UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
Schedule 14A
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant ☐☒
Filed by a Party other than the Registrant ☐
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☒ Preliminary Proxy Statement | ☐ Confidential for use of the Commission |
| only (as permitted by Rule 14a-6(e)(2)) |
☐ Definitive Additional Materials | |
☐ Soliciting Material Pursuant to §240.14a-11(c) of §240.14a-12 | |
Orbital EnergyInfrastructure Group, Inc.
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Not applicable
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☒ | No fee required. |
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☐ | Fee computed on table |
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August 22, 2021
Dear Stockholders:
Our company achieved major milestones this year in pursuing our strategy to expand our electric power transmission and distribution, telecommunications, and renewable energy infrastructure services platform. The impactNotice of COVID-19 is for the most part behind us, as customer capital spending is returning to pre-pandemic levels.
Our stock price increased meaningfully during the first half of this year. which we believe can be attributed to the positive momentum in our utility scale solar infrastructure services business – as our solar programs and our partnership with the Black Sunrise Fund, who announced their plan to build over 1 gigawatt of solar power on retired coal power generation facilities with a beginning investment of $725 million. The stock price increase was a significant catalyst to our acquisition strategy.
In April, we acquired Gibson Technical Services (GTS), based in Georgia, to serve as our telecommunication infrastructure platform and to serve telecommunication, heath care, and entertainment venue customers building out 5G Spectrum networks and increasing bandwidth requirements on their systems. A strategy is already in place with GTS to build their platform through synergistic acquisitions that will provide customers with broader solutions and expand their capabilities geographically, adding significant shareholder value.
We are now directing our focus on acquiring an established electric transmission and distribution infrastructure services company to serve as a platform for that segment of our business. By the end of this year, we believe we will have a strong foundation in place for renewables, electric power transmission and distribution, and our telecommunication infrastructure services business, to complement our engineering solutions and services segment.
In parallel with our acquisition strategy, we continue to fund Orbital Power Inc. (OPI), which was started in the first quarter of 2020. OPI is gaining recognition in the electric power infrastructure services market and has been on a steady growth trajectory since inception, expanding their geographic footprint throughout the southwest and southern U.S. with investor-owned utilities and municipalities.
Earlier this year we launched Eclipse Foundation Group which compliments OPI, by providing drilled pier foundations primarily serving the electric transmission and substation markets.
COVID-19 did provide challenges to our business during 2020 and into 2021. In many areas of our business, customer spending on non-critical projects were delayed until this year. Our company primarily felt the impact in our solar and gas measurement and sampling areas. To a lesser extent, Orbital Power experienced setbacks establishing new customers that resulted in a temporary negative impact on hiring new service providers. However, as we enter the second half of this year, we are experiencing a resurgence in each of these areas, as solar developers, energy companies, and electric utility customer spending appears to be returning to pre-COVID levels.
I am very proud of our employees and their efforts to mitigate the impact of COVID-19 to our business. Our employees implemented and adhered to safety procedures for themselves, their families, and our key stakeholders, all the while continuing to provide services to our customers without a serious safety incident. I am very appreciative and thankful to our entire Orbital Energy Group family.
The end markets we serve continue to have multi-year drivers we believe will create continued momentum in the markets we serve. Mandates to transition the country, and the world, for that matter, from fossil fuel to renewable generation will be a significant catalyst to build billions of dollars of utility scale solar generation assets.
As technology continues to advance, the aging electric grid becomes more important to programs such as electric vehicles and many other smart grid applications. The rollout of the 5G spectrum will revolutionize communication and require significant new infrastructure to provide bandwidth continuity and security. This new infrastructure impact does not include further positive impact we expect to receive from the current federal administration and any infrastructure spending bill that may be passed.
The progress we are making this year through our acquisition and organic growth strategies, our customer spending returning to pre-pandemic levels, and positive multi-year growth drivers, will likely result in the company achieving positive EBITDA and cashflow by the end of this calendar year.
Last, but certainly not least, we continue to advance Orbital Energy Group’s diversity, equity, and inclusion (DEI) strategy. This year, we have added more diversity to our board of directors with the appointment of Paul T. Addison, Jerry Sue Thornton, and LaForrest V. Williams. We are also developing processes to hire, employ, train, and promote people of color and other disadvantaged persons at all levels of our organization more effectively. Our objective is to be a recognized leader in diversity, equity, and inclusion in the industries we serve.
In summary, we continue to be a company in transition. Our strategy is straight forward…to build an infrastructure services platform that serves the electric power transmission and distribution, telecommunications, and renewable industries, which will complement our legacy gas engineering solutions and services business. We will primarily execute strategy through acquiring successful, well established, and privately held infrastructure services companies that have reached a threshold in their operations and need financial support to profitably increase their business to the next level. We will also continue to advance our strategy to have a more diverse, equitable and inclusive workforce, providing opportunities for advancement of underserved and underrepresented peoples at all levels of our organization.
The headwinds of the COVID-19 pandemic caused a year delay in ‘rolling out’ our strategy. We believe we will be EBITDA and cash flow positive by the end of 2021. Thank you for your ongoing support and I look forward to sharing our progress throughout the year.
Sincerely,
Jim O’Neil
AnnualVirtual Special Meeting of Stockholders
To: The Stockholders of Orbital EnergyInfrastructure Group, Inc.
We will hold our 2021 Annuala Virtual Special Meeting of Stockholders at 9:00 am MSTCT on Tuesday, October 12, 2021, at the Fairmont Scottsdale Princess, 7575 East Princess Drive, Scottsdale, Arizona 85255 (the “Annual Meeting”)April 18, 2023. A link for the virtual meeting will be posted at our Company website, www.orbinf.com. Stockholders can submit questions via email, StockholderQuestions@orbinf.com. The following purposes:Proposals will be considered:
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4. | Adjournment Proposal. To consider and vote on a proposal to adjourn or postpone the Virtual Special Meeting, if necessary, to solicit additional proxies to approve |
5. | Other Business. To transact such other business as may properly come before the |
Our board of directors recommends that you vote FOR the Proposals 1, 2, 3 and 4.
These items of business are more fully described in the Proxy Statementproxy statement accompanying this notice. The board of directors has fixed the close of business on August 18, 2021,February 17, 2023, as the Record Date for the determination of stockholders entitled to receive notice of, and to vote at, the AnnualVirtual Special Meeting of Stockholders. For a period of at least ten days prior to the AnnualVirtual Special Meeting, a complete list of stockholders entitled to vote at the AnnualVirtual Special Meeting will be open to examination by any stockholder during ordinary business hours at the offices of the Company, 1924 Aldine Western,5444 Westheimer Road, Suite #1650, Houston, Texas 77038.TX 77056.
Your vote is especially important.important. All stockholders are cordially invited to virtually attend the AnnualVirtual Special Meeting. Whether or not you plan to virtually attend the AnnualVirtual Special Meeting, we encourage you to read this Proxy Statementproxy statement and submit your proxy or voting instructions as soon as possible. For specific instructions on how to vote your shares, please refer to the instructions on the Notice of Internet Availability of Proxy Materials (the “Notice”) you received in the mail, the section entitled General Information about the AnnualVirtual Special Meeting beginning on page 1 of the Proxy Statementproxy statement or, if you requested to receive printed proxy materials, your enclosed proxy card.
To assure your representation at the AnnualVirtual Special Meeting of Stockholders, we ask that you vote as promptly as possible.
Your stock will be voted in accordance with the instructions you provide in your proxy. You may revoke your proxy at any time before it is voted by signing and returning a proxy bearing a later date for the same shares, by filing with the Secretary of the Company a written revocation bearing a later date or by attending and voting in person at the AnnualVirtual Special Meeting.
By Order of the Board of Directors | |
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| James F. O’Neil, CEO |
Introduction
This Proxy Statementproxy statement is furnished in connection with the solicitation of proxies by the board of directors of Orbital EnergyInfrastructure Group, Inc. (the “Company", “we,” “us,” “OIG”) for use at the AnnualVirtual Special Meeting of Stockholders to be held at 9:00 am MSTCT on Tuesday, October 12, 2021, atApril 18, 2023. Due to ongoing public health concerns regarding the Fairmont Scottsdale Princess, 7575 East Princess Drive, Scottsdale, Arizona 85255COVID-19 pandemic and for any postponements or adjournments thereof.the health and well-being of our shareholders, directors, management and associates, the Virtual Special Meeting will be held online in a virtual format. A link to the Virtual Special Meeting is on our Company website at www.orbinf.com. Please vote your shares of Orbital EnergyInfrastructure Group common stock. You are invited to virtually attend the Virtual Special Meeting by following the link at www.orbinf.com. Your vote at the AnnualVirtual Special Meeting is important to us. Whether or not you plan to attend the AnnualVirtual Special Meeting, we encourage you to read this Proxy Statementproxy statement and submit your proxy or voting instructions as soon as possible. For specific instructions on how to vote your shares, please refer to the instructions on the Notice of Internet Availability of Proxy Materials (the “Notice”) you received in the mail, the section entitled General Information about the AnnualVirtual Special Meeting beginning below in this Proxy Statementproxy statement or, if you requested to receive printed proxy materials, your enclosed proxy card. The Proxy Statementproxy statement and the accompanying materials are being made available to the stockholders on or about August 28, 2021.March 3, 2023. This solicitation of proxies is made on behalf of our board of directors.
WE URGE YOU TO VOTE AS SOON AS POSSIBLE, EVEN IF YOU ARE CURRENTLY INTENDING TO VIRTUALLY ATTEND THE MEETING. THIS |
General Information about the AnnualVirtual Special Meeting
Q: Why am I receiving these materials?
A: Our board of directors has made these materials available to you on the internet or, upon your request, delivered printed proxy materials to you in connection with the solicitation of proxies for use at the Orbital EnergyInfrastructure Group AnnualVirtual Special Meeting of Stockholders, which will take place at 9:00 am MSTCT on Tuesday, October 12, 2021, atApril 18, 2023. Due to ongoing public health concerns regarding the Fairmont Scottsdale Princess, 7575 East Princess Drive, Scottsdale, Arizona 85255.COVID-19 pandemic and for the health and well-being of our shareholders, directors, management and associates, the Virtual Special Meeting will be held online in a virtual format. As a stockholder, you are invited to virtually attend the AnnualVirtual Special Meeting and you are requested to vote on the items of business described in this Proxy Statement.
Q: What information is contained in this Proxy Statement?
A: The information in this Proxy Statement relatesproxy statement. A link to the proposals to be voted onVirtual Special Meeting is at the Annual Meeting, the voting process, the compensation award process of our directors and most highly paid executive officers, a description of an amendment to paragraph 11.27 of the Orbital Energy Group 2020 Incentive Award Plan to increase the Overall Share Limit to 5,000,000, ratification of the appointment of Grant Thornton LLP as the Company’s independent registered public accounting firm for the year ending December 31, 2021, corporate governance and information on our board of directors and certain other required information.www.orbinf.com.
Q: Why did I receive a notice in the mail regarding the internet availability of proxy materials instead of a full set of proxy materials?
A: In accordance with rules adopted by the Securities and Exchange Commission (the “SEC” or "Commission"), we may furnish proxy materials, including this Proxy Statement and our 2020 Annual Report on Form 10-K and our most recent Form 10-Q,proxy statement, to our stockholders by providing access to such documents on the internet instead of mailing printed copies. Most stockholders will not receive printed copies of the proxy materials unless they request them. Instead, the Notice, which was mailed to most of our stockholders, will instruct you as to how you may access and review all the proxy materials on the internet. The Notice also instructs you as to how you may submit your proxy on the internet. If you would like to receive a paper or email copy of our proxy materials, you should follow the instructions in the Notice for requesting such materials.
Q: I share an address with another stockholder and we received only one paper copy of the proxy materials. How may I obtain an additional copy of the proxy materials?
A: We have adopted a procedure called “householding,” which the SEC has approved. Under this procedure, we deliver a single copy of the Notice and, if applicable, the proxy materials and the Annual Report to Stockholders to multiple stockholders who share the same address unless we received contrary instructions from one or more of the stockholders. This procedure reduces environmental impact as well as our printing costs, mailing costs and fees. Stockholders who participate in householding will continue to be able to access and receive separate proxy cards. Upon written request, we will promptly deliver a separate copy of the Notice and, if applicable, the proxy materials and the Annual Report to Stockholders to any stockholder at a shared address to which we delivered a single copy of any of these documents. To receive a separate copy of the Notice and, if applicable, these proxy materials, or the 2020 Annual Report on Form 10-K and the most recent Form 10-Q, stockholders may telephone, write or email us as follows: (832) 467‑1420, Orbital EnergyInfrastructure Group, Inc., 1924 Aldine Western,Inc, 5444 Westheimer Road, Suite #1650, Houston, Texas 77038; Investors@OrbitalEnergyGroup.com.
TX 77056 or Investors@OrbInf.com. Stockholders who hold shares in street name (as described below) may contact their brokerage firm, bank, broker-dealer or other similar organization to request information about householding.
Q: How do I get electronic access to the proxy materials?
A: The Notice will provide you with instructions regarding how to:
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View our proxy materials for the Virtual Special Meeting on our website, www.OrbitalInfrastructureGroup.com and
Instruct us to send our future proxy materials to you electronically by email.
Choosing to receive your future proxy materials by email will save us the cost of printing and mailing documents to you and will reduce the impact on the environment of printing and mailing these materials. If you choose to receive future proxy materials by email, you will receive an email next year with instructions containing a link to those materials and a link to the proxy voting site. Your election to receive proxy materials by email will remain in effect until you terminate it.
Q: Is the AnnualVirtual Special Meeting going to be webcast?
A: Yes. Due to ongoing public health concerns regarding the COVID-19 pandemic and for the health and well-being of our shareholders, directors, management and associates, the Virtual Special Meeting will be held online in a virtual format. For your convenience, we are pleased to offer a live webcast of our AnnualVirtual Special Meeting on the Investor Relations section of our website at www.OrbitalEnergyGroup.com.www.orbinf.com.
Q: Can I participate in the question-and-answer portion of the Annual Meeting without attending the AnnualVirtual Special Meeting?
A: No. The live webcast will be only visual and audio; there will be no opportunity to participate in the question-and-answer portion of the Annual Meeting unless you are present at the meeting.Virtual Special Meeting. However, Stockholders can submit questions via email, StockholderQuestions@orbinf.com.
Q: What items of business will be voted on at the 2021 AnnualVirtual Special Meeting?
A: The items of business scheduled to be voted on at the AnnualVirtual Special Meeting are:
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● | Proposal 3: To ratify the appointment of |
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| Other Business. To |
We will also consider any other business that properly comes before the Annual Meeting.
Q: How can I vote my shares in person at the Annual Meeting?
A: Shares held in your name as the stockholder
Q: How shall I sign my name on the proxy card?
A: The following general rules for signing proxy cards may be of assistance to you and avoid the time and expense to Orbital Energy Groupus in validating your vote if you fail to sign your proxy card properly.
• | Individual Accounts: Sign your name exactly as it appears in the registration on the proxy card. |
• | Joint Accounts: Either party may sign, but the name of the party signing should conform exactly to a name shown in the registration on the proxy card. |
• | All Other Accounts: The capacity of the individual signing the proxy card should be indicated unless it is reflected in the form of registration. |
Q: How can I vote my shares without attendingfor the AnnualVirtual Special Meeting?
A: Whether you hold shares directly as the stockholder of record or beneficially, in street name, you may direct how your shares are voted without attending the AnnualVirtual Special Meeting. If you are a stockholder of record, you may vote by proxy. You can vote by proxy over the internet by following the instructions provided in the Notice or, if you requested to receive printed proxy materials, you can also vote by mail or telephone pursuant to instructions provided on the proxy card. If you hold shares beneficially in street name, you may also vote by proxy over the internet by following the instructions provided in the Notice or, if you requested to receive printed proxy materials, you can also vote by telephone or mail by following the voting instruction card provided to you by your broker, bank, trustee or nominee.
Q: May I change my vote?
A: You may change your vote at any time prior to the taking of the vote at the AnnualVirtual Special Meeting. If you are the stockholder of record, you may change your vote by: (1) granting a new proxy bearing a later date (which automatically revokes the earlier proxy) using any of the methods described above (and until the applicable deadline for each method), or (2) providing a written notice of revocation to Orbital EnergyInfrastructure Group’s Corporate Secretary at Orbital EnergyInfrastructure Group, Inc., 1924 Aldine Western,5444 Westheimer Road, Suite #1650, Houston, Texas 77038TX 77056 prior to your shares being voted or (3) attending the Annual Meeting and voting in person.voted. Attendance at the meeting will not cause your previously granted proxy to be revoked unless you specifically so request. For shares you hold beneficially in street name, you may change your vote by submitting new voting instructions to your broker, bank, trustee or nominee following the instructions they provided or, if you have obtained a legal proxy from your broker, bank, trustee or nominee giving you the right to vote your shares, by attending the Annual Meeting and voting in person.shares.
Q: Is my vote confidential?
A: Proxy instructions, ballots and voting tabulations that identify individual stockholders are handled in a manner that protects your voting privacy. Your vote will not be disclosed either within Orbital EnergyInfrastructure Group or to third parties, except: (1) as necessary to meet applicable legal requirements, (2) to allow for the tabulation of votes and certification of the votes and (3) to facilitate a successful proxy solicitation. Occasionally, stockholders provide on their proxy card written comments, which are then forwarded to Orbital EnergyInfrastructure Group management.
Q: How many shares must be present or represented to conduct business at the AnnualVirtual Special Meeting?
A: The presence at the AnnualVirtual Special Meeting, in person or by proxy, of the holders of one third of the aggregate voting power of the common stock outstanding on the Record Date will constitute a quorum. Each share of common stock is entitled to one vote. As of the Record Date for this AnnualVirtual Special Meeting, approximately 65,264,305__________ shares of common stock were outstanding and entitled to vote at the AnnualVirtual Special Meeting. Both abstentions and broker non-votes (described below) are counted for the purpose of determining the presence of a quorum. Unless otherwise indicated, all references herein to percentages of outstanding shares of stock are based on such numbers of shares outstanding. Shares entitled to vote are referred to hereafter as “Voting Shares.”
Q: What shares can I vote?
A: Each share of Orbital Energy Groupour common stock issued and outstanding as of the close of business on the Record Date for the AnnualVirtual Special Meeting is entitled to be voted on all items being voted onproposed at the AnnualVirtual Special Meeting. You may vote all shares owned by you as of the Record Date, including: (1) shares held directly in your name as the stockholder of record and (2) shares held for you as the beneficial owner in street name through a broker, bank, trustee or other nominee.
Q: How many votes am I entitled to per share?
A: Each holder of shares of common stock is entitled to one vote for each share held as of the Record Date.
Q: What is the Record Date?
A: Record Date, in the context of voting at the AnnualVirtual Special Meeting, is the date on which our stock ledger is closed for the purpose of determining which stockholders officially own voting shares in order to be entitled to vote at the AnnualVirtual Special Meeting. The Record Date for the 2021 AnnualVirtual Special Meeting of Stockholders is August 18, 2021.February 17, 2023.
Q: How may I vote?
A: Regarding the election of directors, you may vote “FOR” all or some of the nominees or your vote may be “WITHHELD” with respect to one or more of the nominees.
A: Regarding the following proposals,Proposals 1, 2, 3, and 4 you may vote “FOR” or “AGAINST” or “ABSTAIN”:“ABSTAIN.”
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Q: If I check the box for “ABSTAIN” or “WITHHOLD,“ABSTAIN” what happens to my vote?
A: If you check the box for “ABSTAIN” or “WITHHOLD,”, your vote will not be counted in favor of the matter on which you voted; however, it will be counted for the purpose of determining the presence of a quorum.
Q: What vote is required to approve each item?
A: Election of directors
TheProposals 1, 2, 3, and 4 require the affirmative vote “FOR” of a simple majority of the votes cast at the AnnualVirtual Special Meeting is required for the election of each director.approval. A properly executed proxy marked "WITHHOLD" with respect to the election of one or more directors“ABSTAIN” regarding these proposals will not be voted with respect to the director or directors indicated or the other items to be voted on; however, it will be counted for purposes of determining whether there is a quorum. Voting Shares represented by properly executed proxies for which no instruction is given will be voted “FOR” election of the nominee for director.
A: Ratification of Grant Thornton LLP as our independent registered public accounting firm.
The affirmative vote “FOR” of a simple majority of the votes cast at the Annual Meeting is required for the ratification of the appointment of Grant Thornton LLP as our independent registered public accounting firm for the year ending December 31, 2021. A properly executed proxy marked “ABSTAIN” regarding this issue will not be voted with respect to the itemProposal to be voted on; although, it will be counted for purposes of determining whether there is a quorum. Voting Shares represented by properly executed proxies for which no instruction is given will be voted “FOR” these issues.
A: Advisory vote on the approval of the Company’s executive compensation (Say-on-Pay).
While we intend to carefully consider the voting results of this proposal, in accord with the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, the final vote is advisory in nature, therefore, not binding on us, our board or the Compensation Committee. Our executive compensation will be approved, on an advisory basis, if the votes cast by stockholders in favor of advisory approval exceed those votes cast in opposition of advisory approval.
A: To approve an amendment to paragraph 11.27 of the Orbital Energy Group 2020 Incentive Award Plan by increasing the Overall Share Limit to 5,000,000.
The affirmative vote “FOR” of a simple majority of the votes cast at the Annual Meeting is required to approve an amendment to paragraph 11.27 of the Orbital Energy Group 2020 Incentive Award Plan by increasing the Overall Share Limit. A properly executed proxy marked "WITHHOLD" with respect to this proposal will not be voted with respect to approval of this proposal; however, it will be counted for purposes of determining whether there is a quorum. Voting Shares represented by properly executed proxies for which no instruction is given will be voted “FOR” approval of an amendment to paragraph 11.27 of the Orbital Energy Group 2020 Incentive Award Plan by increasing the Overall Share Limit.
