Audit Committee. The Audit Committee held four meetings during 2022. The Audit Committee’s responsibilities, which are described in detail in its charter, include, among other duties,Shareholders of record owning fewer than the responsibility to:

The Audit Committee has the sole authority to retain, set compensation and retention terms for, terminate and oversee the relationship with Safeguard’s independent registered public accounting firm (which reports directlyMinimum Number of shares of common stock immediately prior to the Audit Committee). The Audit Committee also oversees the activitieseffective time of the internal auditor, reviewsReverse Stock Split, whom we refer to as the “Cashed Out Shareholders,” and who will only be entitled to a fraction of a share of common stock upon the effectiveness of the internal audit function and approvesReverse Stock Split, will be paid cash, in lieu of such fraction of a share of common stock, on the appointmentbasis of $1.65, without interest, for each share of common stock held immediately prior to the effective time of the internal auditor. The Audit Committee has the authority to obtain advice, counselReverse Stock Split, and assistance from internal and external legal, accounting or other advisors as the Audit Committee deems necessary to carry out its duties and to receive appropriate funding from Safeguard for such advice and assistance. Although the Audit Committee has the powers and responsibilities set forth in its charter, its role is oversight, and management has primary responsibility for the financial reporting processthey will no longer be shareholders of Safeguard.

Shareholders of record who own at least the Minimum Number of shares common stock immediately prior to the effective time of the Reverse Stock Split, whom we refer to as the “Continuing Shareholders,” will not receive any cash for their fractional share interests resulting from the Reverse Stock Split, if any. The Forward Stock Split that will immediately follow the Reverse Stock Split will reclassify whole shares and fractional shares held by the Continuing Shareholders after the Reverse Stock Split back into the same number of shares of common stock they held immediately before the effective time. As a result, the total number of shares of common stock held by a Continuing Shareholder will not change, but their ownership percentage will increase.

Although amendments to our articles of incorporation to effect each of the Reverse Stock Split and the Forward Stock Split will be voted on separately, we will not effect either the Reverse Stock Split or the Forward Stock Split unless the proposals to approve both amendments are each approved by shareholders. Even if the proposals are approved by our shareholders, the Board may still determine that it is no longer in the best interests of Safeguard or our shareholders to proceed with the Stock Splits or the Transaction.

Purpose of and Reasons for the Stock Splits and the Transaction

The primary purpose of the Stock Splits is to enable Safeguard to reduce the number of record holders of its common stock below 300, which is the level at or above which Safeguard is required to file public reports with the SEC. If the Board determines to proceed with the Transaction, it will determine the Stock Split Ratios after the special meeting, however Safeguard believes that any Reverse Stock Split ratio within the proposed range would reduce the number of record holders below 300. The Stock Splits are being undertaken as part of our plan to suspend our duty to file periodic and current reports and other information with the SEC pursuant to the Exchange Act.

After giving effect to the Transaction, we will no longer be subject to the reporting requirements under the Exchange Act or other requirements applicable to a public company, including requirements under the Sarbanes-Oxley Act and the listing standards of any national securities exchange. In addition to being delisted from Nasdaq, we do not intend to list our shares of common stock on any other national securities exchange. Any trading in our common stock after giving effect to the Transaction would only occur in privately negotiated sales and potentially on an OTC market, if one or more brokers chooses to make a market for our common stock on any such market and complies with applicable regulatory requirements; however, there can be no assurances regarding any such trading.

The Board has determined that each memberthe costs of being an SEC reporting company outweigh the Audit Committee meetsbenefits and, thus, it is no longer in the independence requirements established bybest interests of our shareholders, including our unaffiliated shareholders (consisting of shareholders other than our executive officers, directors and shareholders who own more than 10% of our outstanding common stock), for us to remain an SEC regulations, NASDAQ listing standards and our Corporate Governance Guidelines.reporting company. The Board has also determined that Mr. DeMont, Mr. Glass, Mr. Manko and Ms. MichelsonStock Splits, along with other actions constituting the Transaction, are “audit committee financial experts” withinintended to make us a non-SEC reporting company.

Our principal reasons for the meaning ofTransaction (including the SEC regulations, and the Board has determined that each member of the Audit Committee has accounting and related financial management expertise within the meaning of the NASDAQ listing standards.

Compensation Committee. The Compensation Committee held three meetings during 2022. The Compensation Committee’s responsibilities, whichproposed Stock Splits) are described in detail in its charter, include, among other duties, the responsibility to:as follows:

It also is the responsibility of the Compensation Committee to assess Safeguard’s compensation policies and practices insofar as they may create risk for Safeguard. The Compensation Committee evaluates this risk annually and made the affirmative determination that it does not believe that any of our compensation policies and practices are reasonably likely to have a material adverse effect on Safeguard.

The Board has determined that each member of the Compensation Committee meets the independence requirements established by SEC regulations, NASDAQ listing standards and our Corporate Governance Guidelines.

Nominating & Corporate Governance Committee. The Nominating & Corporate Governance Committee held two meetings during 2022. The Nominating & Corporate Governance Committee’s responsibilities, which are described in detail in its charter, include, among other duties, the responsibility to:

The Board has determined that each member of the Nominating & Corporate Governance Committee meets the independence requirements established in NASDAQ listing standards and by our Corporate Governance Guidelines.

Annual Performance Evaluations. The Nominating & Corporate Governance Committee annually assesses the performance of the Board and the individual performance of each Board member, based on input from all directors, and shares its assessment with the Board. The Audit Committee, Compensation Committee and Nominating & Corporate Governance Committee also annually assess their respective performance and committee processes. The Chairman of the Board reviews the feedback received on individual director performance with each director and solicits suggestions for improving committee and Board performance.

Board Refreshment and Tenure. Our Corporate Governance Guidelines do not maintain term limits on the service of our directors.  The Board believes that term limits could result in the loss of directors who have been able to develop over time increasing insight into our business and operations and an institutional memory that benefits the entire membership of the Board.  Instead, the Nominating & Corporate Governance Committee reviews annually each director’s continuation on the Board, which allows the director to confirm his or her desire to continue to serve and provides the Board an opportunity to refresh its membership when it deems appropriate.

There has been significant Board refreshment since 2018, with two of the four nominees for election to the Board having joined the Board during or after 2018 and the remaining two nominees having joined the Board in 2022.

Our Corporate Governance Guidelines generally restrict a non-employee director who has reached his or her 75^th birthday prior to the date of our annual meeting of shareholders from being nominated for re-election to the Board.  However, the Nominating & Corporate Governance Committee may, in special circumstances and where deemed in Safeguard’s best interests, grant an exception to this policy on an annual basis.

Review and Approval of Transactions with Related Persons. The Board has adopted a written policy that charges the Audit Committee with the responsibility of reviewing with management at each regularly scheduled meeting and determining whether to approve any transaction (other than a transaction that is available to all employees generally on a non-discriminatory basis) between us and our directors, director nominees and executive officers or their immediate family members. Between regularly scheduled meetings of the Audit Committee, management may preliminarily approve a related party transaction, subject to ratification of the transaction by the Audit Committee. If the Audit Committee does not ratify the transaction, management will make all reasonable efforts to cancel the transaction.

Risk Management. Our Board, as a whole and at the committee level, is actively involved in the oversight of risks that affect Safeguard’s business. The Compensation Committee is responsible for overseeing the management of risks relating to our compensation plans and arrangements. The Audit Committee oversees the management of financial related risks and related party transactions. The Nominating & Corporate Governance Committee manages risks associated with the independence of our Board and potential conflicts of interest. Although the oversight of certain risks is conducted through committees of the Board, our full Board retains responsibility for risk oversight and no individual committee has been delegated responsibility for such function. Our Board receives reports at each regularly scheduled Board meeting by each committee chair regarding each committee’s considerations and actions, as well as regular reports directly from our senior management team regarding particular risks that may impact Safeguard. This allows our Board and its committees to coordinate the risk oversight role and to keep our Board timely apprised of all risks that might impact Safeguard’s business.

Communications with Safeguard’s Board. Any shareholder or other interested party may communicate with our Board or any specified non-management director(s) by addressing the communication as follows:

c/o Corporate Secretary

Safeguard Scientifics, Inc.

150 N. Radnor Chester Rd.

STE F-200

Radnor, PA 19087

All communications are initially reviewed by the Corporate Secretary. The Chair of the Audit Committee is advised promptly of any such communication that alleges misconduct on the part of Safeguard’s management or raises legal, ethical or compliance concerns about Safeguard’s policies or practices. Typically, we do not forward to our independent directors communications from our shareholders or other communications which are of a personal nature or not related to the duties and responsibilities of the Board, including, without limitation, business plan or other business opportunity submissions, inquiries related to products or services provided by Safeguard’s companies, spam, junk mail and mass mailings, resumes and other forms of job inquiries, surveys or polls, business solicitations or advertisements, and any material that relates to improper or irrelevant topics or is unduly hostile, threatening, illegal or similarly unsuitable.

Process for Shareholders to Recommend Potential Director Candidates. In addition to its other responsibilities, the Nominating & Corporate Governance Committee is responsible for screening potential director candidates and recommending qualified candidates to the Board for nomination. The Nominating & Corporate Governance Committee may use any number of methods to identify and evaluate potential director nominees, including personal, management and industry contacts; recruiting firms; and candidates recommended by shareholders.

The Nominating & Corporate Governance Committee considers properly submitted shareholder recommendations of director candidates in substantially the same manner as it considers director candidate recommendations from other sources. Any shareholder recommendation must include the following: the nominee’s name and the information about the nominee that would be required in a proxy statement under the SEC’s rules; information about the relationship between the nominee and the recommending shareholder; proof of the number of shares of Safeguard common stock that the recommending shareholder owns and the length of time the shares of Safeguard common stock have been owned; and a letter from the nominee consenting to serve, if elected, as a director.

Recommendations should be addressed to the Chairperson, Nominating & Corporate Governance Committee:

c/o Corporate Secretary

Safeguard Scientifics, Inc.

