UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the Registrant ( X )
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
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(X) | Definitive Proxy Statement |
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( )Definitive Additional Materials |
( )Soliciting Material Pursuant to Section 240.14a-11(c) or
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ALJ Regional Holdings, Inc.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement if other than the Registrant)
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(X) | No fee required. |
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( )Fee computed on table below per Exchange Act Rules 14a-6(i) and O-11. |
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( )Check box if any part of the fee is offset as provided by Exchange Act Rule O-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. |
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ALJ Regional Holdings, Inc.
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON August 17, 2018AUGUST 20, 2021
6, 2021
Dear Stockholder:
You are invited to attend the Annual Meeting of Stockholders of ALJ Regional Holdings, Inc. (the “Company”, “we” or “our”), which will be held at the offices of Shearman & Sterling LLP, 599 Lexington Avenue, New York, NY 100221460 El Camino Real, Floor 2, Menlo Park, CA 94025 on August 17, 201820, 2021 at 10:9:00 a.m. EasternPacific Time.
We discuss the matters to be acted upon at the meeting in more detail in the attached notice of annual meeting and proxy statement (the “Proxy Statement”). There are sixtwo specific items for which you are being asked to vote:
| 1. | To elect Michael C. Borofsky, Julie Cavanna-Jerbic, Jess M. Ravich, |
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Our Board of Directors recommends that you vote:
| 1. | “FOR” the |
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We encourage you to read our annual report for the year ended September 30, 20172020 on Form 10-K (the “Annual Report”) filed with the SEC on December 19, 2017,18, 2020, which may be found on the SEC’s EDGAR database at www.sec.gov. It includes our audited financial statements and information about our operations, markets and products.
You can vote by following the instructions included in the Proxy Statement and the enclosed proxy card. Please read these instructions carefully. If you have any questions or need assistance voting, please contact Okapi Partners LLC, our proxy solicitor assisting us in connection with the 2018 Annual Meeting, via phone at (855) 305-0856 or via email at info@okapipartners.com.
We hope that you can attend the Annual Meeting. You may be requested to present valid, government-issuedgovernment issued photo identification to gain admission to the Annual Meeting. Whether or not you plan to attend, you can be sure that your shares are represented at the meeting by promptly voting by one of the methods provided. Any record stockholder attending the Annual Meeting may vote in person, even if that stockholder has returned a proxy or voted by telephone or the Internet. Your vote is important, whether you own a few shares or many.
Thank you for your continued support of ALJ Regional Holdings, Inc.
Very truly yours,
/s/ Jess M. Ravich.
Jess M. Ravich,
Chief Executive ChairmanOfficer
This document is dated July 2, 20186, 2021 and is being first mailed to stockholders of ALJ Regional Holdings, Inc. on or about July 2, 2018.
6, 2021.
244 Madison Avenue, PMB #358
New York, NY 10016
Telephone: (212) 883-0083(888) 486-7775
www.aljregionalholdings.com
ALJ Regional Holdings, Inc.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON August 17, 2018aUGUST 20, 2021
TO THE STOCKHOLDERS OF ALJ REGIONAL HOLDINGS, INC.:
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NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of ALJ Regional Holdings, Inc., a Delaware corporation (the “Company”, “we” or “our”), will be held on August 17, 201820, 2021 at 10:9:00 a.m. EasternPacific Time (the “Annual Meeting”) at the offices of Shearman & Sterling LLP, 599 Lexington Avenue, New York, NY 100221460 El Camino Real, Floor 2, Menlo Park, CA 94025 for the following purposes:
1.To1.To elect Michael C. Borofsky, Julie Cavanna-Jerbic, Jess M. Ravich, and Anna Van Buren, each Robert Scott Fritz, Hal G. Byer, Rae G. Ravich and John Scheelas a Class III director,directors to hold office until the Company’s 20212022 Annual Meeting of Stockholders (or, if Proposal 2 is approved, until the Company’s 2019 Annual Meeting of Stockholders) or until their respective successors are elected and duly qualified, or until their respective earlier resignation or removal.
2.To approve the amendment and restatement of the Restated Certificate of Incorporation of the Company to phase out the classified board structure of the Board of Directors.
3.To approve the amendment and restatement of the Restated Certificate of Incorporation of the Company to eliminate the Preferred Stock and authorize the issuance of 5,000,000 shares of blank check preferred stock.
4.To approve the amendment and restatement of the Restated Certificate of Incorporation of the Company to update and modify the indemnification provisions.
5.To approve the amendment and restatement of the Restated Certificate of Incorporation of the Company to update and modify the Section 382 ownership change tax provisions.
6.To2.To ratify the appointment of Mayer Hoffman McCann P.C.Deloitte & Touche LLP as the Company’s independent registered public accounting firm for the fiscal year ending September 30, 2018.2021.
7.To3.To transact such other business as may properly come before the Annual Meeting or any adjournment or postponement thereof.
The foregoing items of business are more fully described in the Proxy Statement accompanying this notice (the “Proxy Statement”).
The Board of Directors of the Company has fixed the close of business on June 22, 201828, 2021 as the record date for the determination of stockholders entitled to notice of and to vote at the Annual Meeting and at any adjournment or postponement thereof. For ten days prior to the Annual Meeting, a complete list of stockholders entitled to vote at the Annual Meeting will be available for examination by any stockholder, for any purpose relating to the Annual Meeting, during ordinary business hours at the offices of Shearman & Sterling LLP, 599 Lexington Avenue, New York, NY 10022.1460 El Camino Real, Floor 2, Menlo Park, CA 94025.
All stockholders are cordially invited to attend the Annual Meeting in person. Whether or not you expect to attend the Annual Meeting in person, please vote as promptly as possible by following the instructions included in the Proxy Statement and the enclosed proxy card in order to ensure your representation and the presence of a quorum at the Annual Meeting. If you send in your proxy card or vote by telephone or the Internet, you may still decide to attend the Annual Meeting and vote your shares in person. If you have any questions or need assistance voting, please contact Okapi Partners LLC, our proxy solicitor assisting us in connection with
By Order of the 2018 Annual Meeting, via phone at (855) 305-0856 or via email at info@okapipartners.com.Board of Directors,
/s/ Jess M. Ravich
Chief Executive Officer and Chairman of the Board
Los Angeles, CA
July 2, 20186, 2021
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
To Be Held on August 17, 2018AUGUST 20, 2021
INFORMATION CONCERNING SOLICITATION AND VOTING
General
The Board of Directors (the “Board”) of ALJ Regional Holdings, Inc., a Delaware corporation (the “Company”), is soliciting proxies for use at the Annual Meeting of Stockholders to be held on August 17, 201820, 2021 at 10:9:00 a.m. EasternPacific Time (the “Annual Meeting”), or at any adjournment or postponement thereof, for the purposes set forth in this proxy statement (the “Proxy Statement”) and in the accompanying Notice of Annual Meeting of Stockholders. The Annual Meeting will be held at the offices of Shearman & Sterling LLP, 599 Lexington Avenue, New York, NY 10022.1460 El Camino Real, Floor 2, Menlo Park, CA 94025.
Important Notice Regarding the Availability of Proxy Materials for the Stockholders’ Meeting to Be Held on August 17, 201820, 2021
Our Annual Report and Proxy Statement are available at www.voteproxy.com, the SEC’s EDGAR database at www.sec.gov and www.aljregionalholdings.com. You are encouraged to access and review all of the important information contained in the proxy materials before voting.
QUESTIONS AND ANSWERS ABOUT THE PROXY MATERIALS AND OUR ANNUAL MEETING
Q: | What is the purpose of the Annual Meeting? |
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A: | To vote on the following proposals: |
| •Proposal 1: To elect Michael C. Borofsky, Julie Cavanna-Jerbic, Jess M. Ravich, •Proposal 2:
•To transact such other business as may properly come before the Annual Meeting or any adjournment or postponement thereof. |
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What are the Board’s recommendations? | |
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A: | The Board recommends a vote: |
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Q: | Who is entitled to vote at the meeting? |
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A: | Stockholders Entitled to Vote. Stockholders who our records show owned shares of the Company as of the close of business on June
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Q: | What is the difference between record stockholders and street name stockholders? |
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| Record Stockholders. If, as of the Record Date, your shares are registered directly in your name with American Stock Transfer & Trust Company, LLC, our transfer agent, you are considered, with respect to those shares, the stockholder of record, and the proxy materials are being sent to you by us. As the stockholder of record, you have the right to grant your voting proxy directly to the individuals listed on the proxy card or to vote by telephone or the Internet as instructed on the proxy card or in person at the Annual Meeting.
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| Street Name Stockholders. If your shares are held in a stock brokerage account or by a bank or other nominee, you are considered, with respect to those shares, the beneficial owner of shares held in street name. The proxy materials are being forwarded to you by your broker or nominee, who is considered, with respect to those shares, the record holder. As the beneficial owner, you have the right to direct your broker or nominee how to vote, and you are also invited to attend the Annual Meeting. However, since you are not the record holder, you may not vote these shares in person at the Annual Meeting unless you follow your broker’s procedures for obtaining a legal proxy. Your broker or nominee will provide a voting instruction card for you to use. |
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Q: | Can I attend the meeting in person? |
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A: | You are invited to attend the Annual Meeting if you are a record stockholder or a street name stockholder as of June |
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How can I vote my shares? | |
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A: | Record Stockholders: Record stockholders may vote in person at the Annual Meeting or by one of the following methods: |
| •By Mail. If you received printed proxy materials, you may submit your vote by marking, dating, signing and mailing the enclosed proxy card in the prepaid envelope. Giving a proxy will not affect your right to vote your shares if you attend the Annual Meeting and want to vote in person. The shares represented by the proxies received in response to this solicitation and not properly revoked will be voted at the Annual Meeting in accordance with the instructions therein. •By Telephone or over the Internet. You may vote your shares by telephone or via the Internet by following the instructions provided in the proxy materials. If you vote by telephone or via the Internet, you do not need to return a proxy card by mail. Telephone and Internet voting are available 24 hours a day. Votes submitted by telephone or through the Internet must be received by 11:59 p.m. Eastern Time on August •In person at the Annual Meeting. You may vote your shares in person at the Annual Meeting. Even if you plan to attend the Annual Meeting in person, we recommend that you also submit your proxy card or vote by telephone or via the Internet by the applicable deadline so that your vote will be counted if you later decide not to attend the meeting. |
| Street Name Stockholders: If your shares are held by a broker, bank or other nominee, you must follow the instructions on the form you receive from your broker, bank or other nominee in order for your shares to be voted. Please follow their instructions carefully. Also, please note that if the holder of record of your shares is a broker, bank or other nominee and you wish to vote in person at the Annual Meeting, you must request a legal proxy from the bank, broker or other nominee that holds your shares and present that proxy and proof of identification at the Annual Meeting to vote your shares. |
| Based on the instructions provided by the broker, bank or other holder of record of their shares, street name stockholders may generally vote by one of the following methods: |
| •By Mail. You may vote by signing, dating and returning your voting instruction card in the enclosed pre-addressed envelope. |
| •By Methods Listed on the Voting Instruction Card. Please refer to your voting instruction card or other information forwarded by your bank, broker or other holder of record to determine whether you may vote by the Internet, telephone, mail or fax, and follow the instructions on the voting instruction card or other information provided by the record holder. |
| •In Person with a Legal Proxy from the Record Holder. A street name stockholder who wishes to vote at the Annual Meeting will need to obtain a legal proxy from his or her bank or brokerage firm. Please consult the voting instruction card sent to you by your bank or broker to determine how to obtain a legal proxy in order to vote in person at the Annual Meeting.