Q: Why am I asked to approve an amendment to paragraph 11.27 of the Orbital Energy Group 2020 Incentive Award Plan by increasing the Overall Share Limit to 5,000,000?
A: Nasdaq Stock Market Listing Rule 5635(c) requires shareholder approval prior to the issuance of securities when a stock option or purchase plan is to be established or materially amended or other equity compensation arrangement is made or materially amended, pursuant to which stock may be acquired by officers, directors, employees, or consultants.
We had two previous equity incentive plans, 2008 Equity Incentive Plan and the Company’s 2009 Equity Incentive Plan (Executive), which have both expired.
Q: What is the purpose of the Orbital Energy Group 2020 Incentive Award Plan and what is in it?
A: Orbital Energy Group is requesting its stockholders to approve an amendment to paragraph 11.27 of the Orbital Energy Group 2020 Incentive Award Plan (the “Plan”) by increasing the Overall Share Limit from 2,000,000 to 5,000,000 shares of which 397,597 have been granted. The Overall Share Limit is the total number of shares reserved and available for grant and issuance pursuant to the Plan. By the terms of the Plan, the Company shall reserve and keep available a sufficient number of shares as shall be required to satisfy the requirements of all outstanding awards granted under the Plan. This increase will become effective upon stockholder approval.
The purpose of the Orbital Energy Group 2020 Incentive Award Plan is to enhance our ability to attract, retain and motivate persons who make (or are expected to make) important contributions to Orbital Energy Group by providing these individuals with equity ownership opportunities. Equity awards are intended to motivate high levels of performance and align the interests of our directors, employees and consultants with those of our stockholders by giving directors, employees and consultants the perspective of an owner with an equity stake in Orbital Energy Group and providing a means of recognizing their contributions to the success of the Company. Our board of directors and management believe that equity awards are necessary to remain competitive in the Company’s industry and are essential to recruiting and retaining the highly qualified employees who help Orbital Energy Group meet its goals.particular Proposal.
Q: What is the effect of the proposal to ratify the Audit Committee’s appointment of Grant ThorntonPricewaterhouseCoopers LLP as our independent registered public accounting firm?
A: Selection of our independent registered public accounting firm is not required to be submitted to a vote of stockholders. The Sarbanes-Oxley Act of 2002 requires the Audit Committee of our board of directors to be responsible for the appointment, compensation and oversight of the audit work of the independent registered public accounting firm. However, the board of directors has elected to submit the selection of Grant ThorntonPricewaterhouseCoopers LLP as our independent registered public accounting firm to stockholders for ratification as a matter of corporate practice. If the stockholders fail to ratify the appointment, the Audit Committee will reconsider whether to retain Grant ThorntonPricewaterhouseCoopers LLP and may retain that firm or another firm without resubmitting the matter to our stockholders. Even if the appointment is ratified, the Audit Committee may, at its discretion, appoint a different independent registered public accounting firm at any time during the year.
Q: Is cumulative voting permitted for the election of directors?
A: No. You may not cumulate your votes for the election of directors.
Q: What is cumulative voting?
A: A system of voting in which each voter is given as many votes as there are positions to be filled and allowed to cast those votes for one candidate or distribute them in any way among the candidates.
Q: What happens if additional matters are presented at the AnnualVirtual Special Meeting?
A: Other than:
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As described in this Proxy Statement,proxy statement, we are not aware of any other business to be acted upon at the AnnualVirtual Special Meeting. If you submit a signed proxy, the persons named as proxy will have the discretion to vote your shares on any additional matters properly presented for a vote at the meeting.
Q: What is the difference between holding shares as a stockholder of record and as a beneficial owner?
A: Many Orbital Energy GroupOIG stockholders hold their shares as a beneficial owner through a broker or other nominee rather than directly in their own name. As summarized below, there are some distinctions between shares held as a stockholder of record and those owned beneficially.
Stockholder of Record
If your shares are registered directly in your name with our transfer agent, Computershare Trust Company, N.A., you are considered, with respect to those shares, the stockholder of record, and the Notice was sent directly to you by Orbital Energy Group.us. As the stockholder of record, you have the right to grant your voting proxy directly to Orbital EnergyInfrastructure Group or toyou can vote by proxy over the internet by following the instructions provided in person at the Annual Meeting. IfNotice or, if you requested to receive printed proxy materials, Orbital Energy Group has enclosed or sent a proxy card for you to use. You maycan also vote by mail or telephone pursuant to instructions provided on the internet or by telephone, as described in the Notice and below under the heading “How can I vote my shares without attending the Annual Meeting?”proxy card.
Beneficial Owner
If your shares are held in an account at a brokerage firm, bank, broker-dealer, trust or other similar organization, like most of our stockholders, you are considered the beneficial owner of shares held in street name, and the Notice was forwarded to you by that organization. As the beneficial owner, you have the right to direct your broker, bank, trustee or nominee how to vote your shares and you are also invited to attend the Annual Meeting.shares.
Since a beneficial owner is not the stockholder of record, you may not vote your shares in person at the AnnualVirtual Special Meeting unless you obtain a “legal proxy” from the broker, bank, trustee or nominee that holds your shares giving you the right to vote the shares atfor the meeting. If you do not wish to vote in person or you will not be virtually attending the AnnualSpecial Meeting, you may vote by proxy. You may vote by proxy over the internet or by telephone, as described in the Notice and below under the heading “How can I vote my shares without attending the AnnualVirtual Special Meeting?”
If you hold your shares in "street name” through a broker or other nominee, your broker or nominee may not be permitted to exercise voting discretion with respect to some of thenon-routine matters to be acted upon.upon which includes Proposals 1, 2, 3, and 4. Thus, if you do not give your broker or nominee specific instructions, your shares may not be voted on those matters and will not be counted in determining the number of shares necessary for approval. Shares represented by such "broker non-votes" will, however, be counted in determining whether there is a quorum.
Q: Who will bear the cost of soliciting votes for the AnnualVirtual Special Meeting?
A: Orbital EnergyInfrastructure Group will pay the entire cost of preparing, assembling, printing, mailing and distributing these proxy materials and soliciting votes. If you choose to access the proxy materials and/or vote over the internet, you are responsible for internet access charges you may incur. If you choose to vote by telephone, you are responsible for telephone charges you may incur. In addition to the mailing of these proxy materials, the solicitation of proxies or votes may be made in person, by telephone or by electronic communication by our directors, officers and employees, who will not receive any additional compensation for such solicitation activities.
Q: Where can I find the voting results of the AnnualVirtual Special Meeting?
A: We intend to announce preliminary voting results at the AnnualVirtual Special Meeting and to disclose the vote results on Form 8-K as well as on our website at www.OrbitalEnergyGroup.comwww.orbinf.com as soon as possible after the Virtual Special Meeting.
Q:How does the Company’s board recommend that I vote?
A: Our board unanimously recommends that our stockholders vote “For” each of the four Proposals: Reverse Stock Split Proposal, Issuance Proposal, Ratification of Auditors Proposal and Adjournment Proposal.
Q: What factors did the board consider in recommending the Reverse Stock Split Proposal?
A: The board of directors considered the benefits of maintaining the trading of our common stock on the Nasdaq Capital Market as in our stockholders best interests. Our board of directors is recommending that stockholders approve the Reverse Stock Split Proposal to maintain compliance with Nasdaq Listing Market Rule 5550(a)(2) to maintain compliance with the $1.00 minimum bid price requirement for continued listing.
Q: What factors did the board consider in recommending the Issuance Proposal?
A: Due to the Company’s limited capital resources and restrictions and negative covenants set forth in our agreements with lenders we have restricted access to available cash resources. Accordingly, issuing shares of our common stock to raise additional capital or to satisfy obligations under outstanding debt obligations provides the Company with flexibility and the ability to service outstanding obligations and raise working capital.
Q: Do I have dissenters rights of appraisal?
A. No, neither Texas Corporate Law nor the Bylaws of the Company provides dissenters rights of appraisal to our shareholders in connection with the Reverse Stock Split Proposal, Issuance Proposal, Ratification of Auditors Proposal, or Adjournment Proposal.
Q: May I obtain a list of shareholders entitled to attend and vote at the Virtual Special Meeting?
A. Yes. A list of shareholders will be available for inspection by any shareholder at our principal executive offices located at 5444 Westheimer Road, Suite #1650, Houston, Texas 77056, beginning two (2) business days after notice of the Virtual Special Meeting is given, until voting at the Virtual Special Meeting ends.
Cautionary Statement Regarding Forward-Looking Statements
The statements in this Proxy Statement that are not historical statements, including statements regarding future capital-raising activities and expected use of proceeds therefrom, our estimates regarding expenses, future revenues, capital requirements, needs for additional financing, our ability to obtain additional financing, our success with regard to any business development initiatives, our ability to recruit or retain key technical or management personnel or to retain our executive officers, our stock price and ability to meet the continued listing requirements of The Nasdaq Capital Market, and any other statements regarding our future expectations, beliefs, plans, objectives, financial conditions, assumptions or future events or performance that are not historical facts, are forward-looking statements within the meaning of the federal securities laws. These statements are subject to numerous risks and uncertainties, many of which are beyond our control, which could cause actual results to differ materially from the results expressed or implied by the statements. We describe risks and uncertainties that could cause actual results and events to differ materially in the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section of our Annual Meeting.Report on Form 10-K for the fiscal year ended December 31, 2021 (the “Annual Report”), which was filed on March 31, 2022, amendment filed April 4, 2022, amendment filed April 20, 2022 as revised or supplemented by our most recent Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2022, which was filed on November 14, 2022.
Any forward-looking statements should be considered in light of such important factors. We undertake no obligation to revise or update publicly any forward-looking statements for any reason. Readers are cautioned not to place undue reliance on any forward-looking statement, which speaks only as of the date on which such statement is made.
All subsequent written and oral forward-looking statements concerning the matters addressed in this Proxy Statement and attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this Proxy Statement.
Election of Directors
Issued and outstanding shares of our Common Stock are entitled to one vote per share for each Director for a one-year term or until a successor has been elected and qualified or the Director’s earlier resignation or removal. Cumulative voting is not permitted.
Unless stated to be voted otherwise, each proxy will be voted for the election of the nominees named. The nominees have consented to serve as director if elected. If any nominee becomes unavailable for election before the Annual Meeting of Stockholders, the board of directors may name a substitute nominee and proxies will be voted for such substitute nominee unless an instruction to the contrary is written on the proxy card.
Information about Director Nominees
Board of Directors Independence
The board of directors has determined that each of the director nominees standing for election has no relationship that, in the opinion of the board of directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. Additionally, several of the director nominees standing for election are “independent directors” as defined by Rule 5605(a)(2) of The Nasdaq Stock Market (“Nasdaq”). In determining the independence of our directors, the board of directors has adopted independence standards that mirror exactly the criteria specified by applicable laws and regulations of the SEC and the Rules of The Nasdaq Stock Market. In determining the independence of our directors, the board of directors considered all transactions in which Orbital Energy Group and any director had any interest, including those discussed below under Transactions with Related Persons, Promoters and Certain Control Persons.
Sean P. Rooney to Retire from the Board
On March 23, 2021, our director, Sean P. Rooney, formally notified the board of directors he will retire from the Orbital Energy Group board of directors when his term expires and will not seek reelection at the Company’s annual meeting in 2021.
Following is a brief description of the business experiences, ages as of September 30, 2021, and positions and offices with the Company for each of the director nominees.
William J. Clough, Esq.Executive Chairman of the board of directors and General Counsel of the Company and its wholly owned subsidiaries, age 70. Mr. Clough has served on the board of directors since 2006 and was reelected at the 2020 Annual Meeting of Stockholders to serve a one-year term.
A seasoned executive and entrepreneur, Mr. Clough joined the company’s Board in 2006 and was subsequently appointed chief executive officer in 2008. In his role as CEO, a position he held until 2019 with the appointment of Jim O’Neil, he led the establishment of the company’s Energy division, formed its Energy operations in North America, and guided the company to its largest Energy contract award in its history while concurrently managing the company’s Power & Electro-Mechanical division to greater than average electronics industry growth rates in recent years. As CEO, he directed company’s capital markets strategy, including leading several equity offerings to institutional investors and spearheaded the company’s uplist to the Nasdaq Capital Market in 2012.
Mr. Clough previously founded and operated a multi-state, multi-office law firm for 14 years. He received a Juris Doctorate, Cum Laude, from the University of California’s Hastings College of Law in 1990. He is a former law enforcement officer and U.S. Federal Air Marshal. Mr. Clough serves on the board of directors of privately-held Virtual Power Systems, creator of Software Defined Power®, in which Orbital Energy Group holds a minority equity investment.
James F. O’Neil III, Vice Chairman of the board of directors and Chief Executive Officer of the Company and its wholly owned subsidiaries, age 63. Mr. O’Neil was appointed to the Board of Directors in July 2019 and reelected at the 2020 Annual Meeting of Stockholders to serve a one-year term.
James (Jim) O'Neil joined Orbital Energy Group as vice chairman in July 2019 and was subsequently appointed chief executive officer in October 2019. He is a veteran executive of the power industry and has been instrumental in formulating and is overseeing execution on Orbital Energy Group’s transformation plan that reshapes the company into a diversified energy services platform.
Mr. O’Neil was previously chief operating officer, chief executive officer and president of Quanta Services, Inc. (Quanta) from 2008 to 2016, an infrastructure solutions provider for the electric power, oil and natural gas, telecommunications and renewable industries. During this period, he grew the company into a Fortune 500 enterprise with $7+ billion in annual revenue at its peak through a combination of both organic growth and many strategic acquisitions.
Mr. O’Neil joined Quanta in 1999 and over his tenure was responsible for various initiatives including the company’s growth strategy, internal audit, and merger and acquisition initiatives. He began his career at Halliburton Company in 1980 where he held various positions, lastly as Director, Global Deepwater Development.
Mr. O’Neil holds a B.S. in Civil Engineering from Tulane University.
C. Stephen Cochennet, Director, age 64
Mr. Cochennet was elected to serve as a director at the 2018 Annual Meeting and continues to serve on the board of directors as an independent director within the meaning of Rule 5605(a)(2) of The Nasdaq Stock Market. Mr. Cochennet was reelected at the 2020 Annual Meeting of Stockholders to serve a one-year term.
Mr. Cochennet, as an independent director, serves on the nominating committee along with Messrs. Rooney, Lambrecht, Addison and Ms. Tucker. Mr. Cochennet is also a member of our Audit Committee, Compensation Committee and Investment Committee.
Mr. Cochennet has served as CEO/President, of Kansas Resource Development Company, a private oil and gas exploration company since 2011. From 2011 through 2015 he was also the CEO and president of Guardian 8 Corporation. From 2005 to 2010 Mr. Cochennet was the Chairman, President, and Chief Executive Officer of EnerJex Resources, Inc., a publicly traded SEC registered Oil and Gas Company. Prior to joining EnerJex, Mr. Cochennet was President of CSC Group, LLC in which he supported several Fortune 500 corporations, international companies, and natural gas/electric utilities as well as various startup organizations. The services provided included strategic planning, capital formation, corporate development, executive networking and transaction structuring. From 1985 to 2002, he held several executive positions with UtiliCorp United Inc. (Aquila) in Kansas City, Missouri. His responsibilities included finance, administration, operations, human resources, corporate development, natural gas/energy marketing, and managing several new startup operations. Prior to his experience at Aquila Mr. Cochennet served 6 years with the Federal Reserve System managing problem and failed banking institutions primarily within the oil and gas markets.
Mr. Cochennet graduated from the University of Nebraska with a B.A. in Finance and Economics.
Paul D. White, Employee and Director, age 60
Mr. White was appointed in April 2014 as a director and continues to serve on the board of directors. Mr. White was reelected at the 2020 Annual Meeting to serve a one-year term. In March 2021, Mr. White was appointed to the position of Chief Diversity Officer, a position unique to the Company.
Mr. White is a graduate of Humboldt State University and brings to the Orbital Energy Group board of directors over 25 years of upper-level business management skills. Mr. White served for two years as the President of Orbital Gas Systems, Ltd. Prior to working for the Company, Mr. White served as Vice President of the Healthcare Division for North America of a global security company. His responsibilities included direct responsibility for profit and loss statements with approximately $120 million in revenues, along with management, control, and supervision of approximately 3,000 employees working at 44 medical centers & hospitals and over 600 medical office buildings throughout the United States. He previously served in the Office of the General Counsel and Risk Services, as an Environmental Risk Consultant with Sutter Health Support Services - Corporate Services. His key responsibilities included: formulating best practice solutions to minimize/eliminate existing and potential risk and quality concerns, patient, employee health & safety and security exposures as well as consultations of state, federal, and professional standards for Risk Control/Environmental Health, & Safety programs from agencies such as OSHA, TJC, DHS, EPA, NFPA, and DOT.
As a results-oriented business leader, Mr. White has skills in developing, managing and expanding business portfolios. Mr. White has senior management experience in contract management, public relations, program strategy and design and has been consistently recognized for effective financial management, leadership, integrity, teambuilding, and program management skills.
Corey A. Lambrecht, Director, age 52
Mr. Lambrecht was elected to serve as a director at the 2007 Annual Meeting of Stockholders and continues to serve on the board of directors as an independent director within the meaning of Rule 5605(a)(2) of The Nasdaq Stock Market. Mr. Lambrecht was reelected at the 2020 Annual Meeting to serve a one-year term.
Mr. Lambrecht, as an independent director, serves on the nominating committee along with Messrs. Cochennet, Rooney, Addison and Ms. Tucker. Mr. Lambrecht is also Chairman of our Compensation Committee and Investment Committee and a member of our Audit Committee.
Mr. Lambrecht is a 20+ year public company executive with broad experience in strategic acquisitions, corporate turnarounds, new business development, pioneering consumer products, corporate licensing, and interactive technology services. In addition, Mr. Lambrecht has held public company executive roles with responsibilities including day-to-day business operations, management, raising capital, board of directors' communication and investor relations. Mr. Lambrecht holds a certificate as a Certified Director from the UCLA Anderson Graduate School of Management Accredited Directors program.
Mr. Lambrecht, as an independent director, serves as one of four independent directors on the nominating committee along with Messrs. Cochennet, Rooney, and Ms. Tucker. Mr. Lambrecht is also Chairman of our Compensation Committee.
Mr. Lambrecht is a director of ORHub, a SaaS company as well as a strategic consultant for American Rebel Holdings, Inc. He served as Director of Sales for Leveraged Marketing Associates, the worldwide leader in licensed brand extension strategies. While Executive Vice President for Smith & Wesson Holding Corporation, he was responsible for Smith & Wesson Licensing, Advanced Technologies and Interactive Marketing divisions. Previously, Mr. Lambrecht served as an independent director of Guardian 8 Holdings. He was the former President of A For Effort, an interactive database marketing company specializing in online content (advergaming) for clients such as the National Hockey League. Mr. Lambrecht's prior experience also includes Pre-IPO founder for Premium Cigars International and VP Sales/Marketing for ProductExpress.com.
Sarah Tucker, Director, age 76
Sarah Tucker was appointed to the Board of Directors in October 2019, and was elected at the 2020 Annual Meeting to serve a one-year term as an Independent Director within the meaning of Rule 5605(a)(2) of The Nasdaq Stock Market. Ms. Tucker, as an independent director, serves on the nominating committee along with Messrs. Cochennet, Rooney, Lambrecht and Addison.
Sarah Tucker is a veteran executive for the business strategy/development, risk management, planning, engineering, procurement and construction of oil and gas projects globally. She has led projects with budgets from $5 million to over $3 billion in refining, petrochemicals, power, and offshore (both shallow and deep-water) for oil and liquified natural gas in Angola, Brazil, China, India, Italy, Korea, Mexico, Nigeria, Oman, Qatar, Spain, the United Kingdom and the United States.
She has served as an operations executive and managing director for major engineering, construction and petrochemical technology companies including Kellogg, KBR, Kellogg-Mitsubishi Development Company, Raytheon Engineers and Constructors, Kvaerner Engineering and Construction of Norway and Silvertech of United Kingdom, a Process Control and High Integrity Safety System Solutions.
Sarah headed the Pollution Prevention Task Force Committee with eight Oil Companies' representatives participating and contributing to the Study for "Refinery Crude Unit Pollution Prevention Project" which is now an American Petroleum Institute DC Publication number 31101.
Over the past several years, she has worked closely with Mexican national oil company PEMEX to establish the country’s first deep water project valued at $14 billion.
According to her personal and professional philosophy, Sarah believes in developing strong relationships and respecting diverse cultures. As part of her philosophy, she led in 1992 a program to author a 51-page report which became the American Petroleum Institute publication, Environmental Design Considerations for Petroleum Refining Crude Processing Units.
Her parallel and subsequent effort with the World Bank was successful in striking a balance between the interests of indigenous people and major oil companies allowing projects to proceed in Africa. The publication became an influential guide for doing business in the developing world.
Paul T. Addison, Director, age 74
Paul T. Addison was appointed to the Board of Directors in June 2021, as an Independent Director within the meaning of Rule 5605(a)(2) of The Nasdaq Stock Market. Mr. Addison, as an independent director, serves on the nominating committee along with Messrs. Cochennet, Rooney, Lambrecht and Ms. Tucker.
Paul T. Addison earned a B. A. in political science and economics from Howard University in 1969 and a M.B.A. from Harvard University in 1972.
He began his career as a loan specialist for The Economic Development Administration of the US Department of Commerce in 1972 providing loan assistance for companies that agreed to expand operations in areas of high unemployment before moving to New York in 1974 to join a Chase Manhattan subsidiary as Vice President and Treasurer that provided financing and startup capital for minority small business enterprises (a MESBIC). In 1978, he joined Citibank/Citicorp as a banker in the firm’s energy and utilities department rising to the level of a senior credit officer and Managing Director.
In this capacity, he managed the bank’s significant exposure to a large segment of the gas and electric utility industry. He also provided financial advice to the firm’s clients and on numerous occasions provided testimony before state and federal regulatory commissions. He also developed financing structures which allowed a number of utilities to rate base large nuclear projects without which a number of utilities would have suffered significant losses. This was a particular issue during the last significant construction cycle for the industry.