150 N. Radnor Chester Rd.

STE F-200

Radnor, PA 19087

Board Compensation. During 2022, each of our directors was compensated for his or her service as a director through payments as shown in the table below:

The foregoingsmall amounts are not paid in cash and are instead paid in the form of our common stock based upon the average closing price of a share of our common stock on NASDAQ (or, prior to Safeguard’s listing on NASDAQ, the New York Stock Exchange composite tape) for the 20 consecutive trading days immediately preceding the grant date.

Directors’ fees are paid quarterly, in arrears, and retainers are prorated based on actual days of service relative to a full year of Board service or the service period during which the fees were in effect. We also reimburse our directors for expenses they incur, if any, to attend our Board and committee meetings and for attendance at one director continuing education program during each calendar year or the reasonable cost of one year’s membership in an organization that is focused on director education.

Each director serving on the Board on July 1, 2022 also received 18,942 shares of restricted stock, which had a value of $75,000 based upon the average closing price of a share of our common stock on the New York Stock Exchange composite tape for the 20 consecutive trading days immediately preceding July 1, 2022. These annual restricted stock service grants are fully vested at issuance for directors who have reached age 65 and otherwise vest on the first anniversary of the grant date or, if earlier, once a director reaches age 65.

Safeguard also maintained a Group Deferred Stock Unit Program for Directors (“Directors’ DSU Program”), which was applicable when directors received cash compensation for their Board service and allowed each outside director, at his or her election, to receive DSUs in lieu of the cash retainers when such cash retainers were paid to the directors, as described above, for service on the Board and its committees (“Directors’ Fees”). The deferral election applied to Directors’ Fees to be received for the calendar year following the year in which the election was made and remained in effect for each subsequent year unless the director elected otherwise by the end of the calendar year prior to the year in which the services were rendered. The number of DSUs awarded was determined by dividing the Directors’ Fees by the fair market value of Safeguard’s stock on the date on which the director would have otherwise received the Directors’ Fees. Each director also received a number of matching DSUs, based on the same fair market value calculation, equal to 25% of the Directors’ Fees deferred. A director was always fully vested in DSUs awarded in lieu of Directors’ Fees deferred; the matching DSUs were fully vested at grant for directors who have reached age 65 and otherwise vested on the first anniversary of the date the matching DSUs were credited to the director’s account or, if earlier, once a director reaches age 65. Each DSU entitled the director to receive one share of Safeguard common stock following the date upon which the director left the Board. A director also could elect to receive the stock in annual installments over a period of up to five years after leaving the Board.

Director Compensation – 2022. The following table provides information on compensation earned for services provided during 2022 by each director who served on our Board at any time during 2022:

Stock Ownership Guidelines. Each non-employee director is expected to own a number of shares of our stock having a value at least equal to a designated multiple of the annual retainer paid to such director for service on our Board. Such ownership is expected to be achieved within the later of five years after an individual’s election to our Board or the fifth anniversary following any increase in the required multiple of the annual retainer. Since 2012, the equity position threshold in our stock that is required to be held by non-employee directors is three times the annual Board retainer. No sales of stock are permitted during the period in which the ownership requirement has not been met (except for limited stock sales to meet tax obligations), without the approval of the Board. Shares counted toward these guidelines include:

For purposes of calculating the value to be used in monitoring compliance with the ownership guidelines, we utilize (a) the greater of the current value or the cost basis of purchased shares; (b) the greater of the current value or fees deferred in connection with vested DSUs; and (c) our trailing six-month average share price in determining Net Option Value.

Based on information they have provided to us, each non-employee director serving on the Board during 2022 has achieved the required ownership levels.

PROPOSAL NO. 2 – NON-BINDING, ADVISORY VOTE ON NAMED EXECUTIVE
OFFICER COMPENSATION

Consistent with our Board’s initial determination, in 2017 our Board again determined that an annual advisory “say-on-pay” vote on executive compensation would be the most appropriate alternative for Safeguard and approximately 81% of the votes cast by our shareholders at our 2017 annual meeting were voted in favor of future advisory say-on-pay votes being held annually.

Accordingly, pursuant to Section 14A of the Securities Exchange Act of 1934, as amended, we are providing our shareholders with the opportunity to endorse or not endorse Safeguard’s 2022 executive compensation as described in this proxy statement. Shareholders also may abstain from voting.

In considering your vote, we invite you to review the Compensation Discussion and Analysis beginning on page 24 of this proxy statement. As described in the Compensation Discussion and Analysis, the purpose of Safeguard’s compensation policies and procedures is to attract and retain experienced, highly qualified executives crucial to Safeguard’s ultimate success and enhancement of shareholder value. The Compensation Committee has developed an executive compensation program designed to pay for performance and to align the interests of our named executive officers with the interests of our shareholders. The vote is intended to provide an overall assessment of our executive compensation program rather than focus on any specific item of compensation.

Our Board recommends that shareholders indicate their support for the 2022 executive compensation afforded to Safeguard’s named executive officers by voting FOR the following resolution:

“RESOLVED, that the compensation paid to Safeguard’s named executive officers, as disclosed pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, the compensation tables and related narrative disclosure included in this proxy statement, is hereby APPROVED.”

This vote will not be binding on our Board or the Compensation Committee and may not be construed as overruling a decision by our Board or the Compensation Committee or imply any additional fiduciary duty on our Board. Further, it will not affect any compensation paid or awarded to any executive.

Recommendation of the Board of Directors

Our Board of Directors recommends that you vote “FOR” the approval of the compensation paid to Safeguard’s named executive officers in 2022 as disclosed in this proxy statement.

Even after giving effect to the Transaction, our corporate ethics standards will continue to reflect our commitment to integrity. Accordingly, our commitment to a high standard of accounting practices and regulatory compliance will remain. In addition, despite no longer being an SEC reporting company, Safeguard will continue to be subject to the general anti-fraud provisions of applicable federal and state securities laws.

PROPOSAL NO. 3 - NON-BINDING, ADVISORY VOTE CONCERNING THE FREQUENCY OF THE NON-BINDING, ADVISORY VOTE ON EXECUTIVE COMPENSATIONBackground of the Stock Splits to Effect the Transaction

PursuantHistorically, Safeguard has provided capital and relevant expertise to fuel the proxy rules under the Securities Exchange Actgrowth of 1934, as amended, and as required by the Dodd-Frank Act, Safeguard is required, no less frequently than once every six years, to put to shareholders a non-binding, advisory shareholder vote concerning the frequency of future advisory votes concerning executive compensation. Safeguard shareholders may indicate whether they would prefer an advisory vote concerning executive compensation every one (annually), two (biennially) or three (triennially) years. Shareholders also may abstain from voting. Accordingly, Safeguard shareholders are being asked to approve the following resolution:

“RESOLVED, that the shareholders’ non-binding, advisory vote concerning executive compensation shall occur every year, as approved by the shareholders at the annual meeting of shareholders.”

As provided by the Dodd-Frank Act, this vote will not be binding on the Board or the Compensation Committee and may not be construed as overruling a decision by the Board or the Compensation Committee nor imply any additional fiduciary duty on the Board. However, the Compensation Committee and the Board recognize the importance of receiving input from Safeguard’s shareholders on important issues and expect to take into account the outcome of the vote when considering the frequency with which future say-on-pay votes will be held. So long as a quorum representing a majority of our outstanding voting stock is present, either in person or by proxy, the affirmative vote of a majority of the votes cast by all the shareholders entitled to vote for the proposal will determine our shareholders preference for the frequency of advisory votes on executive compensation in the future.

Safeguard’s Board is recommending an annual non-binding, advisory vote concerning executive compensation because the Compensation Committee reviews and considers executive compensation and Safeguard’s compensation policies and procedures on an annual basis. As a result, the Board believes that input from shareholders concerning executive compensation annually, although not binding, would be beneficial to the Compensation Committee as it considers these matters. Shareholders may cast their vote on the frequency of advisory votes on executive compensation for one of the following four choices: every one, two or three years, or abstain. Shareholders are voting on one of these frequencies and are not voting to approve or disapprove Safeguard’s recommendation.

SAFEGUARD’S BOARD RECOMMENDS THAT SHAREHOLDERS VOTE “FOR”

AN ANNUAL NON-BINDING, ADVISORY VOTE CONCERNING EXECUTIVE COMPENSATION.

Compensation Discussion and Analysis

Executive Summary

Our Compensation Committee (for purposes of this discussion, the “Committee”) is responsible for establishing our company-wide compensation philosophy and practices, for determining the compensation for our “named executive officers” and for approving the compensation for our other senior executives, based on the recommendations of our Chief Executive Officer. This Compensation Discussion and Analysis describes our executive compensation program and the compensation decisions made for 2022 for our named executive officers.

technology-driven businesses. In January 2018, Safeguard ceased deploying capital into new opportunities in order to focus on supporting itsthe existing ownership interests (such companies are referred to throughout this Compensation Discussion and Analysis (“CD&A”) as our “companies” or Safeguard’s or its “companies”) and maximizing monetization and other strategic opportunities to enable Safeguard to returnreturning value to shareholders. We have considered and taken action on various initiatives, including the sale of individual ownership interests, the sale of certain or all ownership interests in secondary market transactions, as well as other opportunities to maximize shareholder value. Since January 2018, Safeguard’s individual ownership interests have been reduced from over 25 entities to only six companies, four of which are expected to provide the majority of remaining exit proceeds. This monetization process resulted in satisfying all of Safeguard’s historical debt obligations, paying a $1.00 per share dividend in 2019 and repurchasing 5.3 million shares of our common stock through a combination of open market purchases and a tender offer.

We are actively involved with certain of our remaining ownership interests, influencing development through board representation and management support in addition to the influence we exert through our equity ownership. We also continue to hold relatively small equity interests in other enterprises where we do not exert significant influence and do not participate in management activities. In some cases, those ownership interests relate to residual interests from prior larger interests or from companies that had acquired companies in which we had ownership interests.

We have also reduced the operating costs of Safeguard since January 2018 and intend to reduce them further, after giving effect to the Transaction assuming shareholder approval of the Stock Split Proposals, in order to maximize distributions available to shareholders from proceeds, if any, from future monetization of remaining individual ownership interests.

In January 2022, while continuing to seek monetization opportunities for its shareholders. Thisownership interests, Safeguard’s Board met to discuss a range of strategic alternatives for the Company, including a potential sale of all of its ownership interests in a single transaction or a series of transactions, merger, business combinations or other strategic transaction involving Safeguard.