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A: | When proxies are properly delivered, the shares represented by such proxies will be voted at the Annual Meeting in accordance with the instructions of the stockholder. However, if no specific instructions are given, the shares will be voted in accordance with the above recommendations of our Board. If any matters not described in the Proxy Statement are properly presented at the Annual Meeting, the proxy holders will use their own judgment to determine how to vote your shares. If the Annual Meeting is adjourned, the proxy holders can vote your shares on the new meeting date as well, unless you have revoked your proxy instructions, as described below under “Can I change my vote?” |
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Q: | What should I do if I get more than one set of voting materials? |
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A: | Stockholders may receive more than one set of voting materials, including multiple voting instruction cards. For example, stockholders who hold shares in more than one brokerage account may receive a separate voting instruction card for each brokerage account in which shares are held. Stockholders of record whose shares are registered in more than one name will receive more than one set of voting materials. You should vote in accordance with the instructions in each set of voting materials you receive relating to our Annual Meeting to ensure that all of your shares are voted. |
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Q: | Can I change my vote? |
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A: | Record Stockholders: You may change your vote at any time prior to the vote at the Annual Meeting. Your vote may be revoked by filing with the Company’s counsel, Shearman & Sterling LLP, located at 1460 El Camino Real, 2nd Floor, Menlo Park, CA 94025, Attention: Christopher M. Forrester, a written notice of revocation, or it may be revoked by a later-dated vote, by mail, by Internet or by telephone, or by attending the meeting and voting in person. Only a stockholder’s latest proxy received by 11:59 p.m. Eastern Time on August Street Name Stockholders: If you hold your shares through a broker, bank or other nominee, please follow the instructions provided by your broker, bank or other nominee as to how you may change your vote or obtain a “legal proxy” to vote your shares if you wish to cast your vote in person at the Annual Meeting. |
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Q: | What happens if I decide to attend the Annual Meeting but I have already voted or submitted a proxy covering my shares? |
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A: | You may attend the meeting and vote in person even if you have already voted or submitted a proxy. Please be aware that attendance at the Annual Meeting will not, by itself, revoke a proxy. If a bank, broker or other nominee holds your shares and you wish to attend the Annual Meeting and vote in person, you must obtain a “legal proxy” from the record holder of the shares giving you the right to vote the shares.
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Q: | What is the voting requirement to approve each of the proposals? |
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A: | •Proposal No. 1: Directors are elected by a plurality vote. The •Proposal No. 2:
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A: | A broker non-vote occurs when a broker submits a proxy card with respect to shares of common stock held in street name but declines to vote on a particular matter because the broker has not received voting instructions from the beneficial owner. Under the rules that govern brokers who are voting with respect to shares held in street name, brokers have the discretion to vote such shares on certain routine matters, but not on non-routine matters. Proposal |
Q: | How are abstentions and broker non-votes counted? |
| Abstentions and broker non-votes will be counted for purposes of calculating whether a quorum is present at the Annual Meeting and will be counted for purposes of determining whether proposals requiring approval by the affirmative vote of the holders of at least a majority of the shares having voting power present in person or represented by proxy at the Annual Meeting. Thus, an abstention |
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Q: | What constitutes a quorum? |
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A: | A quorum of stockholders is necessary to hold a valid meeting. A quorum will be present if at least a majority of the Company’s outstanding shares entitled to vote are represented at the Annual Meeting, either in person or by proxy. |
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Q: | How are votes counted? |
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A: | All votes will be tabulated by the inspector of elections appointed for the Annual Meeting by the Company, who will tabulate affirmative and negative votes, abstentions and broker non-votes. Votes for and against, abstentions and broker non-votes will each be counted for determining the presence of a quorum. |
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Q: | Who is making this solicitation? |
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A: | This proxy is being solicited on behalf of the Board of ALJ Regional Holdings, Inc. |
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Q: | Who pays for the proxy solicitation process? |
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A: | We will pay the cost of preparing, assembling, printing, mailing, distributing and making available these proxy materials and soliciting votes. |
Q: | How do I obtain a separate set of proxy materials or request a single set for my household? |
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A: | We have adopted a procedure approved by the SEC called “householding.” Under this procedure, if you share an address with another stockholder, have the same last name, and do not participate in electronic delivery of proxy materials, you will receive only one set of proxy materials (including our Annual Report and Proxy Statement). If you wish to receive a separate set of proxy materials at this time, please request the additional copy by contacting our transfer agent, American Stock Transfer & Trust Company, LLC, by telephone at (800) 937-5449. You may also request to receive a separate Annual Report and a separate Proxy Statement by contacting our Corporate Secretary at |
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Q: | What if I have questions about lost stock certificates or need to change my mailing address? |
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A: | You may contact our transfer agent, American Stock Transfer & Trust Company, LLC, by telephone at (800) 937-5449 if you have lost your stock certificate or need to change your mailing address. |
IMPORTANT |
Whether or not you expect to attend the Annual Meeting in person, please vote as promptly as possible by following the instructions included in this Proxy Statement and the enclosed proxy card. This will not limit your rights to attend or vote at the Annual Meeting.
PROPOSAL 1
ELECTION OF DIRECTORS
The number of directors constituting the entire Board is currently fixed at nine (9). The members of the Board are divided into three (3) classes,, with one class of directors elected at each annual meeting of stockholders. Each director shall hold office for a three-year term or until his or her successor is elected and duly qualified, or until his or her earlier resignation or removal. If Proposal No. 2 is approved, the Board will no longer be classified, and the nominees, if elected, will serve for a one-year term, rather than a three-year term, and until their successors are elected and qualified, subject to earlier resignation or removal. See “Proposal 2—Approval of the Amendment and Restatement of the Restated Certificate of Incorporation of the Company to Phase Out the Classified Board Structure” in this Proxy Statement.(1) vacancy.
At the Annual Meeting, three (3) Class IIIeight (8) directors will be elected by the stockholders to serve until the 20212022 Annual Meeting of Stockholders (or, if Proposal 2 is approved, until the 2019 Annual Meeting of Stockholders) or until their respective successors are elected and duly qualified, or until their respective earlier resignation or removal. Michael C. Borofsky, Julie Cavanna-Jerbic, Jess M. Ravich, and Anna Van Buren, Robert Scott Fritz, Hal G. Byer, Rae G. Ravich and John Scheel have been nominated by the Board for election as the Class III directors. If any nominee is unable or unwilling to serve as a director, proxies may be voted for a substitute nominee designated by the present Board. The Board has no reason to believe that the nominees will be unable or unwilling to serve as a nominee or as a director if elected. Proxies received will be voted “FOR” the election of the nominees unless otherwise directed.
Directors are elected by a plurality vote. The three (3) Class IIIeight (8) director nominees who receive the most votes cast in their favor will be elected to serve as the Class III directors. If no contrary indication is made, proxies in the accompanying form are to be voted for the election of Michael C. Borofsky, Julie Cavanna-Jerbic, Jess M. Ravich, and Anna Van Buren, Robert Scott Fritz, Hal G. Byer, Rae G. Ravich and John Scheel as the Board’s nominees or, in the event any such nominee is not a candidate or is unable to serve as a director at the time of the election (which is not currently expected), for any nominee who shall be designated by the Board to fill such vacancy.
Information Regarding Directors
Biographical information concerning each of the directors whose term as director will continue after the Annual Meeting and the Class III director nominees as of the date of this Proxy Statement is set forth below:below.
Name |
| Age |
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| Year in Which Term Expires |
Robert Scott Fritz |
| 61 |
| Class I Director |
| 2019 |
Marc Reisch |
| 62 |
| Class I Director |
| 2019 |
John Scheel |
| 63 |
| Class I Director and Vice Chairman of the Board |
| 2019 |
Hal G. Byer |
| 60 |
| Class II Director |
| 2020 |
Rae G. Ravich |
| 27 |
| Class II Director |
| 2020 |
Margarita Paláu-Hernández |
| 61 |
| Class II Director |
| 2020 |
Michael C. Borofsky |
| 46 |
| Class III Director and Nominee |
| 2021* |
Jess M. Ravich |
| 60 |
| Executive Chairman, Chairman of the Board, and Class III Director and Nominee |
| 2021* |
Anna Van Buren |
| 60 |
| Class III Director and Nominee |
| 2021* |
Name | Age | Position | ||
Jess M. Ravich | 63 | Chairman of the Board, Chief Executive Officer and Nominee | ||
Anna Van Buren | 63 | Director and Nominee | ||
John Scheel | 66 | Director, Nominee and Vice Chairman of the Board | ||
Michael C. Borofsky | 49 | Director and Nominee | ||
Hal G. Byer | 64 | Director and Nominee | ||
Julie Cavanna-Jerbic | 60 | Director and Nominee | ||
Robert Scott Fritz | 64 | Director and Nominee | ||
Rae G. Ravich | 30 | Director and Nominee |
*Term expiration assuming reelection and assuming Proposal 2 is not approved.
Jess M. Ravich. Mr. Ravich has served as a director of the Company since June 26, 2006 and the Chairman of the Board since August 31, 2006 and has2006. He served as the Executive Chairman and senior executive officer of the Company since February 20, 2013.from December 2012 through July 2019, at which time he became the Company’s fulltime Chief Executive Officer. Mr. Ravich joinedwas a Group Managing Director at The TCW Group as Group Managing Director infrom December 2012 and joined the board of directors on December 27, 2017. Prioruntil July 2019. From 2009 to that,2012, Mr. Ravich was Managing Director at Houlihan Lokey since December 2009. Prior to that,Lokey. In 1991 Mr. Ravich was Chairman and Chief Executive Officer offounded Libra Securities, LLC (“Libra Securities”), a Los Angeles-based investment banking firm that focused on capital raising and financial advisory services for middle marketmiddle-market corporate clients and the sales and trading of debt and equity securities for institutional investors.investors, and served as its Chairman and Chief Executive Officer from 1991 until 2009. Prior to founding Libra Securities, in 1991, Mr. Ravich was an Executive Vice President at Jefferies & Co., Inc. and a Senior Vice President at Drexel Burnham Lambert.
Mr. Ravich has
served onwas a member of the board of directors of Apex Global Brands (Nasdaq: APEX), formerly known as Cherokee Inc. (Nasdaq GS:(Nasdaq: CHKE) sincefrom May 1995 until February 2020 and served as its Chairman of the Board from 2011 until 2017. Mr. Ravich has also served on the board of directors of A-Mark International since 2014. In addition to his professional responsibilities, Mr. Ravich has also served on the Undergraduate Executive Board of the Wharton School and the Board of Trustees of the Archer School for Girls. Mr. Ravich hasearned both a B.S and M.S. from the Wharton School and a J.D. from Harvard University. Among other qualifications, Mr. Ravich brings to the Board executive leadership experience, experience serving on the board of a public company, extensive financial expertise and a financial services industry background.
Hal Mr. Ravich is the father of Rae G. Byer. Mr. Byer has served asRavich, a director of the Company since January 30, 2003. Mr. Byer was formerly a Senior Vice President at Houlihan Lokey in their Financial Sponsors Coverage Group until his retirement in 2017. From May 2001 to November 2009, Mr. Byer was a Senior Vice President of Libra Securities, a broker-dealer registered with the SEC and an NASD member. From 1995 to 2003, Mr. Byer was Chief Executive Officer of Byer Distributing Co., a snack food distribution company. From 2000 to 2003, Mr. Byer was also the Chief Operating Officer of eGreatcause.com, an internet start-up involved in fundraising for charitable and non-profit organizations that is no longer active. Mr. Byer brings to the board executive leadership experience, financial expertise and a background in corporate strategy and operations.Company.