He also approved and structured a number of large energy project financings for the firm.
Mr. Addison continued his work in the utility industry when he joined Solomon Smith Barney (Citigroup) in 1997 as a Managing Director in the electric and gas utility space until his retirement from the firm in 2002.
Upon retirement from Citigroup, Mr. Addison became an independent director of First Energy Corporation of Akron, Ohio, serving until his mandatory retirement in 2019. In his capacity as independent director, he served as Chair of the Finance Committee, and member of the Audit Committee as a designated financial expert. He was heavily involved in numerous financings over his term on the board and significantly participated in the company’s $4.7 billion acquisition of Allegheny Energy in 2010.
Mr. Addison is also a Trustee of the Maimonides Medical Center in Brooklyn New York, where he resides. Maimonides is the largest nonprofit hospital in Brooklyn with revenues approaching $1.5 billion and serves an extremely diverse population where over 60 languages are spoken. In his capacity as Trustee, Mr. Addison serves as Chair of the Budget and Finance Committee, member of the Legal and Audit Committee, member of the Quality and Safety Committee, and member of the Executive Committee. Mr. Addison also has served as the hospital’s representative on their self-insurance malpractice company, Hospital Insurance Company (HIC). Mr. Addison also served as Chair of the Audit Committee of HIC’s parent, the Federation of Jewish Philanthropies (FOJP), until its dissolution in 2019.
Jerry Sue Thornton, Director, age 74
Dr. Thornton was appointed to the Board of Directors in July 2021, as an Independent Director within the meaning of Rule 5605(a)(2) of The Nasdaq Stock Market.
Dr. Jerry Sue Thornton earned her B.A. and M. A. in Communications from Murray State University (Kentucky) and Ph.D. in Higher Education Leadership/Administration from The University of Texas (Austin). She earned a post-doctorate certificate from Harvard University.
Dr. Thornton is President of DreamCatcher Education Consulting providing professional development, coaching and mentoring for newly appointed presidents of colleges. She is President Emeritus of the Cuyahoga Community College District serving from 1992 to 2013 which is headquartered in Cleveland, Ohio. The College serves over 30,000 students on four campuses with a budget over $300 million. She brings over 45 years of experience in leading and managing higher education institutions in Chicago, Minnesota and Ohio with a focus on workforce training and professional education.
She also has extensive corporate board service beginning in 1992 with National City Bank/Corporation, Office Max, American Greetings and Bridgestreet Worldwide, Inc. until those companies had a change of control. She later served on the Boards of American Family Insurance, Applied Industrial Technologies, Inc., Republic Powdered Metals, (RPM, Inc.) and First Energy. She is currently serving on the Boards of Barnes and Noble Education (BNED) and Parkwood LLC (an Ohio financial planning company).
Gaining extensive business experience through her board director services of public and private companies, she has been a member of compensation, nominating and governance and audit committees. From manufacturing through distribution; industrial through commercial; financial through merchandizing and energy, Dr. Thornton has amassed over 29 years of business experience. During that tenure, she has served on Special Committees of the Board of Directors involved in acquisition.
Dr. Thornton brings to the Board of Directors broad leadership and business skills as well as an extensive background in workforce/talent acquisition, development and evaluation/assessment.
La Forrest V. Williams, Director, age 70
Mr. Williams was appointed to the Board of Directors in July 2021, as an Independent Director within the meaning of Rule 5605(a)(2) of The Nasdaq Stock Market.
Mr. Williams is a veteran executive of the communications, computer and information assurance business of the Department of Defense and Intelligence community. He served in the civilian Defense Intelligence Senior Executive Service and the United States Air Force senior officer corps as a communication/computer intelligence and information assurance strategist for more than 40 years. His activity in information assurance became a nexus with the vulnerabilities of the energy grid.
His accomplishments include serving as a leader in the original merging of communications and computer systems technology into one management structure for the United States Air Force. His energy focus evolved through his engagement in studying cybersecurity threats to our energy grid during his career at the National Security Agency. Mr. Williams has a history of leadership positions which includes, Chief Information Officer (CIO) of the National Security Agency (NSA), Director of Information Assurance for the U.S. European Command and Director of Legislative Affairs for the National Security Agency. Mr. Williams' experience includes leading a military Communications Group of more than 500 technicians and staff, supporting Nellis Air Force Base Nevada networks. He has installed, managed, upgraded and secured communication cable and space networks worldwide; to include the United States, Europe and South Pacific.
Mr. Williams holds a B.S. degree in Business Administration from San Jose State University and an M.S. Degree in Technology of Management Information Systems from the American University, Washington D.C. He has served at the forefront in the Information Age and was an early leader at NSA in advocating concern about the vulnerability of our nation's energy grid. His advocacy led to the formation of customer assistance teams that he established to advise on the survivability of energy systems of national security concern. He later joined the National War College faculty in 2010 to teach National Security Strategy as a visiting Professor until 2013.
He is a proven results-oriented leader with broad experience as an Air Force Colonel and three years of Board of Director experience with The Government Employees Benefit Association for federal employees. In his spare time, he is a volunteer Docent at the Smithsonian Institute in Washington D.C. and gives tours through the National Museum of American History.
All nine directors are nominated for election to a one-year term on the Board of Directors.
Vote Required
In compliance with our corporate bylaws, the election of each director nominee requires the affirmative vote “FOR” of a simple majority of the votes cast in person or by proxy at the Annual Meeting.
The Board of Directors recommends that Stockholders vote “FOR” election of the nominees for director named above.
Ratification of the Appointment of Grant Thornton LLP
as the Company’s Independent Registered Public Accounting Firm
for the Year Ending December 31, 2021
The Audit Committee has selected Grant Thornton LLP to serve as independent registered public accounting firm for the fiscal year ending December 31, 2021. The board is submitting the appointment of the independent registered public accounting firm to the stockholders for ratification at the Annual Meeting.
Representatives of Grant Thornton LLP are expected to be available by teleconference at the Annual Meeting, will have the opportunity to make a statement if they desire to do so and are expected to be available to respond to appropriate questions.
Shareholder ratification of the appointment of Grant Thornton LLP as the Company’s independent registered public accounting firm is not required by the Company’s Restated Articles of Incorporation, bylaws or otherwise; however, the board of directors is submitting the selection of Grant Thornton LLP to the stockholders for ratification as a matter of good corporate practice. If the stockholders fail to ratify the selection, the Audit Committee will review its future selection of an independent registered public accounting firm considering that vote result. Your ratification of the appointment of Grant Thornton LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2021, does not preclude us from terminating our engagement of Grant Thornton LLP and retaining a new independent registered public accounting firm, if we determine that such an action would be in the best interests of the Company and its stockholders.
Vote Required
Ratification of the appointment of Grant Thornton LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2021, requires the affirmative vote “FOR” of a simple majority of the votes cast in person or by proxy at the Annual Meeting.
The Board of Directors recommends a vote “FOR” the ratification of the appointment of Grant Thornton LLP as the independent registered public accounting firm of the Company for the fiscal year ending December 31, 2021.
Advisory Approval of the Company’s Executive Compensation
(Say-on-Pay)
The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”) and related SEC regulations require that, at least once every three years, we provide our stockholders with the opportunity to express their views on a non-binding, advisory basis, the compensation of our named executive officers as disclosed in this Proxy Statement. We held this vote, which is often referred to as the Say-on-Pay vote, at our annual meeting of stockholders held in 2019. At the meeting, our stockholders voted to hold the frequency of our Say-on-Pay vote on an annual basis. Our board of directors agreed to support the stockholder decision; therefore, the Company will hold future non-binding advisory votes on the compensation of our named executive officers every year, at least until the next required vote of frequency of stockholder votes on the compensation of our named executive officers. Such Say-on-Frequency vote must occur no later than the annual or other meetings of stockholders held in the sixth calendar year after the immediately preceding Say-on-Frequency vote which was the 2019 Annual Meeting of Stockholders. The 2019 vote affirmed the frequency of our say-on-pay vote to be held on an annual basis. The Company could hold a Say-on-Frequency vote more frequently than every six years if it elects to do so.
The compensation of our named executive officers for the past three fiscal years is set forth in the Elements of Executive Compensation Section. The Compensation Discussion and Analysis, or CD&A Section, describes our executive compensation policies and practices and analyzes the compensation received by our named executive officers in fiscal year 2020. As described in the CD&A, our executive compensation philosophy is to reward performance and motivate collective achievement of strategic objectives that will contribute to our company’s success. Our board of directors believes the compensation programs for our named executive officers effectively meet the primary objectives of attracting and retaining highly qualified executives, motivating our executives to achieve our business objectives, rewarding our executives appropriately for their individual and collective contributions and aligning our executives’ interests with the long-term interests of our stockholders, and our board believes our programs are reasonable when compared to compensation at similar companies.
The vote on this resolution is not intended to address any specific element of executive compensation. Instead, the vote relates to the executive compensation of our named executive officers, as set forth in this Proxy Statement pursuant to the rules of the SEC. This vote provides stockholders with the opportunity to endorse or not endorse the compensation of our named executive officers, but is advisory and not binding on our company or our board of directors.
Accordingly, the board of directors believes the Company’s executive compensation achieves these objectives, therefore, unanimously recommends that stockholders vote “FOR” the proposal.
The Board of Directors recommends a vote “FOR” the approval, on an advisory basis, of the compensation of the Company’s named executive officers as disclosed in the compensation tables in the Proxy Statement.
This vote will not be binding on the board of directors or the Compensation Committee and may not be construed as overruling a decision by the board or the Compensation Committee or create or imply any additional fiduciary duty on the board. It will also not affect any compensation paid or awarded to any executive. The approval or disapproval of this proposal by stockholders will not require the board of directors or the Compensation Committee to take any action regarding the Company’s executive compensation practices. The final decision on the compensation and benefits of the Company’s executive officers and on whether, and if so, how to address shareholder disapproval remains with the board and the Compensation Committee. Although the Say-on-Pay resolution is non-binding, the board of directors will review and consider the voting results when making future executive compensation decisions.
Vote Required
In compliance with our corporate bylaws, the affirmative vote “FOR” of a majority of the votes cast in person or represented by proxy at the Annual Meeting is required for approval, on an advisory basis, of this Proposal.
The Board of Directors recommends a vote “FOR” Advisory Approval of the Company’s Executive Compensation (Say-on-Pay).
To Approve an Amendment to Paragraph 11.27 of the
Orbital Energy Group 2020 Incentive Award Plan
by Increasing the Overall Share Limit to 5,000,000
In this Proposal, Orbital Energy Group is requesting its stockholders to approve an amendment to paragraph 11.27 of the Orbital Energy Group 2020 Incentive Award Plan (the “Plan”) by increasing the Overall Share Limit from 2,000,000 to 5,000,000 shares. The Overall Share Limit is the total number of shares reserved and available for grant and issuance pursuant to the Plan, as adopted by the Stockholders. Currently, the Overall Share Limit is two million (2,000,000) shares of which 397,597 have been granted. By the terms of the Plan, the Company shall reserve and keep available a sufficient number of shares as shall be required to satisfy the requirements of all outstanding awards granted under the Plan. This increase will become effective upon stockholder approval.
A Brief Description of the Orbital Energy Group 2020 Incentive Award Plan
The purpose of the Orbital Energy Group 2020 Incentive Award Plan is to enhance our ability to attract, retain and motivate persons who make (or are expected to make) important contributions to Orbital Energy Group by providing these individuals with equity ownership opportunities. We believe that the Orbital Energy Group 2020 Incentive Award Plan is essential to the Company’s success. Equity awards are intended to motivate high levels of performance and align the interests of our directors, employees and consultants with those of our stockholders by giving directors, employees and consultants the perspective of an owner with an equity stake in the Company and providing a means of recognizing their contributions to the success of Orbital Energy Group. Our board of directors and management believe that equity awards are necessary to remain competitive in its industry and are essential to recruiting and retaining the highly qualified employees who help Orbital Energy Group meet its goals.
Employee Equity Incentive Plans
As of December 31, 2020, the Company had outstanding the following equity compensation plan information:
Number of securities to be issued upon exercise of outstanding options, warrants and rights | Weighted-average exercise price of outstanding options, warrants and rights | Future issuance under equity compensation plans (excluding securities reflected in column (a) | ||||||||||
Plan Category | (a) | (b) | (c) | |||||||||
Equity compensation plans approved by security holders | 2,500 | $ | 4.58 | 1,761,724 | ||||||||
Equity compensation plans not approved by security holders | 788,148 | 6.07 | — | |||||||||
| 790,648 | $ | 6.06 | 1,761,724 | |||||||||
The Orbital Energy Group 2020 Incentive Award Plan Share Limit
In determining whether to approve the amendment to paragraph 11.27 of the Orbital Energy Group 2020 Incentive Award Plan by increasing the Overall Share Limit to 5,000,000, our board of directors considered, among other factors, the following:
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In light of the factors described above, and the fact that the ability to continue to grant equity compensation is vital to Orbital Energy Group’s ability to continue to attract and retain employees in the extremely competitive labor markets in which it competes, our board of directors believes it has approved a recommendation for the stockholders to approve an amendment to paragraph 11.27 of the Orbital Energy Group 2020 Incentive Award Plan by increasing the Overall Share Limit to 5,000,000 shares that is reasonable and appropriate at this time. The Orbital Energy Group board of directors does not intend to create a subcommittee to evaluate the risk and benefits for issuing shares under the Plan.
A copy of the Plan is attached to the 2020 Annual Stockholder Meeting Proxy Statement as Annex A that was filed with the SEC on October 1, 2020.
Vote Required
In compliance with our corporate bylaws, the affirmative vote “FOR” of a majority of the votes cast in person or represented by proxy at the Annual Meeting is required for approval of this Proposal.
The Board of Directors recommends a vote “FOR” the adoption of an amendment to paragraph 11.27 of the Orbital Energy Group 2020 Incentive Award Plan by increasing the Overall Share Limit to 5,000,000 shares.
Summary of the Orbital Energy Group 2020 Incentive Award Plan
This section summarizes certain principal features of the Orbital Energy Group 2020 Incentive Award Plan (the “Plan”). The summary is qualified in its entirety by reference to the complete text of the Plan, a copy of which is attached to the 2020 Annual Stockholder Meeting Proxy Statement as Annex A that was filed on EDGAR October 1, 2020.
Eligibility and Administration
Orbital Energy Group’s employees, consultants and directors, and employees and consultants of Orbital Energy Group’s subsidiaries, will be eligible to receive awards under the Orbital Energy Group 2020 Incentive Award Plan.
The Orbital Energy Group 2020 Incentive Award Plan is administered by the Orbital Energy Group board of directors, which may delegate its duties and responsibilities to one or more committees of Orbital Energy Group’s directors and/or officers referred to collectively as the plan administrator, subject to limitations imposed under the Plan, Section 16 of the Exchange Act, stock exchange rules and other applicable laws. The plan administrator has the authority to take all actions and make all determinations under the Plan, to interpret the Plan and Award Agreement and to adopt, amend and repeal rules for the administration of the Plan as it deems advisable. The plan administrator will also have the authority to determine which eligible service providers receive awards, grant awards and set the terms and conditions of all awards under the Plan, including vesting provisions, subject to the conditions and limitations in the Plan.
Lapsed or Terminated Shares
If all or any part of an Award expires, lapses or is terminated, exchanged for cash, surrendered, repurchased, canceled without having been fully exercised or forfeited, in any case, in a manner that results in the Company acquiring Shares covered by the Award at a price not greater than the price (as adjusted to reflect any Equity Restructuring) paid by the Participant for such Shares or not issuing any Shares covered by the Award, the unused Shares covered by the Award will not become or again be available for Award grants under the Plan.
Awards
The Plan provides for the grant of stock options, including ISOs and nonqualified stock options (“NSOs”), stock appreciation rights (“SARs”), restricted stock, dividend equivalents, restricted stock units (“RSUs”) and other stock or cash-based awards. Certain awards under the Plan may constitute or provide for payment of “nonqualified deferred compensation” under Section 409A of the Code. All awards under the Plan will be set forth in the award agreement, which will detail the terms and conditions of awards, including any applicable vesting and payment terms and post termination exercise limitations. All Awards shall be subject to a minimum vesting of one year from the Grant Date.
Certain Transactions
In connection with certain corporate transactions and events affecting the common stock of Orbital Energy Group, including a change in control, or change in any applicable laws or accounting principles, the plan administrator has broad discretion to take action under the Orbital Energy Group 2020 Incentive Award Plan to prevent the dilution or enlargement of intended benefits, facilitate the transaction or event or give effect to the change in applicable laws or accounting principles. This includes providing for the assumption or substitution of awards by a successor entity, adjusting the number and type of shares subject to outstanding awards and/or with respect to which awards may be granted under the Plan.
Provisions of the Orbital Energy Group 2020 Incentive Award Plan Relating to Director Compensation
The Plan provides that the plan administrator may establish compensation for non-employee directors from time to time subject to the Plan’s limitations. The plan administrator will from time to time determine the terms, conditions and amounts of all non-employee director compensation in its discretion and pursuant to the exercise of its business judgment, taking into account such factors, circumstances and considerations as it shall deem relevant from time to time, provided that, the sum of any cash compensation or other compensation and the grant date fair value of any equity awards granted under the Plan as compensation for services as a non-employee director during any fiscal year may not exceed $250,000 per year of a non-employee director’s service as a non-employee director. The non-employee Director receiving such additional compensation may not participate in the decision to award such compensation or in other contemporaneous compensation decisions involving the non-employee Director.
Plan Amendment and Termination
The Orbital Energy Group board of directors may amend or terminate the Plan at any time; however, an amendment that increases the number of shares available under the Plan requires stockholder approval. The Plan will remain in effect until the fifth anniversary of the date the Orbital Energy Group board of directors adopted the Plan, unless earlier terminated by the board of directors.
Foreign Participants and Transferability
The plan administrator may modify awards granted to participants who are foreign nationals or employed outside the United States or establish subplans or procedures to address differences in laws, rules, regulations or customs of such foreign jurisdictions. Except as the plan administrator may determine or provide in an award agreement, awards under the Plan are generally non-transferrable, except by will or the laws of descent and distribution or, subject to the plan administrator’s consent, pursuant to a domestic relations order, and are generally exercisable only by the participant. With regard to tax withholding obligations arising in connection with awards under the Plan, and exercise price obligations arising in connection with the exercise of stock options under the Plan, the plan administrator may, in its discretion, accept cash, wire transfer or check, shares of common stock of Orbital Energy Group that meet specified conditions, a promissory note, a “market sell order,” such other consideration as the plan administrator deems suitable or any combination of the foregoing.
Securities Laws
The Plan is intended to conform to all provisions of the Securities Act of 1933, as amended, and the Exchange Act, and any and all regulations and rules promulgated by the Securities and Exchange Commission thereunder, including without limitation Rule 16b-3. The Plan will be administered, and options will be granted and may be exercised, only in such a manner as to conform to such laws, rules and regulations.
Other Business
Management does not presently know of any matter that may be presented for action at this Annual Meeting other than as set forth herein. However, if any other matters properly come before this Annual Meeting, it is the intention of the persons named in the proxies solicited by management to exercise their discretionary authority to vote the shares represented by all effective proxies on such matters in accordance with their best judgment or as instructed by the shareholder.
Directors and Executive Officers
Our bylaws permit the number of directors to be fixed by resolution of the board of directors, but to be no less than one. The board of directors has set the maximum number of members to no more than twelve members. Directors are elected by a majority of the votes cast by the stockholders and serve a one-year term or until their successors have been elected and qualified or their earlier resignation or removal. During 2021 the board of directors appointed three additional directors (Paul T. Addison, Jerry Sue Thornton, La Forrest V. Williams) who qualify as the “independent director” as defined by applicable rules promulgated by the Securities and Exchange Commission and within the meaning of Rule 5605(a)(2) of the Nasdaq Stock Market.
The board of directors has five standing committees: Audit Committee, Disclosure Committee, Compensation Committee, Investment Committee and Nominating Committee, each of which has a written charter and/or statement of policy approved by our board. Our board currently appoints the members of each committee. Copies of the current committee charters and/or statement of policy for each committee are posted on our website at www.OrbitalEnergyGroup.com. During 2020, two directors missed one board meeting each. In each of those instances, the board members were informed of the meeting agenda and results. All directors attended, either in person or electronically, all of the meetings held by the committees on which such director served.
The following are executive officers and directors of the Company with their ages as of September 30, 2021, and a list of the members of our four standing committees: Audit Committee, Compensation Committee, Disclosure Committee and Nominating Committee.
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Audit Committee:
Sean P. Rooney, Chairman (1)
Corey A. Lambrecht, Committee Member (1)
C. Stephen Cochennet, Committee Member (1)
Compensation Committee
Cory A. Lambrecht, Chairman (1)
C. Stephen Cochennet, Committee Member (1)
Disclosure Committee
The Disclosure Committee consists of our Principal Officers, the individual or representative of the third-party firm primarily charged with investor/public relations, the Audit Committee Chairman and outside SEC counsel.
Nominating Committee
The Nominating Committee consists of the independent directors of the board of directors.
Notes
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Environmental, Social and Governance
Orbital Energy Group’s Mission:
Orbital Energy Group is dedicated to maximizing shareholder value through greenfield development and the acquisition of, and investment in successful, entrepreneurial led companies, to profitably grow revenues by providing end-to-end solutions to customers, primarily in the renewable, electric power, and telecommunications infrastructure markets. OEG is committed to the safety of all of its employees and leading the expansion of environmental and social initiatives through ethnic diversification and equality of our workforce and people development within the communities we serve.