In February 2022, Safeguard engaged Houlihan Lokey (the “financial advisor”) to serve as its financial advisor in connection with Safeguard’s consideration of potential strategic opportunities and engaged Blank Rome LLP (“Blank Rome”), Safeguard’s outside legal counsel, to represent Safeguard in connection with a potential strategic transaction.

Ultimately, from February 2022 to July, 2023, at the direction of the Board, the financial advisor contacted approximately 393 parties that might be interested in exploring a strategic transaction with Safeguard, and Safeguard negotiated and entered into 42 non-disclosure agreements with potential parties to such transactions. The potential parties that executed non-disclosure agreements received access to a non-public electronic data room. As a result of this process, Safeguard received eight (8) initial non-binding indications of interest in June, 2022. Each of the eight (8) parties that submitted non-binding indications of interest were invited to a second round of due diligence, and invited to submit a formal transaction proposal. In August 2022, four (4) parties submitted formal transaction proposals. In March 2023, Safeguard entered into exclusivity with one of the parties that submitted a formal transaction proposal (“Party A”). From March to July 2023, Safeguard was engaged in the process of negotiating a potential transaction with Party A. However, Safeguard and Party A were unable to agree on the terms of a potential transaction and suspended their respective efforts to reach mutually agreeable terms of the deal, as discussed below. Throughout this process, the management and financial advisor provided updates to the Board on the status of these negotiations.

Since late August 2022 until May 2023, as part of its ongoing strategic planning process, the Board held a series of telephonic meetings, at which it started to explore, together with Safeguard’s management, whether Safeguard’s status as a public reporting and Nasdaq-listed company is an advantage to Safeguard and its shareholders, whether Safeguard realizes any of the traditional benefits of such status (given the significant annual expenses and indirect costs associated with being a public reporting and Nasdaq-listed company), and whether Safeguard should consider a “going dark” transaction, and if so, the proper method for effectuating such a transaction.

On January 17, 2023, the Board held a meeting with management and discussed establishing a timeline for the specific strategic decision-making process in 2023, including undertaking a “going dark” transaction in the third or fourth quarter of 2023 if an alternative strategic transaction could not be entered into during such time frame.

On May 24, 2023, the Board held a telephonic meeting with management and the financial advisor to discuss the potential strategic transaction with Party A and potential alternatives to such transaction, including the possibility of a “going dark” transaction.

On June 9, 2023, the Board held a telephonic meeting with management to discuss, among other matters, strategic alternatives to the potential strategic transaction, including a “going dark” transaction, Safeguard remaining a public reporting company through the fiscal year ending December 31, 2024 and Safeguard’s merger opportunities, if any.

On June 22, 2023, the Board held a telephonic meeting with management to review additional information regarding the “going dark” strategy, including the process, timing, projected costs, the estimated annual cost savings, the advantages and disadvantages of “going dark,” and the requirements and process of delisting our common stock from Nasdaq and deregistering our common stock with the SEC. The Board and management also discussed the costs and timing of the potential strategic transaction.

On July 24, 2023, the Board held a telephonic meeting with management, at which the management informed the Board that Safeguard and Party A mutually had suspended their efforts to reach aggregable terms of a potential transaction, and that there was not an alternative strategic transaction available with another party at such time. At that meeting, the Board, management and representatives of Blank Rome further discussed the timing and costs of, and a series of actions related to the “going dark” process. The Board agreed that management and Blank Rome would provide the Board with further information on the “going dark” process so that Board could continue to evaluate it.

On August 8, 2023, the Board held a telephonic meeting with management to discuss the “going dark” process, as well as an outsourced management structure. The Board directed management to commence work on the reverse stock split, including, without limitation, conducting a valuation of the common stock in connection with the determination of the cash to be paid in connection with the reverse stock split and determining the appropriate ratio.

On August 10, 2023, Safeguard issued its earnings press release related to the financial results of the quarter ended June 30, 2023 and announced, among other matters, that Safeguard was no longer in discussions regarding a potential strategic transaction, due to, among other things, certain valuation, tax and structural issues that were fundamental to the transaction, and that, in order to substantially reduce its ongoing operating costs, Safeguard was exploring delisting from Nasdaq and becoming a non-reporting company.

In August, 2023, after the earnings call related to financial results of the quarter ended June 30, 2023, management requested that its financial advisor review any parties that were originally contacted as part of the strategic process to determine whether Safeguard’s announcement that it was exploring delisting from Nasdaq and becoming a non-reporting company would lead to renewed interest in a strategic transaction. Based on this review and further discussions with its financial advisor, Safeguard determined that there were no parties to re-engage with at the time.

On September 22, 2023, the Board held a telephonic meeting with management and representatives of Blank Rome to discuss a potential “going dark” transaction using a reverse stock split followed immediately by the forward stock split and related SEC requirements. Management provided information regarding assumptions and estimates related to the potential payment to Cashed Out Shareholders, as well as potential adjustments to Safeguard’s management structure. Following this discussion, representatives of Blank Rome provided additional information, and responded to questions from the Board and management regarding the potential “going dark” transaction, including the timing of required SEC filings.

On September 30, 2023, the Board held a telephonic meeting with management and representatives of Blank Rome. The purpose of the meeting was to formally review and approve, as appropriate, the specific terms of the proposed Stock Splits and the overall Transaction. At the request of the Board, management reviewed with the Board its financial analyses of Safeguard and the Cash Payment to be received by the Cashed Out Shareholders in the Reverse Stock Split, and the Board discussed the following: (i) the purpose of and reasons for the Stock Splits and the overall Transaction; and (ii) various advantages and potential disadvantages relating to the Stock Splits and the overall Transaction, including whether to proceed with the Transaction.

Based on all the factors which had been considered by the Board at this and at its other meetings, although not relying upon any one factor but considering all factors as a whole, the Board determined (by a unanimous vote) that the Stock Splits and the overall Transaction would be in the best interests of all of Safeguard’s shareholders, including the unaffiliated Cashed Out Shareholders and the unaffiliated Continuing Shareholders, and unanimously approved the Stock Splits and the overall Transaction, including the Cash Payment of $1.65 and a range of split ratios of (i) not less than 1-for-50 and not greater than 1-for-100, in the case of the Reverse Stock Split, and (ii) not less than 50-for-1 and not greater than 100-for-1, in the case of the Forward Stock Split, with the exact Stock Split Ratios to be set within the foregoing ranges at the discretion of the Board after the special meeting, and recommended the Stock Splits to effect the Transaction to the shareholders of Safeguard. The Board also retained the right to abandon the proposed Stock Splits or the overall Transaction at any time prior to its completion, whether prior to or following the special meeting, if it believes either the Stock Splits or the overall Transaction is sometimes referredno longer in the best interests of Safeguard or its shareholders (for example, among other things, if prior to the effective time, the Board determines that there is no Reverse Stock Split Ratio for which Safeguard can accomplish its goal of reducing its holders of record below 300 with acceptable costs to cash out shareholders owning fewer than the Minimum Number chosen by the Board). The Board also considered that, subject to its compliance with Pennsylvania law and the federal proxy rules, it can change the terms of the Stock Splits and the overall Transaction, including the Stock Split Ratios and the amount of the Cash Payment, at any time to the extent it believes it is necessary or desirable in this CD&Aorder to accomplish Safeguard’s goal of staying below 300 record holders.

On October 5, 2023, we announced that the Board had approved the Stock Splits to effect the Transaction. Safeguard also filed with the SEC a preliminary proxy statement and a Schedule 13E-3 relating to the Stock Splits.

Alternatives to the Stock Splits to Effect the Transaction

Prior to selecting the Stock Splits as the “Strategy.”appropriate approach to achieve the Transaction and as further discussed below, the Board considered alternative transactions to reduce the number of shareholders of record below 300 shareholders and to effect a “going dark” transaction. When considering various alternatives to the Stock Splits, our primary objective was to ensure that the selected approach would result in Safeguard having fewer than 300 record holders of our common stock within our desired timeframe, and the Board ultimately concluded that the Stock Splits would be the best approach to achieve this objective. In making its determination, the Board also considered the potential costs of the Stock Splits and the alternative transactions discussed below.

At December 31, 2022,Purchases of Shares in the Open Market or Issuer Tender Offer. In this alternative, we would purchase shares in the open market or offer to purchase a set number of shares within a specific timeframe. The results of an open market purchase or issuer tender offer would be unpredictable, however, due to its voluntary nature, and we would have no assurance that enough shareholders would sell in open market transactions, or tender in an issuer tender offer, all of their shares of our common stock to reduce the number of record owners of our common stock to fewer than 300. In addition, the rules governing tender offers require equal treatment of all shareholders, including the pro rata acceptance of offers from all shareholders. The Board determined that, since participation in an issuer tender offer is voluntary, it may not be successful in reducing the number of holders of record to below 300. In addition, the estimated costs of this type of transaction potentially could be higher than the costs of the Stock Splits because Safeguard would need to purchase the shares tendered by all tendering shareholders, not just the shareholders who were being cashed out. As a result of these disadvantages, the Board determined not to pursue this alternative.

Odd-Lot Tender Offer. Unlike a traditional tender offer, an odd-lot tender offer would offer to purchase the shares of our common stock only from those shareholders owning 99 or fewer shares. As of September 26, 2023, there were two individuals serving as named executive officersapproximately 224 holders of Safeguard:record owning 99 or fewer shares of our common stock. However, like an issuer tender offer, this method would be voluntary on the part of shareholders and there could be no assurance that a requisite number of shareholders would participate. While the time frame for completing an odd-lot tender offer is shorter than for the Stock Splits and would be less expensive, the Board decided this alternative was not the best option due to a lack of certainty that it would produce the desired result.

Our senior executive group is currently comprisedMerger into an Operating Company or Sale of Substantially All Assets of Safeguard. Under this alternative, we attempted (subject to the shareholders’ approval) to negotiate a totalmerger of three executives, including ourSafeguard into an operating company or a sale of substantially all of the assets of Safeguard. However, the Board concluded that its efforts were ineffective in reaching a mutually agreeable deal with potential buyers, as discussed above, and that, under the current two named executive officers. This CD&A also describes programsconditions, the interest in the market to purchase the shares or assets of Safeguard was extremely low or absent. Further, this alternative would take an extended amount of time while likely incurring significant legal and audit fees to complete, and, there would be no assurance that applya potential buyer would be found or, if found, such potential buyer would proceed to our senior executive group as a whole.completion of the acquisition.