Robert Scott Fritz. Mr. Fritz has served as a director of the Company since January 30, 2003. Since May 1982, Mr. Fritz has served as the President of Robert Fritz and Sons Sales Company, a food broker and paper distributor that he owns in New Jersey. Mr. Fritz holds a B.S. in Business from Fairleigh Dickinson University. Mr. Fritz brings to the Board executive leadership experience, along with financial expertise and industry knowledge.
Rae G. Ravich. Ms. Ravich has served as a director of the Company since June 4, 2014. Ms. Ravich is currently the founder of a startup in the health and wellness space, which she started in July 2016. From July 2015 to July 2016, Ms. Ravich was an Associate in the direct lending group at TCW Financial Planning LLC. From July 2013 to July 2015, Ms. Ravich was a Financial Analyst at Houlihan Lokey. Ms. Ravich has dual B.S. degrees from the Wharton School and the Nursing School at the University of Pennsylvania. Ms. Ravich is the daughter of Jess M. Ravich, the Company’s Executive Chairman. Ms. Ravich brings to the Board her experience and background in the financial services industry.
John Scheel. Mr. Scheel has served as a director of the Company since September 13, 2006 and Vice Chairman of the Board since December 16, 2016. From August 31, 2006 to February 20, 2013, Mr. Scheel was the President and Chief Executive Officer of the Company. Mr. Scheel is a principal of and also currently serves as the Chief Operating Officer of Pinnacle Steel, and pursuant to a management agreement, he served as the plant manager for the Company’s former subsidiary Kentucky Electric Steel’s (“KES”) steel mini-mill in Ashland, Kentucky (the “Mill”) and managed the operations of KES on our behalf from January 2004 until its sale to Optima on February 5, 2013. Following such sale, Mr. Scheel not only has continued to manage the Mill for Optima as its general manager, but also managed the melt shop and caster for Warren Steel Holdings EAF in Warren, Ohio, which is also managed by Optima. Prior to joining Pinnacle, Mr. Scheel held various positions of increased responsibility at AK Steel, Nucor Corporation and Birmingham Steel Management. Mr. Scheel holds both B.S. and M.S. degrees in Metallurgical Engineering from Purdue University and a Master of Business Administration in Finance and International Business from Xavier University. Mr. Scheel’s executive management experience and expertise in the manufacturing industry provides valuable insight to our Board in evaluating potential acquisitions and operating our subsidiaries.
Anna Van Buren. Ms. Van Buren has served as a director of the Company since November 2013. Ms. Van Buren was appointed President and Chief Executive Officer of Faneuil Inc. (“Faneuil”), in April 2009, after previously serving as President and Chief Operating Officer from 2007 to 2009, as Vice President and Managing Director of Faneuil’s Government Services Division from 2005 to 2007, and as its Vice President of Business Development from 2004 to 2005. Prior to her association with Faneuil, Ms. Van Buren founded Capital Initiatives, a consulting service for clients seeking visibility among federal lawmakers with the objective of encouraging legislative action, and operated numerous government services and marketing companies. Ms. Van Buren has served in leadership roles for many civic and business organizations including chairmanship of the United Way of the Virginia Peninsula, the Peninsula Chamber of Commerce and the NASA Aeronautics Support Team. She is the recipient of numerous awards including the Women in Business Achievement Award by Inside Business Magazine, the Presidential Citizenship Award from Hampton University and the NCCJNational Conference for Community and Justice Humanitarian Award. Ms. Van Buren holds a degree fromA graduate of Hollins University and the University of Virginia Executive School. Ms. Van BurenSchool, she brings to the Board extensive executive leadership and industry experience.
John Scheel. Mr. Scheel has served as a director since September 2006 and our Vice Chairman since December 2016. From August 2006 to February 2013, Mr. Scheel was the President and Chief Executive Officer of ALJ. Mr. Scheel is a principal of, and also currently serves as the Chief Operating Officer, of Pinnacle Steel. He served as the plant manager for the Company’s former subsidiary Kentucky Electric Steel’s (“KES”) steel mini-mill in Ashland, Kentucky (the “Mill”) and managed the operations of KES on our behalf from January 2004 until its sale in February 2013 to Optima Specialty Steel (“Optima”). Following such sale, Mr. Scheel not only continued to manage the Mill for Optima as its general manager, but also managed the melt shop and caster for Warren Steel Holdings EAF in Warren, Ohio, which was also managed by Optima. He is also currently the Senior Vice President of Operations and Supply Chain for Easy Gardener (d/b/a Jobe’s), a landscape fabric and fertilizer manufacturing company. Prior to joining Pinnacle Steel, Mr. Scheel held various positions of increased responsibility at AK Steel, Nucor Corporation, and Birmingham Steel Management. Mr. Scheel holds both B.S. and M.S. degrees in Metallurgical Engineering from Purdue University and a Master of Business Administration in Finance and International Business from Xavier University. Mr. Scheel’s executive management experience and deepexpertise in the manufacturing industry expertise.provides valuable insight to our Board in evaluating potential acquisitions and operating our subsidiaries.
Michael C. Borofsky. Mr. Borofsky has served as a director of the Company since September 27, 2013. Mr. Borofsky is currently general counsel for Gryphon Investors. From 2019 to mid-2020, Mr. Borofsky was formerlythe Chief Operating and Strategy Officer for The Pohlad Company. Prior to that, Mr. Borofsky was a Senior Vice President of MacAndrews & Forbes. Prior to joining MacAndrews & Forbes in 2003, Mr. Borofsky was with the law firm of Skadden, Arps, Slate, Meagher & Flom LLP, where he specialized in mergers & acquisitions, and before that he was an analyst at Goldman Sachs. Mr. Borofsky hasearned a B.A. from Yale University and a J.D. from Columbia University School of Law. Mr. Borofsky brings to the Board a valuable perspective due to his dual background in business and law.
Marc ReischHal G. Byer. Mr. Reisch was appointed Chairman of Phoenix Color Corp. (“Phoenix”) in August 2015 andByer has served as a director since January 2003. Mr. Byer joined Houlihan Lokey as a Senior Vice President in its Financial Sponsors Coverage Group in December 2009. He was a director for Houlihan Lokey from 2011 to 2017 and a senior advisor during 2017 until his retirement in November 2017. From May 2001 to November 2009, Mr. Byer was a Senior Vice President of Libra Securities, a broker-dealer registered with the Company sinceSEC and an NASD member. From 1995 to 2003, Mr. Byer was Chief Executive Officer of Byer Distributing Co., a snack food distribution company. From 2000 to 2003, Mr. Byer was also the Chief Operating Officer of eGreatcause.com, an internet start-up involved in fundraising for charitable and non-profit organizations that time.is no longer active. Mr. ReischByer brings to the Board executive leadership experience, financial expertise and a background in corporate strategy and operations.
Julie Cavanna-Jerbic. Ms. Cavanna-Jerbic has served as Chairmana director since July 2020.Ms. Cavanna-Jerbic is currently the principal and founder of Iron Butterfly LLC, a consulting firm providing business advisory and executive education services which she founded in 2012. Since November 2012, Ms. Cavanna-Jerbic has served on the Supervisory (Audit) Committee of First Tech Federal Credit Union, and since August 2012, Ms. Cavanna-Jerbic has served as a member of the Board of Trustees, Morrissey Compton Educational Center. Prior to this, Ms. Cavanna-Jerbic held various positions at Hewlett Packard, including as the Chief ExecutiveFinancial Officer and& Vice President of Visant Corp.Global Information Technology and Visant Holding Corp. (“Visant”) from October 2004 to November 2015. Prior to joining Visant, he served as Senior Advisor to Kohlberg Kravis Robertsthe Chief Information Officer & Co.Vice President of Information Technology and has over 35 years of experience in the printing and publishing industries. Mr. Reisch holds a Bachelor of Science Degree and a Master of Business Administration degree from Cornell University. Mr. ReischIntegrations. Ms. Cavanna-Jerbic brings to the Board extensive executive leadership, experiencefinancial expertise and deepa financial services industry expertise.background.
Margarita Paláu-HernándezRobert Scott Fritz. Ms. Paláu-HernándezMr. Fritz has served as a director since January 2003. Since May 1982, Mr. Fritz has served as the President of Robert Fritz and Sons Sales Company, a New Jersey-based food broker and paper distributor that he owns. Mr. Fritz earned a B.S. in Business from Fairleigh Dickinson University. Mr. Fritz brings to the CompanyBoard executive leadership experience, financial expertise and a background in corporate strategy and operations.
Rae G. Ravich. Ms. Ravich has served as a director since November 25, 2015.June 2014. Ms. Paláu-HernándezRavich is currently the founder of a Principal and Founding Partner of Hernández Ventures, a privately held entitystartup engaged in the acquisitionhealth and management of a variety of business interests. She has servedwellness space, which she founded in this capacity since 1988.July 2016. From July 2013 until June 2016, Ms. Paláu-Hernández also serves as a director of Herbalife Nutrition Ltd., a publicly traded company (NYSE: HLF) based in Los Angeles, operating in over 90 countries. Prior to founding Hernández Ventures, Ms. Paláu-HernándezRavich was an attorney withAssociate in the law firm of McCutcheon, Black, Verleger & Shea, wheredirect lending group at TCW Financial Planning LLC. Previously, Ms. Ravich was a Financial Analyst at Houlihan Lokey, which she focused on domestic and international business and real estate transactions. In addition to her professional responsibilities,joined in July 2013. Ms. Paláu-Hernández is a member ofRavich has dual B.S. degrees from the UCLAWharton School of Law Board of Advisors, the Pacific Council on International Policy, the Commission on Building a Secure and Competitive U.S.-Mexico Border and the Smithsonian National Latino Board and serves as Co-Chair of the YaleNursing School of Management Council of Global Advisors. Previously Ms. Paláu-Hernández served onat the University of San Diego BoardPennsylvania. Ms. Ravich is the daughter of Trustees.Jess M. Ravich, ALJ’s Chief Executive Officer and Chairman of the Board. Ms. Paláu-Hernández has a B.A. from the University of San Diego and a J.D. from UCLA School of Law. Ms. Paláu-HernándezRavich brings to the Board her experience as the founder of a businessexpertise and her background in law.the financial services industry.
Board Independence
The Board has determined that the below directors have met the requirements for independence under the applicable rules and regulations of the SEC and the NASDAQ Global Market (“NASDAQ”), as applicable:
| - | Hal G. Byer |
|
|
|
|
|
|
| - | Michael C. Borofsky |
- | Julie Cavanna-Jerbic |
- | Robert Scott Fritz |
- | John Scheel |
Board Leadership Structure
Our Board retains flexibility to select its Chairman of the Board and our Chief Executive ChairmanOfficer in the manner that it believes is in the best interests of our stockholders. Accordingly, the Chairman of the Board and the Chief Executive ChairmanOfficer positions may be filled by one individual or two. The Board currently believes that having Mr. Ravich serve as both Chief Executive ChairmanOfficer and Chairman of the Board is in the best interests of the stockholders given Mr. Ravich’s extensive knowledge of, years of service to and experience with, the Company. The Board does not currently have a lead independent director.director, but has appointed Mr. Scheel, an independent director, as Vice Chairman of the Board.
Board Committees
The Board has a standing audit committee (the “Audit Committee”) and compensation, nominating and corporate governance committee (the “Compensation, Nominating and Corporate Governance Committee”). The composition and responsibilities of each committee are described below. Members will serve on these committees until their resignation or until otherwise determined by the Board.