We are committed to:
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OEG is committed to the health and well-being of our employees:
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OEG is committed to delivering quality differentiated solutions to energy infrastructure customers by:
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OEG is committed to building a diverse, equitable, and inclusive skilled workforce:
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OEG is committed to building stockholder value:
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Corporate Governance and Board of Directors Matters
We are committed to maintaining the highest standards of business conduct and corporate governance, which we believe are essential to running our business efficiently, serving our stockholders well and maintaining our integrity in the marketplace. We have adopted a Corporate Code of Ethics and Business Conduct, including our Whistleblower Policy, for employees, directors and officers (including our principal executive officer and principal financial and accounting officer). We have also adopted the following governance guides: Charter of the Audit Committee, Charter of the Compensation Committee, Investment Committee Charter, Policy for Director Independence, Nominating Committee Charter, Whistleblower Policy, Disclosure Controls and Procedures and Corporate Social Responsibility Policy, all of which, in conjunction with our Articles of Incorporation and bylaws, form the framework for our corporate governance. These corporate governance documents are available on our website at www.OrbitalEnergyGroup.com.
Board Diversity
Although Orbital Energy Group does not presently have a formal Board Diversity Policy, we believe in diversity and value the benefits that diversity can bring to our board of directors. Diversity promotes the inclusion of different perspectives and ideas, mitigates against group think and ensures that the Company has the opportunity to benefit from all available talent. The promotion of a diverse Board makes prudent business sense and makes for better corporate governance. Of our nine board members, two are female, and five are persons of color.
The Company seeks to maintain a Board comprised of talented and dedicated directors with a diverse mix of expertise, experience, skills and backgrounds. The skills and backgrounds collectively represented on the Board should reflect the diverse nature of the business environment in which the Company operates. For purposes of Board composition, diversity includes, but is not limited to, business experience, geography, age, gender, ethnicity and aboriginal status. In particular, the Board should include an appropriate number of female directors.
The Company is committed to a merit-based system for Board composition within a diverse and inclusive culture which solicits multiple perspectives and views and is free of conscious or unconscious bias and discrimination. When assessing Board composition or identifying suitable candidates for appointment or re-election to the Board, the Company will consider candidates on merit against objective criteria having due regard to the benefits of diversity and the needs of the Board.
Companywide Diversity
At Orbital Energy Group, diversity, equity, and inclusion is the foundation for our success. This foundation is critical to our mission to foster an inclusive culture that encourages and supports the diverse voices of all our employees. Diverse companies are more innovative and better positioned to succeed. More importantly, diversity creates an environment that respects the uniqueness of an employee’s characteristics, experiences, and perspectives.
Orbital Energy Group and its employees are committed to systematically change energy infrastructure in North America by opening up significant opportunities for people of color entrepreneurs and people of color led or owned companies. Further, OEG commits to diversifying the energy industry by increasing the opportunities and quality of life for underrepresented and underserved people throughout North America.
In March 2021, the board of directors appointed Paul D. White, a person of color and a director, as Chief Diversity Officer (CDO), charged with the responsibility to create a strategy and lead execution of company-wide programs to support diversity, equity and inclusion (DE&I) ensuring an end-to-end inclusive recruiting, screening, hiring, onboarding and employee experience with action and to ensures compliance with employment, benefits, insurance, safety, regulatory laws and requirements. This responsibility provides for the enhancement of DE&I in our current recruitment and retention programs and ensure that employees have a comfortable place to work and learn, regardless of their race, gender, age, ethnicity, socioeconomic status, sexual orientation, or disability. Mr. White will also oversee the Orbital Solar Services University which, in cooperation with the Black Sunrise Half Century Fund, is designed to recruit, train, and employ people of color and underserved communities by offering living wage jobs and careers in the energy industry for OEG. This concept of a living wage is not just pecuniary and material but also extends to meeting people’s aspirations for a decent quality of life (and work life), being productive (at work), and enabling shared prosperity at home and across future generations. Additionally, the board appointed a former Baltimore Civil Rights Leader to assist Mr. White in an advisory/consultant capacity.
Our Corporate Governance Practices
We have always believed in strong and effective corporate governance procedures and practices. In that spirit, we have summarized several of our corporate governance practices below.
The Board of Director’s Role in Risk Oversight
The board of directors and its committees have an important role in the Company’s risk oversight, management and assessment process. The board regularly reviews with management, the Company’s financial and business strategies, which include a discussion of relevant material risks as appropriate. The board discusses with the Company’s outside general counsel, as appropriate, its risk oversight and assessment as well as any material risks to the Company. In addition, the board delegates risk management responsibilities to the Audit Committee and Compensation Committee, which are each comprised of only independent directors.
The Audit Committee, as part of its charter, oversees the Company’s risk oversight, management and assessment of the Company and oversees and assesses the risks associated with the corporate governance and ethics of the Company. Risk considerations are a material aspect of the Compensation Committee. The Compensation Committee is responsible for overseeing the management of risks relating to executive compensation. In addition, the Compensation Committee also, as appropriate, assesses the risks relating to the Company’s overall compensation programs.
The Investment Committee is responsible for overseeing and advising on possible investment opportunities as well as to administer and operate the Company’s investment portfolio. This includes aligning investment policies and strategies with the Company’s short and long-term goals, as well as setting benchmarks to evaluate long-term objectives and continual evaluation of the investment strategies.
While the Audit Committee and Compensation Committee oversee the management of the risk areas identified above, the entire board is regularly informed through committee reports about such risks. This enables the board and its committees to coordinate the risk management, assessment and oversight roles.
Adopting Governance Guidelines
Our board of directors has adopted a set of corporate governance guidelines to establish a framework within which it will conduct its business and to guide management in its running of our Company. The governance guidelines can be found on our website at www.OrbitalEnergyGroup.com and are summarized below.
Providing Transparency
We believe that it is important that stockholders understand our governance practices. To help ensure transparency of our practices, we have posted information regarding our corporate governance procedures on our website at www.OrbitalEnergyGroup.com.
Communications with the Board of Directors
Stockholders may communicate with the board of directors by writing to the Company at Orbital Energy Group, 1924 Aldine Western, Houston, Texas 77038 or phone (832) 467‑1420. Stockholders who would like their submission directed to a member of the board may so specify and the communication will be forwarded as appropriate.
Monitoring Board Effectiveness
It is important that our board of directors and its committees are performing effectively and in the best interest of the Company and its stockholders. The board of directors and each committee are responsible for annually assessing their effectiveness in fulfilling their obligations.
Conducting Formal Independent Director Sessions
On a regular basis, many times at the conclusion of regularly scheduled board meetings, the independent directors are encouraged to meet privately, without our management or any non-independent directors.
Hiring Outside Advisors
The board and each of its committees may retain outside advisors and consultants of their choosing at company expense, without management's consent.
Avoiding Conflicts of Interest
We expect our directors, executives and employees to conduct themselves with the highest degree of integrity, ethics and honesty. Our credibility and reputation depend upon the good judgment, ethical standards and personal integrity of each director, executive and employee. To provide assurances to the Company and its stockholders, we have implemented standards of business conduct which provide clear conflict of interest guidelines to our employees and directors, as well as an explanation of reporting and investigatory procedures.
Corporate Social Responsibility
Our board adopted a companywide Corporate Social Responsibility Policy (CSR). As a responsible member of society, we believe that the long-term future of our business is best served by respecting the interests of our employees, customers, contractors, suppliers and the wider global community. We look for opportunities to reduce our impact on the environment and to contribute to the wellbeing of those less fortunate than ourselves. Our CSR policy sets out the principles we follow with a view to supporting our CSR ethos. Demonstrating our commitment to Corporate Social Responsibility is an objective toward which we aim to align our business values, purpose and strategy with the social and economic needs of our stockholders, while embedding responsible and ethical business policies and practices into everything we do. The CSR is available for review in the governance section of our website: www.OrbitalEnergyGroup.com.
Accuracy of All Public Disclosure
It is the Company's policy that all public disclosure made by the Company should be accurate, complete, and present fairly, in all material respects, the Company's financial condition and results of operations, and be made on a timely basis as required by applicable laws and securities exchange requirements. To oversee this policy, a Disclosure Committee Charter has been adopted by the Chief Executive Officer and Chief Financial Officer and ratified by our Audit Committee. A copy of this document is posted on our website at www.OrbitalEnergyGroup.com or a copy is available by making a written request to the Company at Orbital Energy Group, Inc., 1924 Aldine Western, Houston, Texas 77038, phone (832) 467‑1420.
Standards of Business Conduct
The board of directors has adopted a Corporate Code of Ethics and Business Conduct, including our Whistleblower Policy, for all employees and directors, including the Company's principal executive and senior financial officers. The Code of Ethics and Business Conduct can be viewed on our website at www.OrbitalEnergyGroup.com.
You can obtain a copy of these documents on our website at www.OrbitalEnergyGroup.com or by making a written request to the Company at Orbital Energy Group, Inc., 1924 Aldine Western, Houston, Texas 77038, phone (832) 467‑1420. We will disclose any amendments to the Code of Ethics and Business Conduct or waiver of a provision on our website.
Internal Auditor
The board of directors adopted a Charter of Internal Audit that authorizes and outlines the function of an Internal Audit as an independent and objective assurance activity that is guided by a philosophy of adding value to improve the operations of Orbital Energy Group. A copy of this charter is posted on our website, www.OrbitalEnergyGroup.com.. It is designed to assist Orbital Energy Group in accomplishing objectives by bringing a systematic and disciplined approach to evaluate and improve the design and operating effectiveness of Orbital Energy Group’s governance, risk management, and internal control over financial reporting.
Ensuring Independent Registered Public Accounting Firm Independence
We have taken several steps to ensure the continued independence of our independent registered public accounting firm. That firm reports directly to the Audit Committee, which also has the ability to pre-approve or reject any non-audit services proposed to be conducted by our independent registered public accounting firm. For further information on independent registered public accounting firm independence see the section hereafter entitled Audit Committee.
Whistleblower Policy
In furtherance of our governance transparency and ethical standards, we adopted a comprehensive Whistleblower Policy that encourages employees to report to proper authorities incorrect financial reporting, unlawful activity, activities that are not in line with Orbital Energy Group Code of Ethics and Business Conduct or activities, which otherwise amount to serious improper conduct. Our Whistleblower Policy is posted on our website at www.OrbitalEnergyGroup.com.
Committees of the Board of Directors
Our board of directors has the following standing committees: Audit Committee, Nominating Committee, Compensation Committee, Investment Committee and Disclosure Committee. Each of the committees operates under a written charter adopted by the board of directors. All committee charters are available on our website at www.OrbitalEnergyGroup.com.
The Audit Committee is established pursuant to the Sarbanes-Oxley Act of 2002 for the purposes of overseeing the Company’s accounts and financial reporting processes and audits of its financial statements. The Audit Committee reviews the financial information that will be provided to the stockholders and others, the systems of internal controls established by management and the board of directors and the independence and performance of the Company’s audit process. The Audit Committee is directly responsible for, among other things, the appointment, compensation, retention and oversight of our independent registered public accounting firm, review of financial reporting, internal company processes of business/financial risk and applicable legal, ethical and regulatory requirements. During 2020, the Audit Committee held seven formal meetings. The Audit Committee reviews the financial information that will be provided to the stockholders and others, the systems of internal controls established by management and the board and the independence and performance of the Company’s audit process.
At December 31, 2020, the Audit Committee is comprised of Sean P. Rooney, Chairman, C. Stephen Cochennet, and Corey A. Lambrecht. Messrs. Rooney, Cochennet, and Lambrecht are independent in accordance with Rule 10A-3 under the Securities Exchange Act of 1934 and Rule 5605(a)(2) of The Nasdaq Stock Market.
Audit Committee Report
THE FOLLOWING REPORT OF THE AUDIT COMMITTEE DOES NOT CONSTITUTE SOLICITING MATERIAL AND SHOULD NOT BE DEEMED FILED OR INCORPORATED BY REFERENCE INTO ANY OTHER COMPANY FILING UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES EXCHANGE ACT OF 1934, EXCEPT TO THE EXTENT THE COMPANY SPECIFICALLY INCORPORATES THIS REPORT BY REFERENCE THEREIN.
The Audit Committee has:
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Based on these reviews and discussions, the Audit Committee has recommended that the audited consolidated financial statements be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020. The Audit Committee has also considered whether the amount and nature of non-audit services provided by Grant Thornton LLP is compatible with the auditor’s independence and determined that it is compatible.
Submitted by: Audit Committee by:
Sean P. Rooney
Corey A. Lambrecht
C. Stephen Cochennet
The nominating committee consists of all of the members of the board of directors who are ‘‘independent directors’’ within the meaning of Rule 5605(a)(2) of The Nasdaq Stock Market. The nominating committee is responsible for the evaluation of nominees for election as director, the nomination of director candidates for election by the stockholders and evaluation of sitting directors.
The board of directors has developed a formal policy for the identification and evaluation of nominees, Charter of the Nominating Committee of the Board of Directors, which can be reviewed on our website at www.OrbitalEnergyGroup.com. In general, when the board of directors determines that expansion of the board of directors or replacement of a director is necessary or appropriate, the nominating committee will review, through candidate interviews with members of the board of directors and management, consultation with the candidate's associates and through other means, a candidate's honesty, integrity, reputation in and commitment to the community, judgment, personality and thinking style, willingness to invest in the Company, residence, willingness to devote the necessary time, potential conflicts of interest, independence, understanding of financial statements and issues, and the willingness and ability to engage in meaningful and constructive discussion regarding Company issues. The committee reviews any special expertise, for example, which qualifies a person as an audit committee financial expert, membership or influence in a geographic or business target market, or other relevant business experience. To date the Company has not paid any fee to any third party to identify or evaluate, or to assist it in identifying or evaluating, potential director candidates.
The nominating committee considers director candidates nominated by stockholders during such times as the Company is actively considering obtaining new directors. Candidates recommended by stockholders will be evaluated based on the same criteria described above. Stockholders desiring to suggest a candidate for consideration should send a letter to the Company's secretary and include: (a) a statement that the writer is a stockholder (providing evidence if the person's shares are held in street name) and is proposing a candidate for consideration; (b) the name and contact information for the candidate; (c) a statement of the candidate's business and educational experience; (d) information regarding the candidate's qualifications to be director, including but not limited to an evaluation of the factors discussed above which the board of directors would consider in evaluating a candidate; (e) information regarding any relationship or understanding between the proposing stockholder and the candidate; (f) information regarding potential conflicts of interest and (g) a statement that the candidate is willing to be considered and willing to serve as director if nominated and elected. Because of the small size of the Company and the limited need to seek additional directors, there is no assurance that all stockholder-proposed candidates will be fully considered, that all candidates will be considered equally or that the proponent of any candidate or the proposed candidate will be contacted by the Company or the board of directors and no undertaking to do so is implied by the willingness to consider candidates proposed by stockholders.
We have formed a Disclosure Committee, which has been adopted by our CEO and CFO (‘‘Principal Officers’’) and ratified by our Audit Committee. The Disclosure Committee assists our Principal Officers in fulfilling their responsibility for oversight of the accuracy, completeness and timeliness of our public disclosures including, but not limited to our SEC filings, press releases, correspondence disseminated to security holders, presentations to analysts and release of financial information or earnings guidance to security holders or the investment community. The Disclosure Committee consists of our Principal Officers, the individual or representative of the firm primarily charged with investor/public relations, the Audit Committee Chairman and outside SEC counsel. Our CEO is Chairman of the committee. Our Senior Officers may replace or add new members from time to time. Our Senior Officers have the option to assume all the responsibilities of this committee or designate a committee member, who shall be a person with expertise in SEC rules and regulations with respect to disclosure, who shall have the power, acting together with our Senior Officers, to review and approve disclosure statements when time or other circumstances do not permit the full committee to meet. You may review the full text of our Disclosure Committee Charter on our website, www.OrbitalEnergyGroup.com, under the link, governance.
Generally, the committee serves as a central point to which material information should be directed and a resource for people who have questions regarding materiality and the requirement to disclose. In discharging its duties, the committee has full access to all Company books, records, facilities and personnel, including the board of directors, Audit Committee, independent public accountants and outside counsel.
The purpose of the investment committee is to administer and to operate the portfolio. The members of the investment committee are fiduciaries of the portfolio, with responsibility for overseeing investment policies, general policies, guidelines, investment performance and related risk management. Committee members will fulfill their duties solely on behalf of the company’s mission. In addition to aligning investment policies and strategies with the company’s short- and long-term goals, investment committees must set benchmarks to evaluate long-term objectives and continually evaluate their strategies to keep pace with market fluctuations and changes.
The Investment Committee shall also provide initial oversight and analysis of potential acquisition targets being considered by Management. In that capacity, Investment Committee members may, among other things, participate in reviewing initial due diligence; visit prospective acquisition targets; participate in strategy and other discussions with Management; and, where appropriate, more. You may review the full text of our Investment Committee Charter on our website, www.OrbitalEnergyGroup.com, under the link, governance.
At December 31, 2020, the Investment Committee is comprised of C. Stephen Cochennet, Corey A. Lambrecht, Chairman, and Daniel N. Ford, CFO.
The Compensation Committee discharges the board of director’s responsibilities relating to general compensation policies and practices and to compensation of our executives. In discharging its responsibilities, the Compensation Committee establishes principles and procedures in order to ensure to the board of directors and the stockholders that the compensation practices of the Company are appropriately designed and implemented to attract, retain and reward high quality executives and are in accordance with all applicable legal and regulatory requirements. In this context, the Compensation Committee’s authority, duties and responsibilities are:
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To periodically review market and industry data to assess the Company’s competitive position, and to retain any compensation consultant to be used to assist in the evaluation of directors’ and executive officers’ compensation.
To establish and approve the Company goals and objectives, and associated measurement metrics relevant to compensation of the Company’s executive officers.
To establish and approve incentive levels and targets relevant to compensation of the executive officers.
To annually review and make recommendations to the board of directors to approve, for all principal executives and officers, the base and incentive compensation, taking into consideration the judgment and recommendation of the Chief Executive Officer for the compensation of the principal executives and officers.
To separately review, determine and approve the Chief Executive Officer’s applicable compensation levels based on the Committee’s evaluation of the Chief Executive Officer’s performance considering the Company’s and the individual goals and objectives.
To review for any related party employee situations, to ensure appropriate controls are implemented surrounding compensation changes, bonuses and performance reviews of the related party employee, and to participate in such controls as appropriate.
To periodically review and make recommendations to the board of directors with respect to the compensation of directors, including board of directors and committee retainers, meeting fees, equity-based compensation and such other forms of compensation as the Compensation Committee may consider appropriate.
To administer and annually review the Company’s incentive compensation plans and equity-based plans.
To review and make recommendations to the board of directors regarding any executive employment agreement, any proposed severance arrangements or change in control and similar agreement/provisions, and any amendments, supplements or waivers to the foregoing agreement, and any perquisites, special or supplemental benefits.
To review and discuss with management, the Compensation Discussion and Analysis (CD&A) and determine the Committee’s recommendation for the CD&A’s inclusion in the Company’s annual report filed with the SEC on Form 10-K and Proxy Statement on Schedule 14A.
The Committee may, in its sole discretion, retain or obtain the advice of a compensation consultant, legal counsel or other adviser.
The Committee shall be directly responsible for the appointment, compensation and oversight of the work of any compensation consultant, legal counsel and other adviser retained by the Committee. The Company must provide for appropriate funding, as determined by the Committee, for payment of reasonable compensation to a compensation consultant, legal counsel or any other adviser retained by the Committee.
The Committee may select, or receive advice from, a compensation consultant, legal counsel or other adviser to the Committee, other than in-house legal counsel, only after taking into consideration the following factors:
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The Committee is not required to implement or act consistently with the advice or recommendations of the compensation consultant, legal counsel or other adviser to the Committee.
Compensation Committee Charter
Our Compensation Committee Charter is posted on our website at www.OrbitalEnergyGroup.com.
Compensation Committee Members
The Compensation Committee of the board of directors is appointed by the board of directors to discharge the board of director’s responsibilities with respect to all forms of compensation of the Company’s executive officers, to administer the Company’s equity incentive plans and to produce an annual report on executive compensation for use in the Company’s Form 10-K and the Proxy Statement on Schedule 14A. At December 31, 2020, the Compensation Committee consists of two independent members of the board of directors, Messrs. Corey A. Lambrecht, and C. Stephen Cochennet, both of whom are ‘‘independent directors’’ within the meaning of Rule 5605(a) (2) of the Nasdaq Stock Market.
Committee Meetings
Our Compensation Committee meets formally and informally as often as necessary to perform its duties and responsibilities. The Compensation Committee held three formal meetings during fiscal 2020. On an as requested basis, our Compensation Committee receives and reviews materials prepared by management, consultants or committee members, in advance of each meeting. Depending on the agenda for the meeting, these materials may include, among other factors:
minutes and materials from the previous meeting(s);
reports on year-to-date Company financial performance versus budget;
reports on progress and levels of performance of individual and Company performance objectives;
reports on the Company’s financial and stock performance versus a peer group of companies;
reports from the Committee’s compensation consultant regarding market and industry data relevant to executive officer compensation;
reports and executive compensation summary worksheets, which set forth for each executive officer: current total compensation and incentive compensation target percentages, equity ownership and general partner ownership interest and current and projected value of each and all such compensation elements, including distributions and dividends therefrom, over a five-year period.
Compensation Committee Interlocks and Insider Participation
None of the members of the Company’s Compensation Committee is or has at any time during the last completed fiscal year been an officer or employee of the Company. None of the Company’s executive officers has served as a member of the compensation or similar committee, of any entity that has one or more executive officers who served on the Company’s board of directors or Compensation Committee during the last completed fiscal year.
Compensation Committee Report
We have reviewed and discussed the Compensation Discussion and Analysis with management and based on our review and discussion with management, we have recommended to the board of directors that the Compensation Discussion and Analysis be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, and the Proxy Statement on Schedule 14A for the 2021 Annual Meeting of Stockholders.
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Compensation Discussion and Analysis
General Philosophy
Our compensation philosophy is based on the premise of attracting, retaining and motivating exceptional leaders, setting high goals, working toward the common objectives of meeting the expectations of customers and stockholders and rewarding outstanding performance. Following this philosophy, in determining executive compensation, we consider all relevant factors, such as the competition for talent, our desire to link pay with performance, the use of equity to align executive interests with those of our stockholders, individual contributions, teamwork and performance, each executive’s total compensation package and internal pay equity. We strive to accomplish these objectives by compensating all employees with total compensation packages consisting of a combination of competitive base salary and incentive compensation.