Dissolution of Safeguard and Liquidation of Its Assets. Under this alternative, we would (subject to the shareholders’ approval) dissolve Safeguard under Pennsylvania law and wind up and liquidate our assets. However, winding up and selling (as part of liquidation) our assets would require costly engagement of an investment banking firm or a business broker to market our assets in order to reach potential buyers (if any). Even after filing the Articles of Dissolution, Safeguard may still be deemed to have the number of record shareholders in excess of the Exchange Act Rule 12g-4 thresholds. Accordingly, Safeguard would likely be required to continue its reporting under the Exchange Act until the time all assets and liabilities of Safeguard are wound up and sorted out pursuant to state law, which would continue to be costly for Safeguard.

Maintaining the Status Quo. The Board also considered maintaining the status quo. In that case, Safeguard would continue to incur the significant expenses of being an SEC reporting company, including retaining the employee base necessary to comply with Safeguard’s SEC reporting obligations, without enjoying the benefits traditionally associated with SEC reporting company status, including, but not limited to, raising capital in the public markets, stock liquidity and the ability to use its common stock as currency for acquisitions. However, the Board believed that becoming a private company would be in the best interests of our shareholders and rejected this alternative.

After carefully reviewing all of these alternatives, for the reasons discussed above, the Board unanimously approved the Stock Splits as the most expeditious and economical way of changing our status from that of a reporting company to that of a non-reporting company.

Effects of the Transaction (including the Stock Splits)

Recent Business HighlightsEffect of the Transaction (including the Stock Splits) on Safeguard. The primary purpose of the Stock Splits is to reduce the number of our shareholders of record below 300, which will allow us to cease our reporting obligations with the SEC. If the Board determines to proceed with the Transaction, it will determine the Stock Split Ratios after the special meeting, however Safeguard believes that any Reverse Stock Split ratio within the proposed range would reduce the number of record holders below 300. In determining whether the number of our shareholders of record is below 300 for regulatory purposes, we will count shareholders of record in accordance with Rule 12g5-1 under the Exchange Act. Rule 12g5-1 provides, with certain exceptions, that in determining whether issuers, including Safeguard, are subject to the registration provisions of the Exchange Act, securities are considered to be “held of record” by each person who is identified as the owner of such securities on the respective records of security holders maintained by or on behalf of the issuers. However, institutional custodians such as Cede & Co. and other commercial depositories are not considered a single holder of record for purposes of these provisions. Rather, Cede & Co.’s and these depositories’ accounts are treated as the record holder of our shares. Based on information available to us as of September 26, 2023 and for illustrative purposes only, if the Reverse Stock Split Ratio were 1-for-75, which is the approximate midpoint within the proposed range of the Reverse Stock Split Ratios, we expect that as a result of the Stock Splits the number of our shareholders of record would be reduced from approximately 390 to approximately 176 and we estimate that there are approximately 214 holders of record who own fewer than 75 shares of our common stock whose shares would be cashed out as a result of the Stock Splits.

We believe that if the Stock Splits and the overall Transaction occur, there will be certain advantages to the shareholders, including the following:

Key 2022 Compensation Decisions

We also believe that if the Stock Splits and the overall Transaction occur, there will be certain disadvantages to the shareholders, including the following:

Effect of the Transaction (including the Stock Splits) on our Directors, Executive Officers and 10% Shareholders. Shares held by affiliated shareholders will be treated in the same manner as shares held by unaffiliated shareholders. As of September 26, 2023, approximately 9.3% and 12.7% of the issued and outstanding shares of our common stock was held by our directors and executive officers and 10% shareholders, respectively. Our directors and executive officers have indicated that they intend to vote all of the shares of our common stock held by them “FOR” the Stock Split Proposals and “FOR” the Adjournment Proposal.

Upon the effectiveness of the Stock Splits, the aggregate number of shares of our common stock owned by our executive officers, directors and affiliated shareholders will not increase. The ownership percentage of the shares of our common stock held by those of our directors, executive officers and 10% shareholders who will be Continuing Shareholders will increase at the same rate as the ownership percentage of all the other Continuing Shareholders, as a result of the reduction of the number of shares of our common stock outstanding. However, the ownership percentage and the reduction in the number of shares outstanding following the Stock Splits may increase or decrease depending on the Stock Split Ratio ultimately selected by the Board, as well as the purchases, sales and other transfers of our shares of common stock by our shareholders prior to the effective time of the Stock Splits. The ownership percentage of our shares of common stock held by those of our directors, executive officers and 10% shareholders who will be Continuing Shareholders, as well as the ownership percentage of the other Continuing Shareholders, will proportionally increase or decrease as a result of such purchases, sales and other transfers of our shares of common stock by our shareholders prior to the effective time of the Stock Splits.

In addition, our directors, executive officers and 10% shareholders may have interests in the Stock Splits that are different from your interests as a shareholder in Safeguard, including holding restricted stock or restricted stock unit grants that will remain outstanding following the Stock Splits, although these grants will not increase in value.

See “Discussion and Special Factors—Interests of Executive Officers, Directors and 10% Shareholders.”

Illustrative Examples. The number of shares held by a shareholder of record in two or more separate but identical record holder accounts will be combined to determine the number of shares of our common stock owned by that holder and, accordingly, whether the holder will be a Cashed Out Shareholder or a Continuing Shareholder.

Shares held by record holders in joint accounts, such as by a husband and wife, and shares held in similar capacities will be treated separately, and will not be combined with individual accounts in determining whether a holder will be a Cashed Out Shareholder or a Continuing Shareholder.

If you hold fewer than the Minimum Number of shares of our common stock in “street name”, your broker, bank or other nominee is considered the shareholder of record with respect to those shares and not you. You are considered the beneficial owner of these shares. Pursuant to the SEC rules and regulations, we intend to treat each bank, broker or other nominee as one shareholder of record. These banks, brokers and other nominees may have different procedures for processing the Stock Splits. It is possible that the bank, broker or other nominee also holds shares for other beneficial owners of our common stock and that it may hold at least the Minimum Number, or more than the Minimum Number, of shares of our common stock in the aggregate. Therefore, depending upon their procedures, your bank, broker or other nominee may not be obligated to treat the Reverse Stock Split or the Forward Stock Split as affecting beneficial owners’ shares.

If you hold an account with fewer than the Minimum Number of shares of our common stock in “street name” and want to ensure that your shares are cashed out, we encourage you to promptly contact your bank, broker or other nominee to change the manner in which your shares are held from “street name” into a record holder account in your own name so that you will be a record owner of the shares and could receive the Cash Payment for your fractional shares.

The effect of the Stock Splits on both Cashed Out Shareholders and Continuing Shareholders may be illustrated, in part, by the below illustrative examples, which, solely for the purposes of these illustrative examples, assume the Board determines to use 75 as the Minimum Number, which is the approximate midpoint within the proposed range of the Stock Split Ratios.

Effective Corporate Governance PrinciplesReservation of Rights

BelowSubject to its compliance with Pennsylvania law and the federal proxy rules, the Board reserves the right to change the terms of the Stock Splits and the overall Transaction, including the Stock Split Ratios and the amount of the Cash Payment, to the extent it believes it is necessary or desirable in order to accomplish our goal of remaining below 300 record holders. The Board may also abandon the proposed Stock Splits or the overall Transaction at any time prior to its completion, whether prior to or following the special meeting, if it believes either the Stock Splits or the overall Transaction is no longer in the best interests of Safeguard or its shareholders. Following the special meeting, the Board will need to evaluate updated ownership data impacting the various Stock Split Ratios so that it can determine the aggregate costs of the Stock Splits within the range of Stock Split Ratios before choosing a Stock Split Ratio. Depending on the number of shareholders owning fewer than the Minimum Number of shares, the Board may abandon the Stock Splits if the Stock Splits become too costly. The Board may also abandon the overall Transaction. For more information, see “—Termination of Transaction.” Subject to the Board’s ability to abandon the proposed Stock Splits and the overall Transaction, the Board intends to determine the Stock Split Ratios and effect the Stock Splits as soon as practicable after the Stock Splits are approved by our shareholders, which would likely occur immediately following the public announcement of the Stock Split Ratios chosen by the Board. Furthermore, after giving effect to the Transaction and as necessary to maintain our suspension of SEC reporting obligations, Safeguard reserves the right to take additional actions that may be permitted under Pennsylvania law, including effectuating further reverse stock splits.

Nasdaq; OTC Market

Our common stock is currently listed on Nasdaq. To obtain the cost savings we anticipate by no longer preparing and filing annual, periodic and current reports with the SEC, our common stock will need to be delisted from Nasdaq. Any trading in our common stock after the Transaction will only occur in privately negotiated sales and potentially on an OTC market, if one or more brokers chooses to make a market for our common stock on any such market and complies with applicable regulatory requirements; however, there can be no assurances regarding any such trading.

Fairness of the Stock Splits to Effect the Transaction

The Board fully considered and reviewed the terms, purpose, effects, advantages, disadvantages of, and alternatives to, the Stock Splits and unanimously determined that effecting the Transaction by means of the Stock Splits is procedurally and substantively fair to all shareholders of Safeguard, including the unaffiliated shareholders who will receive cash consideration in the Stock Splits and unaffiliated shareholders who will continue as owners of Safeguard. The Board has approved the Transaction, including the specific terms of the Stock Splits, with the exact Stock Split Ratios to be set within the approved range at the discretion of the Board, without further approval or authorization of our shareholders and with our Board, in its sole discretion, able to effect the Stock Splits immediately following the public announcement of the Stock Split Ratios or to elect to abandon the proposed Stock Splits or the overall Transaction (whether or not authorized by the shareholders) at any time, and recommended that shareholders vote “FOR” the Stock Split Proposals and “FOR” the Adjournment Proposal. See “—Effects of the Transaction (including Stock Splits).”