The Board has determined that the composition and functioning of the Board and all of our committees comply with all applicable requirements of the Sarbanes-Oxley Act, and NASDAQ and SEC rules and regulations. The Audit Committee and the Compensation, Nominating and Corporate Governance Committee each operate under a written charter approved by the Board. Each committee will review and reassess the adequacy of its charter periodically. The charters of both committees are available in the Investor RelationsCorporate Governance section of the Company’s website, www.aljregionalholdings.com.
The following chart details the current membership of each committee:
Name of Director |
| Audit Committee |
| Compensation, Nominating and Corporate Governance Committee |
Michael C. Borofsky | M* | C | ||
Hal G. Byer |
|
|
|
|
Julie Cavanna-Jerbic | M* | M | ||
Robert Scott Fritz |
|
|
|
|
John Scheel |
|
|
|
|
| M = Member | C = Chair | ||
|
|
|
|
|
Audit Committee
Our Audit Committee consists of Messrs.Ms. Cavanna-Jerbic and Messrs. Scheel, Borofsky and Fritz, with Mr. Scheel chairing this committee. All members of our Audit Committee meet the requirements for financial literacy under the applicable rules and regulations of the SEC and NASDAQ. Our Board has determined that Ms. Cavanna-Jerbic and Mr. Scheel iseach are an “audit committee financial expert” as defined under the applicable rules of the SEC and has the requisite financial sophistication as defined under the applicable rules and regulations of NASDAQ. All the members of our Audit Committee are independent directors as defined under the applicable rules and regulations of the SEC and NASDAQ. The Audit Committee operates under a written charter that satisfies the applicable standards of the SEC and NASDAQ.
The Audit Committee’s responsibilities include, among other responsibilities:
|
|
| appointing, approving the compensation of, and assessing the independence of our independent registered public accounting firm; |
|
|
| pre-approving auditing and permissible non-audit services, and the terms of such services, to be provided by our independent registered public accounting firm; |
|
|
| reviewing and discussing with management and the independent registered public accounting firm our annual and quarterly financial statements and related disclosures; |
|
|
| coordinating the oversight and reviewing the adequacy of our internal control over financial reporting; |
|
|
| establishing policies and procedures for the receipt and retention of accounting-related complaints and concerns; and |
|
|
| preparing the Audit Committee report required by SEC rules to be included in our annual proxy statement. |
AUDIT COMMITTEE REPORT
The following is the report of the Audit Committee of the Board.
Notwithstanding anything to the contrary set forth in any of the Company’s previous or future filings under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, that might incorporate filings made by the Company, including this Proxy Statement, in whole or in part, the following Audit Committee Report shall not be deemed to be “soliciting material” or to be incorporated by reference into any prior or future filings made by the Company.
The Audit Committee has reviewed and discussed with management the Company’s audited financial statements for the fiscal year ended September 30, 2017.2020. In addition, the Audit Committee has discussed with the Company’s independent auditors the matters required to be discussed by Statement on Auditing Standards No. 61, as amended (Communications with Audit Committee). The Audit Committee also has received the written disclosures and the letter as required by the Public Company Accounting Oversight Board Rule 3526 “Communications with Audit Committees Concerning Independence” and the Audit Committee has discussed with the independent auditors the independence of that firm.
Based on the Audit Committee’s review of the matters noted above and its discussions with the Company’s independent auditors and management, the Audit Committee recommended to the Board that the financial statements be included in the Company’s Annual Report.
Respectfully submitted by:
Members of the Audit Committee
John Scheel (Chair)
Michael C. Borofsky
Julie Cavanna-Jerbic
Robert Scott Fritz
Compensation, Nominating and Corporate Governance Committee
Our Compensation, Nominating and Corporate Governance Committee consists of Ms. Cavanna-Jerbic and Messrs. Borofsky and Byer, and Ms. Paláu-Hernández, with Mr. Borofsky chairing this committee. All members of this committee meet the requirements for independence under the applicable rules and regulations of the SEC, NASDAQ and the Internal Revenue Code of 1986, as amended (the “Code”), including the rules applicable to members of a listed company’s compensation committee. The Compensation, Nominating and Corporate Governance Committee operates under a written charter that satisfies the applicable standards of the SEC and NASDAQ.
The committee’s responsibilities include:
|
| ● | reviewing and approving corporate goals and objectives relevant to compensation of our chief executive |
|
| ● | evaluating the performance of our chief executive |
|
| ● | determining the compensation of all our other officers and reviewing |
● | developing and making recommendations to the Board with respect to succession plans for our chief executive officer and other key officers; |
|
| ● | overseeing and making recommendations to the Board with respect to our incentive-based compensation and equity plans; |
|
| ● | reviewing and making recommendations to the Board with respect to director |
As well as:
|
| ● | developing and recommending to the Board the criteria for selecting board and committee membership; |
|
| ● | establishing procedures for identifying and evaluating director candidates including nominees recommended by stockholders; |
|
| ● | identifying individuals qualified to become board members; |
|
| ● | recommending to the Board the persons to be nominated for election as directors and to each of the Board’s committees; |
|
| ● | overseeing the evaluation of the Board, its committees, and |
● | reviewing and accessing the adequacy of our policies and practices in corporate governance, and recommending any proposed changes to the Board for approval; and |
● | reviewing and accessing the adequacy of our code of ethics for selected executives and other internal policies and guidelines, and monitor that the principles described therein are incorporated into our culture and business practices. |
Board’s Role in Risk Oversight
Both the full Board and its committees oversee the various risks faced by the Company. Management is responsible for the day-to-day management of the Company’s risks and provides periodic reports to the Board and its committees relating to those risks and risk-mitigation efforts.
Board oversight of risk is conducted primarily through the standing committees of the Board, the members of which are independent directors. The Audit Committee takes a lead role on overseeing financial risks and in interfacing with management on significant risks or exposures and assessing the steps management has taken to minimize such risks. The Audit Committee also is charged with, among other tasks, oversight of management on the Company’s guidelines and policies with respect to risk monitoring, assessment and management. Members of the Company’s management periodically report to the Audit Committee regarding risks overseen by the Audit Committee, including quarterly reports with respect to the Company’s internal controls over financial reporting.
Director Nominations
The Compensation, Nominating and Corporate Governance Committee evaluates and recommends to the Board director nominees for each election of directors.
In fulfilling its responsibilities, the Compensation, Nominating and Corporate Governance Committee considers the following factors:
the appropriate size of the Board;
the needs of the Company with respect to the particular talents and experience of its directors;
the knowledge, skills and experience of nominees, including experience in business, finance, administration or public service, in light of prevailing business conditions and the knowledge, skills and experience already possessed by other members of the Board;
experience with accounting rules and practices;
applicable regulatory and securities exchange/association requirements; and
a balance between the benefit of continuity and the desire for a fresh perspective provided by new members.
The Compensation, Nominating and Corporate Governance Committee’s goal is to assemble a group of directors that brings to the Company a variety of perspectives and skills derived from high quality business and professional experience. In doing so, the Compensation, Nominating and Corporate Governance Committee also considers candidates with appropriate non-business backgrounds.
Other than the foregoing factors, there are no stated minimum criteria for director nominees. However, the Compensation, Nominating and Corporate Governance Committee may also consider such other factors as it may deem are in the best interests of the Company and its stockholders.
The Compensation, Nominating and Corporate Governance Committee identifies nominees by first evaluating the willingness of the current members of the Board to continue in service. Current members of the Board with skills and experience that are relevant to the Company’s business and who are willing to continue in service are considered for re-nomination, balancing the value of continuity of service by existing members of the Board with that of obtaining a new perspective. If any member of the Board up for re-election at an upcoming annual meeting of stockholders does not wish to continue in service, the Compensation, Nominating and Corporate Governance Committee identifies the desired skills and experience of a new nominee in light of the criteria above. Current members of the Board will be polled for suggestions as to individuals meeting the criteria of the Board. Research may also be performed to identify qualified individuals. If the Compensation, Nominating and Corporate Governance Committee believes that it requires additional candidates for nomination, the Compensation, Nominating and Corporate Governance Committee may explore alternative sources for identifying additional candidates. This may include engaging, as appropriate, a third party search firm to assist in identifying qualified candidates.
The Compensation, Nominating and Corporate Governance Committee will evaluate any recommendation for a director nominee proposed by a stockholder who gives timely written notice to the Corporate Secretary of the Company. In order to be timely, the notice must be delivered by a nationally recognized courier service or mailed by first class United States mail, postage or delivery charges prepaid, and received by the Company at 244 Madison Avenue, PMB #358, New York, NY 10016 not less than fifty (50) days or more than eighty (80) days prior to the scheduled date of the annual meeting, provided, however, that if fewer than sixty (60) days’ notice or prior public disclosure of the date of the meeting is given or made to stockholders, notice by the stockholder to be timely must be so delivered or mailed and received not later than the close of business on the tenth (10th) day following the earlier of (a) the day on which such notice of the date of the meeting was mailed or (b) the day on which such public disclosure was made. Additionally, the Company’s bylaws require that all stockholder notices for director nominations contain the following information:
As to each person whom the stockholder proposes to nominate for election or reelection as a director:
| o | the name, age, business address and residence address of the person; |
| o | the principal occupation or employment of the person; |
| o | the class, series and number of shares of capital stock of the Company that are owned beneficially by the person on the date of such stockholder’s notice; |
| o | a statement as to the person’s citizenship; and |
| o | any other information relating to the person that is required to be disclosed in solicitations for proxies for election of directors pursuant to Section 14 of the Securities Exchange Act of 1934, including, without limitation, such person’s written consent to being named in the Proxy Statement as a nominee and to serving as a director if elected. |
As to the stockholder giving the notice:
| o | the name and address, as such information appears on the Company’s books, of such stockholder and any other stockholders known by such stockholder to be supporting such nominee(s); |
| o | the class, series and number of shares of capital stock of the Company that are owned beneficially by the stockholder and each other stockholder known by such stockholder to be supporting such nominee(s) on the date of such stockholder’s notice; and |
| o | a representation that the stockholder is a holder of record of stock of the Company entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to nominate the person or persons specified in the notice. |
A description of all arrangements or understandings between the stockholder and each nominee and other person or persons (naming such person or persons) pursuant to which the nomination or nominations are to be made by the stockholder.
The Board will evaluate recommendations for director nominees submitted by directors, management or qualifying stockholders in the same manner, using the criteria stated above.
All directors and director nominees will submit a completed form of directors’ and officers’ questionnaire as part of the nominating process. The process may also include interviews and additional background and reference checks for non-incumbent nominees, at the discretion of the Board.
Board Meetings
During the fiscal year ended September 30, 2017,2020, the Board met sevenfourteen times and took action by written consent on twothree occasions. During the fiscal year ended September 30, 2017,2020, all directors attended at least 75% of the aggregate number of meetings of the Board. The Board encourages the directors to attend the annual meetings of stockholders.
Communications with Directors
If a stockholder wishes to communicate with the Board, they may send their communication in writing to: Corporate Secretary, ALJ Regional Holdings, Inc., 244 Madison Avenue, PMB #358, New York, NY 10016. Such stockholder must include their name and address in the written communication and indicate whether they are a stockholder of the Company. The Corporate Secretary will review any communication received from a stockholder, and all material communications from stockholders will be forwarded to the appropriate director or directors or the Board based on the subject matter.
Director Compensation
In December 2015, the Board approved a non-employee director compensation package comprised of (i) an annual retainer of $40,000 in cash, (ii) an annual grant of common stock with a value of $40,000, (iii) an additional $12,500 for the chair and $5,000 for each other member of the Audit Committee, and (iv) an additional $10,000 for the chair and $4,000 for each other member of the Compensation, Nominating and Corporate Governance Committee. Effective July 1, 2017, each non-employee director was given the option of how to allocate the payment between cash and common stock.
The following table provides information regarding all compensation awarded to, earned by or paid to each person who served as a non-employee director of the Company for the year ended September 30, 2017.2020. Other than as set forth in the table and described more fully below, the Company did not pay any fees, make any equity or non-equity awards, or pay any other compensation, to its non-employee directors. All compensation paid to its employee directors is set forth in the tables summarizing executive officer compensation below.
Name |
| Fees Earned or Paid in Cash |
|
| Stock Awards |
|
| Option Awards |
|
| Non-Equity Incentive Compensation |
|
| Nonqualified Deferred Compensation on Earnings |
|
| All Other Compensation |
|
| Total |
|
| Fees Earned or Paid in Cash |
|
| Stock Awards |
|
| Option Awards |
|
| Non-Equity Incentive Compensation |
|
| Nonqualified Deferred Compensation on Earnings |
|
| All Other Compensation |
|
| Total |
| ||||||||||||||
Hal G. Byer |
| $ | 54,000 |
|
| $ | 30,000 |
|
| $ | — |
|
| $ | — |
|
| $ | — |
|
| $ | — |
|
| $ | 84,000 |
|
| $ | 84,000 |
|
| $ | — |
|
| $ | — |
|
| $ | — |
|
| $ | — |
|
| $ | — |
|
| $ | 84,000 |
|
Robert Scott Fritz |
|
| 48,750 |
|
|
| 36,250 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 85,000 |
|
|
| 85,000 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 85,000 |
|
Rae G. Ravich |
|
| 40,000 |
|
|
| 40,000 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 80,000 |
|
|
| 52,500 |
|
|
| 27,500 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 80,000 |
|
John Scheel |
|
| 52,500 |
|
|
| 40,000 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 92,500 |
|
|
| 52,500 |
|
|
| 40,000 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 92,500 |
|
Michael Borofsky |
|
| 55,000 |
|
|
| 40,000 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 95,000 |
| ||||||||||||||||||||||||||||
Margarita Paláu Hernández |
|
| 44,000 |
|
|
| 40,000 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 84,000 |
| ||||||||||||||||||||||||||||
Michael C. Borofsky |
|
| 55,000 |
|
|
| 40,000 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 95,000 |
| ||||||||||||||||||||||||||||
Julie Cavanna-Jerbic |
|
| 15,025 |
|
|
| 6,250 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 21,275 |
|
| (1) | The following table shows the number of shares subject to outstanding and unexercised stock and option awards held by each non-employee director as of September 30, |
Name |
| Number of Shares Subject to Outstanding Option Awards |
|
| Number of Shares Subject to Outstanding Stock Awards |
|
| Number of Shares Subject to Outstanding Option Awards |
| Number of Shares Subject to Outstanding Stock Awards | ||
Hal G. Byer |
|
| 134,000 |
|
|
| 18,672 |
|
| — |
| 30,684 |
Robert Scott Fritz |
|
| — |
|
|
| 18,658 |
|
| — |
| 55,964 |
Rae G. Ravich |
|
| 100,000 |
|
|
| 16,169 |
|
| 100,000 |
| 98,297 |
John Scheel |
|
| — |
|
|
| 23,679 |
|
| — |
| 126,879 |
Michael Borofsky |
|
| — |
|
|
| 16,169 |
| ||||
Margarita Paláu Hernández |
|
| — |
|
|
| 6,494 |
| ||||
Michael C. Borofsky |
| — |
| 119,369 |
Required Vote
The three (3) Class IIIeight (8) director nominees receiving the highest number of affirmative votes of the shares present and voting at the Annual Meeting in person or by proxy will be elected as the Class III directors. Each proxy cannot be voted for a greater number of persons than three.seven.
the BOARD RECOMMENDS A VOTE
“FOR” the election of each nominee listed above.
PROPOSAL
Proposal 2
Approval of the Amendment and Restatement of the Restated Certificate of Incorporation of the Company to PHASE OUT the Classified Board Structure
The Board has unanimously determined that it would be in the best interests of the Company and its stockholders to amend our Restated Certificate of Incorporation to declassify the Board and provide for the annual election of all directors, as described below. We are asking our stockholders to approve this amendment and restatement to the Restated Certificate of Incorporation, which is attached hereto as Appendix A.
The Company’s Current Classified Board Structure
Article VII, Section A of the Restated Certificate of Incorporation currently divides our directors into three classes. Each class is elected for a three-year term, with the terms staggered so that approximately one third of the directors stand for election each year.
Proposed Declassification of the Board
After careful consideration, the Board has adopted a resolution that the classified board structure should be eliminated. If approved by our stockholders, this proposed declassification of the board would be accomplished gradually, ultimately requiring every director to stand for election each year at our annual meeting. Beginning with this 2018 Annual Meeting, as each director’s existing three-year term expires, that director would then stand for election annually, and by our Annual Meeting of Stockholders in 2020, all directors would stand for election annually.
The table below summarizes the implementation of the declassification of our Board pursuant to the proposed amendment.
Annual Meeting Year |
| Class of Directors up for Nomination |
| Length of Term for Elected Directors |
| Year that Term would Expire |
2018 |
| Class III |
| 1 year |
| 2019 |
2019 |
| Class III and Class I |
| 1 year |
| 2020 |
2020 |
| All Directors |
| 1 year |
| 2021 |
If our stockholders do not approve this proposal, our directors will continue to be elected in three staggered classes with three-year terms. This includes the director nominees standing for election at this Annual Meeting, who would stand for three-year terms expiring in 2021.
Rationale for Declassification
The Board is committed to strong corporate governance policies and regularly considers and evaluates a broad range of corporate governance issues affecting the Company. In determining whether to propose the declassification of our board as described above, our Board carefully reviewed the various arguments for and against a classified board structure and the work and recommendation of our Compensation, Nominating and Corporate Governance Committee.
Our Board recognizes that a classified structure may offer several advantages, such as promoting board continuity and stability, enhancing long-term planning, ensuring directors serving on our Board have substantial knowledge of the Company and increasing the protection against potentially abusive and unfair takeover tactics. Our Board also recognizes that a classified structure may appear to reduce directors’ accountability to stockholders, since such a structure does not enable stockholders to express a view on each director’s performance by means of an annual vote. After consideration of the foregoing and other factors, the Board believes that the benefits of moving to annual elections outweigh the reasons for keeping a classified board and has unanimously determined that it is in the best interests of the Company and our stockholders to phase out the classified board structure as proposed.
A copy of the Restated Certificate of Incorporation reflecting the proposed amendments to Article VII is attached as Appendix A to this proxy statement. Additions of text to our Restated Certificate of Incorporation contained in Appendix A are indicated by underlining and deletions of text are indicated by strike-outs. The description of the proposed amendment to our Restated Certificate of Incorporation is a summary and is qualified by and subject to the full text of the proposed amendment.
Our Board has also approved the amendment and restatement of our Restated Bylaws to eliminate the Board’s classified structure, subject to and effective upon the filing of the Restated Certificate of Incorporation phasing out the classified board structure with the Secretary of State of the State of Delaware.
Vote Required and Board of Directors’ Recommendation
The affirmative vote of at least eighty percent (80%) of the then outstanding shares of the capital stock of the Company, either in person or by proxy, is required to approve Proposal 2.
THE BOARD RECOMMENDS A VOTE “FOR”
APPROVING THE AMENDMENT AND RESTATEMENT OF THE
RESTATED CERTIFICATE OF INCORPORATION TO PHASE OUT THE CLASSIFIED BOARD STRUCTURE.
APPROVAL OF THE AMENDMENT AND RESTATEMENT OF THE RESTATED CERTIFICATE OF INCORPORATION OF THE COMPANY TO ELIMINATE THE PREFERRED STOCK AND AUTHORIZE THE ISSUANCE OF 5,000,000 SHARES OF BLANK CHECK PREFERRED STOCK
The Board has unanimously determined that it would be in the best interests of the Company and its stockholders to amend our Restated Certificate of Incorporation to eliminate the class of Preferred Stock and all authorized shares of Preferred Stock and to authorize the issuance of 5,000,000 shares of blank check preferred stock, as described below.
The Company’s Current Authorized Stock
Article V of the Restated Certificate of Incorporation currently authorizes the Company to issue up to 100,000,000 shares of common stock, par value $0.01 per share, and up to 5,000,000 shares of Preferred Stock, par value $0.01 per share. Out of the 5,000,000 shares of Preferred Stock authorized, 1,000,000 shares are designated as Series A Preferred Stock and 550,000 shares are designated as Series B Preferred Stock. As of June 22, 2018, there were no shares of Preferred Stock outstanding. The Company has no intention to issue such shares at any time in the future. The Board therefore believes that elimination of the class of Preferred Stock is appropriate in conjunction with the authorization of the new class of blank check preferred stock described below.
Proposed Elimination of Preferred Stock
After careful consideration, the Board has adopted a resolution that all authorized shares of Preferred Stock should be eliminated. The proposal also calls for the authorization of a new class of blank check preferred stock consisting of 5,000,000 shares which may be issued in one or more series by vote of the Board.
Rationale for Blank Check Preferred Stock
The term "blank check" preferred stock refers to stock which gives the Board the flexibility to create one or more series of preferred stock, from time to time, and to determine the relative rights, preferences, powers and limitations of each series, including, without limitation: (i) the number of shares in each series, (ii) whether a series will bear dividends and whether dividends will be cumulative, (iii) the dividend rate and the dates of dividend payments, (iv) liquidation preferences and prices, (v) terms of redemption, including timing, rates and prices, (vi) conversion rights, (vii) any sinking fund requirements, (viii) any restrictions on the issuance of additional shares of any class or series, (ix) any voting rights and (x) any other relative, participating, optional or other special rights, preferences, powers, qualifications, limitations or restrictions. Any issuances of preferred stock by the Company will need to be approved by the Board.
The Board believes that the authorization of such blank check preferred stock is desirable because it will provide the Company with increased flexibility of action to meet future working capital and capital expenditure requirements through equity financings without the delay and expense ordinarily attendant on obtaining further stockholder approvals. The Board believes that the authorization of blank check preferred stock will improve the Company's ability to attract needed investment capital, as various series of the preferred stock may be customized to meet the needs of any particular transaction or market conditions.
A copy of the Restated Certificate of Incorporation reflecting the proposed amendments to Article V is attached as Appendix A to this proxy statement. Additions of text to our Restated Certificate of Incorporation contained in Appendix A are indicated by underlining and deletions of text are indicated by strike-outs. The description of the proposed amendment to our Restated Certificate of Incorporation is a summary and is qualified by and subject to the full text of the proposed amendment.
Our Board has also approved the amendment and restatement of our Restated Bylaws to eliminate the Preferred Stock and authorize the issuance of 5,000,000 shares of blank check preferred stock, subject to and effective upon the filing of the Restated Certificate of Incorporation phasing out the classified board structure with the Secretary of State of the State of Delaware.
Vote Required and Board of Directors’ Recommendation
The affirmative vote of the holders of at least a majority of the voting power of all of the then outstanding shares of the capital stock of the Company, either in person or by proxy, is required to approve Proposal 3.
THE BOARD RECOMMENDS A VOTE “FOR” APPROVING THE AMENDMENT AND RESTATEMENT OF THE RESTATED CERTIFICATE OF INCORPORATION TO ELIMINATE THE PREFERRED STOCK AND AUTHORIZE THE ISSUANCE OF BLANK CHECK PREFERRED STOCK.
APPROVAL OF THE AMENDMENT AND RESTATEMENT OF THE RESTATED CERTIFICATE OF INCORPORATION OF THE COMPANY TO UPDATE AND MODIFY THE INDEMNIFICATION PROVISIONS
The Board has unanimously determined that it would be in the best interests of the Company and its stockholders to amend our Restated Certificate of Incorporation to update and modify certain provisions related to the indemnification of our directors, as described below. We are asking our stockholders to approve this amendment and restatement to the Restated Certificate of Incorporation, which is attached hereto as Appendix A.
The Company’s Current Indemnification Provisions
Article VIII of the Restated Certificate of Incorporation currently provides indemnification to our directors and officers in the event that a proceeding is brought, or threatened to be brought, against our directors and officers because of their service to the Company. This right to indemnification is subject to limitations if the liability for which indemnity is sought was incurred because of certain bad acts by the director or officer.
Indemnification provisions are expressly authorized by the Delaware General Corporation Law and are common among public companies. We believe that indemnification provisions, coupled with a director and officer liability insurance program, are important tools in recruiting and retaining the best individuals to serve as directors and officers of the Company.
We discovered that certain provisions could benefit from additional clarification and that an additional procedural protection related to the burden of proof in indemnification disputes had become a common feature of corporate indemnification provisions.
The Board has unanimously adopted the proposed amendments, subject to shareholder approval at the Annual Meeting.
Proposed Update and Modification
The proposed amendments would update and modify Article VIII of the Articles as discussed below. We do not believe that any of these amendments would materially alter the substantive protections afforded to our directors and officers.
The proposed amendments would provide that i) the liability of our directors and officers shall be limited or eliminated to the fullest extent of the law, ii) that our directors and officers shall be provided indemnification by us to the fullest extent of the law, and iii) that in the event of any amendment to applicable law governing liability and indemnification of our directors and officers, the liability and indemnification of such directors and officers shall be adjusted accordingly.
A copy of the Restated Certificate of Incorporation reflecting the proposed amendments to Article VIII is attached as Appendix A to this proxy statement. Additions of text to our Restated Certificate of Incorporation contained in Appendix A are indicated by underlining and deletions of text are indicated by strike-outs. The description of the proposed amendment to our Restated Certificate of Incorporation is a summary and is qualified by and subject to the full text of the proposed amendment.
Vote Required and Board of Directors’ Recommendation
The affirmative vote of the holders of at least a majority of the voting power of all of the then outstanding shares of the capital stock of the Company, either in person or by proxy, is required to approve Proposal 4.
THE BOARD RECOMMENDS A VOTE “FOR” APPROVING THE AMENDMENT AND RESTATEMENT OF THE RESTATED CERTIFICATE OF INCORPORATION TO UPDATE AND MODIFY THE INDEMNIFICATION PROVISIONS.
APPROVAL OF THE AMENDMENT AND RESTATEMENT OF THE RESTATED CERTIFICATE OF INCORPORATION OF THE COMPANY TO UPDATE AND MODIFY THE SECTION 382 OWNERSHIP CHANGE TAX PROVISIONS.
The Board has unanimously determined that it would be in the best interests of the Company and its stockholders to amend our Restated Certificate of Incorporation to update and modify certain provisions related to ownership change as defined in Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”), as described below. We are asking our stockholders to approve this amendment and restatement to the Restated Certificate of Incorporation, which is attached hereto as Appendix A.
The Company’s Current Ownership Change Provisions
Article IX of the Restated Certificate of Incorporation currently provides that, subject to certain specified exceptions set forth therein, that any attempted transfer of the Company’s stock shall be prohibited and void ab initio to the extent that any such transfer either (i) results in a person (other than a “public group,” as defined in Treasury regulations promulgated under the Code) becoming the owner of 5-percent or more of the Company’s outstanding stock, as determined under Section 382 of the Code and the Treasury regulations promulgated thereunder, or (ii) results in an increase to the percentage of the Company’s outstanding stock that is owned by a person (other than a “public group,” as defined in Treasury regulations promulgated under the Code) that owns five percent or more of the Company’s outstanding stock, as determined under Section 382 of the Code and the Treasury regulations promulgated thereunder. Exceptions to this general prohibition include, without limitation, (i) transfers whereby the transferor or transferee obtains the written approval of the Board or duly authorized committee thereof and (ii) transfers whereby a person that was known to the Company to own five percent or more of the Company’s outstanding stock as of April 30, 2009 increases the percentage of the Company’s outstanding stock that it owned as of such date by no more than five percentage points.
The prohibition on certain transfers of the Company’s outstanding stock is intended to preserve the Company’s net operating loss and other tax attribute carryforwards by ensuing that the Company does not experience an “ownership change,” within the meaning of Section 382(g) of the Code.
The Board has unanimously adopted the proposed amendments, subject to shareholder approval at the Annual Meeting.
Proposed Update and Modification
The proposed amendments would update and modify Article IX of the Articles as discussed below.
The proposed amendments would modify certain definitions used in Article IX of the Articles in order to: (i) clarify the application of certain aggregation rules, stock attribution rules and stock ownership presumptions utilized in the Treasury regulations promulgated under Section 382; (ii) reflect changes to changes to Section 382 of the Code made by the Tax Cuts and Jobs Act of 2017; and (iii) reflect the promulgation of new Treasury regulations under Section 382 of the Code. Furthermore, the proposed amendments would update the internal formatting and numbering set forth in Article IX.
A copy of the Restated Certificate of Incorporation reflecting the proposed amendments to Article IX is attached as Appendix A to this proxy statement. Additions of text to our Restated Certificate of Incorporation contained in Appendix A are indicated by underlining and deletions of text are indicated by strike-outs. The description of the proposed amendment to our Restated Certificate of Incorporation is a summary and is qualified by and subject to the full text of the proposed amendment.
Vote Required and Board of Directors’ Recommendation
The affirmative vote of the holders of at least a majority of the voting power of all of the then outstanding shares of the capital stock of the Company, either in person or by proxy, is required to approve Proposal 5.
THE BOARD RECOMMENDS A VOTE “FOR” APPROVING THE AMENDMENT AND RESTATEMENT OF THE RESTATED CERTIFICATE OF INCORPORATION TO UPDATE AND MODIFY THE SECTION 382 OWNERSHIP CHANGE TAX PROVISIONS.
RATIFICATION OF Appointment OF
Independent Registered Public Accounting Firm
The Audit Committee of theALJ’s Board has determined to appoint Mayer Hoffman McCann P.C.engaged Deloitte & Touche LLP (“MHMDeloitte”) as the independent registered public accounting firm for the Company and its subsidiaries for the fiscal year ending September 30, 2018, subject to completion of a mutually agreeable engagement letter, and has further directed that such appointment be submitted for ratification by the stockholders at the Annual Meeting. MHM was the independent registered public accounting firm for the Company and its subsidiaries for the fiscal year ended September 30, 2017. MHM leases substantially all its personnel, who work under the control of MHM shareholders, from wholly-owned subsidiaries of CBIZ, Inc., including CBIZ MHM, LLC, in an alternative practice structure.Representatives of MHM will be present at the Annual Meeting and will be given the opportunity to make a statement if they so desire and to respond to appropriate questions.
The decision to appoint MHM as the independent registered public accounting firm for the Company and its subsidiaries for the fiscal year ended September 30, 2021. The Audit Committee regularly reviews and determines whether any non-audit services provided by Deloitte potentially affects its independence with respect to the Company. The Audit Committee’s policy is to pre-approve all audit and permissible non-audit services provided by Deloitte. Pre-approval is generally provided by the Audit Committee for up to one year, is detailed as to the particular service or category of services to be rendered and is generally subject to a specific budget. The Audit Committee may also pre-approve additional services or specific engagements on a case-by-case basis. Management provides annual updates to the Audit Committee regarding the extent of any services provided in accordance with this pre-approval. To date, all services performed by Deloitte have been pre-approved by the Audit Committee in accordance with this policy. It is not expected that representatives of Deloitte will be present at the Annual Meeting.
Prior to August 21, 2019, the Audit Committee had engaged Mayer Hoffman McCann P.C. (“MHM”) as the independent registered public accounting firm for the Company. As previously disclosed, on August 21, 2019, the Audit Committee formally appointed Deloitte, and formally dismissed MHM, as the Company’s independent registered public accounting firm.
The reports of MHM on the consolidated financial statements of the Company and subsidiaries for the interim period commencing on October 1, 2018 through August 21, 2019 did not contain any adverse opinion or a disclaimer of opinion and was not qualified or modified as to uncertainty, audit scope or accounting principles.
During the interim period commencing on October 1, 2018 through August 21, 2019, there were (i) no disagreements within the meaning of Item 304(a)(1)(iv) of Regulation S-K between the Company and MHM on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, any of which, if not resolved to MHM’s satisfaction, would have caused MHM to make reference thereto in their reports, and (ii) no “reportable events” within the meaning of Item 304(a)(1)(v) of Regulation S-K.
The following table sets forth the aggregate fees billed, or expected to be billed, by Deloitte with respect to audit and non-audit services for the Company during the fiscal years ended September 30, 2020 and 2019, and the aggregate fees billed by MHM with respect to audit and non-audit services for the Company during the fiscal year ended September 30, 2019 before the change in auditors became effective:
|
| Year Ended September 30, |
| |||||||||
Fee Category |
| 2020 |
|
| 2019 |
| ||||||
|
| Deloitte |
|
| Deloitte |
|
| MHM |
| |||
Audit fees (1) |
| $ | 789,344 |
|
| $ | 643,364 |
|
| $ | 262,565 |
|
Audit-related fees (2) |
|
| 160,000 |
|
|
| 50,000 |
|
|
| 22,078 |
|
Tax fees (3) |
|
| 124,548 |
|
|
| — |
|
|
| — |
|
All other fees (4) |
|
| 1,895 |
|
|
| — |
|
|
| 120,000 |
|
Total |
| $ | 1,075,787 |
|
| $ | 693,364 |
|
| $ | 404,643 |
|
(1) | Consists of fees billed for professional services rendered for the audit of our consolidated financial statements and review of our interim consolidated financial statements included in quarterly reports and services that are normally provided in connection with statutory and regulatory filings or engagements, including post-effective amendments to previously filed registration statements. |
(2) | Includes services that are reasonably related to the performance of the audit or review of the financial statements, including audit and attestation services related to financial reporting that are not required by statute or regulation. |
(3) | Tax fees generally consist of tax compliance and return preparation, and tax planning and advice. Tax compliance and return preparation services consist of preparing original and amended tax returns and claims for refunds. Tax planning and advice services consist of support during income tax audits or inquiries. |
(4) | All other fees consist of permitted services other than those that meet the criteria above. For the year ended September 30, 2020 such fees were for technical subscriptions. For the year ended September 30, 2019 such fees were for transition services. |
As part of its duties, the Audit Committee considers whether the provision of services, other than audit services, by Deloitte is compatible with maintaining the auditor’s independence. All audit fees, including audit fees associated with the audit by Deloitte and MHM of the Company’s consolidated financial statements for the years ended September 30, 2020 and 2019, audit related fees that were billed by Deloitte and MHM, and all other fees that were billed by MHM were approved by the Audit Committee in accordance with SEC requirements.
The decision to appoint Deloitte as the independent registered public accounting firm for the Company and its subsidiaries for the fiscal year ended September 30, 2021 was approved by the Audit Committee. Stockholder ratification of the appointment of MHMDeloitte as the independent registered public accounting firm for the Company and its subsidiaries is not required by the Company’s bylaws or otherwise. However, the Audit Committee is submitting the appointment of MHMDeloitte to the stockholders for ratification as a matter of good corporate governance. If the stockholders fail to ratify the appointment of MHM,Deloitte, the Audit Committee will reconsider whether or not to retain MHMDeloitte or engage a different firm. Even if the appointment is ratified, the Audit Committee, in its discretion, may direct the appointment of a different independent registered public accounting firm at any time during the year if they determine that such a change would be in the best interests of the Company and its stockholders.
During the fiscal years ended September 30, 2017 and 2016, there were no (i) disagreements, as defined in Item 304(a)(1)(v) of Regulation S-K, between the Company and MHM, on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, any of which that, if not resolved to MHM’s satisfaction, as applicable, would have caused MHM to make reference to the subject matter of any such disagreement in connection with its reports for such year and (ii) reportable events as defined in Item 304(a)(1)(v) of Regulation S-K.
During the fiscal year ended September 30, 2017, the Company did not consult with MHM regarding any of the matters described in Item 304(a)(2)(i) and (ii) of Regulation S-K.
The following table sets forth the aggregate fees billed to the Company for the fiscal years ended September 30, 2017 and 2016 by MHM. As part of its duties, the Audit Committee considers whether the provision of services, other than audit services, by MHM is compatible with maintaining the auditor’s independence.
Fee Category |
| 2017 |
|
| 2016 |
| ||
Audit fees (1) |
| $ | 537,000 |
|
| $ | 518,000 |
|
Audit-related fees (2) |
|
| — |
|
|
| 125,000 |
|
Tax fees |
|
| — |
|
|
| — |
|
All other fees |
|
| — |
|
|
| — |
|
Total |
| $ | 537,000 |
|
| $ | 643,000 |
|
Audit Committee’s Pre-Approval Policies and Procedures
Consistent with policies of the SEC regarding auditor independence and the Audit Committee Charter, the Audit Committee has the responsibility for appointing, setting compensation and overseeing the work of the registered independent public accounting firm (the “Firm”). The Audit Committee’s policy is to pre-approve all audit and permissible non-audit services provided by the Firm. Pre-approval is detailed as to the particular service to category of services and is generally subject to a specific budget. The Audit Committee may also pre-approve particular services on a case-by-case basis. In assessing request for services by the Firm, the Audit Committee considers whether such services are consistent with the Firm’s independence, whether the Firm is likely to provide the most effective and efficient service based upon their familiarity with the Company, and whether the service could enhance the Company’s ability to manage or control risk or improve audit quality.
All audit fees, including audit fees associated with the audit by MHM of the Company’s consolidated financial statements for the years ended September 30, 2017 and 2016, and audit-related fees that were billed by MHM were approved by the Audit Committee in accordance with SEC requirements.
Required Vote
The affirmative vote of at least a majority of the votes cast at the meeting at which a quorum is present, either in person or by proxy, is required to approve Proposal 6.2.
THE BOARD RECOMMENDS A VOTE “FOR” the ratification of the appointment of MAYER HOFFMAN MCCANN P.C.DELOITTE & TOUCHE LLP as the independent registered public accounting firm for the COMPANY AND ITS SUBSIDIARIES for the fiscal year ending September 30, 2018.2021.
EXECUTIVE COMPENSATION
Named Executive Officers and Other Key Employees
The following table sets forth the name and position of our named executive officers and other key employees for the fiscal year ended September 30, 2017.2020.
Name |
| Principal Position | |
Named Executive |
|
| |
Jess M. Ravich |
| Chief Executive | |
Anna Van Buren |
| President and Chief Executive Officer, Faneuil | |
|
| ||
|
|
| |
Brian Hartman |
| Chief Financial Officer | |
|
|
|
The information provided below is biographical information about each other key employee. For information concerning our named executive officers, see “Information Regarding Directors” above.
Brian Hartman. Mr. Hartman has served as Chief Financial Officer since August 2017. Previously, Mr. Hartman was the Senior Vice President, Chief Financial Officer of Arcade Beauty, a manufacturer of sampling solutions for the beauty, fragrance and skincare segments, having served in such role since March 2012. From April 2005 to March 2012, Mr. Hartman was the Vice President, Corporate Controller of Visant Corporation, a specialty printing and marketing services enterprise. From January 1996 to April 2005, Mr. Hartman was the Controller for Metallurg Inc, a producer and distributor of specialty metals. Prior to this, Mr. Hartman held various accounting and auditing positions at Witco Chemical Corp., a manufacturer of specialty chemicals and Deloitte & Touche, LLP. Mr. Hartman is a certified public accountant and received a Bachelor of Business Administration degree in public accounting and a Master of Business Administration in financial management from Pace University.
Steve Chesin. Mr. Chesin has served as the Chief Executive Officer of Carpets since August 2007. From 2002 to 2007, Mr. Chesin served as the Executive Vice President of Carpets. From 1995 to 2001, Mr. Chesin served as the Senior Vice President and the Chief Operating Officer of Carpet Barn Inc., a subsidiary of Nations Flooring Inc. Mr. Chesin attended University of Nevada, Las Vegas.
Each executive officer is chosen by the Board and holds office until a successor has been elected and qualified or until such officer’s earlier death, resignation or removal.
The following table sets forth the total compensation paid or accrued by the Company to the named executive officers and other key employees for services rendered during the last two fiscal years ended September 30, 2017 and 2016. No other executive officers received total annual compensation exceeding $100,000 during such fiscal years.
Name and Principal Position |
| Year Ended September 30, |
| Salary |
|
| Bonus |
|
| Stock Awards(1) |
|
| Option Awards(2) |
|
| Non-equity Incentive Plan Compensation |
|
| All Other Compensation |
|
| Total |
| |||||||
Named Executive Officers: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jess M. Ravich |
| 2017 |
| $ | 93,750 |
|
| $ | — |
|
| $ | 131,250 |
| (3) | $ | — |
|
| $ | — |
|
| $ | — |
|
| $ | 225,000 |
|
Executive Chairman |
| 2016 |
|
| 125,000 |
|
|
| — |
|
|
| 100,000 |
| (3) |
| — |
|
|
| — |
|
|
| — |
|
|
| 225,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Anna Van Buren |
| 2017 |
|
| 520,000 |
|
|
| — |
|
|
| — |
|
|
| 244,196 |
| (4) |
| 798,872 |
| (5) |
| 30,463 |
| (6) |
| 1,593,531 |
|
President and Chief Executive Officer, Faneuil |
| 2016 |
|
| 520,000 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 628,737 |
| (5) |
| 30,413 |
| (6) |
| 1,179,150 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Marc Reisch |
| 2017 |
|
| 200,000 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
| (7) |
| — |
|
|
| 200,000 |
|
Chairman, Phoenix |
| 2016 |
|
| 200,000 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 74,246 |
| (7) |
| — |
|
|
| 274,246 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Key Employees: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brian Hartman |
| 2017 |
|
| 45,769 |
| (8) |
| 175,000 |
| (9) |
| — |
|
|
| 239,063 |
| (10) |
| — |
|
|
| — |
|
|
| 459,832 |
|
Chief Financial Officer |
| 2016 |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Steve Chesin |
| 2017 |
|
| 300,000 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 300,000 |
|
President and Chief Executive Officer, Carpets |
| 2016 |
|
| 300,000 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 300,000 |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
Employment Arrangements with Named Executive Officers and Other Key Employees
Named Executive Officers
Jess M. Ravich. Mr. Ravich has served as our Executive Chairman since February 2013. During the last two fiscal years, Mr. Ravich has received total annual compensation of $225,000. From October 1, 2015, through June 30, 2017, Mr. Ravich elected to receive $125,000 in cash and $100,000 in common stock. Effective July 1, 2017, Mr. Ravich elected to receive his entire annual compensation of $225,000 in common stock.
Anna Van Buren. In October 2013, concurrent with ALJ’s acquisition of Faneuil, Faneuil entered into an employment agreement with Ms. Van Buren through December 31, 2018. In August 2017, Faneuil and Ms. Van Buren entered into an amended employment agreement, which extended the term to December 31, 2021. Pursuant to the original employment agreement, Ms. Van Buren received an annual base salary of $520,000 and was eligible to earn an incentive bonus equal to 10% of Faneuil’s defined EBITDA, before any bonus amount owed to Ms. Van Buren, in excess of $5,000,000. The amended employment agreement changed the following material terms: (i) the thresholds for calculating Ms. Van Buren’s incentive bonus increased to $6,250,000 for calendar year 2017 and $7,500,000 thereafter, subject to further adjustment by ALJ’s Compensation, Nominating and Corporate Governance Committee from time to time in its discretion, (ii) the incentive bonus percentage decreased from 10% to 5% of Faneuil’s pre-bonus EBITDA in the event that Ms. Van Buren’s total annual compensation reached $2,000,000, and (iii) the severance payment decreased to the lesser of one-year base salary or pro-rated base salary for the remaining term. Ms. Van Buren’s annual base salary remains $520,000.
Marc Reisch. In August 2015, concurrent with ALJ’s acquisition of Phoenix, ALJ entered into an employment agreement with Mr. Reisch through December 31, 2018. In March 2018, Phoenix and Mr. Reisch entered into an amended employment agreement, which extended the term to December 31, 2021. Pursuant to the original employment agreement, Mr. Reisch received an annual base salary of $200,000 and was eligible to earn an annual bonus equal to five percent (5%) of the defined EBITDA of Phoenix in excess of $20,000,000, before any bonus amount owed to Mr. Reisch and the Chief Operating Officer of Phoenix. In connection with ALJ’s acquisition of Phoenix, ALJ granted Mr. Reisch an option to purchase 250,000 shares of ALJ’s common stock at $4.27 per share. The option expires on August 13, 2025. The amended employment agreement changed the following material terms: (i) the incentive bonus percentage increased from 5% to 10% of the positive difference (if any) between Phoenix’s pre-bonus EBITDA and $20,000,000 in the event that pre-bonus EBITDA is $27,000,000 or less, (ii) the incentive bonus amount was set to be the sum of $700,000 and five percent (5%) of the positive difference between the pre-bonus EBITDA less $27,000,000 in the event the pre-bonus EBITDA is greater than $27,000,000, and (iii) the severance payment changed to the full annual bonus for each calendar year for the remaining term, if such annual bonus would have been paid had he still been employed. Mr. Reisch’s annual base salary remains $200,000.
Other Key Employees
Brian Hartman. In connection with ALJ’s appointment of Mr. Hartman to serve
Marc Reisch
Chairman, Phoenix
The information provided below is biographical information about our non-director Named Executive Officers and other key employees. For information concerning our named executive officers who are also our directors, see “Information Regarding Directors” above.
Brian Hartman. Mr. Hartman has served as its Chief Financial Officer since August 2017. Previously, Mr. Hartman was the Senior Vice President, Chief Financial Officer of Arcade Beauty, a manufacturer of sampling solutions for the beauty, fragrance and skincare segments, having served in such role since March 2012. From April 2005 to March 2012, Mr. Hartman was the Vice President, Corporate Controller of Visant Corporation, a specialty printing and marketing services enterprise. From January 1996 to April 2005, Mr. Hartman was the Controller for Metallurg Inc, a producer and distributor of specialty metals. Prior to this, Mr. Hartman held various accounting and auditing positions at Witco Chemical Corp., a manufacturer of specialty chemicals, and Deloitte & Touche LLP. Mr. Hartman is a certified public accountant and received a Bachelor of Business Administration degree in public accounting and a Master of Business Administration in financial management from Pace University.
Marc Reisch. Mr. Reisch was appointed Chairman of Phoenix in August 2015 and served as a director of the Company from that time until his resignation as director effective October 24, 2019. Mr. Reisch served as Chairman of the Board, Chief Executive Officer and President of Visant and Visant Holding Corp. from October 2004 to November 2015. Prior to joining Visant, he served as Senior Advisor to Kohlberg Kravis Roberts & Co. and has over 35 years of experience in the printing and publishing industries. Mr. Reisch holds a Bachelor of Science degree and a Master of Business Administration degree from Cornell University.
Each executive officer is chosen by the Board and holds office until a successor has been elected and qualified or until such officer’s earlier death, resignation or removal.
Summary Compensation Table
The following table sets forth the total compensation paid or accrued by the Company to the named executive officers and other key employees for services rendered during the last two fiscal years ended September 30, 2020 and 2019. No other executive officers received total annual compensation exceeding $100,000 during such fiscal years.
Name and Principal Position |
| Fiscal Year |
| Salary |
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| Bonus |
|
| Stock Awards (1) |
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| Non-equity Incentive Plan Compensation |
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| All Other Compensation |
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| Total |
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Named Executive Officers: |
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Jess M. Ravich |
| 2020 |
| $ | 225,000 |
| (2) | $ | — |
|
| $ | — |
|
| $ | — |
|
| $ | 81,096 |
| (3) | $ | 306,096 |
|
Chief Executive Officer |
| 2019 |
|
| 37,500 |
| (2) |
| — |
|
|
| 187,500 |
| (2) |
| — |
|
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| 11,136 |
| (3) |
| 236,136 |
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Anna Van Buren |
| 2020 |
|
| 520,000 |
|
|
| — |
|
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| — |
|
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| — |
|
|
| 42,351 |
| (6) |
| 562,351 |
|
President and CEO, Faneuil |
| 2019 |
|
| 520,000 |
|
|
| 250,000 |
| (4) |
| — |
|
|
| 341,275 |
| (5) |
| 31,153 |
| (6) |
| 1,142,428 |
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Brian Hartman |
| 2020 |
|
| 375,000 |
|
|
| 234,375 |
| (7) |
| — |
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| — |
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| — |
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| 609,375 |
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Chief Financial Officer |
| 2019 |
|
| 350,000 |
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| 198,875 |
| (7) |
| — |
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| — |
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| — |
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| 548,875 |
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Other Key Employees: |
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Marc Reisch |
| 2020 |
|
| 200,000 |
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| — |
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| — |
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| 87,958 |
| (8) |
| — |
|
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| 287,958 |
|
Chairman, Phoenix |
| 2019 |
|
| 200,000 |
|
|
| — |
|
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| — |
|
|
| 80,000 |
| (8) |
| — |
|
|
| 280,000 |
|
(1) | This column represents the aggregate fair value of common stock awards calculated in accordance with Accounting Standards Codification (“ASC”) Topic 718, “Compensation – Stock Compensation” (“ASC Topic 718”). Fair value is the closing price of the common stock as listed on the NASDAQ Global Market on the issuance date. |
(2) | During the last two fiscal years, Mr. Ravich has received total annual compensation of $225,000. From October 2017 through July 2019, Mr. Ravich elected to receive his entire annual compensation in ALJ common stock. Beginning in August |
(3) | Out-of-policy business expenses, which were allowed up to $192,000 from July 29, 2019 through September 30, 2020 under the terms of Mr. Ravich’s employment |
(4) | Represents a discretionary bonus, which was approved by |
(6) | Represents health care insurance premiums. Fiscal Year 2020 included a $10,000 cash payment in lieu of paid time off. |
(7) | Represents performance bonus according to the terms of Mr. |
(8) | Represents an annual bonus amount equal to 10% of Phoenix pre-bonus EBITDA, in excess of $20.0 million, with a step down to 5% in excess of $27.0 million. Mr. |
Employment Arrangements with Named Executive Officers and Other Key Employees
Named Executive Officers
Jess M. Ravich. On July 29, 2019, the Company entered into an employment agreement with Mr. Ravich (the “Ravich Employment Agreement”). Prior to entering into the Employment Agreement, Mr. Ravich served as the Company’s Chairman of the Board. Pursuant to the Ravich Employment Agreement, Mr. Ravich assumed full-time responsibilities as the Company’s Chief Executive Officer until September 30, 2020 (the “Initial Term”), subject to subsequent automatic two-year renewals.
Additional material terms of the Ravich Employment Agreement include:
(i) | Base salary is $225,000 per year, of which up to $150,000 per year may be paid at the Company’s discretion through the issuance of the Company’s stock; |
(ii) | A stipend of $117,000 during the Initial Term for Mr. Ravich’s use in connection with out of policy business expenses; |
(iii) | Incentive bonus structure includes (a) an annual bonus in the amount of 10% of the difference between (1) the Company’s pre-bonus consolidated EBITDA less actual cash interest paid during the trailing twelve month measurement period and (2) a bonus threshold of $22,000,000, subject to adjustment from time to time, and (b) a one-time realization bonus for any sale of a business of the Company in an amount equal to: (1) for a sale of Faneuil, 2.5% of the first $25,000,000 of profit from such sale, less growth capital expenditures (“Profit”), and 5% of any Profit in excess of $25,000,000; (2) for a sale of any other subsidiary, 5% of the Profit; |
(iv) | A standstill provision, pursuant to which (a) Mr. Ravich, without |
(v) | A clawback provision in the event of (a) a material restatement, revision or change to the Company’s financial statements requiring a recalculation of EBITDA for |
On June 21, 2020, the Company entered into an amended and restated employment agreement with Jess M. Ravich (the “A&R Ravich Employment Agreement”). The A&R Ravich Employment Agreement amended and restated Ravich Employment Agreement, which term was to expire on September 30, 2020. Pursuant to the A&R Ravich Employment Agreement, effective July 1, 2020 (the “Effective Date”), Mr. Ravich will continue to serve as the Company’s Chief Executive Officer until September 30, 2022 (the “A&R Initial Term”), subject to subsequent automatic two-year renewals.
Additional material terms amended by the A&R Ravich Employment Agreement include:
(i) | No annual bonus for the fiscal year ending September 30, 2020; |
(ii) | An increase in the out of |
(iii) | An amendment to the incentive bonus structure to include (a) an annual bonus in the amount of 10% of the difference between (1) the Company’s pre-bonus consolidated EBITDA less actual cash interest paid during the trailing twelve month measurement period (“Company Adjusted EBITDA”) and (2) a bonus threshold of $7,500,000, subject to adjustment from time to time; provided, that if |
As of September 30, 2020, if Mr. Ravich’s employment is terminated by ALJ without cause, or by Mr. Ravich for good reason, Mr. Ravich is entitled to receive as severance: (i) the lesser of one-year base salary or pro-rated base salary for the remaining term; (ii) continuation of group health plan benefits, with the cost of the regular premium for such benefits paid in full by Faneuil; and (iii) annual bonus prorated for the period of Mr. Ravich’s service during the year of termination and calculated based on actual EBITDA (as defined in the Ravich Employment Agreement) for the year of termination equal to full annual bonus for the year of termination if otherwise entitled to receive the bonus.
Anna Van Buren. In October 2013, concurrent with ALJ’s acquisition of Faneuil, Faneuil entered into an employment agreement with Ms. Van Buren through December 2018. In August 2017, Faneuil and Ms. Van Buren entered into an amended employment agreement (the “Van Buren Amended Employment Agreement”), which extended the term to December 2021. Pursuant to the Van Buren Amended Employment Agreement, Ms. Van Buren receives an annual base salary of $520,000 and is eligible to earn an incentive bonus equal to 10% of Faneuil EBITDA, as defined in the Van Buren Amended Employment Agreement, before any bonus amount owed to Ms. Van Buren, in excess of $6,250,000 for calendar year 2017 and $7,500,000 thereafter, subject to further adjustment by ALJ Compensation, Nominating and Corporate Governance Committee from time to time in its discretion, with a step down to 5% of pre-bonus Faneuil EBITDA at $2,000,000 total compensation.
As of September 30, 2020, if Ms. Van Buren’s employment is terminated by Faneuil without cause, or by Ms. Van Buren for good reason, Ms. Van Buren is entitled to receive: (i) the lesser of one-year base salary or pro-rated base salary for the remaining term; (ii) continuation of group health plan benefits, with the cost of the regular premium for such benefits paid in full by Faneuil; (iii) full annual bonus for the year of termination if otherwise entitled to receive the bonus; and (iv) the annual bonus for the previous year if such bonus has been earned but not yet paid at time of termination.
Brian Hartman. In connection with ALJ’s appointment of Mr. Hartman to serve as its Chief Financial Officer in August 2017, ALJ entered into an employment agreement with Mr. Hartman through August 2018, subject to one-year renewals. Pursuant to the employment agreement, Mr. Hartman received an annual base salary of $300,000, a one-time sign-on bonus of $75,000, a cash bonus of $100,000 for the calendar year 2017, and an individual bonus target of 50% of annual base salary effective January 2018. In August 2019, the Company entered into the Second Amended and Restated Employment Agreement (the “A&R Employment Agreement”) with Mr. Hartman. The A&R Employment Agreement amended and restated the Employment Agreement, dated August 8, 2017, as amended by the First Amended and Restated Employment Agreement dated August 2, 2018, between Mr. Hartman and the Company, which term expired in August 2019. Pursuant to the A&R Employment Agreement, Mr. Hartman will serve as the Company’s Chief Financial Officer until September 30, 2021, subject to further one-year or two-year renewals, as determined by the Chief Executive Officer of the Company. Additional material terms changed by the A&R Employment Agreement include: (i) an increase in base salary from $350,000 to $375,000 effective October 2019, and (ii) Mr. Hartman’s incentive bonus structure, which was amended to include an annual bonus target of (a) up to 50% of his annual base salary based on the general quality and success of his efforts during the immediately preceding fiscal year and (b) up to 25% of his annual base salary based on certain goals agreed between the Chief Executive Officer and Mr. Hartman for the applicable fiscal year.
As of September 30, 2020, if Mr. Hartman’s employment is terminated by ALJ without cause, or by Mr. Hartman for good reason, Mr. Hartman is entitled to receive: (i) nine months of base salary; (ii) continuation of group health plan benefits with the cost of the regular premium for such benefits shared in the same relative proportion by ALJ and Mr. Hartman as in effect on the date of termination; (iii) full annual bonus for the year of termination if otherwise entitled to receive the bonus; and (iv) the annual bonus for the previous year if such bonus has been earned but not yet paid at time of termination.
Other Key Employees
Marc Reisch. In August 2015, concurrent with ALJ’s acquisition of Phoenix, Phoenix entered into an employment agreement with Mr. Reisch through December 2018. In August 2018, Phoenix entered into a new employment agreement with Mr. Reisch, which superseded and terminated the August 2015 employment agreement, and extended the term to December 2021. In November 2020, Phoenix entered into a new employment agreement (the “New Reisch Agreement”) with Mr. Reisch. In connection with the entry into the New Reisch Agreement, the previous employment agreement, entered into in August 2018 (the “Old Reisch Agreement”) was superseded and terminated. Pursuant to the New Reisch Agreement, Mr. Reisch’s term was extended to September 2023. Additional material terms changed by the New Reisch Agreement as compared to the Old Reisch Agreement include:
(i) | a one-time payment of $300,000 to be paid on or prior to December 31, 2020, in full satisfaction of any amounts owed under the Old Reisch Agreement; |