Pay for Performance
At the core of our compensation philosophy is our strong belief that pay should be causally linked to performance. We believe in a pay for performance culture that places a significant portion of executive officer total compensation as contingent upon, or variable with, individual performance, Company performance and achievement of strategic goals including increasing shareholder value.
The performance based compensation for our executives may be in the form of (i) annual cash incentives to promote achievement of, and accountability for, shorter term performance plans and strategic goals and (ii) equity grants, designed to align the long-term interests of our executive officers with those of our shareholders, by creating a strong and direct link between executive compensation and shareholder return over a multiple year performance cycle. Long-term incentive equity awards are typically granted in restricted stock, stock appreciation rights or stock options. These awards generally vest over a two to four-year period. This opportunity for share ownership was to provide incentive and retain key employees and align their interests with our long-term strategic goals. At the 2020 Annual Meeting, the Stockholders approved the Orbital Energy Group 2020 Incentive Award Plan, a copy of which is attached to the 2020 Annual Stockholder Meeting Proxy Statement as Annex A that was filed with the SEC on October 1, 2020.
Base Compensation to be Competitive within Industry
A key component of an executive’s total base salary compensation is designed to compensate executives commensurate with their respective level of experience, scope of responsibilities, sustained individual performance and future potential. The goal has been to provide for base salaries that are sufficiently competitive with other similar-sized companies, both regionally and nationally, to attract and retain talented leaders.
Compensation Setting Process
Management’s Role in the Compensation Setting Process
Management plays a significant role in the compensation-setting process. The most significant aspects of management’s role are:
assisting in establishing business performance goals and objectives;
evaluating employee and Company performance;
CEO and/or Executive Chairman recommending compensation levels and awards for executive officers;
implementing the board approved compensation plans; and
assistance in preparing agenda and materials for the Committee meetings.
The Chief Executive Officer, and/or Executive Chairman generally attend the Committee meetings; however, the Committee also meets in executive session when considering the compensation of executive officers. The Chief Executive Officer and/or Executive Chairman make recommendations with respect to financial and corporate goals and objectives and makes non-executive officer compensation recommendations to the Compensation Committee based on Company performance, individual performance and the peer group compensation market analysis. The Compensation Committee considers and deliberates on this information and in turn makes recommendations to the board of directors, for the board’s determination and approval of the executives’ and other members of senior management’s compensation, as necessary, including base compensation, short-term cash incentives and long-term equity incentives. For related party employee matters, appropriate personnel meet with the Compensation Committee to determine compensation and incentives and to review ongoing performance of the employee. The performance and compensation of the Chief Executive Officer, Executive Chairman and Chief Financial Officer are reviewed, evaluated and established separately by the Compensation Committee and presented to the board of directors for ratification or approval.
Setting Compensation Levels
To evaluate whether total compensation is competitive and provides appropriate rewards to attract and retain talented leaders, as discussed above, we may rely on analyses of peer companies performed by independent compensation consultants and on other industry and occupation specific survey data available. Our general benchmark is to establish both base salary and total compensation for the executive officers at or near the compensation of peer group data, recognizing that a significant portion of executive officer total compensation should be contingent upon, or variable with, achievement of individual and Company performance objectives and strategic goals, as well as being variable with stockholder value. Further, while the objective for base salary is at that of peer group data, executives’ base salaries are designed to reward core competencies and contributions to the Company and may be increased above this general benchmark based on (i) the individual’s increased contribution over the preceding year; (ii) the individual’s increased responsibilities over the preceding year; and (iii) any increase in median competitive pay levels.
Setting Performance Objectives
The Company’s business plans and strategic objectives are generally presented by management annually and as needed to the board of directors. The board engages in an active discussion concerning the financial targets, the appropriateness of the strategic objectives and the difficulty in achieving the same. In establishing the compensation plan, our Compensation Committee then utilizes the primary financial targets and strategic objectives from the adopted business plan as the primary targets for determining the executive officers’ short-term cash incentives and long-term equity incentive compensation. The Committee also establishes additional nonfinancial performance goals and objectives, the achievement of which is required for funding of a significant portion, approximately twenty five percent, of the executive officers’ incentive compensation. In 2020, these non-financial performance goals and objectives included among other factors: the identification and procurement process to enhance and enable the growth of the Company through strategic industry specific acquisitions; management of oversight of the continued growth of power transmission and distribution operations; capitalizing on market drivers to create significant growth; increase customer relationships; oversight and taking advantage of potential financing opportunities including both dilutive (debt) and non-dilutive (equity raise); and general and administrative management responsibilities. In addition, such factors as revenue growth; market penetration; M&A activities; and investment banking transactions were and are considered in setting compensation levels.
Annual Evaluation
The Chief Executive Officer and/or Executive Chairman recommend the actual incentive award amounts for all other executives based on actual Company performance relative to the targets set as well as on individual performance and recommends the executives’ base salary levels. The Compensation Committee considers these recommendations generally following the end of each fiscal year in determining its recommendations to the board of directors for the final short-term cash incentive and long-term equity award amounts for each executive. Executive base salary levels are reviewed in accordance with their respective employment agreements. The actual incentive amounts awarded to each executive are ultimately subject to the discretion of the Compensation Committee and the board of directors.
Voting Results on Executive Compensation (Say-on-Pay) Advisory Vote
As required by Section 14A of the Exchange Act, under the Dodd-Frank Wall Street Reform and Consumer Protection Act, the Compensation Committee considers the prior year shareholder advisory vote on the compensation of the Named Executive Officers as appropriate for making compensation decisions. At the annual meeting of shareholders held December 8, 2020, 69% percent of the shareholders present and voting on the proposal approved, on an advisory basis, the compensation disclosed in the Company’s proxy statement for the meeting filed with the Securities and Exchange Commission on October 1, 2020. As a result, the Compensation Committee concluded that the Company's shareholders were supportive of the Company's executive compensation philosophy, policies and programs. The Compensation Committee will continue to reach out to shareholders regarding compensation matters and will continue to review compensation philosophy, policies and programs as appropriate for changing circumstances.
Special Evaluation
Additional equity-based awards may also be granted to executives, as well as other employees, upon commencement of employment, promotions, for special performance recognition or for retention purposes, based on the recommendation of the Chief Executive Officer or Chief Financial Officer. In determining whether to recommend additional grants to an executive, the Chief Executive Officer typically considers the individual’s performance and any planned change in functional responsibility.
Elements of Executive Compensation
Total Compensation
Total compensation for our executives consists of three elements: (i) base salary; (ii) incentive cash award based on achieving specific performance targets as measured by revenues, cash flow and other objectives and (iii) equity incentive award, which is also performance based and may be paid out over a future period in the form of stock, restricted stock, stock appreciation rights, or stock purchase options. Base salaries are the value upon which both the incentive compensation percentage targets are measured against. For evaluation and comparison of overall compensation of the executives and to assist it in making its compensation decisions, the Compensation Committee reviews an executive compensation summary, which sets forth for each executive: current compensation and current equity ownership holdings as well as the projected value of each and all such compensation elements, including distributions and dividends therefrom. Also included in the summary are comparative performance numbers, specific milestones, strategic objectives, and other elements used to measure each executive's individual performance.
Base Salaries
Base salaries are designed to compensate executives commensurate with their respective level of experience, scope of responsibilities and to reward sustained individual performance and future potential. The goal has been to provide for base salaries that are sufficiently competitive with other similar-sized companies, both regionally and nationally, to attract and retain talented leaders.
Incentive Compensation
Incentive compensation is intended to align compensation with business objectives and performance and enable the Company to attract, retain and reward high quality executive officers whose contributions are critical to both the short and long-term success of the Company. The executives’ incentive awards are based upon three key performance metrics: (i) the Company’s earnings before interest, taxes, depreciation, and amortization (EBITDA); (ii) achievement of agreed-upon strategic and corporate performance goals including development of greenfield operations and acquisition opportunities; and/or (iii) existing Employment Agreement.
The strategic and corporate performance goals are not intended to be a specific agreed-upon goal, but rather a general objective. Management and the board of directors discuss these factors and set objectives that are dynamic and change periodically. In setting these periodic goals, the board of directors discusses with management the nature of the objective and management’s proposed method of achieving the goal. These goals change throughout the operational process because of changing dynamics such as economic conditions, current success of marketing, availability of materials, availability of funding and overall momentum toward achieving the goal.
Incentive Plan Compensation
Incentive awards are typically paid out in cash, restricted common stock, stock appreciation rights or option awards. The incentive award targets for the executives are established at the beginning of the year, generally, as a percentage of their base salary and the actual awards are determined in the following year at a Compensation Committee meeting based on actual Company performance relative to established goals and objectives, as well as on evaluation of the executive’s relevant departmental and individual performance during the past year. In many instances the award of restricted common stock, stock appreciation rights and stock options vests over a multi-year term in equal periodic tranches. The award of restricted common stock purchased through options generally, although not in every instance, vests over a multi-year term upon exercise of the option and generally has a validity of up to five years and a per share purchase price of no less than the fair market value of our common stock on the date of grant. The awards are intended to serve as a means of incentive compensation for performance.
Defined Contribution Plans
The Company has a 401(k) retirement savings plan that allows employees to contribute to the plan after they have completed 60 days of service and are at least 18 years of age. The Company matches the employee's contribution up to 6% of total compensation. Orbital Power Services, Orbital Solar Services, Orbital Gas Systems, North America, Inc., and Orbital Energy Group made total employer contributions, net of forfeitures, of $0.4 million and $0.2 million for 2020 and 2019, respectively. In addition, in 2020 and 2019, the Company made contributions of $0 million and $0.3 million, respectively, associated with discontinued operations.
Involuntary Termination, Resignation for Good Reason and Change in Control
Our executives are awarded protection from involuntary termination, resignation for good reason and change in control specifically provided in their employment contracts.
Under involuntary termination without cause or resignation for good reason, the Executive Chairman, Chief Executive Officer and Chief Financial Officer each would receive any amounts earned, accrued or owing but not yet paid; full vesting of any unvested stock options, stock appreciation rights and any deferred past bonuses that have been earned but not paid. Should the executive be terminated on account of disability he is entitled to 75% of his then current annual base salary for six months and eighteen months of medical coverage.
Perquisites
The Company does not provide for any perquisites or any other benefits for its senior executives that are not generally available to all employees.
Employment Agreements
During fiscal year 2020, three executive officers were employed under employment agreements. Those executive officers included:
Executive Chairman and General Counsel;
Chief Executive Officer;
Chief Financial Officer.
To see the material terms of each named executive officer’s employment agreement, please see the footnotes to the Summary Compensation Table.
Executive Salary and Bonus Performance Assessment Considerations
Bonuses for certain executive officers and employees of Orbital Energy Group and subsidiaries are calculated based on historical financial and non-financial information and accomplishments based on an ongoing review and approval by the Compensation Committee and the Chief Executive Officer. Accordingly, the Company accrues bonuses through components calculated on prior data. This review also considers ongoing performance and incentives for those officers and employees to increase their performance. As such, bonuses calculated based on fiscal 2020 data are not necessarily earned or owed to the employees as of December 31, 2020, and there is no legal right by the employees to receive such bonuses upon either termination by the Company or voluntary termination, unless they have been approved based on the subsequent review of subjective items.
William J. Clough, Esq., General Counsel and Executive Chairman, James F. O’Neil, Chief Executive Officer, and Daniel N. Ford, Chief Financial Officer, as an executive team, successfully managed the implementation of an acquisition and growth strategy to become an energy centric service company, focused on infrastructure engineering, construction and maintenance primarily in areas that contribute to improving the carbon footprint of the world as we know it today. This management team focused the company on the acquisition and greenfield development of portfolio companies that contribute to reducing the energy industry carbon footprint.
The team’s refocus of the Company’s business model considers that the existing electric grid cannot handle ‘an electrified America’ as more of our nations’ infrastructure, such as transportation, transitions to electric, the electric grid is being reconfigured as generation is shifting from predominately coal and nuclear power generation to reliance on renewables and natural gas. A significant portion of the nation’s electric grid is approaching or has exceeded its useful life and needs to be upgraded.
The management team’s efforts include:
Forming Orbital Power Services (OPS), a full-service electric power contractor providing engineering, construction, and maintenance services of electric transmission, distribution, substation assets for our customers, as well as emergency response capabilities. OPS was launched in January 2020 and has expanded its customer outreach to Oklahoma, Texas, and Georgia. In addition to serving those states, OPS provided emergency storm services along the Eastern Seaboard in response to Hurricane Isaias during 2020 as well.
Continued transition into a diversified infrastructure service company with the 2020 acquisition of Orbital Solar Services, formerly Reach Construction Group, a full-service engineering, procurement, and construction contractor focused on building utility scale solar projects throughout the United States.
April 2021, the Company purchased all of the capital stock of Gibson Technical Services, Inc. (“GTS”). GTS, our wholly owned subsidiary, is an Atlanta-based telecommunications company providing diversified telecommunications services nationally since 1990.
July 2020, the Company formed Orbital Renewables, LLC for the purpose of forming a joint venture to provide engineering, procurement and construction services for the design, construction and operation of biomethane-to-grid facilities throughout North America.
October 2020, the Company formed a wholly owned subsidiary Eclipse Foundation Group, Inc., based in Gonzales, Louisiana. Eclipse is a drilled shaft foundation construction company that specializes in providing services to the electric transmission and substation, industrial, communication towers and disaster restoration market sectors, with expertise in water, marsh and rock terrains.
Right sized our legacy product and integration service groups in both North America and the U.K. and expanded business development efforts to pursue the renewable gas market.
Maintaining the Company’s business and preserve stockholder value during the COVID-19 pandemic and the unprecedented difficult business conditions that remain in 2021 while executing the company’s ongoing strategy to build a diversified infrastructure services company.
Promptly and effectively taking advantage of market conditions, banking relationships, and more to raise in excess of $45,000,000 in capital from equity sources in 2021 as well as additional debt financing, while increasing the Company’s Unaffiliated Market Cap from $63,979,836 (on December 31, 2020) to a high of $441,601,131 (on February 16, 2021) to $226,816,958 as of the end of the second quarter ended June 30, 2021– an increase of over 350% in the first six months of 2021.
Summary Compensation Table
The following table sets forth the compensation paid and accrued to be paid by the Company for the fiscal years 2020 and 2019 to the Company’s Chief Executive Officer, Executive Chairman/Chief Legal Counsel and Chief Financial Officer.
Non- | ||||||||||||||||||||||||||
equity | ||||||||||||||||||||||||||
Incentive | ||||||||||||||||||||||||||
Stock | Option | Plan | All Other | |||||||||||||||||||||||
Name and | Salary | Awards | Awards | Compensation | Compensation(7)(8) | Total | ||||||||||||||||||||
Principal Position | Year | ($) | ($) | ($) | ($) | ($) | ($) | |||||||||||||||||||
William J. Clough, Executive Chairman/ | 2020 | $ | 759,363 | (2) | $ | 21,887 | (2) | $ | 288,085 | (2) | $ | 300,000 | (2) | $ | 27,768 | $ | 1,397,103 | |||||||||
| Chief Legal Officer/CEO/ Director (1) | 2019 | 687,018 | (2) | — | — | 710,966 | (2) | 31,833 | 1,429,817 | |||||||||||||||||
Daniel N. Ford, CFO (3) | 2020 | 512,346 | (4) | 18,904 | (4) | 224,066 | (4) | 150,000 | (4) | 43,121 | 948,437 | |||||||||||||||
2019 | 449,000 | (4) | — | — | 456,667 | (4) | 41,456 | 947,123 | ||||||||||||||||||
James F. O'Neil, CEO/ | 2020 | 753,563 | (6) | 8,937 | (6) | 120,036 | (6) | — | 47,797 | 930,333 | ||||||||||||||||
| Vice Chairman/Director (5) | 2019 | 187,896 | (6) | — | — | — | 19,269 | 207,165 | ||||||||||||||||||
Footnotes:
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The following table summarizes potential payments upon termination of employment to each of the named executive officers employed on the last day of our most recently completed fiscal year. The amounts set forth in the table are based on the assumption that the triggering event occurred on the last business day of our last completed fiscal year.
Involuntary | ||||||||||
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William J. Clough, Executive Chairman/ | Salary and bonus continuation | $ | 3,500,000 | (1) | $ | 300,000 | (1) | |||
| Chief Legal Officer/ former CEO/Director | Benefits | 41,652 | (1) | 62,478 | (1) | |||||
Daniel N. Ford, Chief Financial Officer | Salary and bonus continuation | 1,925,000 | (2) | 206,250 | (2) | |||||
Benefits | 39,032 | (2) | 58,547 | (2) | ||||||
James F. O'Neil, Chief Executive Officer/Director | Salary and bonus continuation | 3,500,000 | (3) | 300,000 | (3) | |||||
Benefits | 47,696 | (3) | 71,543 | (3) | ||||||
Notes:
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Outstanding Equity Awards at Fiscal Year-End
The following table sets forth the outstanding equity awards at December 31, 2020, to each of the named executive officers:
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END | |||||||||||||
Name | Number of Securities Underlying Unexercised Options (#) | Option Exercise Price ($) | Option Expiration | Payout Value of Unexercised In-the-Money Options/SARs at Fiscal Year-End ($) | |||||||||
William J. Clough (1) | 19,363 | 4.56 | 4/16/2022 | $ | — | ||||||||
William J. Clough (1) | 3,300 | 4.56 | 4/16/2022 | — | |||||||||
Daniel N. Ford (1) | 12,598 | 4.56 | 4/16/2022 | — | |||||||||
William J. Clough (2) | 330,000 | 6.00 | 9/21/2022 | — | |||||||||
William J. Clough (3) | 200,000 | 6.25 | 6/24/2023 | — | |||||||||
Daniel N. Ford (3) | 100,000 | 6.25 | 6/24/2023 | — | |||||||||
William J. Clough (4) | 131,250 | 1.00 | 6/1/2026 | 156,188 | |||||||||
Daniel N. Ford (4) | 102,083 | 1.00 | 6/1/2026 | 121,479 | |||||||||
James F. O'Neil (4) | 54,688 | 1.00 | 6/1/2026 | 65,079 | |||||||||
Footnotes:
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Compensation, Bonus and Severance Provisions of Employment Arrangements
On May 14, 2019, we entered into executive employment agreements with William J. Clough, our, Executive Chairman and Chief Legal Officer and Daniel N. Ford, our Chief Financial Officer and effective October 1, 2019, we entered into an executive employment agreement with James F. O’Neil, our Chief Executive Officer (collectively, the “Executives”). Any issuance of equity-based compensation to the executive are consistent with the provisions of Nasdaq Stock Market Listing Rule 5635(c).
Set forth below is a summary of the material terms and provisions of each of these Executive’s Employment Agreements:
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Involuntary Termination or Resignation for Good Reason.
In the event of an involuntary termination of Executive’s employment by the Company for any reason other than cause, death, or disability or Executive's resignation for good reason, Mr. Clough and Mr. O’Neil shall be entitled to 2.5 times the sum of the annual base salary target bonus and Mr. Ford shall be entitled to 2.0 times the sum of his annual base salary target bonus, paid in a single lump sum cash payment, eighteen (18) months medical coverage, and all unvested stock options and stock appreciation rights, issued to Executive shall immediately vest in full.
Change of Control
Each employment agreement contains wording that upon acquisitions, corporate consolidation, transfer of substantially all the corporate assets the surviving or new corporation or the transferee of the Company's assets shall be bound by and shall have the benefit of the provisions of the respective Employment Agreements.
Restrictive Covenants
In consideration of the payments and benefits to be received under each of the Employment Agreements, each executive officer is also a party to restrictive covenants regarding non-competition non-solicitation of customers/clients, non-solicitation of employees, intellectual property ownership of Company, confidentiality and non-disparagement.
Director Compensation
For 2020, each of our directors received the following compensation pursuant to our director compensation plan:
Non-employee directors earned/received annual compensation of $100,000.
The $100,000 annual compensation for non-employee directors is issued in the form of $50,000 cash compensation and $50,000 common stock calculated by using the Nasdaq Stock Market closing price per share on the date of issuance. In addition, the chairman and member of the Investment Committee received $44,500 and $37,500, respectively of additional cash compensation for their services.
At the election of each director, all or any portion of the cash compensation may be converted to stock purchase options calculated by using the strike price of ten percent (10%) above the Nasdaq Stock Market closing price per share on the date of grant.
At the election of each director, all or any portion of the cash compensation may be converted to stock calculated by using the Nasdaq Stock Market closing price per share on the date of conversion.
The following table sets forth the compensation of the non-employee directors for the fiscal year ended December 31, 2020:
Fees | Non- | |||||||||||||||||||||||||||
earned | Equity | Nonqualified | ||||||||||||||||||||||||||
or | Incentive | Deferred | ||||||||||||||||||||||||||
paid in | Stock | Option | Plan | Compensation | All Other | |||||||||||||||||||||||
Cash(1) | Awards | Awards | Compensation | Earnings | Compensation | Total | ||||||||||||||||||||||
Name | ($) | ($) | ($) | ($) | ($) | ($) | ($) | |||||||||||||||||||||
C. Stephen Cochennet, Director | $ | 87,500 | $ | 50,000 | $ | — | $ | — | $ | — | $ | — | $ | 137,500 | ||||||||||||||
Corey A. Lambrecht, Director | 94,000 | 50,000 | — | — | — | — | 144,000 | |||||||||||||||||||||
Sean P. Rooney, Director | 50,000 | 50,000 | — | — | — | — | 100,000 | |||||||||||||||||||||
Sarah Tucker, Director | 50,000 | 50,000 | — | — | — | — | 100,000 | |||||||||||||||||||||
Footnotes:
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2020 Stock Appreciation Rights Issuances
Effective June 1, 2020, the executives and officers of Orbital Energy Group, Inc. identified below were issued Stock Appreciation Rights (“SARS”) in lieu of certain cash bonuses. The SARS distributions are as follows:
Executive | SARS | Effective Date | Vesting Period | Exercise Price |
William Clough | 450,000 | June 1, 2020 | 24-months | $1.00 |
James O’Neil | 187,500 | June 1, 2020 | 24-months | $1.00 |
Daniel Ford | 350,000 | June 1, 2020 | 24-months | $1.00 |
The number of SARS granted to each of the officers equates to the corresponding dollar amount of a portion of the cash bonus otherwise due them pursuant to their employment agreements. The SARS are subject to acceleration upon a change in control or termination of the executive’s employment with us in certain circumstances.