Substantive Fairness. The Board considered, among other things, the factors listed below, as well as the alternatives to the Stock Splits as a means to effect the Transaction as noted above in “Discussion and Special Factors—Alternatives to the Stock Splits to Effect the Transaction,” in reaching its conclusion as to the substantive fairness of the Stock Splits to our shareholders as a means to effect the Transaction, including both unaffiliated Cashed Out Shareholders and unaffiliated Continuing Shareholders. The Board did not assign specific weight to any factors they considered, nor did it apply them in a formulaic fashion, although the Board particularly noted the opportunity in the Stock Splits for shareholders to sell their holdings at a premium, as well as the significant anticipated cost and time savings for Safeguard resulting from the overall Transaction, which will also benefit Continuing Shareholders. The discussion below is not meant to be exhaustive, but we believe it addresses all material factors considered by the Board in its determinations.

Future Cost Savings and Reduction in Stock Based Compensation. If shareholders approve the Stock Split Proposals and we proceed with the Transaction, we will be able to eliminate costs associated with our public reporting and other related obligations, as well as implement our planned adjusted management structure due to additional corporate governance flexibility as a result of no longer needing to comply with corporate governance rules applicable to publicly listed companies. We anticipate annual cost savings of approximately $1.5 million in cash and a reduction in annual stock based compensation of approximately $1.2 million after effecting the Transaction and related adjustments to our management structure, primarily as a result of a potential reduction in: (i) professional fees of accountants associated with the audit process, (ii) insurance premiums for our directors’ and officers’ liability insurance, (iii) Board and employee related expenses, as well as (iv) legal, printing, and other miscellaneous costs associated with being a publicly traded company. We believe that these annual cost savings and a reduction in annual stock based compensation will result in a significant reduction in our operating costs. See “Financial Information—Pro Forma Consolidated Financial Statements (Unaudited)” for a discussion of the potential impact of effecting the Transaction and implementing related adjustments to our management structure. Please note, however, that these projected annual cost savings and reduction in stock based compensation are only estimates and our savings and reduction in stock based compensation could be higher or lower than $1.5 million and $1.2 million, respectively. See “Cautionary Statement Regarding Forward-Looking Statements.”

Cash Payment. To determine the Cash Payment, Safeguard reviewed the potential monetization of its remaining ownership interests under different scenarios and determined that the range of likely exit values is $25.0 million to $45.0 million, based on current assumptions, which are subject to change. In addition, Safeguard estimated the follow-on cash required to fund Safeguard’s operations and contingencies after giving effect to this Transaction. For purpose of calculating the Cash Payment, Safeguard used the average of the $25.0 million to $45.0 million range -- $35 million -- in its calculations, factoring in estimates of: (i) Safeguard’s recurring operating costs and contingencies, (ii) exit timing of Safeguard’s ownership interests, and (iii) an appropriate discount rate applied to those cash flows. In determining the Cash Payment, Safeguard excluded any excess cash that represents cash on hand less the amounts required to be retained to: support Safeguard’s operations, satisfy its liabilities and pay costs of the Stock Splits and overall Transaction.

The Board also considered both the historical market prices and recent trading activity as well as the current market prices of our common stock. On September 29, 2023, which was prior to the Board’s approval of the Stock Splits and the Transaction, our common stock closed at $1.00 per share. For each of the ten trading days and twenty trading days prior to September 29, 2023, our average closing stock price was $1.03 per share and $1.08 per share, respectively.

The Cash Payment of $1.65 represents a 65%, 60%, and 53% premium to the September 29, 2023, closing price and the average ten trading day and twenty trading day closing prices prior to September 29, 2023, respectively. On a volume weighted basis, the 30-day, 60-day, and 90-day closing prices per share prior to September 29, 2023 were $1.07, $1.14, and $1.18. The Cash Payment of $1.65 represents a 55%, 44%, and 39% premium to such volume weighted closing prices, respectively.

In reaching its conclusion as to the fairness of the Cash Payment, the Board did not base such conclusion on the liquidation value of Safeguard, as there is no present intention of liquidating Safeguard. In addition, the Board believes that the value of Safeguard’s assets that might be realized in liquidation may be substantially less than its going concern value. Further, the Board believes that a liquidation process would involve substantial legal fees, costs of sale and other expenses that would reduce any amounts that shareholders might receive upon liquidation.

Although the Board did not formally request or rely on a fairness opinion on behalf of unaffiliated shareholders or potential Cashed Out Shareholders, Safeguard has performed valuation work on the ownership interests and has worked extensively with independent financial advisors on its portfolio valuation methodologies. The potential costs of such a fairness opinion were considered to be quite substantial compared to any potential value of such an opinion.

In addition, the Board also believes that the Reverse Stock Split provides a large number of our record holders with the opportunity to obtain cash for their shares in a limited trading market and at a premium over the recent trading price range of our common stock.

No Firm Offers. Despite multiple efforts, the Board did not have the benefit of any firm offers during the past two years by any affiliate or unaffiliated person for the merger or consolidation of Safeguard with or into any other company, the sale or other transfer of all or any substantial part of the assets of Safeguard, or a purchase of our shares of common stock or other securities that would enable the holder to exercise control of Safeguard to consider as part of its deliberations.

Procedural Fairness. No unaffiliated representative acting solely on behalf of our unaffiliated shareholders for the purpose of negotiating the terms of the Stock Splits was retained by Safeguard, nor were special provisions made to grant unaffiliated shareholders access to our corporate files or to obtain counsel or appraisal services. The Board considered and evaluated whether such a deregistration/delisting transaction, or so-called “going dark” transaction, would be in the best interests of our shareholders and approved the specific terms of such a transaction for recommendation to our shareholders. We believe that the Board, whose members are each independent within the meaning of Nasdaq Corporate Governance Listing Standards and Section 10A-3(b) of the Exchange Act, was sufficient to protect the interests of unaffiliated shareholders. In addition, the Board took note of the fact that the interests of unaffiliated shareholders inherently varied depending upon whether any particular unaffiliated shareholder held more or less than the Minimum Number of shares. Although there was no unaffiliated representative that acted solely on behalf of the unaffiliated shareholders for the purpose of negotiating the terms of the Stock Splits, the independent members of the Board protected the unaffiliated shareholders by recommending effecting the Transaction in a way that is fair to them.

The Board believes this proxy statement, along with our other filings with the SEC and provisions of Pennsylvania law that provide shareholders with the right to review our books and records, provide a great deal of information for unaffiliated shareholders to make an informed decision as to the Stock Splits and the overall Transaction, and that no special provision for the review of our files is necessary.

The affirmative vote of a majority of the votes cast by all of our shareholders entitled to vote thereon, and not a majority vote of unaffiliated shareholders, is necessary to approve the Stock Split Proposals. The Board determined not to condition the approval of the Stock Split Proposal on the approval by a majority of the votes cast by unaffiliated shareholders entitled to vote thereon. The Board noted that affiliated and unaffiliated shareholders will be treated equally as a result of the Stock Splits; however, because the number of shares owned by a shareholder is a factor considered in determining affiliate status, as a practical matter, the stock of certain affiliated shareholders will not be cashed out in the Reverse Stock Split. If separate approval of unaffiliated shareholders were required, our affiliated shareholders would receive lesser voting rights than unaffiliated shareholders solely on the basis of their affiliate status even though they will receive no additional benefits or different treatment as a result of the Stock Splits. As of September 26, 2023, approximately 9.3% and 12% of the issued and outstanding shares of our common stock was held by our directors and executive officers and 10% shareholders, respectively. Our directors and executive officers have indicated that they intend to vote all of the shares of our common stock held by them “FOR” the Stock Split Proposals and “FOR” the Adjournment Proposal (see “Discussion and Special Factors—Interests of Executive Officers, Directors and 10% Shareholders”).

Furthermore, a separate vote of the majority of the shares of common stock outstanding as of the record date held by unaffiliated shareholders is not required under Pennsylvania law. Finally, shareholders can increase, divide, or otherwise adjust their existing holdings at any time prior to the effective time of the Stock Splits, so as to retain some or all of their shares of common stock, or to receive cash for some or all of their shares, as they see appropriate.

The Board also noted that there will be no material change in the percentage ownership of the executive officers and directors as a group.

Recommendation of the Board. Based on the foregoing analyses, including a consideration of the disadvantages of the Stock Splits as a means to effect the Transaction, the Board believes that the Transaction, including the specific terms of the Stock Splits, is procedurally and substantively fair to all shareholders, including the unaffiliated shareholders, regardless of whether a shareholder receives cash or continues to be a shareholder following the Stock Splits, and believes that the cash payment of $1.65 per pre-split share to be fair consideration for those shareholders of record holding fewer than the Minimum Number of shares of record. As a result, at a meeting held on September 30, 2023, the Board determined by a unanimous vote that the Transaction, including the specific terms of the Stock Splits, is fair to, and in the best interests of, our shareholders, including all unaffiliated shareholders, and recommends that you vote “FOR” the Stock Split Proposals.

Material Federal Income Tax Consequences

The following is a summary of what we didthe material U.S. federal income tax consequences of the Stock Splits to Safeguard and what we didits shareholders. This summary is based upon the Internal Revenue Code of 1986, as amended (the “Code”), existing Treasury Regulations promulgated thereunder, published rulings, administrative pronouncements and judicial decisions, any changes to which could affect the tax consequences described herein, possibly on a retroactive basis. This summary only addresses shareholders who hold their shares of our common stock as a capital asset. This summary does not do relating to executive compensation during 2022:address any state, local, foreign, or the U.S. federal estate or gift, Medicare net investment income, or alternative minimum tax provisions of the Code. No assurance can be given that possible changes in such United States federal income tax laws or interpretations will not adversely affect this summary. This summary is not binding on the Internal Revenue Service (the “IRS”).

WHAT WE DID:Except as otherwise noted, the federal income tax consequences to shareholders described below is the same for both affiliated shareholders and unaffiliated shareholders. The following summary does not address all United States federal income tax considerations that may be relevant to particular shareholders in light of their individual circumstances or to shareholders that may be subject to special tax rules, including, without limitation: financial institutions, tax-exempt organizations (including private foundations), insurance companies, dealers in securities, foreign investors, pass-through entities such as partnerships, S corporations, disregarded entities for federal income tax purposes and limited liability companies (and investors therein), holders that received their shares pursuant to the exercise of employee stock options or otherwise as compensation, and investors that hold the shares as part of a straddle, hedge, conversion, constructive sale, or other integrated transaction for United States federal income tax purposes, certain former citizens or long-term residents of the United States, and persons for whom our common stock constitutes “qualified small business stock” within the meaning of Section 1202 of the Code or “Section 1244 stock” for purposes of Section 1244 of the Code.

For purposes of this summary, a “U.S. holder” means a beneficial owner of shares of our common stock that is for U.S. federal income tax purposes one of the following:

WHAT WE DIDN’T DO:

The Committee reviews our compensation philosophy each year to ensure that its principles and objectives are aligned with our overall business strategy and aligned with the interestsA "non-U.S. holder” is, for U.S. federal income tax purposes, a beneficial owner of shares of our shareholders.common stock that is a not a U.S. holder or a partnership for U.S. federal income tax purposes.

If a partnership (including any entity treated as a partnership for U.S. federal income tax purposes) holds common stock, the tax treatment of a partner with respect to the Transaction generally will depend upon the status of the partner and the activities of the partnership. Such partner or partnership is urged to consult its own tax advisor as to the U.S. federal, state, local, and foreign income tax consequences of the Stock Splits.

NO RULING FROM THE IRS OR OPINION OF COUNSEL HAS BEEN OR WILL BE OBTAINED REGARDING THE UNITED STATES FEDERAL INCOME TAX CONSEQUENCES TO SHAREHOLDERS IN CONNECTION WITH THE STOCK SPLITS. ACCORDINGLY, EACH SHAREHOLDER IS ENCOURAGED TO CONSULT THEIR OWN TAX ADVISOR AS TO THE PARTICULAR FEDERAL, STATE, LOCAL, FOREIGN, AND OTHER TAX CONSEQUENCES OF THE TRANSACTION, IN LIGHT OF THEIR INDIVIDUAL CIRCUMSTANCES.

Tax Consequences to Safeguard. We seekbelieve that the Stock Splits generally should be treated as a tax-free “recapitalization” or other non-recognition event for federal income tax purposes in which case the Transaction should have no material federal income tax consequences to apply a consistent philosophy acrossSafeguard. Safeguard has significant tax assets, in the form of carryforwards of net operating losses and tax credits, which are fully reserved. These assets nonetheless represent potential value to Safeguard by virtue of their ability to reduce income taxes payable. Safeguard’s ability to utilize such assets may be limited by transactions such as the Stock Splits, particularly if ownership changes trigger certain provisions of Section 382 of the Code (“Section 382”). Safeguard has evaluated its exposure to Section 382 and believes that the Stock Splits are not expected to trigger these provisions. However, Safeguard cannot guarantee that there will be no impact, particularly since it depends on actions of shareholders, who are not within our executive group, not just among our named executive officers.control.

Federal Income Tax Consequences to U.S. Holders Who Do Not Receive Cash in the Stock Splits. If you are a U.S. holder that receives no cash as a result of the Stock Splits, but continue to hold our shares of common stock immediately after the Stock Splits, you will not recognize any gain or loss for United States federal income tax purposes. The aggregate adjusted tax basis of the shares you hold immediately after the Stock Splits will equal the aggregate adjusted tax basis of the shares you held immediately prior to the Stock Splits, and the holding period in those shares will be the same as immediately prior to the Stock Splits.

Federal Income Tax Consequences to U.S. Holders Who Receive Cash in the Stock Splits and Who Will Own, or Will Be Considered under the Code to Own, Shares of Common Stock After the Stock Splits. In some instances, you may be entitled to receive cash in the Stock Splits for shares of our common stock you hold in one capacity but continue to hold shares in another capacity. For example, you may own fewer than the Minimum Number of shares in your own name (for which you will receive cash) and own at least the Minimum Number of shares in your brokerage account in “street name.” Alternatively, for federal income tax purposes you may be deemed to own shares held by others. For instance, if you own fewer than the Minimum Number of shares in your own name (for which you will receive cash) and your spouse owns at least the Minimum Number of shares (which will continue to be held following the completion of the Stock Splits), the shares owned by your spouse generally will be attributable to you. Furthermore, in determining whether you are considered to continue to hold shares of our common stock, for federal income tax purposes, immediately after the Stock Splits, you generally will be treated as owning shares actually or constructively owned by certain family members and entities in which you, or a member of your family, have an interest (such as trusts and estates of which you are beneficiary and corporations and partnerships of which you are an owner, and shares you have an option to acquire). Accordingly, in some instances the shares of common stock you own in another capacity, or which are attributed to you, may remain outstanding.

If you are a U.S. holder that receives cash as a result of the Stock Splits, but are treated as continuing to own shares of common stock through attribution as described above, you will recognize capital gain or loss for federal income tax purposes equal to the difference between the cash you receive for the shares of common stock and your aggregate adjusted tax basis in those shares, provided that the receipt of cash either is “a complete termination of interest,” “not essentially equivalent to a dividend,” or constitutes a “substantially disproportionate redemption of stock,” as described below. Gain or loss must be calculated separately with respect to each block of shares of common stock exchanged in the Stock Splits.

Complete Termination of Interest. Notwithstanding the continued constructive ownership of shares of our common stock from certain family members under the attribution rules described above, the receipt of cash as a result of the Stock Splits may qualify as “a complete termination of interest” if (i) you have no interest in Safeguard after the Transaction other than as a creditor, (ii) you do not acquire any such interest in Safeguard in the next ten years (other than stock acquired by bequest or inheritance), (iii) you file an agreement with the IRS to notify the IRS if you acquire any such interest during such ten-year period, (iv) none of the redeemed shares of our common stock was acquired, within the ten-year period ending on the date of the receipt of cash in the Stock Splits, by you from a person whose stock ownership would be attributed to you under the attributable rules described above, and (v) no person owns, at the time of the redemption, shares of our common stock which is attributable to you under the attribution rules described above and was acquired from you within the ten-year period ending on the date of the redemption, unless such stock acquired from you is also exchanged for cash in the Stock Splits. The rules for qualifying for a complete termination of interest despite family attribution of shares are complex and you must rely on your own tax adviser to determine whether or not you are able to meet such requirements.

Not Essentially Equivalent to a Dividend. The receipt of cash is “not essentially equivalent to a dividend” if the reduction in your proportionate interest in us resulting from the Stock Splits (taking into account for this purpose shares of common stock which you are considered to own under the attribution rules described above) is considered a “meaningful reduction” given your particular facts and circumstances. The IRS has ruled that a small reduction by a minority shareholder whose relative stock interest is minimal and who exercises no control over the affairs of a corporation can satisfy this test.

Substantially Disproportionate Redemption of Stock. The receipt of cash in the Stock Splits will be a “substantially disproportionate redemption of stock” if (a) you own less than 50% of the total combined voting power of all classes of stock entitled to vote, and (b) the percentage of our voting stock owned by you immediately after the Stock Splits is less than 80% of the percentage of shares of voting stock owned by you immediately before the Stock Splits. For purposes of these percentage ownership tests, you are considered to own common stock owned directly as well as indirectly through the application of the attribution ownership rules described above.

Capital gain or loss recognized by a U.S. holder will be long-term if your holding period with respect to the common stock surrendered is more than one year at the time of the Transaction. The deductibility of capital loss is subject to limitations. If you are an individual U.S. holder, long-term capital gain and dividend income should generally be subject to United Stated federal income tax at a maximum rate of 20%. In general, dividends are taxed at ordinary income rates. However, a U.S. holder may qualify for a 20% federal income tax rate on any cash received in the Stock Splits that is treated as a dividend as described above, if (i) you are an individual or other non-corporate shareholder; (ii) you have held the common stock with respect to which the dividend was received for more than 60 days during the 120-day period beginning 60 days before the ex-dividend date, as determined under the Code; and (iii) you were not obligated during such period (pursuant to a short sale or otherwise) to make related payments with respect to positions in substantially similar or related property. You should consult with your tax advisor regarding your eligibility for such lower tax rates on dividend income.

If the receipt of cash by a U.S. holder in exchange for shares of common stock is not treated as capital gain or loss under either of the tests, it will be treated first as ordinary dividend income to the extent of your ratable share of our current and accumulated earnings and profits, then as a tax-free return of capital to the extent of (and in reduction of) your aggregate adjusted tax basis in the shares, and any remaining amount will be treated as capital gain.

If you, or a person or entity whose ownership of shares would be attributed to you, will continue to hold common stock immediately after the Stock Splits, you are urged to consult with your tax advisor as to the particular federal, state, local, foreign, and other tax consequences of the Stock Splits, in light of your specific circumstances.

Federal Income Tax Consequences to U.S. Holders Who Receive Cash in the Stock Splits and Who Will Not Own, and Will Not Be Considered under the Code to Own, Shares of Common Stock After the Stock Splits. If you are a U.S. holder that receives cash as a result of the Stock Splits and you do not own, and are not considered to own, shares of our common stock immediately after the Stock Splits, you will recognize capital gain or loss for federal income tax purposes equal to the difference between the cash you receive for the shares of common stock and your aggregate adjusted tax basis in those shares. Capital gain or loss recognized will be long-term if your holding period with respect to the common stock surrendered is more than one year at the time of the Stock Splits. The deductibility of capital loss is subject to limitations.

Backup Withholding. If you are a U.S. holder that receives cash as a result of the Stock Splits, you will be required to provide your social security or other taxpayer identification number (or, in some instances, additional information) in connection with the Stock Splits to avoid backup withholding requirements that might otherwise apply. Failure to provide such information may result in backup withholding. Backup withholding is not an additional tax. Rather, the amount of the backup withholding can be credited against your United States federal income tax liability provided that the required information is given to the IRS. If backup withholding results in an overpayment of tax, a refund can be obtained by you upon filing an appropriate income tax return on a timely basis.