The $1.00 SAR exercise price represents approximately a 40% premium over the market price of our common stock as reported on the Nasdaq Stock Market as of May 29, 2020. Upon exercise, we are obligated to pay the executive an amount equal to the difference between the average closing price of our common stock, as reported on the Nasdaq Stock Market for the five (5) trading days preceding the exercise date, less the SAR exercise price of $1.00. Reference is made to the form of the Employee Stock Appreciation Rights Agreement – Cash Settled, attached to Form 8-K, filed with the Commission June 4, 2020, the terms of which are incorporated herein by reference.
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information regarding beneficial ownership of our voting shares as of December 31, 2020,2022, by: (i) each stockholder known by us to be the beneficial owner of 5% or more of the outstanding voting shares, based upon a review of filed schedule 13Ds and Schedule 13Gs, (ii) each of our directors and executives and (iii) all directors and executive officers as a group. Except as otherwise indicated, we believe that the beneficial owners of the voting shares listed below, based on information furnished by such owners, have sole investment and voting power with respect to such shares, subject to community property laws where applicable. Shares of common stock issuable upon exercise of options and warrants that are currently exercisable or that will become exercisable within 60 days of December 31, 2020,2022 have been included in the table.
No shares of preferred stock are outstanding at the date of this report.
Beneficial Interest Table
Percentages of | ||||||||
Number of | Shares | |||||||
Securities | Beneficially | |||||||
Name and Address of Beneficial Owner (1) | Owned | Owned (2) | ||||||
William J. Clough (3) | 732,547 | 2.35 | % | |||||
James F. O'Neil (4) | 644,263 | 2.10 | % | |||||
C. Stephen Cochennet (5) | 147,068 | * | % | |||||
Daniel N. Ford (6) | 220,433 | * | % | |||||
Corey A. Lambrecht (7) | 156,073 | * | % | |||||
Sean P. Rooney (8) | 173,900 | * | % | |||||
Paul D. White (9) | 50,727 | * | % | |||||
Sarah Tucker (10) | 56,779 | * | % | |||||
Sabby Management, LLC | ||||||||
10 Mountainview Road, Suite 205, Upper Saddle River, NJ 07458 | 3,333,333 | 10.87 | % | |||||
Officers, Directors, Executives as Group | 2,181,790 | 7.07 | % | |||||
Percentages of | ||||||||
Number of | Shares | |||||||
Securities | Beneficially | |||||||
Name and Address of Beneficial Owner (1) | Owned | Owned (2) | ||||||
Paul T. Addison (3) | 61,706 | * | % | |||||
William J. Clough (4) | 943,011 | * | % | |||||
James F. O'Neil (5) | 1,947,831 | 1.24 | % | |||||
Nicholas M. Grindstaff (6) | 296,052 | * | % | |||||
C. Stephen Cochennet (7) | 297,617 | * | % | |||||
Corey A. Lambrecht (8) | 243,322 | * | % | |||||
Jerry Sue Thornton (9) | 59,659 | * | % | |||||
Sarah Tucker (10) | 147,328 | * | % | |||||
La Forrest V. Williams (11) | 59,659 | * | % | |||||
Officers, Directors, Executives as Group | 4,056,185 | 2.58 | % | |||||
Footnotes:
1. | Except as otherwise indicated, the address of each beneficial owner is c/o Orbital Energy Group, Inc., |
2. | Calculated on the basis of |
3. | Mr. Addison is a Director. | |
4. | Mr. Clough’s |
| Mr. O’Neil’s shares include 331,053 RSUs that will vest within 60 days of December 31, 2022. Mr. O'Neil is a Director, and Chief Executive |
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10. | Ms. Tucker is a Director. | |
11. | Mr. Williams is a Director. |
We relied upon Section 4(2)4(a)(2) of the Securities Act of 1933 as the basis for an exemption from registration for the issuance of the above securities.
Related Party Transactions of DirectorsNo shares are held in margin accounts or pledged or otherwise available to a lender as security by executive officers and Executive Officers
The Board of Directors is responsible for the review and approval of all related party transactions. Although the Board does not have written policies and procedures with respect to the review of related party transactions, we intend that any such transactions will be reviewed by the Board of Directors or one of its committees, which will consider all relevant facts and circumstances and will consider, among other factors:
the material terms of the transaction;
the nature of the relationship between the Company and the related party;
the significance of the transaction to the Company; and
whether or not the transaction would be likely to impair (or create the appearance of impairing) the judgment of a director or executive officer to act in the best interest of the Company.
Except as set forth herein, no related party of the Company, including, but not limited to, any director, officer, nominee for director, immediate family member of a director or officer, immediate family member of any nominee for director, security holder that beneficially owns, directly or indirectly, shares carrying more than 5% of the voting rights attached to its outstanding shares, or immediate family member of any such security holder, since the beginning of fiscal year 2020, has any material interest, direct or indirect, in any transaction or in any presently proposed transaction with the Company where the amount involved exceeds $120,000 which has or will materially affect the Company.
Chief Legal Officer and Executive Chairman of the Board of Directors, William J. Clough’s son, Nicholas J. Clough, serves as Operations Director for Orbital Energy Group. Additional Information on Nicholas Clough’s compensation is included in Note 11 Related Party Transactions, to the Consolidated Financial Statements under Part II, Item 8, ‘‘Financial Statements and Supplementary Data’’ of our Form 10-K filed with the SEC on March 30, 2021.directors.
Description of Orbital Energy GroupProposals To Be Considered’s Capital Stock
Description of Securities
The Company’s common stock is traded on The Nasdaq Stock Market under the trading symbol ‘‘OEG.’’ The Company currently has authorized 325,000,000 common shares, par value $0.001 per share, and as of December 31, 2020, the Company’s issued and outstanding shares consisted of 31,029,642 shares of common stock issued and 30,676,579 shares outstanding of which 28,248,253 shares are freely tradable without restriction or limitation under the Securities Act. As of December 31, 2020, the Company had in excess of 3,000 beneficial holders of our common stock and in excess of 2,300 stockholders of record. The actual number of stockholders is greater than this number of record holders and includes stockholders who are beneficial owners, but whose shares are held in street name by brokers and other nominees.
The 2,428,326 shares of common stock held by existing stockholders as of December 31, 2020, that are ‘‘restricted’’ within the meaning of Rule 144 adopted under the Securities Act (the ‘‘Restricted Shares’’), may not be sold unless they are registered under the Securities Act or sold pursuant to an exemption from registration, such as the exemption provided by Rule 144 promulgated under the Securities Act. The Restricted Shares were issued and sold by us in private transactions in reliance upon exemptions from registration under the Securities Act.
The holders of Common Stock are entitled to one vote per share and do not have cumulative voting rights. Holders of the Company’s Common Stock do not have any pre-emptive or other rights to subscribe for or purchase additional shares of capital stock and no conversion rights, redemption or sinking-fund provisions.
Market Value
The Company’s common stock is traded on the Nasdaq Stock Market under the trading symbol ‘‘OEG.’’ The following table sets forth, the high and low closing sales prices of our Common Stock on the Nasdaq during each quarter of the two most recent years.
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2021 | ||||||||
First Quarter | $ | 9.86 | $ | 2.08 | ||||
Second Quarter | 7.64 | 2.91 | ||||||
2020 | ||||||||
First Quarter | $ | 1.31 | $ | 0.55 | ||||
Second Quarter | 0.90 | 0.61 | ||||||
Third Quarter | 0.74 | 0.49 | ||||||
Fourth Quarter | 2.47 | 0.57 | ||||||
2019 | ||||||||
First Quarter | $ | 1.79 | $ | 1.18 | ||||
Second Quarter | 1.31 | 0.82 | ||||||
Third Quarter | 0.91 | 0.53 | ||||||
Fourth Quarter | 1.19 | 0.68 | ||||||
To Approve an amendment to the Certificate of Formation to effect a reverse stock split of our outstanding Common Stock at a reverse stock split ratio ranging from any whole number between 10-for-1 and 40-for-1, subject to and as determined by the Board of Directors.
At the Virtual Special Meeting, stockholders will be asked to approve an amendment to our Certificate of Formation to effect a reverse stock split of our issued and outstanding Common Stock by a numerical ratio ranging from any whole number between 10-for-1 and 40-for-1, with the exact ratio, if approved and effected at all, to be set within that range at the discretion of the Board of Directors and publicly disclosed by the Company to the stockholders on or before the date on which the Certificate of Amendment to the Certificate of Formation reflecting the Reverse Stock Split is filed with the Secretary of State of the State of Texas. A copy of the full text of the Certificate of Amendment to the Certificate of Formation is attached hereto as Appendix A. The proposed Certificate of Amendment to our Certificate of Formation would be accomplished by adding the following paragraph 3 (Common Stock) to Article IV (Capital) referring to the number of shares with par value the following text:
“3.Reverse Stock Split. Each __ shares of Common Stock issued and outstanding on the effective date of ______, 2023, shall automatically and with no further action be combined and changed into one validly issued, fully paid and non-assessable share of Common Stock, without any further action by the holder thereof, subject to the treatment of fractional interests as described below (the “Reverse Stock Split”). Shareholders who otherwise would be entitled to receive fractional share interests of Common Stock in connection with the Reverse Stock Split (the “Fractional Shareholders”), shall have their fractional interest be rounded up to the nearest whole number of shares (the “Rounded Up Shares”). Each certificate that immediately prior to the Reverse Stock Split represented shares of Common Stock (“Old Certificates”) shall thereafter represent the number of shares of Common Stock into which the shares of Common Stock represented by the Old Certificate shall have been combined, subject to the elimination of fractional share interests as described above. The determination as to whether the Rounded Up Shares are issuable shall be based on the total number of shares of Common Stock that are being exchanged held such Fractional Shareholder, not upon each share of Common Stock being exchanged.”
By approving this proposal, stockholders would give the Board of Directors the authority, but not the obligation, to effect the Reverse Stock Split and full discretion to approve the ratio at which shares of Common Stock issued and outstanding immediately prior to the Reverse Stock Split Effective Time at a reverse stock split ratio ranging from any whole number between 10-for-1 and 40-for-1, subject to and as determined by the Board (the “Reverse Stock Split”).
We are requesting stockholder approval to effect the Reverse Stock Performance GraphSplit at which shares of Common Stock issued and outstanding immediately prior to the Reverse Stock Split Effective Time at a reverse stock split ratio ranging from any whole number between 10-for-1 and 40-for-1, with the exact ratio determined by the Board of Directors and publicly announced by the Company on or before the date on which the amendment to the Certificate of Formation reflecting the Reverse Stock Split is filed with the Texas Secretary of State. However, the Board of Directors reserves the right to elect not to proceed with the Reverse Stock Split, even if approved, and to abandon the Reverse Stock Split if it determines, in its sole discretion, that the Reverse Stock Split is no longer in the best interests of our stockholders. No further action by the stockholders will be required for the Board of Directors to either implement or abandon the Reverse Stock Split. For the avoidance of doubt, except as otherwise specified herein, all share and dollar amounts set forth in this proxy statement are on a pre-Reverse Stock Split basis.
If the Board of Directors does not effect the Reverse Stock Split on or before December 31, 2023, any authority granted to the Board of Directors by our stockholders pursuant to this Proposal 1 will terminate.
Reasons for the Reverse Stock Split
The following graph comparesBoard of Directors has authorized the performanceresolution to seek stockholder approval to effect the Reverse Stock Split with the primary intent of increasing the price of our Common Stock in order to meet The Nasdaq Capital Market’s minimum price per share criteria for continued listing on that exchange. Our Common Stock is publicly traded and listed on The Nasdaq Capital Market under the symbol “OIG.” The Board of Directors believes that, in addition to increasing the price of our Common Stock, the Reverse Stock Split would also reduce certain of our costs, such as Nasdaq listing fees, and make our Common Stock more attractive to a broader range of institutional and other investors. The combination of lower transaction costs and increased interest from institutional investors and investment funds may ultimately improve the trading liquidity of our Common Stock. Accordingly, we believe that authority granted to the Board of Directors to effect the Reverse Stock Split is in the Company’s and the stockholders’ best interests.
On July 19, 2022, the Company received written notice from The Nasdaq Stock Market (“Nasdaq”) indicating that the Company is not in compliance with the $1.00 minimum bid price requirement for continued listing on the Nasdaq Capital Market, as set forth in Listing Rule 5550(a)(2). ("Minimum Bid Price Rule"). On January 18, 2023, Nasdaq notified us that we had not regained compliance with the Minimum Bid Price Rule by January 18, 2023, and unless we request a hearing before the Nasdaq Hearing Panel (the “Panel”) by January 27, 2023, our common stock will be delisted from Nasdaq. We intend to timely request a hearing before the Panel to appeal this determination, which we expect will stay any further action by Nasdaq until the conclusion of the hearing process. While the appeal is pending, our common stock will continue to trade on The Nasdaq Capital Market under the symbol “OIG.” There can be no assurance that our appeal will be successful. There can be no assurance that our stockholders will approve the Reverse Stock Split proposal or that the Reverse Stock Split proposal will increase the share price of our common stock toat or above the performance of the Nasdaq Composite Index and the Russell 2000 Index. The Russell 2000 Index measures the performance of the small-cap segment of the U.S. equity markets. The comparisonsrequired $1.00 per share, initially or in the chart below are not intended to forecastfuture, or be indicative of future performance of our common stock. We issued 7,392,856 shares in October 2017, which increased the totalfor any certain number of shares outstanding by about 35% and this had a dilutive effect ondays. Further, there can be no assurance that even if we regain compliance with the share price as reflectedMinimum Bid Price Rule it will occur in sufficient time to satisfy the following graph.
Orbital Energy Group, Inc.
Period Ending | ||||||||||||||||||||||||
Index | * 12/31/2015 | 12/31/2016 | 12/31/2017 | 12/31/2018 | 12/31/2019 | 12/31/2020 | ||||||||||||||||||
Orbital Energy Group, Inc. | $ | 100.00 | $ | 98.44 | $ | 39.06 | $ | 17.47 | $ | 15.62 | $ | 31.11 | ||||||||||||
NASDAQ Composite | 100.00 | 108.87 | 141.13 | 137.12 | 187.44 | 271.64 | ||||||||||||||||||
Russell 2000 | 100.00 | 121.31 | 139.08 | 123.76 | 155.35 | 186.36 | ||||||||||||||||||
* Assumed $100 invested on 12/31/2015 in stockPanel or index, including reinvestment of dividends. Fiscal year ended December 31.
Source: S&P Global Market Intelligence ©2021
Dividend Policy
The Company has never paid cash dividends on its common stock andthat the Company does not expect to pay dividends in the foreseeable future.
We currently expect to retain future earnings to finance the growth and development ofPanel will ultimately grant our business. The timing, amount and form of future dividends, if any, will depend on, among other things, our future results of operations and cash flows; our general financial condition and future prospects; our capital requirements and surplus; contractual restrictions; the amount of distributions, if any, received by us from our subsidiaries; and other factors deemed relevant by our board of directors. Any future dividends on our common shares would be declared by and subject to the discretion of our board of directors.request for continued listing.
In addition, we believe that the Reverse Stock Split, if implemented, will make our Common Stock Reserved for Future Issuances
Set forth below ismore attractive to a summarybroader range of institutional and other investors, as we believe that the current market price of our Common Stock may affect its acceptability to certain institutional investors, professional investors and other members of the outstanding securities which relateinvesting public. Many brokerage houses and institutional investors have internal policies and practices that either prohibit them from investing in low-priced stocks or tend to 790,648 sharesdiscourage individual brokers from recommending low- priced stocks to their customers. In addition, some of common stockthose policies and practices may function to make the Company is requiredprocessing of trades in low-priced stocks economically unattractive to reserve for potential future issuances. As of December 31, 2020, there were reserved for issuance an aggregate of 790,648 shares of common stock for options outstanding under the Company’s 2008 Equity Incentive Plan and the Company’s 2009 Equity Incentive Plan (Executive).
The Orbital Energy Group 2020 Incentive Award Plan and authorizedbrokers. Moreover, because brokers’ commissions on low-priced stocks generally represent a share limit of 2,000,000 shares. As of December 31, 2020, Orbital Energy Group 2020 Incentive Award Plan there are 1,761,724 remaining shares available.
Recent Sales of Unregistered Securities
Following is a list of all securities we sold within the first two quarters of 2021 and the past two years, which were not registered under the Securities Act. The Company relied on Section 4(2) of the Securities Act of 1933 as the basis for an exemption from registration for the following issuances.
2021 Sales of Unregistered Securities, First Two Quarters
Common Stock Issued During First Two Quarters of 2021
Date of issuance | Type of issuance | Expense/ Prepaid/ Cash | Stock issuance recipient | Reason for issuance | Total no. of shares | Grant date fair value recorded at issuance (in thousands) | ||||||||||
January, April, and May 2021 | Common stock | Expense | Four directors | Director compensation | 118,672 | $ | 541 | |||||||||
January, April, and May 2021 | Common stock | Expense | 3 Employees | Employee bonuses | 1,016,613 | 6,638 | ||||||||||
February and June 2021 | Common stock | Expense | 2 Consultants | Services | 184,516 | 865 | ||||||||||
February 2021 | Common stock | Cashless exercise | Employee | Stock option exercise | 214,596 | * | — | |||||||||
April and June 2021 | Common stock | Acquisition | Various GTS owners | GTS Acquisition and purchase price adjustment | 5,929,267 | 20,293 | ||||||||||
May 2021 | Common stock | Expense | Consultant | Royalty | 2,705 | 12 | ||||||||||
Total other equity transactions | 7,466,369 | $ | 28,349 | |||||||||||||
* Grant date fair value of stock options were recorded over the vesting periodhigher percentage of the stock optionsprice than commissions on higher-priced stocks, the current average price per share of Common Stock can result in individual stockholders paying transaction costs representing a higher percentage of their total share value than would be the case if the share price were substantially higher. We believe that, if approved and implemented by our Board, the Reverse Stock Split will make our Common Stock a more attractive and cost-effective investment for many investors.
Reducing the number of outstanding shares of our Common Stock through the Reverse Stock Split is intended, absent other factors, to increase the per share market price of our Common Stock. However, other factors, such as our financial results, market conditions and the market perception of our business may adversely affect the market price of our Common Stock. As a result, there can be no assurance that the Reverse Stock Split, if completed, will result in the intended benefits described above, that the market price of our Common Stock will increase following the Reverse Stock Split or that the market price of our Common Stock will not decrease in the future. Additionally, we cannot assure you that the market price per share of our Common Stock after a Reverse Stock Split will increase in proportion to the reduction in the number of shares of our Common Stock outstanding before the Reverse Stock Split. Accordingly, the total market capitalization of our Common Stock after the Reverse Stock Split may be lower than the total market capitalization before the Reverse Stock Split.
Dissenters rights of appraisal
Neither Texas Corporate Law nor our Bylaws provide dissenters rights of appraisal to our shareholders in connection with the Reverse Stock Split.
Certain Risks Associated with the Reverse Stock Split
In evaluating the proposed Reverse Stock Split, the Board of Directors also took into consideration certain risks associated with reverse stock splits generally, including the negative perception of reverse stock splits held by some investors, analysts and other stock market participants, the fact that the stock price of some companies that have effected reverse stock splits has subsequently declined back to pre-reverse stock split levels, and the risks described below.
There can be no assurance that the total market capitalization of our Common Stock (the aggregate value of our Common Stock at the then market price) after the implementation of the Reverse Stock Split will be equal to or greater than the total market capitalization before the Reverse Stock Split or that the per share market price of our Common Stock following the Reverse Stock Split will increase in proportion to the reduction in the number of shares of our Common Stock outstanding before the Reverse Stock Split.
There can be no assurance that the market price per share of our Common Stock after the Reverse Stock Split will remain unchanged or increase in proportion to the reduction in the number of shares of our Common Stock outstanding before the Reverse Stock Split. Accordingly, the total market capitalization of our Common Stock after the Reverse Stock Split when and if approved and effected may be lower than the total market capitalization before the Reverse Stock Split. Moreover, in the future, the market price of our Common Stock following the Reverse Stock Split may not exceed or remain higher than the market price prior periods.to the Reverse Stock Split.
2020 SalesIf the Reverse Stock Split is approved and effected, the resulting per-share market price may not attract institutional investors or investment funds and may not satisfy the investing guidelines of Unregistered Securities
such investors and, consequently, the trading liquidity of our Common Stock Issued During 2020may not improve.
(Dollars in thousands) | ||||||||||||||||
Grant date | ||||||||||||||||
fair value | ||||||||||||||||
Type of | Expense/ | Stock issuance | Reason for | Total no. | recorded at | |||||||||||
Dates of issuance | issuance | Prepaid | Recipient | issuance | of shares | issuance | ||||||||||
February and December 2020 | Common Stock | Expense | Licensor | Pursuant to royalty agreement | 54,930 | $ | 51 | (1) | ||||||||
December 2020 | Vested restricted common stock | Expense | Four board members | Director compensation | 170,940 | 200 | ||||||||||
December 2020 | Common stock | Expense | Four employees | Approved bonuses | 67,336 | 66 | ||||||||||
Total 2020 issuances | 293,206 | $ | 317 | (2) | ||||||||||||
(1) Amount includes $39 thousandWhile the Board of Directors believes that a higher stock compensation recordedprice may help generate investor interest, there can be no assurance that the Reverse Stock Split will result in prior years.
(2) Total excludes $2 thousanda per-share market price that will attract institutional investors or investment funds or that such share price will satisfy the investing guidelines of stock compensation related to royalties that were recorded as expense butinstitutional investors or investment funds. As a result, the trading liquidity of our Common Stock may not issued and outstanding as of December 31, 2020.necessarily improve.
2019 SalesA decline in the market price of Unregistered Securitiesour Common Stock after the Reverse Stock Split is approved and effected may result in a greaterpercentage decline than would occur in the absence of the Reverse Stock Split.
If the Reverse Stock Split is approved and effected and the market price of our Common Stock declines, the percentage decline may be greater than would occur in the absence of the Reverse Stock Split. The market price of our Common Stock will, however, also be based upon our performance and other factors, which are unrelated to the number of shares of Common Stock outstanding.
Because the number of authorized shares of our Common Stock Issued During 2019will not be reduced proportionately, the reverse stock split will increase the Board of Directors’ ability to issue authorized and unissued shares without further stockholder action.
Because the number of authorized shares of our Common Stock will not be reduced proportionately, the reverse stock split will increase the Board of Directors’ ability to issue authorized and unissued shares without further stockholder action. Without taking into account the impact of the proposed reverse stock split, we already have a substantial number of authorized, but unissued shares of stock, the issuance of which would be dilutive to our existing stockholders and may cause a decline in the trading price of our Common Stock. With respect to authorized but unissued and unreserved shares, we could also use such shares to oppose a hostile takeover attempt or delay or prevent changes in control or changes in or removal of management.
(Dollars in thousands) | ||||||||||||||||
Grant date | ||||||||||||||||
fair value | ||||||||||||||||
Type of | Expense/ | Stock issuance | Reason for | Total no. | recorded at | |||||||||||
Dates of issuance | issuance | Prepaid | recipient | issuance | of shares | issuance | ||||||||||
January, April, July and October 2019 | Vested restricted common stock | Expense | Four board members | Director compensation | 164,713 | $ | 162 | |||||||||
May 2019 | Common stock | Expense | Employee | Approved bonus | 18,837 | 17 | ||||||||||
Total 2019 issuances | 183,550 | $ | 179 | (1) | ||||||||||||
Effecting the Reverse Stock Split; Board of Directors’ Discretion to Implement Reverse Stock Split
(1) Total excludes $36 thousandIf approved by stockholders at the Virtual Special Meeting and the Board of 2019 stock compensationDirectors decides that it is in the best interests of the Company and $3 thousandour stockholders to effect the Reverse Stock Split, the Board of 2018 stock compensation relatedDirectors will establish an appropriate ratio for the Reverse Stock Split based on several factors existing at such time, the Company will publicly announce the ratio selected by the Board of Directors and we will subsequently file an amendment to royaltiesthe Certificate of Formation in the form of the proposed amendment to the Certificate of Formation shown above. The Board of Directors will consider, among other factors, prevailing market conditions, the likely effect of the Reverse Stock Split on the trading price of our Common Stock and on our compliance with applicable Nasdaq listing requirements, and the marketability and liquidity of our Common Stock. The Board of Directors will also determine the appropriate timing for filing the amendment to our Certificate of Formation with the Texas Secretary of State to effect the Reverse Stock Split. If, for any reason, the Board of Directors deems it advisable, the Board of Directors in its sole discretion may abandon the Reverse Stock Split at any time prior to the effectiveness of the amendment to our Certificate of Formation, without further action by our stockholders. Assuming the Board of Directors determines that were recorded as expense but not issuedit is in the best interests of the Company and outstandingour stockholders to proceed with the Reverse Stock Split, the Reverse Stock Split will be effective as of December 31, 2019.the date and time set forth in the amendment to our Certificate of Formation that is filed with the Texas Secretary of State (the “Effective Time”).
Issuer PurchasesAt the Effective Time, without any further action on the part of Equity Securities
On December 3, 2019,the Company or our stockholders, the outstanding shares of Common Stock held by stockholders of record as of the Effective Time will be converted into a lesser number of shares of Common Stock based on the ratio selected by the Board of directors and publicly announce by the Company. For example, if the Board of Directors approves a ratio of 1-for-40, a stockholder who holds 400,000 shares of Common Stock as of the Company authorized and approved a two-year share repurchase program for up to $5 millionEffective Time will hold 10,000 shares of Common Stock following the Reverse Stock Split.
Effect on Shares of Common Stock [this will be updated]
For the purposes of providing examples of the then outstandingeffect of the Reverse Stock Split on our Common Stock, the following table contains approximate information, based on share information as of the Record Date, of the effect of a Reverse Stock Split at certain ratios within the range of the proposed Reverse Stock Split ratios on the number of shares of the Company's common stock. The following table provides information regarding repurchases of the Company's common stock during the quarter ended December 31, 2019:our Common Stock authorized, outstanding, reserved for future issuance and not outstanding or reserved:
Period | Total Number of Shares Purchased | Average Price Paid Per share | Total Number of Shares as Part of Publicly Announced Plans or Programs | Maximum Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs | ||||||||||||
December 1, 2019, through December 31, 2019 | 353,063 | $ | 1.17 | 353,063 | $ | 4,586,678 | ||||||||||
Total | 353,063 | $ | 1.17 | 353,063 | $ | 4,586,678 | ||||||||||
Principal Accountant Fees and Services
Fees or controlled billings for services billed by the Company’s principal accountant, Perkins & Company, P.C. through June 20, 2019, and Grant Thornton LLP from June 20, 2019, through December 31, 2020, were as follows:
For the Years Ended December 31, | ||||||||
(In thousands) | 2020 | 2019 | ||||||
Audit fees (1) | $ | 725 | $ | 738 | ||||
Audit related fees | — | 125 | ||||||
Tax fees and other fees (2) | 106 | 30 | ||||||
Total Fees | $ | 831 | $ | 893 | ||||
Status | Number of Common Authorized | Number of Shares Stock Issued and Outstanding | Number of Shares of Stock Underlying 2020 Incentive Plan and RSU | Number of Shares of Common Stock Authorized, But Not Outstanding or Reserved | ||||||||||||
Pre-Reverse Stock Split | 325,000,000 | 161,384,024 | 6,113,187 | 163,615,976 | ||||||||||||
Post-Reverse Stock Split 1:10 | 325,000,000 | 16,138,402 | 611,319 | 147,477,574 | ||||||||||||
Post-Reverse Stock Split 1:15 | 325,000,000 | 10,758,935 | 407,546 | 152,857,041 | ||||||||||||
Post-Reverse Stock Split 1:20 | 325,000,000 | 8,069,201 | 305,659 | 155,546,775 | ||||||||||||
Post-Reverse Stock Split 1:25 | 325,000,000 | 6,455,361 | 244,527 | 157,160,615 | ||||||||||||
Post-Reverse Stock Split 1:30 | 325,000,000 | 5,379,467 | 203,773 | 158,236,509 | ||||||||||||
Post-Reverse Stock Split 1:35 | 325,000,000 | 4,610,972 | 174,662 | 159,005,004 | ||||||||||||
Post-Reverse Stock Split 1:40 | 325,000,000 | 4,034,601 | 152,830 | 159,581,375 | ||||||||||||
Footnote | |
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2. These shares are available for future issuance. |
InEffect on Outstanding Shares, Options, and Certain Other Securities
If the Reverse Stock Split is approved and effected, the number of shares of our Common Stock owned by each stockholder will be reduced in the same proportion as the reduction in the total number of shares outstanding, such that the percentage of our Common Stock owned by each stockholder will remain unchanged, except for any de minimis change resulting from the treatment of any fractional shares that such stockholder would have received as a result of the Reverse Stock Split. The number of shares of Common Stock that may be received upon conversion, exercise or exchange, as the case may be, of outstanding options or other securities convertible into, or exercisable or exchangeable for, shares of our Common Stock, and the exercise or conversion prices for these securities, will also be adjusted in accordance with the requirementsReverse Split ratio, as of the Sarbanes-Oxley ActEffective Time.
If the Reverse Stock Split is approved by our stockholders and our Board decides to implement the Reverse Stock Split, as of 2002the Effective Time, based on the Reverse Stock Split ratio selected by the Board, proportionate adjustments will be made to all then-outstanding equity awards, the 2020 Incentive Award Plan and the rulesRSU award program with respect to the number of shares of Common Stock subject to such award and regulations promulgated thereunder, the Audit Committee has adopted an informal approval policy that it believesexercise or conversion price thereof. The number of shares of Common Stock available for issuance under the 2020 Incentive Award Plan will remain unchanged as a result in an effective and efficient procedure to pre-approve services performed byof the independent registered public accounting firm.Reverse Stock Split.
Effect on Registration and Stock Trading
Our Common Stock is currently registered under Section 12(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and we are subject to the periodic reporting and other requirements of the Exchange Act. The proposed Reverse Stock Split will not affect the registration of our Common Stock under the Exchange Act. If the Reverse Stock Split is approved and effected, our Common Stock will receive a new CUSIP number.
Mechanics of Reverse Split
If this Proposal 1 is approved by the stockholders at the Virtual Special Meeting and the Board of Directors decides that it is in the best interests of the Company and our stockholders to effect the Reverse Stock Split, our stockholders will be notified of the ratio for the Reverse Stock Split selected by the Board of Directors and that the Reverse Stock Split has been approved and effected. The mechanics of the Reverse Stock Split will differ depending upon whether a stockholder holds its shares of Common Stock in brokerage accounts or “street name” or whether the shares are registered directly in a stockholder’s name and held in book-entry form or certificate form.
● | Our stockholders who hold shares of Common Stock in “street name” through a nominee (such as a bank or broker) will be treated in the same manner as stockholders whose shares are registered in their names, and nominees will be instructed to effect the Reverse Stock Split for their beneficial holders. However, nominees may have different procedures for processing the reverse stock split and stockholders holding shares in “street name” are encouraged to contact their nominees. |
● | Our registered stockholders may hold some or all of their shares of Common Stock electronically in book-entry form under the direct registration system for securities. These stockholders will not have stock certificates evidencing their ownership of our Common Stock. They are, however, provided with a statement reflecting the number of shares registered in their accounts. Stockholders holding registered shares of our Common Stock in book-entry form need not take any action to receive post-Reverse Stock Split shares as a transaction statement will automatically be sent to the stockholder’s address of record indicating the number of shares held. |
● | Some of our registered stockholders hold all their shares of Common Stock in certificate form or a combination of certificate and book-entry form. Stockholders holding shares of Common Stock in certificate form will receive a transmittal letter from Computershare, our Transfer Agent, as soon as practicable after the effective date of the Reverse Stock Split. The letter of transmittal will contain instructions for the surrender of stock certificates received prior to the Effective Time (the “Old Certificates”) to the Transfer Agent in exchange for new certificates representing the appropriate number of whole shares of Common Stock giving effect to the Reverse Stock Split. No new stock certificates will be issued to any stockholder until such stockholder has surrendered all Old Certificates, together with a properly completed and executed Letter of Transmittal, to the Transfer Agent. The stockholders will then receive, at their option, either a new certificate or certificates or book-entry shares representing the number of whole shares of Common Stock into which their pre-Reverse Stock Split shares have been converted as a result of the Reverse Stock Split. Until surrendered, we will deem outstanding Old Certificates held by stockholders to be cancelled and to only represent the number of whole shares of post-Reverse Stock Split Common Stock to which the stockholders are entitled. |
STOCKHOLDERS SHOULD NOT DESTROY ANY STOCK CERTIFICATE(S) AND SHOULD NOT SUBMIT ANY CERTIFICATE(S) UNTIL REQUESTED TO DO SO.
Treatment of Fractional Shares
We do not intend to issue fractional shares in connection with the Reverse Stock Split. Therefore, we will not issue certificates representing fractional shares. In lieu of issuing fractional shares, we will round up to the next whole number of shares.
Effect on Authorized but Unissued Shares of Capital Stock
Currently, we are authorized to issue up to a total of 10,000,000 shares of Preferred Stock, of which none have been issued, and 325,000,000 shares of Common Stock, of which approximately _________ shares were issued and outstanding as of the Record Date. The Reverse Stock Split, if approved and effected, will not have any effect on the authorized number of authorized shares of our Common Stock or Preferred Stock.
Accounting Consequences
The Reverse Stock Split will not affect the par value of our Common Stock per share, which will remain $0.001 par value per share. As a result, as of the Effective Time, the combined total of the stated capital attributable to Common Stock and the additional paid-in capital account on our balance sheet will not change due to the Reverse Stock Split. Reported per share net income or loss will be higher because there will be fewer shares of Common Stock outstanding.
Pursuant to the Reverse Stock Split, the par value of our Common Stock would remain $0.001 per share. As a result of the Reverse Stock Split, at the Effective Time, the stated capital on our balance sheet attributable to our Common Stock would be reduced in proportion to the size of the Reverse Stock Split, subject to a minor adjustment in respect of the treatment of fractional shares, and the additional paid-in capital account would be credited with the amount by which the stated capital attributable to Common Stock is reduced. Our stockholders’ equity, in the aggregate, would remain unchanged.
No Going Private Transaction
Notwithstanding the decrease in the number of outstanding shares following the implementation of the Reverse Stock Split, the Board of Directors does not intend for this transaction to be the first step in a “going private transaction” within the meaning of Rule 13e-3 of the Exchange Act, and the implementation of the proposed Reverse Stock Split will not cause the Company to go private.
Reservation of Right to Abandon the Amendment to our Certificate of Formation
The Board of Directors reserves the right to abandon the proposed amendment to our Certificate of Formation described in this Proposal 1 without further action by our stockholders at any time before the Effective Time, even if stockholders approve this Proposal 1 at the Virtual Special Meeting. By voting in favor of the Reverse Stock Split, stockholders are also expressly authorizing the Board of Directors to determine not to proceed with, and abandon, the Reverse Stock Split if it should so decide.
Material U.S. Federal Income Tax Consequences of the Reverse Stock Split
The following discussion is a summary of material U.S. federal income tax consequences of an implemented Reverse Stock Split to U.S. Holders (as defined below). This summary is based upon the Internal Revenue Code of 1986, as amended (the “Code”), Treasury regulations promulgated thereunder, published rulings and administrative pronouncements of the Internal Revenue Service (“IRS”), and judicial decisions in each case in existence on the date hereof, all of which are subject to change. Any such change could apply retroactively and could adversely affect the tax consequences described below. No assurance can be given that the IRS will agree with the consequences described in this summary, or that a court will not sustain any challenge by the IRS in the event of litigation. No advance tax ruling has been or will be sought or obtained from the IRS regarding the tax consequences of the transactions described herein.
For purposes of this summary, a “U.S. Holder” is a beneficial owner of shares of our Common Stock that is (a) an individual who is a citizen of the United States or who is resident in the United States for U.S. federal income tax purposes, (b) an entity that is classified for U.S. federal income tax purposes as a corporation and that is organized under the laws of the United States, any state thereof, or the District of Columbia, or is otherwise treated for U.S. federal income tax purposes as a domestic corporation, (c) an estate the income of which is subject to U.S. federal income taxation regardless of its source, or (d) a trust (i) whose administration is subject to the primary supervision of a court within the United States and all substantial decisions of which are subject to the control of one or more United States persons as described in Section 7701(a)(30) of the Code (“United States persons”), or (ii) that has a valid election in effect under applicable Treasury regulations to be treated as a United States person.
This summary does not discuss all U.S. federal income tax considerations that may be relevant to U.S. Holders in light of their particular circumstances or that may be relevant to certain beneficial owners that may be subject to special treatment under U.S. federal income tax law (for example, tax-exempt organizations, S corporations, partnership and other pass-through entities (and investors therein), mutual funds, insurance companies, banks and other financial institutions, dealers in securities, brokers or traders in securities, commodities or currencies, that elect to use a mark-to-market method of accounting, real estate investment trusts, regulated investment companies, individual retirement accounts, qualified pension plans, persons who hold shares of our Common Stock as part of a straddle, hedging, constructive sale, conversion, or other integrated transaction, U.S. Holders that have a functional currency other than the U.S. dollar, and persons who acquired shares of our Common Stock as a result of the exercise of employee stock options or otherwise as compensation or through a tax-qualified retirement plan). Furthermore, this summary does not discuss any alternative minimum tax consequences or the Medicare contribution tax on net investment income and does not address any aspects of U.S. state or local or non-U.S. taxation. This summary only applies to those beneficial owners that hold shares of our Common Stock as “capital assets” within the meaning of Section 1221 of the Code (generally, property held for investment).
If an entity classified for U.S. federal income tax purposes as a partnership owns shares of our Common Stock, the tax treatment of a member of the entity will depend on the status of the member and the activities of the entity and such member. The tax treatment of such an entity, and the tax treatment of any member of such an entity, are not addressed in this summary. Any entity that is classified for U.S. federal income tax purposes as a partnership and that owns shares of our Common Stock, and any members of such an entity, are encouraged to consult their tax advisors.
BENEFICIAL OWNERS OF SHARES OF OUR COMMON STOCK ARE ENCOURAGED TO SEEK ADVICE FROM THEIR OWN TAX ADVISORS REGARDING THE INCOME TAX CONSEQUENCES OF THE REVERSE STOCK SPLIT, TAKING INTO ACCOUNT THEIR PARTICULAR SITUATIONS AS WELL AS ANY TAX CONSEQUENCES OF THE REVERSE STOCK SPLIT ARISING UNDER THE U.S. FEDERAL INCOME, ESTATE OR GIFT TAX LAWS OR UNDER THE LAWS OF ANY STATE, LOCAL OR NON-U.S. TAXING JURISDICTION OR UNDER ANY APPLICABLE INCOME TAX TREATY.
We intend to take the position that the Reverse Stock Split constitutes a recapitalization for U.S. federal income tax purposes pursuant to Section 368(a)(1)(E) of the Code. Assuming the Reverse Stock Split qualifies as a recapitalization:
a U.S. Holder will not recognize gain or loss on the Reverse Stock Split;
the aggregate tax basis of the shares of our Common Stock received by a U.S. Holder in the Reverse Stock Split will be equal to the aggregate tax basis of the shares exchanged therefor; and
the holding period of the shares of our Common Stock received by a U.S. Holder in the Reverse Stock Split will include the holding period of the shares exchanged therefor.
U.S. Treasury regulations provide detailed rules for allocating the tax basis and holding period among shares of common stock which were acquired by a stockholder on different dates and at different prices. U.S. Holders that acquired shares of our Common Stock on different dates or at different prices should consult their tax advisors regarding the allocation of the tax basis and holding period among such shares.
Consequences if the Reverse Split is Not Approved
In the event that the Reverse Stock Split is not approved, we intend to actively monitor the trading price of our Common Stock on The Nasdaq Capital Market and will consider available options to resolve our non-compliance with the Nasdaq listing rules. We believe that our ability to remain listed on The Nasdaq Capital Market would be significantly and negatively affected if the Reverse Stock Split is not approved. If we are unable to achieve an increase in our stock price and our Common Stock is subsequently delisted, we could experience significant negative impacts. In addition, if our Common Stock is delisted it may adversely affect our ability to obtain alternative debt or equity financing in order to support Company operations.
Required Vote of Stockholders
The affirmative vote required for stockholder approval shall be that of a majority of the shares present in person or represented by proxy (as counted for purposes of determining the existence of a quorum) and entitled to vote at a meeting of stockholders at which a quorum is present.
Because matters considered “routine” by the applicable regulations, such as ratification of auditors, are under consideration at the Virtual Special Meeting, abstentions and broker non-votes will be counted towards a quorum, but these abstentions, broker non-votes, and any other outstanding shares that are not voted will have the effect of a vote “AGAINST” the proposal.
THE BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” PROPOSAL 1 -
To approve an amendment to the Certificate of Formation to effect a reverse stock split of our outstanding Common Stock at a reverse stock split ratio ranging from any whole number between 10-for-1 and 40-for-1, subject to and as determined by the Board of Directors.
To approve the issuance of shares of our Common Stock and/or securities convertible into or exercisable for our Common Stock equal to 20% or more of our Common Stock outstanding before the issuance in one or more non-public transactions as required by and in accordance with Nasdaq Marketplace Listing Rule5635(d) and Nasdaq Marketplace Listing Rule 5635(b).
At the virtual Special Meeting, stockholders will be asked to approve, pursuant to Nasdaq Marketplace Rule 5635(d) (“Rule 5635(d)”) and Nasdaq Marketplace Listing Rule 5635(b) (“Rule 5635(b)”), the issuance of our Common Stock (and/or securities convertible into or exercisable for our Common Stock) equal to 20% or more of the Common Stock outstanding before the issuance in one or more non-public transactions.
Stockholder Approval Requirement
Our Common Stock is currently listed on the Nasdaq Capital Market and, as such, we are subject to Nasdaq Marketplace Rules. Nasdaq Marketplace Rule 5635(d) requires us to obtain stockholder approval prior to the issuance of our Common Stock in connection with certain non-public offerings involving the sale, issuance or potential issuance by the Company of Common Stock and/or securities convertible into or exercisable for common stock equal to 20% or more of the Common Stock outstanding before the issuance at a price less than the "Minimum Price." Shares of our Common Stock issuable upon the exercise or conversion of warrants, options, debt instruments or other equity securities issued or granted in such non-public offerings will be considered shares issued in such a transaction in determining whether the 20% limit has been reached, except in certain circumstances. The "Minimum Price" is the lower of: (i) the Nasdaq Official Closing Price of the common stock (NOCP); or (ii) the average NOCP for the five trading days, in either case immediately preceding the signing of a binding agreement.
In addition, Nasdaq Marketplace Listing Rule 5635(b) also requires prior stockholder approval of change of control transactions, with Nasdaq presuming a change of control where a stockholder acquires 20% of the Company’s outstanding Common Stock, calculated on a post-transaction basis. For purposes of this rule, Nasdaq finds a change of control where an issuance:
● | Causes a stockholders or stockholder group to own or have the right to acquire 20% or more of the outstanding shares of common stock or voting power. |
● | This ownership or voting power would be the largest ownership position. |
We need to raise additional capital to maintain our operations and meet our short term liquidity requirements. If we cannot raise additional capital and satisfy our near term debt obligations, there is substantial doubt about our ability to continue as a going concern. We continue to consider all strategic alternatives, including restructuring or refinancing of our debt, seeking additional debt or equity capital, disposing of assets, other strategic transactions and/or other restructuring measures.
We have not determined the particular terms for such prospective offerings or exchanges. Because we may seek additional capital or issue shares that triggers the requirements of Rule 5635(d) or Rule 5635(b), we are seeking stockholder approval now, so that we will be able to move quickly to take full advantage of any opportunities that may develop.
We hereby submit this Proposal 2 to our stockholders for their approval of the potential issuance of shares of our Common Stock, or securities convertible into our Common Stock, in one or more non-public capital-raising transactions, or offerings, subject to the following limitations:
● | the aggregate number of shares issued will not exceed 100,000,000 shares of our Common Stock, subject to adjustment for stock splits, reverse stock splits, stock dividends and similar transactions effected prior to the offerings; |
● | the purchase or exchange price of the securities offered (which may consist of shares of convertible securities) will be no less than $0.50 per share of Common Stock (subject to adjustment for stock splits, reverse stock splits, stock dividends and similar transactions). |
● | the time frame for the issuance of shares of our Common Stock authorized by this Proposal 2 shall not exceed three (3) months from the date of this Proxy Statement or ___________, 2023. |
If this proposal is approved, we will not solicit further authorization from our stockholders prior to the issuance of any shares of our Common Stock authorized by Proposal 2. If our stockholders do not approve this Proposal, we may not utilize shares of our Common Stock in excess of the Nasdaq Marketplace Listing Rule 5635(d) or Rule 5635(b) 20% share limitation, unless and until stockholder approval of this Proposal is obtained. The failure to obtain stockholder approval of this Proposal may have a material negative impact upon us as It will constrain our ability to meet our short term liquidity requirements.
Potential Effects of this Proposal
The issuance of shares of our Common Stock, or other securities convertible into shares of our Common Stock, in accordance with any offerings would dilute, and thereby reduce, each existing stockholder’s proportionate ownership in our Common Stock. The stockholders do not have preemptive rights to subscribe to additional shares that may be issued by the Company in order to maintain their proportionate ownership of the Common Stock. The issuance of shares of our Common Stock could also have a dilutive effect on our book value per share and on any future earnings per share, in the sale or resale of any such shares could cause prevailing market prices of our Common Stock to decline.
The issuance of shares of Common Stock, or securities convertible into our Common Stock, in one or more non-public offerings could have an anti-takeover effect. Such issuance could dilute the voting power of a person seeking control of the Company, thereby deterring or rendering more difficult a merger, tender offer, proxy contest or an extraordinary corporate transaction opposed by the Company.
We have not yet determined the terms and conditions of any offerings or issuances. As a result, the level of potential dilution cannot be determined at this time, but as discussed above, we may not issue more than 100,000,000 shares of Common Stock in the aggregate pursuant to the authority requested from stockholders under this proposal (subject to adjustment for any reverse stock split, and including, for this purpose, shares issuable upon conversion, options, warrants, convertible debt or other securities convertible into or exercisable for Common Stock). It is possible that some of the shares we issue could be acquired by one or more investors who could hold a large block of our Common Stock. This would concentrate voting power in the hands of a few stockholders who could exercise greater influence on our operations or the outcome of matters put to a vote of stockholders in the future.
We currently have no definitive arrangements or understandings regarding any specific transaction for the issuance of shares authorized by Proposal 2. Assuming that we issue all 100,000,000 shares authorized by this Proposal at the minimum price of $0.50, we will generate $50,000,000 in consideration before related expenses.
Our Articles of Formation authorize us to issue up to 325,000,000 shares of Common Stock, of which approximately 157,503,312 shares were issued and outstanding as of December 31, 2022 and approximately 22,267,034 of which are reserved for issuance upon exercise of options, warrants, and vesting of RSU’s. If we issue all 100,000,000 shares of our Common Stock authorized by this Proposal, we would have approximately 257,503,312 shares of our Common Stock outstanding, excluding outstanding options, warrants, RSU’s and other future issuances, which represents an approximate 63% increase in the number of our outstanding common shares as of December 31, 2022.
We cannot assure you that our stockholders will authorize an increase in the number of shares of our Common Stock in the future to the extent required. Our ability to use our options and RSU’s to attract and retain employees could be limited in the future. Our failure to have a sufficient number of authorized shares of Common Stock for future issuance could adversely affect our business, financial condition, results of operations and prospects.
Required Vote of Stockholders
The affirmative vote required for stockholder approval shall be that of a majority of the shares present in person or represented by proxy (as counted for purposes of determining the existence of a quorum) and entitled to vote at a meeting of stockholders at which a quorum is present. Because matters considered “routine” by the applicable regulations, such as ratification of auditors, are under consideration at the Virtual Special Meeting, abstentions and broker non-votes will be counted towards a quorum, but these abstentions, broker non-votes, and any other outstanding shares that are not voted will have the effect of a vote “AGAINST” the proposal.
Effect of Abstentions
Abstentions will be counted for purposes of establishing quorum, and if a quorum is present, will have the same effect as a vote “AGAINST” this proposal with respect to any abstaining shares.
THE BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” PROPOSAL 2 -
To approve the issuance of shares of our Common Stock and/or securities convertible into or exercisable for our Common Stock equal to 20% or more of our Common Stock outstanding before the issuance in one or more non-public transactions as required by and in accordance with Nasdaq Marketplace Listing Rule5635(d) and Nasdaq Marketplace Listing Rule 5635(b).
To ratify the appointment of PricewaterhouseCoopers LLP as the independent registered public accounting firm of the Company for the fiscal year ending December 31, 2023.
The Audit Committee has selected PricewaterhouseCoopers LLP to serve as independent registered public accounting firm for the fiscal year ending December 31, 2023. The board is submitting the appointment of the independent registered public accounting firm to the stockholders for ratification at the Virtual Special Meeting.
Representatives of Grant ThorntonPricewaterhouseCoopers LLP are expected to be available by teleconference at the AnnualVirtual Special Meeting, will have the opportunity to make a statement if they desire to do so and are expected to be available to respond to appropriate questions.
Legal ProceedingsShareholder ratification of the appointment of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm is not required by the Company’s Articles of Formation, bylaws or otherwise; however, the board of directors is submitting the selection of PricewaterhouseCoopers LLP to the stockholders for ratification as a matter of good corporate practice. If the stockholders fail to ratify the selection, the Audit Committee will review its future selection of an independent registered public accounting firm considering that vote result. Your ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2023, does not preclude us from terminating our engagement of PricewaterhouseCoopers LLP and retaining a new independent registered public accounting firm, if we determine that such an action would be in the best interests of the Company and its stockholders.
No director, officer
Vote Required
If a quorum is present, approval of this proposal requires the affirmative vote of a majority of the outstanding shares of the Company’s common stock entitled to vote on this proposal at the Virtual Special Meeting. Because matters considered “routine” by the applicable regulations, such as ratification of auditors, are under consideration at the Virtual Special Meeting, abstentions and broker non-votes will be counted towards a quorum, but these abstentions, broker non-votes, and any other outstanding shares that are not voted will have the effect of a vote “AGAINST” the proposal.
THE BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” PROPOSAL 3 -
To ratify the appointment of PricewaterhouseCoopers LLP as the independent registered public accounting firm of the Company for the fiscal year ending December 31, 2023.
To consider and vote for a proposal to adjourn or affiliatepostpone the Virtual Special Meeting, if necessary, to solicit additional proxies to approve Proposals 1 and 2.
Although it is not expected, the Virtual Special Meeting may be adjourned for the purpose of Orbital Energy Group, Inc., any ownersoliciting additional proxies. Any such adjournment of recordthe Virtual Special Meeting may be made without notice, other than by the announcement made at the Virtual Special Meeting, by approval of the holders of a majority of the outstanding shares of our common stock, present in person or beneficiallyrepresented by proxy and entitled to vote at the Virtual Special Meeting. We are soliciting proxies to grant discretionary authority to the chairperson at the Virtual Special Meeting to adjourn the Virtual Special Meeting, if necessary, for the purpose of soliciting additional proxies in favor of Proposals 1 and 2. The chairperson will have the discretion to decide whether or not to use the authority granted to such person pursuant to this Proposal 4 to adjourn the Virtual Special Meeting.
Required Vote of Stockholders
To approve the grant of discretionary authority to the chairperson of the Virtual Special Meeting to adjourn the Virtual Special Meeting, if necessary, for the purpose of soliciting additional proxies in favor of Proposals 1 and 2, the affirmative vote of the holders of a majority of votes cast by shares of our common stock present in person or represented by proxy at the Virtual Special Meeting and entitled to vote is required. Although failure to submit a proxy or vote I person at the Virtual Special Meeting, or a failure to provide your broker, nominee, fiduciary or other custodian, is applicable, with instructions on how to vote your shares will not affect the outcome of the vote on this proposal, the failure to submit a proxy or vote in person at the Virtual Special Meeting will make it more than five percentdifficult to meet the requirement under the Bylaws that the holders of 1/3 of our capital stock issued and outstanding and entitled to vote at the Virtual Special Meeting be present in person or by proxy to constitute a quorum at the Virtual Special Meeting.
THE BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” PROPOSAL 4 -
To consider and vote for a proposal to adjourn or postpone the Virtual Special Meeting, if necessary, to solicit additional proxies to approve Proposals 1 and 2.
Other Business
Management does not presently know of any classmatter that may be presented for action at this Virtual Special Meeting other than as set forth herein. However, if any other matters properly come before this Virtual Special Meeting, it is the intention of voting securities of Orbital Energy Group, Inc.the persons named in the proxies solicited by management to exercise their discretionary authority to vote the shares represented by all effective proxies on such matters in accordance with their best judgment or any associate of any such director, officer, affiliate of Orbital Energy Group, Inc. or security holder is a party adverse to Orbital Energy Group, Inc. or any of its subsidiaries or has a material interest adverse to Orbital Energy Group, Inc. or any of its subsidiaries.as instructed by the shareholder.
Expenses
The following table sets forth an estimateCommunications with the Board of Directors
Stockholders may communicate with the board of directors by writing to the Company at Orbital Infrastructure Group, 5444 Westheimer Road, Suite #1650, Houston, TX 77056 or phone (832) 467‑1420. Stockholders who would like their submission directed to a member of the various expenses, whichboard may so specify and the communication will be incurred in connection with the issuance and distribution of this Proxy Statement. Orbital Energy Group will be responsible for these expenses:forwarded as appropriate.
| Printing and Distribution Expenses | $ | 3,000 | ||
| Legal Fees and Expenses | 30,000 | |||
| Accounting Fees and Expenses | 20,000 | |||
| Miscellaneous expenses | 2,000 | |||
| Total | $ | 55,000 |
Where You Can Find Additional Information
The Company will provide to each person to whom a Proxy Statementproxy statement is delivered:
• | a copy of any or all the information, if any, that has been incorporated by reference in the |
• | we will provide this information upon written or oral request; |
• | we will provide this information at no cost to the requester. |
Contact us at: Orbital Gas Systems, North America, Inc., 1924 Aldine Western,Infrastructure Group, Inc, 5444 Westheimer Road, Suite #1650, Houston, Texas 77038;TX 77056; phone us at (832) 467‑1420; email us at Investors@OrbitalEnergyGroup.comInvestors@OrbitalInfrastructureGroup.com or view copies online at www.OrbitalEnergyGroup.com.www.OrbitalInfrastructureGroup.com.
You may read and copy all or any portion of the Proxy Statementproxy statement or any other information, which we filed at the SEC's public reference rooms in Washington, D.C., New York City and Chicago, Illinois. The address for the SEC's public reference room in Washington, D.C. is U.S. Securities and Exchange Commission, 100 "F" Street, N.E., Washington, DC 20549. You may request copies of these documents, upon payment of a duplicating fee, by writing to the SEC. Please call the Securities and Exchange Commission at 1-800-SEC-0330 for further information on the operation of the public reference rooms. Our SEC filings are also available to you free of charge at the SEC's web site at http://www.sec.gov and our Company website at www.OrbitalEnergyGroup.com.www.OrbitalInfrastructureGroup.com.
Shareholder Proposals for the 20222023 Annual Meeting of Stockholders
Under the Security and Exchange Commission’s proxy rules, shareholder proposals that meet certain conditions may be included in our Proxy Statementproxy statement and form of proxy for a particular annual meeting.our 2023 Annual Meeting of. Stockholders may present proper proposals for inclusion in our Proxy Statementproxy statement and for consideration at the next annual meetingAnnual Meeting of stockholdersStockholders by submitting their proposals in writing to Orbital Energy Group’sInfrastructure Group's Corporate Secretary in a timely manner. For a stockholder proposal to be considered for inclusion in our Proxy Statementproxy statement for our 20222023 Annual Meeting of Stockholders, the Corporate Secretary of Orbital EnergyInfrastructure Group must receive the written proposal at our principal executive offices no later than June 1, 2022;May 27, 2023; provided, however, that in the event that we hold our 20222023 Annual Meeting of stockholdersStockholders more than 3060 days before or after the one-year anniversary date of the 20212022 Annual Meeting, we will disclose the new deadline by which stockholders proposals must be received in a Form 8-K or under Item 5 of our earliest possible Quarterly Report on Form 10-Q or, if impracticable, by any means reasonably calculated to inform stockholders. In addition, stockholder proposals must otherwise comply with the requirements of our bylaws and Rule 14a-8 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) regarding the inclusion of stockholder proposals in company-sponsored proxy materials. Proposals should be addressed to:
Orbital EnergyInfrastructure Group, Global, Inc.
Attn: Corporate Secretary
1924 Aldine Western5444 Westheimer Road
Suite #1650
Houston, Texas 7703877056
Our receipt of any such proposal from a qualified shareholder in a timely manner will not guarantee its inclusion in our proxy materials or its presentation at the 2022 Annual2023 Virtual Special Meeting because there are other requirements in the proxy rules.
Annual Reportrules and our bylaws.
A COPY OF OUR ANNUAL REPORT TO STOCKHOLDERS WHICH INCLUDES OUR ANNUAL REPORT ON FORM 10-K AND OUR MOST RECENT QUARTERLY FORM 10-Q AND THIS PROXY STATEMENT AREIS AVAILABLE TO YOU ON THE INTERNET OR, UPON YOUR REQUEST, WILL BE PROMPTLY MAILED TO YOU, PROVIDED YOU ARE A STOCKHOLDER ENTITLED TO VOTE AT THE ANNUALVIRTUAL SPECIAL MEETING. THE NOTICE, WHICH WAS MAILED TO YOU, INSTRUCTS YOU AS TO HOW YOU MAY ACCESS AND REVIEW ALL OF THE PROXY MATERIALS ON THE INTERNET. IF YOU WOULD LIKE TO RECEIVE A PAPER OR EMAIL COPY OF OUR PROXY MATERIALS, YOU SHOULD FOLLOW THE INSTRUCTIONS FOR REQUESTING SUCH MATERIALS IN THE NOTICE.
By Order
Certificate of Amendment
to the
Certificate of Formation
of
Orbital Infrastructure Group, Inc.
Pursuant to the provisions of Sections 3.051 to 3.056 of the BoardTexas Business Organizations Code (the “TBOC”), the undersigned adopts the following certificate of Directors
Deborah Moen,
Corporate Secretaryamendment (“Certificate of Amendment”) to its Certificate of Formation (the “Certificate of Formation”).
Documents Incorporated1. The name of the filing entity is Orbital Infrastructure Group, Inc. (the “Corporation”). The Corporation is a for-profit corporation. The filing number issued to the Corporation by Referencethe Secretary of State of the State of Texas is 0804665685.
The SEC allows us
2. Article IV (Capital) of the Certificate of Formation is amended by adding the following paragraph 3:
“3.Reverse Stock Split. “Each __ shares of Common Stock issued and outstanding on the effective date of ______, 2023, shall automatically and with no further action be combined and changed into one validly issued, fully paid and non-assessable share of Common Stock, without any further action by the holder thereof, subject to incorporate by reference into this Proxy Statement the information that we filetreatment of fractional interests as described below (the “Reverse Stock Split”). Shareholders who otherwise would be entitled to receive fractional share interests of Common Stock in connection with the SEC in other documents. This means that we may disclose important information to you by referring to other documents that contain that information. The information may include documents filed after the date of this Proxy Statement which update and supersede the information you read in this Proxy Statement. We incorporate by reference the following documents listed below, exceptReverse Stock Split (the “Fractional Shareholders”), shall have their fractional interest be rounded up to the extent informationnearest whole number of shares (the “Rounded Up Shares”). Each certificate that immediately prior to the Reverse Stock Split represented shares of Common Stock (“Old Certificates”) shall thereafter represent the number of shares of Common Stock into which the shares of Common Stock represented by the Old Certificate shall have been combined, subject to the elimination of fractional share interests as described above. The determination as to whether the Rounded Up Shares are issuable shall be based on the total number of shares of Common Stock that are being exchanged held such Fractional Shareholder, not upon each share of Common Stock being exchanged.”
3. The foregoing amendment to the Certificate of Formation has been approved in thosethe manner required by the TBOC and by the governing documents is different fromof the information containedCorporation.
4. This document becomes effective upon filing with and acceptance of the Texas Secretary of State, in this Proxy Statement, and all future documents filedaccordance with the SEC under Sections 13(a), 13(c), 14, or 15(d)provisions of the Exchange Act. The Company filed withTBOC.
5. Except as expressly provided above, the Commission:Corporation’s Certificate of Formation shall remain in full force and effect.
IN WITNESS WHEREOF, the below named officer signed this Certificate of Amendment on _______, 2023.
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Proxy Solicited on Behalf of the
Board of Directors
for the AnnualVirtual Special Shareholder Meeting of the
Orbital EnergyInfrastructure Group Global, Inc. Stockholders
The undersigned, revoking all previous proxies, appoints Deborah Moen, Corporate Secretary, proxy of the undersigned, with power of substitution, to represent the undersigned at the AnnualVirtual Special Meeting of Stockholders of Orbital EnergyInfrastructure Group, Inc., Inc. to be held at 9:00 am MSTCT on Tuesday, October 12, 2021, at the Fairmont Scottsdale Princess, 7575 East Princess Drive, Scottsdale, Arizona 85255 and for any adjournments andApril 18, 2023 to vote all shares of Voting Stock of the Company, which the undersigned is entitled to vote on all matters coming before said meeting. Due to ongoing public health concerns regarding the COVID-19 pandemic and for the health and well-being of our shareholders, directors, management and associates, the Virtual Special Meeting will be held online in a virtual format. A link to the Virtual Special Meeting is at www.orbinf.com.
[X] Please mark your votes with an "X" as in the example. |
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PROPOSAL I
Election of Directors1
The board of directors recommends a vote FOR the following directors:
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PROPOSAL II
Ratification of the Appointment of
Grant Thornton LLP
as the Company’s Independent Registered Public Accounting Firm
for the Year Ending December 31, 2021
The board of directors recommends a vote FOR ratification of the appointment of Grant Thornton LLP as the Company’s independent registered public accounting firm for the year ending December 31, 2020.
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PROPOSAL III
Advisory Approval of the Company’s Executive Compensation
(Say-on-Pay)
The board of directors recommends a vote FOR the advisory approval of the Company’s executive compensation (Say-on-Pay).
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PROPOSAL IV
To Approve an Amendment to Paragraph 11.27 of the
Orbital Energy Group 2020 Incentive Award Plan
by Increasing the Overall Share Limit to 5,000,000
The Board of Directors recommends a vote “FOR” adoption ofapprove an amendment to Paragraph 11.27our Certificate of Formation to effect a reverse stock split of our outstanding Common Stock at a reverse stock split ratio ranging from any whole number between 10-for-1 and 40-for-1, subject to and as determined by the Orbital Energy Group 2020 Incentive Award Plan by Increasing the Overall Share Limit to 5,000,000.Board of Directors.
[ ] FOR | [ ] AGAINST | [ ] ABSTAIN |
PROPOSAL 2
To approve the issuance of shares of our Common Stock and/or securities convertible into or exercisable for our Common Stock equal to 20% or more of our Common Stock outstanding before the issuance in one or more non-public transactions as required by and in accordance with Nasdaq Marketplace Listing Rule5635(d) and Nasdaq Marketplace Listing Rule 5635(b).
[ ] FOR | [ ] AGAINST | [ ] ABSTAIN |
PROPOSAL 3
To ratify the appointment of PricewaterhouseCoopers LLP as the independent registered public accounting firm of the Company for the fiscal year ending December 31, 2023.
[ ] FOR | [ ] AGAINST | [ ] ABSTAIN |
PROPOSAL 4
To consider and vote for a proposal to adjourn or postpone the Virtual Special Meeting, if necessary, to solicit additional proxies to approve Proposals 1 and 2.
[ ] FOR | [ ] AGAINST | [ ] ABSTAIN |
PLEASE SIGN, DATE AND RETURN THIS PROXY CARD USING THE ENCLOSED ENVELOPE. THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED "FOR" THE THREE PROPOSALS TO ELECT THE NOMINEE DIRECTORS, RATIFY THE APPOINTMENT OF GRANT THORNTON LLP AS THE COMPANY’S INDEPENDENT AUDITOR FOR THE YEAR ENDING DECEMBER 31, 2020, ADVISORY APPROVAL OF THE COMPANY’S EXECUTIVE COMPENSATION (SAY-ON-PAY) AND FOR THE ORBITAL ENERGY GROUP 2020 INCENTIVE AWARD PLAN.
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Please sign exactly as your name appears on your stock certificate or account. Executors,executors, administrators, trustees, etc. should give full title as such. If the signer is a corporation, please sign full corporate name by a duly authorized officer. If a partnership, please sign in partnership name by authorized person.