Non-U.S. Holders. Generally, non-U.S. holders will not recognize any gain or loss as a result of the Stock Splits. In particular, gain or loss will not be recognized with respect to cash received as a result of the Stock Splits provided that (a) such gain or loss is not effectively connected with the conduct of a trade or business in the United States (or, if certain income tax treaties apply, is not attributable to a non-U.S. holder’s permanent establishment in the United States), (b) with respect to non-U.S. holders who are individuals, such non-U.S. holders are present in the United States for less than 183 days in the taxable year of the Stock Splits and other conditions are met, and (c) such non-U.S. holders comply with certain certification requirements. If such gain is effectively connected with the non-U.S. holder’s conduct of a trade or business in the U.S., and if an applicable income tax treaty so provides, the gain is attributable to a permanent establishment or fixed base maintained by the non-U.S. holder in the United States, the non-U.S. holder will be taxed on a net income basis at the regular tax rates and in the manner applicable to U.S. holders, and if the non-U.S. holder is a corporation, an additional branch profits tax at a rate of 30%, or a lower rate as may be specified by an applicable income tax treaty, may also apply. If the non-U.S. holder is an individual present in the United States for 183 days or more in the taxable year of the Stock Splits and certain other requirements are met, the non-U.S. holder will be subject to a 30% tax (or such lower rate as may be specified by an applicable income tax treaty between the United States and such holder’s country of residence) on the net gain from the exchange of the shares of our common stock, which may be offset by certain U.S.-source capital losses of the non-U.S. holder, if any.

Notwithstanding the foregoing, if the receipt of cash by a non-U.S. holder in exchange for shares of common stock has the effect of a dividend distribution under the tests set forth above under “Federal Income Tax Consequences to U.S. Holders Who Receive Cash in the Stock Splits and Who Will Own, or Will Be Considered under the Code to Own, Shares of Common Stock After the Stock Splits,” the gain will be treated as a dividend rather than capital gain to the extent of your ratable share of our current or accumulated earnings and profits as calculated for U.S. federal income tax purposes, then as a tax-free return of capital to the extent of (and in reduction of) your aggregate adjusted tax basis in the shares, and any remaining amount will be treated as capital gain.

Safeguard will withhold U.S. federal income taxes equal to 30% of any cash payments made to a non-U.S. holder as a result of the Stock Splits that may be treated as a dividend, unless such holder properly demonstrates that a reduced rate of U.S. federal income tax withholding or an exemption from such withholding is applicable. For example, an applicable income tax treaty may reduce or eliminate U.S. federal income tax withholding, in which case a non-U.S. holder claiming a reduction in (or exemption from) such tax must provide Safeguard with a properly completed IRS Form W-8BEN (or other appropriate IRS Form W-8) claiming the applicable treaty benefit. Alternatively, an exemption generally should apply if the non-U.S. holder’s gain is effectively connected with a U.S. trade or business of such holder, and such holder provides Safeguard with an appropriate statement to that effect on a properly completed IRS Form W-8ECI. Moreover, Safeguard may withhold U.S. federal income taxes at a 30% rate on cash payments to a non-U.S. holder regardless of whether the non-U.S. holder satisfies a test described above under “Federal Income Tax Consequences to U.S. Holders Who Receive Cash in the Stock Splits and Who Will Own, or Will Be Considered under the Code to Own, Shares of Common Stock After the Stock Splits.” A non-U.S. holder may be eligible to obtain a refund of all or a portion of any tax withheld if the non-U.S. holder (i) meets one of the tests described above that would characterize the exchange as a sale (as opposed to a dividend) with respect to which the non-U.S. holder is not subject to U.S. federal income tax or (ii) is otherwise able to establish that no tax or a reduced amount of tax is due

Non-U.S. holders should consult their own tax advisors regarding possible dividend treatment and should consult their own tax advisor regarding the U.S. federal, state, local, and foreign income and other tax consequences of the Stock Splits.

U.S. Information Reporting and Backup Withholding. In general, backup withholding and information reporting will not apply to payment of cash in lieu of a fractional share of our common stock to a non-U.S. holder pursuant to the Stock Splits if the non-U.S. holder certifies under penalties of perjury that it is a non-U.S. holder and the applicable withholding agent does not have actual knowledge to the contrary. Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules may be refunded or allowed as a credit against the non-U.S. holder’s U.S. federal income tax liability, if any, provided that certain required information is timely furnished to the IRS. In certain circumstances the amount of cash paid to a non-U.S. holder in lieu of a fractional share of our common stock, the name and address of the beneficial owner and the amount, if any, of tax withheld may be reported to the IRS.

FATCA. Under the Foreign Account Tax Compliance Act (‘‘FATCA’’), withholding taxes may apply to certain types of payments made to ‘‘foreign financial institutions’’ (as specially defined in the Code) and certain other non-United States entities. Specifically, a 30% withholding tax may be imposed on dividends on stock paid to a foreign financial institution or to a non-financial foreign entity, unless (1) the foreign financial institution undertakes certain diligence and reporting, (2) the non-financial foreign entity either certifies it does not have any substantial United States owners or furnishes identifying information regarding each substantial United States owner, or (3) the foreign financial institution or non-financial foreign entity otherwise qualifies for an exemption from these rules. If the payee is a foreign financial institution and is subject to the diligence and reporting requirements in clause (1) above, then, pursuant to an agreement between it and the U.S. Treasury or an intergovernmental agreement between, generally, the jurisdiction in which it is resident and the U.S. Treasury, it must, among other things, identify accounts held by certain United States persons or United States-owned foreign entities, annually report certain information about such accounts and withhold 30% on payments to non-compliant foreign financial institutions and certain other account holders.

Any cash paid to a non-U.S. holder as a result of the Stock Splits that is treated as dividend may be subject to withholding under FATCA unless the requirements set forth above are satisfied (if applicable) and appropriate certifications are made. While withholding under FATCA would have applied also to payments of gross proceeds from the sale or other disposition of our common stock on or after January 1, 2019, proposed Treasury Regulations eliminate FATCA withholding on payments of gross proceeds entirely. Taxpayers generally may rely on these proposed Treasury Regulations until final Treasury Regulations are issued.

Compensation Philosophy and ObjectivesPlanned Management Structure Adjustments

Our overall goals in compensatingUpon giving effect to the Transaction, we will no longer be subject to the reporting requirements under the Exchange Act or other requirements applicable to a public company, including governance requirements under the Sarbanes-Oxley Act and the listing standards of any national securities exchange, and we plan to adjust our executives in 2022 were as follows:

Rolemanagement structure by reducing the size of the Compensation Committee in Compensation Decisions

The Committee is responsible forBoard to two members and reorganizing our management to primarily use an external service provider, with our current executive officers and employees expected to provide limited consulting services to Safeguard, on an as-needed basis, on the design of our executive compensation programterms and for making decisions regarding our named executive officers’ compensation. The Committee also makes, or has final approval authority regarding, all compensation decisions for our other senior executives. Annually, the Committee reviews executive compensation practices, including the methodology for setting total named executive officers’ compensation, the goals of the program and the overall compensation philosophy for Safeguard. The Committee believes that the overall objectives of its compensation philosophy are better achieved through flexibility. The Committee ultimately makes decisions regarding executive compensation based on its assessment of Safeguard’s performance and the achievement of its companies’ and corporate goals.

The Committee is also responsible for approving and granting equity awardsschedule to our directors, executives, employees and, from time to time, other independent advisors and consultants. The Committee’s responsibilities are more fully described in its charter, which is available at https://ir.safeguard.com/corporate-governance/documents-charters/.

Role of Executive Officers in Compensation Decisions

Within the parametersbe approved by the Committee eachBoard, at its discretion, depending on the timing of the Transaction.

If shareholders approve the Stock Split Proposals and we proceed with the Transaction, the size of the Board is expected to be reduced to two members from the current governance structure of Safeguard, to be determined by the Board upon the filing of our Annual Report on Form 10-K for the fiscal year ending December 31, 2023, and any applicable existingthere will be no standing committees of the Board. Each of such two directors is expected to serve on the Board for a term expiring at the 2024 annual meeting of shareholders and until such director’s successor is duly elected and qualified. Each Board member is expected to receive $75,000 per year as an annual cash retainer fee for the Board service instead of equity grants under the current director compensation structure.

Pursuant to the terms of his employment agreements,agreement, Eric C. Salzman serves as our Chief Executive Officer is responsible for evaluatinga term ending on December 31, 2023, and recommending compensation for our other employees, including annually assessingwe do not expect to be entering into a new employment agreement with Mr. Salzman or extending the performanceterm of each other employee. In determining the compensation of our executives, the Committee considers our Chief Executive Officer’s assessment and recommendations. However, other than for compensation that has been established contractually or under quantitative formulas established by the Committee each year under our management incentive program, the Committee exercises its own discretion in determining whether to accept or modify our Chief Executive Officer’s recommendations. These individuals are not present when the Committee andexisting employment agreement. Starting from January 1, 2024, Mr. Salzman will no longer serve as our Chief Executive Officer review their performance or whenand is expected to provide certain consulting services to Safeguard, on an as needed basis, on the Committee makesterms and schedule to be approved by the Board, at its determinations concerning their compensation.discretion, depending on the timing of the Transaction.

Setting Executive Compensation

The Committee believes that a significant portionIn addition, if shareholders approve the Stock Split Proposals and we proceed with the Transaction, starting from January 1, 2024, we expect to begin transitioning Safeguard’s general and administrative functions, including, but not limited to, overseeing the remaining ownership interests, monitoring any continued escrow amounts due to Safeguard and other contractual arrangements, maintaining Safeguard’s books and records, overseeing the process of each executive’s total compensation should be variable or “at-risk.” The Committee also believes that a significant portionshareholder distributions when and if proceeds from the monetization of our Chief Executive Officer’s total compensation shouldownership interests are available and maintaining quarterly and annual shareholder communications, to an external management service provider to be paid inselected by the form of equity. It isBoard, with our remaining officers and employees no longer maintaining their current positions, but instead providing consulting services to Safeguard, on an as needed basis, on the viewterms and schedule to be approved by the Board, at its discretion, depending on the timing of the Committee that the greater the ability of an executive (based on role and responsibilities at Safeguard) to impact Safeguard’s achievement of its short- and long-term objectives, the greater the percentage of such executive’s overall compensation that should be “at-risk” or paid in the form of equity. In 2022, the Committee principally utilized variable/at-risk equity-based compensation to pursue its objectives in this regard. For further discussion of setting executive compensation, see “The Strategy - Changes in Compensation Policies and Practices” below.

Outcome of the 2022 Say-on-Pay Vote and Shareholder Outreach

At our 2022 annual meeting of shareholders, our shareholders approved the compensation of our named executive officers, with approximately 81% of shareholder votes being cast in favor of our say-on-pay proposal on executive compensation. The Committee will continue to consider the outcome of our shareholders’ advisory vote on executive compensation and shareholder feedback when making future compensation decisions for our named executive officers.Transaction.

2022 Compensation Program

During 2022, the Committee used the following principal elementsInterests of executive compensation to meet its overall goals:

Base Pay. Base pay is established initially on the basis of several factors, including market competitiveness; past practice; individual performanceExecutive Officers, Directors and experience; the level of responsibility assumed; the level of skills and experience that can be leveraged across our companies to facilitate their growth and success; and individual employment negotiations with executives. Each of our executive officers has an agreement with us that sets a minimum base salary.

Base salaries typically are reviewed annually (at the end of one year and the beginning of the upcoming calendar year) by the Committee, as well as in connection with a promotion or other changes in job responsibilities. Effective January 1, 2022, Mr. Herndon’s annual base salary was increased from $270,000 to $285,000. Neither Mr. Salzman nor Mr. Herndon received increases in their base salaries for the 2023 calendar year.

The Committee does not typically make adjustments to the base salary levels for our executives based on cost-of-living types of factors.

Incentives.10% Shareholders

General Philosophy.

We believe that short-term compensation (such as base salary and annual incentive awards) should not be based solely on the short-term performance of our stock, whether favorable or unfavorable, but also on our executives’ management of Safeguard towards achieving the annual goals that we believe will contribute to shareholder value.

Incentive Opportunity for Chief Executive Officer.Information

Effective April 1, 2020,Upon the effectiveness of the Stock Splits, the aggregate number of shares of our common stock owned by our directors and executive officers will not increase and the ownership percentage of the shares of our voting stock held by those of our directors, executive officers and 10% shareholders who will be Continuing Shareholders will increase at the same rate as the ownership percentage of all the other Continuing Shareholders, as a result of the reduction of the number of shares of our common stock outstanding. Safeguard appointed Mr. Salzmanwill not be prevented from repurchasing shares of our common stock in the future from the Continuing Shareholders, including the affiliated Continuing Shareholders, as a result of the Transaction.

The ownership percentage and the reduction in the number of shares outstanding following the Stock Splits may increase or decrease depending on purchases, sales and other transfers of our shares of common stock by our shareholders prior to the positioneffective time of Chief Restructuring Officer to succeed Brian Sisko, Safeguard’s then Presidentthe Stock Splits. The ownership percentage of our shares of common stock held by those of our directors, executive officers and Chief Executive Officer. Later, on December 21, 2020, Safeguard appointed Mr. Salzman10% shareholders who will be Continuing Shareholders, as well as the ownership percentage of our other Continuing Shareholders, will proportionally increase or decrease as a result of such purchases, sales and other transfers of our shares of common stock by our shareholders prior to the positioneffective time of Chief Executive Officer. Mr. Salzman does not participate in Safeguard’s Management Incentive Program (“MIP”). Instead, Mr. Salzman receives significant equity-based compensation. The initial six-month period (i.e., April 1, 2020 through September 30, 2020) of Mr. Salzman’s employment included equity-based compensation that consisted of: (i) a fully vested stock grant of 8,000 shares of Safeguard’s common stock, (ii) 20,000 additional shares of Safeguard’s common stock, which vested during such period, and (iii) an additional 17,000 shares of Safeguard’s common stock, which were issued at the end of such initial six-month period. Following such initial six-month period, Mr. Salzman received: (i) a restricted stock award of 75,000 shares of Safeguard’s common stock, which vested and was paid ratably on a monthly basis through December 31, 2021, and (ii) a performance stock unit grant representing a right to receive up to 120,000 shares of Safeguard’s common stock, which would vest if certain performance criteria were achieved by December 31, 2021. After reviewing Safeguard’s performance against such criteria, in January 2022, the Committee approved the vesting of 85,000 of such performance stock units.Stock Splits.

Effective January 1, 2022, Mr. Salzman received an additional restricted stock award of 60,000 shares of Safeguard’s common stock, which vested and was paid ratably on a monthly basis through December 31, 2022, and a performance stock unit grant representing a right to receive 80,000 shares of Safeguard’s common stock, which would vest based on the Committee’s discretion and if certain performance criteria were achieved by December 31, 2022, subject to Mr. Salzman’s continued employment. After reviewing Safeguard’s performance against such criteria, the Committee approved the vesting of 64,000 of such performance stock units.

EffectiveOn January 17, 2023, Eric Mr.C. Salzman, our Chief Executive Officer, received an additionala restricted stock award of 125,000 shares of Safeguard’sour common stock, which will vest and be paid ratablyvests on a monthly basis through December 31, 2023, subject to Mr. Salzman’s continued employment. Effective Marchemployment at Safeguard, of which approximately 10,417 shares are expected to vest on each of October 15, 2023, November 15, 2023 and December 15, 2023. In March 2023, Mr. Salzman received an additionala performance stock unit grant representing a right to receive 125,000 shares of Safeguard’sour common stock, which will vest based on the Committee’s discretion of the Compensation Committee of the Board and if certain performance criteria are achieved by December 31, 2023, subject to Mr. Salzman’s continued employment.employment at Safeguard. See “—Agreements with Safeguard” below for additional information related to Mr. Salzman’s equity grants.

Incentive OpportunityOn June 30, 2023, each member of our Board received a restricted stock grant of 44,497 shares of our commons stock vesting on the first anniversary of the date of the grant. If prior to such first anniversary, a director ceases to be a member of the Board for any reason other Officers.than (i) death, (ii) disability or (iii) as a result of not being nominated by Safeguard’s Nominating and Corporate Governance Committee for re-election to the Board, the unvested shares of common stock under this grant will be forfeited. If shareholders approve the Stock Split Proposals and we proceed with the Transaction, the size of the Board is expected to be reduced to two members from the current governance structure of Safeguard, to be determined by the Board upon the filing of our Annual Report on Form 10-K for the fiscal year ending December 31, 2023, and the remaining directors are expected to resign from the Board. We expect to deem such resignation related to the Transaction to be an equivalent of not being nominated for re-election for the purposes of the vesting of the restricted stock grant.

The Committee annually awards bonusesNone of our directors, executive officers or 10% shareholders has any interest, direct or indirect, in the Stock Splits, other than interests arising from (i) the ownership of shares of our common stock, where those directors, executive officers or 10% shareholders receive no extra or special benefit from the Transaction that is not shared on a pro rata basis by all other holders of our common stock, (ii) the ownership of restricted stock or restricted stock unit grants relating to the right to receive shares of our other executives undercommon stock upon the MIP. The MIP is designedvesting of these grants, which will not be affected by the Stock Splits, (iii) severance arrangements, or (iv) potential arrangements related to provide a variable short-term incentive tothe planned adjusted management structure of Safeguard.

As of September 26, 2023, approximately 9.3% and 12% of the issued and outstanding shares of our namedcommon stock was held by our executive officers and our other executives and employees principally based on Safeguard’s annual performance and/or individual achievement. These awards are determined annually following the end of each calendar year based on the Committee’s assessment10% shareholders, respectively. Our executive officers have indicated that they intend to vote all of the achievement of objectives established at the beginning of the year. Payments may be made in cash and/or equity, in the Committee’s discretion. The awards for the 2022 calendar year were paid one-half in cash and one-half in shares of our common stock held by them “FOR” the Stock Split Proposals and “FOR” the Adjournment Proposal. Safeguard’s affiliated shareholders, including our directors and executive officers, will be treated no differently than unaffiliated shareholders, including unaffiliated Cashed Out Shareholders and unaffiliated Continuing Shareholders.

For information relating to the beneficial ownership of our common stock. Neither the actual awards to be made under the MIP nor the minimum long-term valuestock by executive officers, directors and 10% shareholders, see “Security Ownership of any equity grants made is guaranteed.Certain Beneficial Owners and Management.”

For 2022,See “—Effects of the Committee determined thatTransaction (including the Stock Splits)—Effect of the Transaction (including the Stock Splits) on our named executive officersDirectors, Executive Officers and other senior executives participating in the MIP would be eligible to receive an award under the MIP based on the achievement by Safeguard of corporate objectives as well as personal performance. Other employees also participated in our 2022 MIP based on the achievement by Safeguard of corporate objectives as well as personal performance. The Committee may adjust the relative weightings of corporate and, when applicable, individual objectives for specified employees under our MIP, including our named executive officers, in the future in light of Safeguard’s overall compensation goals.10% Shareholders.”

2022 MIP Performance Measures.

The Committee established specific performance criteria under the 2022 MIP, incenting the senior executives participating in the MIP to deliver a strategic plan that would enable Safeguard to return value to its shareholders and ensure that redundancy plans were in place for each such executive’s position at Safeguard. Within the specific parameters of the 2022 MIP, the Committee also reserved a significant level of discretion generally and in reaching final determinations of achievement levels attained. The determination to reserve such discretion and flexibility arose from the Committee’s belief that, given Safeguard’s business activities, as circumstances change throughout a given fiscal year, on a macro and/or a micro level, specific/rigid formulas or guidelines for measuring achievement set in the beginning of a year, if strictly applied, may well incent activity that does not result in, or compensation grants that do not match, actual shareholder value creation and that the execution of the Strategy would likely entail the arising of unforeseen circumstances. The award criteria finally adopted was designed to provide managementAgreements with a meaningful guideline for meeting the Committee’s criteria for a target award, but not guarantee achievement or make achievement somewhat inevitable or impossible. This approach is also intended to provide the possibility of exceeding target awards and some economic recognition, albeit reduced, for near achievement of the target.

Consistent with their respective employment agreements and Safeguard’s overall compensation philosophy, and based upon multiple factors reviewed by the Committee, including an assessment of competitive compensation data in the market in which Safeguard competes for executive talent and to better align the interests of Safeguard management and our shareholders, the following target MIP awards for 2022 were set for our named executive officers: