UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
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| x | Definitive Proxy Statement |
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| o | Soliciting Material Pursuant to §240.14a-12 |
I.D. Systems, Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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I.D. Systems,Systems, Inc.
123 Tice Boulevard
Woodcliff Lake, New Jersey 07677
May 6, 2013
Dear Stockholder:
I would like to extend a personal invitation for you to join us at the Annual Meeting of Stockholders of I.D. Systems, Inc. (the “Company”) to be held on Thursday, June 20, 2013, at 10:00 a.m. (Eastern Time), at the offices of Lowenstein Sandler LLP, 1251 Avenue of the Americas, New York, New York 10020.
At this year’s meeting, you will be asked to vote on the election of directors; the ratification of the appointment of EisnerAmper LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2013; and the approval, on an advisory basis, of the Company’s executive compensation; and any other business that may properly come before the meeting or any adjournment thereof. Attached you will find a notice of meeting and proxy statement that contain additional information about these proposals and the meeting itself, as well as the different methods you can use to vote your proxy, including via telephone and Internet.
In addition to the specific matters to be acted upon, there will be a report on the progress of the Company and an opportunity for questions of general interest to the stockholders.
We hope that you will find it convenient to attend the meeting in person. Whether or not you expect to attend in person, I encourage you to vote your shares to ensure your representation at the meeting and the presence of a quorum. If you do attend the meeting, you may withdraw your proxy if you wish to vote in person.
On behalf of the Board of Directors and management of the Company, I would like to express our appreciation for your continued support of I.D. Systems, Inc.
Sincerely,/s/ Jeffrey M. JagidJeffrey M. JagidChairman of the Board andChief Executive Officer
I.D. Systems, Inc.
123 Tice Boulevard
Woodcliff Lake, New Jersey 07677
NOTICE OF 20132014 ANNUAL MEETING OF STOCKHOLDERS
To Be Held On June 20, 20132014
To the Stockholders of I.D. Systems, Inc.:
Notice is hereby given that the 20132014 Annual Meeting of Stockholders (the “Annual Meeting”) of I.D. Systems, Inc. (the “Company,” “we,” “our” or “us”) will be held at the offices of Lowenstein Sandler LLP, located at 1251 Avenue of the Americas, New York, New York 10020, on Thursday,Friday, June 20, 2013,2014, at 10:11:00 a.m., Eastern Time, and thereafter as it may be postponed or adjourned from time to time, for the following purposes, each of which is described more fully in the Proxy Statement accompanying this Notice of Annual Meeting:
| 1. | To elect five (5) directors, the names of whom are set forth in the accompanying Proxy Statement, each to serve until the Company’s |
| 2. | To vote upon the ratification of the appointment of EisnerAmper LLP as the independent registered public accounting firm of the Company for the fiscal year ending December 31, |
| 3. | To hold an advisory (non-binding) vote to approve the Company’s executive compensation; and |
| 4. | To transact such other business as may properly come before the Annual Meeting, including any motion to adjourn to a later date to permit further solicitation of proxies, if necessary, or before any adjournment thereof. |
The meeting will begin promptly at 10:11:00 a.m., Eastern Time. Only holders of record of shares of our common stock at the close of business on April 25, 2013,May 19, 2014, the date fixed by our Board of Directors as the record date for the Annual Meeting, will be entitled to notice of, and to vote at, the meeting and any postponements or adjournments of the meeting.
To help conserve resources and reduce printing and distribution costs, we will be mailing a notice to most of our stockholders, instead of a paper copy of the Proxy Statement and our 2012 Annual Report, with instructions on how to access our proxy materials, including this Proxy Statement, our 2012 Annual Report and a form of proxy card or voting instruction card, over the Internet. The notice also will contain instructions on how a stockholder can receive a paper copy of our proxy materials.
For a period of at least 10 days prior to the Annual Meeting, a complete list of stockholders entitled to vote at the meeting will be available and open to the examination of any stockholder for any purpose relating to the Annual Meeting during normal business hours at our principal executive offices located at 123 Tice Boulevard, Woodcliff Lake, New Jersey 07677.
Whether you expect to attend the Annual Meeting or not, please vote, sign, date and return in the self-addressed envelope provided the enclosed proxy card as promptly as possible. If you attend the Annual Meeting, you may vote your shares in person, even though you have previously signed and returned your proxy.
By order of the Board of Directors,
/s/ Ned Mavrommatis
Ned Mavrommatis
Corporate Secretary
Dated: May 6, 201328, 2014
Woodcliff Lake, New Jersey
YOUR VOTE IS IMPORTANT.
ALL STOCKHOLDERS OF RECORD AS OF APRIL 25,Important Notice of Internet Availability of Proxy Materials for the 2014 Annual Meeting of Stockholders to be held on June 20, 2014.The Notice, this Proxy Statement, and our Annual Report on Form 10-K for the fiscal year ended December 31, 2013, ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING. REGARDLESS OF WHETHER YOU PLAN TO ATTEND THE MEETING, PLEASE PROMPTLY VOTE BY TELEPHONE, OR, IF AVAILABLE, ELECTRONICALLY, OR, IF YOU RECEIVED PER YOUR REQUEST A PAPER COPY OF OUR PROXY MATERIALS, COMPLETE, SIGN, DATE, AND RETURN THE ENCLOSED PROXY CARD IN THE ACCOMPANYING POSTAGE-PAID ENVELOPE. NO ADDITIONAL POSTAGE IS NECESSARY IF THE PROXY CARD IS MAILED IN THE UNITED STATES OR CANADA. YOU MAY REVOKE YOUR PROXY AT ANY TIME BEFORE IT IS VOTED AT THE MEETING AND YOU MAY VOTE IN PERSON IF YOU ATTEND THE MEETING.as amended, are available through the Internet athttp://www.astproxyportal.com/ast/10255. Under Securities and Exchange Commission rules, we are providing access to our proxy materials both by sending you this full set of proxy materials, and by notifying you of the availability of our proxy materials on the Internet.
I.D. SYSTEMS, INC.
123 TICE BOULEVARD
WOODCLIFF LAKE, NEW JERSEY 07677
PROXY STATEMENT
Annual Meeting of Stockholders
June 20, 20132014
This Proxy Statement is furnished in connection with the solicitation of proxies by the Board of Directors (the “Board”) of I.D. Systems, Inc., a Delaware corporation (the “Company,” “we,” “our” or “us”), for use at our 20132014 Annual Meeting of Stockholders (the “Annual Meeting”) to be held at the offices of Lowenstein Sandler LLP, located at 1251 Avenue of the Americas, New York, New York 10020, on Thursday,Friday, June 20, 2013,2014, at 10:11:00 a.m., Eastern Time, and any adjournments or postponements thereof.
The Board is makingsending the proxy materials relating to the Annual Meeting, which include this Proxy Statement, our Annual Report on Form 10-K for the fiscal year ended December 31, 2012,2013, as amended, and proxy card, available to its stockholders on the Internet, or sending printed proxy materials to certain stockholders, including upon a stockholder’s request, beginning on or about May 6, 2013.28, 2014. The information included in this Proxy Statement relates to the proposals to be voted on at the Annual Meeting, the voting process, the compensation of our most highly paid executive officers and our directors, and certain other required information.
Notice of Internet Availability of Proxy Materials
Pursuant to rules issued by the U.S. Securities and Exchange Commission (the “SEC”), we are providing access to our proxy materials, including this Proxy Statement, the accompanying form of proxy card and our Annual Report on Form 10-K for the fiscal year ended December 31, 2012, over the Internet instead of mailing a full set of such materials to every stockholder. We have sent aImportant Notice of Internet Availability of Proxy Materials (the “Notice”)for the 2014 Annual Meeting of Stockholders to all of our stockholders who were not mailed a full set of the proxy materials. be held on June 20, 2014
The Notice, this Proxy Statement, and our Annual Report on Form 10-K for the fiscal year ended December 31, 20122013, as amended, are available through the Internet athttp://www.amstock.com/ProxyServices/ViewMaterial.asp?CoNumber=www.astproxyportal.com/ast/10255. Our stockholders mayUnder Securities and Exchange Commission rules, we are providing access to our proxy materials over the Internetboth by following the directions set forth in the Notice. In addition, by following the instructions in the Notice, any stockholder may request that asending you this full set of printed proxy materials, be sent to them.
We have chosen to send the Notice to stockholders, instead of automatically sending a full set of printed copiesand by notifying you of the proxy materials to all stockholders, in order to reduce the impactavailability of printing our proxy materials on the environment and to save on the costs of printing and mailing incurred by the Company.Internet.
Instead of receiving future copies of our notices of annual meeting, proxy statements and annual report on Form 10-K by mail, shareholders of record and most beneficial owners can elect to receive an e-mail that will provide electronic links to these documents. Directions on how to receive your future proxy materials electronically will be set forth in the Notice. Opting to receive your proxy materials electronically will save us the cost of producing and mailing documents to your home or business, and will reduce the impact of our annual stockholders’ meetings on the environment.
Record Date and Outstanding Shares
The Board has fixed the close of business on April 25, 2013,May 19, 2014, as the record date (the “Record Date”) for the determination of stockholders entitled to notice of, and to vote at, the Annual Meeting and any adjournments or postponements of the meeting. Only stockholders of record at the close of business on the Record Date will be entitled to vote at the Annual Meeting or any and all adjournments or postponements thereof.
As of the Record Date, we had issued and outstanding 12,113,67412,287,483 shares of common stock. Our common stock comprises all of our issued and outstanding voting stock.
At least ten (10) days before the Annual Meeting, we will make a complete list of the stockholders entitled to vote at the meeting open to the examination of any of our stockholders for any purpose germane to the Annual Meeting. The list will be available for inspection during ordinary business hours at our offices at 123 Tice Boulevard, Woodcliff Lake, New Jersey 07677, and will be made available to stockholders present at the Annual Meeting.
Purposes of the Annual Meeting
The purposes of the Annual Meeting are (i) to elect five (5) directors to our Board, each to serve until our 20142015 annual meeting of stockholders and until their respective successors are duly elected and qualified; (ii) to ratify the appointment of EisnerAmper LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2013;2014; (iii) to approve, on an advisory basis, the Company’s executive compensation; and (iv) to transact such other business as may properly come before the Annual Meeting or at any adjournment or postponement thereof. In addition to the foregoing, there will be a report on the progress of our company and an opportunity for questions of general interest to the stockholders.
Unless we receive specific instructions to the contrary or unless such proxy is revoked, shares represented by each properly executed proxy will be voted: (i) “FOR” the election of each of our nominees as a director;
(ii) “FOR” the ratification of the appointment of EisnerAmper LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2013;2014; (iii) “FOR” the approval, on an advisory basis, of our executive compensation; and (iv) with respect to any other matters that may properly come before the Annual Meeting, at the discretion of the proxy holders. We do not presently anticipate that any other business will be presented for action at the Annual Meeting.
Voting at the Annual Meeting
Quorum Requirements
The presence at the Annual Meeting, in person or by proxy, of the holders of a majority of the total outstanding shares of our common stock is necessary to constitute a quorum for the transaction of business at the meeting. Abstentions and broker “non-votes” (as hereinafter defined) are counted as present and entitled to vote for purposes of determining whether a quorum is present. A broker “non-vote” on a matter occurs when a broker, bank or your representative may not vote on a particular matter because it does not have discretionary voting authority and has not received instructions from the beneficial owner.
Shareholders of Record and Beneficial Owners
Each share of our common stock outstanding on the Record Date will be entitled to one vote on each matter submitted to a vote of our stockholders. Cumulative voting by stockholders is not permitted. The shares to be voted include shares of our common stock that are (i) held of record directly in a stockholder’s name and (ii) held for stockholders in “street name” through a broker, bank or other nominee. If your shares are registered directly in your name with the Company’s stock transfer agent, American Stock Transfer & Trust Company, LLC, you are considered the “shareholder of record” with respect to those shares. If your shares are held in a stock brokerage account or by a bank or other nominee, you are considered the “beneficial owner” of those shares.
If you hold your shares of our common stock through a broker, bank or other representative, generally the broker, bank or representative may only vote the common stock that it holds for you in accordance with your instructions. However, under the rules that govern brokers who have record ownership of shares that are held in street name for their clients who are the beneficial owners of the shares, brokers have the discretion to vote such shares on routine matters. Therefore, if the broker, bank or representative has not timely received your instructions, it may vote on certain matters for which it has discretionary voting authority. The ratification of the appointment of an independent registered public accounting firm is considered a routine matter. Thus, if you do not otherwise instruct your broker, the broker may turn in a proxy card voting your shares “FOR” ratification of the independent registered public accounting firm. The Company believes that all of the other proposals to be voted upon at the meeting will be considered “non-routine.” Thus, a broker or other nominee cannot vote without instructions on these non-routine matters, and, consequently, if your shares are held in street name, you must provide your broker or nominee with instructions on how to vote your shares in order for your shares to be voted on those proposals.
Holders of our common stock will not have any rights of appraisal or similar dissenters’ rights with respect to any matter to be acted upon at the Annual Meeting.
Vote Required
For the election of directors, a plurality of the votes cast is required. Since the number of candidates is equal to the number of vacancies, receipt of any votes in favor of any candidate will ensure that that candidate is elected. If no voting direction is indicated on a proxy card that is signed and returned, the shares will be considered votes FOR the election of all director nominees set forth in this Proxy Statement. In accordance with Delaware law, stockholders entitled to vote for the election of directors may withhold authority to vote for all nominees for directors or may withhold authority to vote for certain nominees for directors. Abstentions and broker “non-votes” are not considered for the purpose of the election of directors.
The ratification of the selection of EisnerAmper LLP as the Company’s independent registered public accounting firm and the advisory (non-binding) proposal to approve the Company’s executive compensation each requires the affirmative vote of a majority of the votes cast. Abstentions and broker non-votes will have no effect on the outcome on these matters.
Your vote will not be disclosed either within the Company or to third parties, except: (i) as may be necessary to meet applicable legal requirements or to assert or defend claims for or against the Company; (ii) to allow for the tabulation of votes and certification of the vote; and (iii) to facilitate a successful proxy solicitation.
Effect of Advisory Votes
The approval, on an advisory basis, of our executive compensation, also known as a “say on pay” vote, is an advisory vote mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act. This means that while we ask stockholders to approve our executive compensation, it is not an action that requires stockholder approval, and stockholders are not voting to approve or disapprove the Board’s recommendation with respect to this proposal. This advisory vote is non-binding on the Board, although the Board welcomes the input of our stockholders on the Company’s compensation policies and compensation program and will take the advisory vote into account in making determinations concerning executive compensation.
At our 2011 annual meeting of stockholders held on June 21, 2011, we conducted a stockholder advisory vote on the frequency of future stockholder votes on the Company’s executive compensation (every one, two or three years), also known as a “say on frequency” vote. The Board considered the results of this “say on frequency” advisory vote and, since the most affirmative votes of all the votes cast on the “say on frequency” matter expressed a preference for having the “say on pay” vote every year, determined that an advisory vote on executive compensation would be conducted on an annual basis until the next vote on the frequency of such votes. Notwithstanding the outcome of stockholder “say on frequency” votes, however, the Board may in the future decide to conduct advisory votes on a less frequent basis if appropriate and may vary its practice based on factors such as discussions with stockholders and the adoption of material changes to compensation programs.
Voting of Proxies
Shareholders of Record
As a shareholder of record, these proxy materials will be furnished directly to you by the Company, via the Internet, as described in the Notice, or by mail. As the stockholder of record, you have the right to grant your voting proxy directly to the Company or to vote in person at the meeting.
Beneficial Owners
As a beneficial owner, you have the right to direct your broker, trustee or nominee as to how to vote your shares. Please refer to the voting instruction card provided by your broker, trustee or nominee. You are also invited to attend the Annual Meeting. However, because a beneficial owner is not the stockholder of record, you may not vote these shares in person at the meeting unless you obtain a “legal proxy” from the broker, trustee or nominee that holds your shares, giving you the right to vote the shares at the meeting. Note that it may take some time to obtain a legal proxy from your broker, trustee or nominee, so, if you plan to request a legal proxy, you should do so well in advance of the meeting.
Voting Without Attending the Meeting
Whether you hold shares directly as the shareholder of record or through a broker, trustee or other nominee as the beneficial owner, you may direct how your shares are voted without attending the Annual Meeting. There are three ways to vote by proxy without attending the meeting:
Revocation of Proxies
Stockholders can revoke a proxy prior to the completion of voting at the Annual Meeting through any of the following methods:
Please note, however, that if a stockholder’s shares are held of record by a broker, bank or other nominee and that stockholder wishes to vote at the Annual Meeting, the stockholder must bring to the Annual Meeting a letter or “legal proxy” from the broker, bank or other nominee confirming the stockholder’s beneficial ownership of the shares.
Solicitation
The cost of preparing, assembling, printing and mailing the proxy material and of reimbursing brokers, nominees and fiduciaries for the out-of-pocket and clerical expenses of transmitting copies of the proxy material to the beneficial owners of shares held of record by such persons will be borne by the Company. Certain officers and employees of the Company, without additional compensation, may use their personal efforts, by telephone or otherwise, to obtain proxies.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
The Board has nominated Jeffrey M. Jagid, LawrenceKenneth Brakebill, Michael Brodsky, Kenneth S. Burstein, Harold D. Copperman, Robert J. FarrellEhrman, Ron Konezny and Michael P. MonacoTony Trousset for election as directors of the Company. If elected to the Board, each nominee wouldwill hold office until our Annual Meeting of Stockholders to be held in 20142015 and until his respective successor has been duly elected and qualified, or until his earlier death, resignation or removal. Each of Messrs. Jagid, Burstein, Copperman, FarrellEhrman, Brakebill, Brodsky, Konezny and MonacoTrousset, has consented to bebeing named as a nominee and, if elected, to serve as a director. The Nominating Committee and the Board believe that each of these nominees possesses the attributes we seek in directors generally as well as the individual experiences, qualifications and skills included in their individual biographies below.
If any nominee is unable to serve, which the Board has no reason to expect, the persons named in the proxy intend to vote for the balance of those nominees named above and, if they deem it advisable, for a substitute nominee.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE ““FOR”THE ELECTION OF ALL OF THE DIRECTOR NOMINEES LISTED ABOVE.
Information About Our Directors, Director Nominees and Executive Officers
The table below sets forth the names and ages of the directors, nominees for director and executive officers of the Company as of April 25, 2013,May 19, 2014, as well as the position(s) and office(s) with the Company held by those individuals. A summary of the background and experience of each of those individuals is set forth after the table.
 | | | ||
| Name | Age | Position(s) | ||
| DIRECTORS | ||||
| Lawrence S. Burstein | Director | |||
| Harold D. Copperman | Director | |||
| Robert J. Farrell | 50 | Director | ||
| Michael P. Monaco | Director | |||
| Kenneth S. Ehrman | President and Interim Chief Executive Officer and Director Nominee | |||
| Kenneth Brakebill | 44 | Director | ||
| Michael Brodsky | 46 | Director Nominee | ||
| Ron Konezny | 46 | Director Nominee | ||
| Tony Trousset | 45 | Director Nominee | ||
| EXECUTIVE OFFICERS WHO ARE NOT | ||||
| Michael L. Ehrman | Chief Technology Officer | |||
| Brett Kilpatrick(2) | Executive Vice President of Worldwide Sales | |||
| Ned Mavrommatis | Chief Financial Officer, Treasurer and Corporate Secretary |
| (1) |
| (2) | On May 13, 2014, Mr. |
Directors and Director Nominees
Jeffrey M. Jagid.Kenneth S. Ehrman. Mr. JagidEhrman is one of our founders and has beenserved as our Chairman of the BoardPresident since June, 2001our inception in 1993 and as our Interim Chief Executive Officer since June, 2000. Prior to that time,March, 2014. Mr. JagidEhrman also previously served as our Chief Operating Officer. Since he joined us in 1995, Mr. Jagid also has served as a director as well as our General Counsel. PriorOfficer from June, 2000 to joining us, Mr. Jagid was a corporate litigation associate at the law firm of Tannenbaum Helpern Syracuse & Hirschtritt LLP in New York, New York. Mr. Jagid also is a director of Coining Technologies, Inc., a privately held company that manufacturesMarch, 2010, and engineers metal components. Mr. Jagid previously served as a director of International Fight League, Inc., a publicly traded company that organized, hosted and promoted live and
televised mixed martial arts through its wholly owned subsidiary, until December, 2009. Mr. Jagid received a Bachelor of Business Administration from Emory University in 1991 and a Juris Doctor degree from the Benjamin N. Cardozo School of Law in 1994. He is a member of the Bar of the States of New York and New Jersey.
As Chief Executive Officer of the Company from 1993 until 2013. Since September, 2012, Mr. Jagid brings deep institutional knowledge and perspective regarding our strengths, challenges, opportunities and operations to his roleEhrman has served as a member of the board of directors of Financial Services, Inc., a privately held provider of data processing solutions for banking. He graduated from Stanford University in 1991 with a Bachelor of Science in Industrial Engineering. Upon his graduation, and until our inception, Mr. Ehrman worked as a production manager with Echelon Corporation. Mr. Ehrman is the brother of Michael L. Ehrman, our Chief Technology Officer.
Mr. Ehrman has a strong technical and engineering background. Mr. Ehrman’s qualifications to serve on the Board include his management experience, his engineering expertise and our Chairman.a long history and familiarity with the Company. In addition, Mr. Jagid possesses an extensive understandingEhrman’s role as the President and Interim Chief Executive Officer and the former Chief Operating Officer of wireless technologythe Company provides the Board with invaluable insight into the management and daily operations of the Company. Mr. Ehrman also is an inventor on several of the Company’s patents. Mr. Jagid brings to the Board the critical link between management and the Board, enabling the Board to perform its oversight function with the benefit of senior management’s perspective on our business. Mr. Jagid also has a legal background.
Lawrence S. Burstein.Kenneth Brakebill. Mr. BursteinBrakebill is a retired intellectual property and trial lawyer. Following a one-year appellate clerkship out of law school, in 1998 Mr. Brakebill joined Morrison & Foerster, a global law firm of which he became a partner in 2005. At Morrison & Foerster, Mr. Brakebill primarily represented technology companies, both in the hardware and software sectors, in bet-the-company type intellectual property cases involving disputes over patents, copyrights and contracts concerning use of technology. He retired from the firm in 2010. Mr. Brakebill also has served as a director of the Company since June, 1999.several not-for-profit organizations. Mr. Burstein also serves as a member of each of the Audit Committee, Compensation Committee and Nominating Committee of the Board and is the Chairman of the Nominating Committee. Since March, 1996, Mr. Burstein has served as President and a director of Unity Venture Capital Associates Ltd., a private investment company. Mr. Burstein also serves as a director and a member of the compensation and governance committees of the board of directors of CAS Medical Systems, Inc., a publicly traded medical technology company that develops, manufactures and markets non-invasive patient monitoring products. Mr. Burstein was formerly a director of THQ, Inc., a video game publisher and Atrinsic, Inc., an internet marketing company (both of which companies filed for protection under Chapter 11 of the Federal Bankruptcy Act in 2012). Mr. Burstein previously served as a director of Millennium India Acquisition Corp. from July 2007 until October 2010 and as a director of American Telecom Services, Inc. from February 2006 until 2009. Mr. BursteinBrakebill received a Bachelor of Arts degree with Honors from Stanford University in Economics from1991 and attended Harvard Law School and the University of Wisconsin andCalifornia, Hastings, from which he received his law degree from Columbia Law School.in 1997.
Mr. BursteinBrakebill has extensive experience representing technology companies in private investmentslitigation concerning intellectual property rights and finance,rightful use of technology, and possesses considerable knowledgeaccordingly, has insights in the area of intellectual property rights in technology. Mr. Brakebill participated on successful trial teams that represented Novell, Inc., then a publicly held software company, in a widely-followed case concerning ownership of the copyrights in the UNIX operating system; and Altera Corporation, a publicly traded global semiconductor company, in cases concerning the designs of Altera’s reprogrammable logic device technology and its software tools. Through these representations, Mr. Brakebill gained significant experience working with respectsenior executives of companies on issues relating to lawlitigation-impacted product lines and strategic business matters across a variety of industries. As a result of these experiencesdirection. We believe that Mr. Brakebill’s legal and the insights he has gained in investments, financial managementtechnology background and other areas, Mr. Burstein makes a significant contribution to the Board’s consideration of issues and oversight of management. In addition, Mr. Burstein’s serviceexperience as a director of the Company since 1999 has provided him with extensive knowledge of the Company and its business and operations. Mr. Burstein also brings significant board expertise to the Company, as he serves as a director (and a member of various board committees) of several of public companies. Mr. Burstein’s skills and experience make him knowledgeable of the complex issues facing global companies today and give him an understanding of what makes businesses work effectively and efficiently.
Harold D. Copperman. Mr. Copperman has served as a director of the Company since October, 2008, and as the Board’s independent lead director since June, 2009. Mr. Copperman also serves as a member of each of the Audit Committee, Compensation Committee and Nominating Committee of the Board, and is the Chairman of the Compensation Committee. Mr. Copperman has served as President and Chief Executive Officer of HDC Ventures, Inc., a management and investment group focusing on enterprise systems, software and services, since March, 2002. From January, 2001, to March, 2002, Mr. Copperman was a consultant and a private investor. From 1993 to 1999, Mr. Copperman served as Senior Vice President and Group Executive at Digital Equipment Corp. Mr. Copperman also has served as President and Chief Executive Officer of JWP Information Services, Inc.; President and Chief Operating Officer of Commodore Business Machines, Inc.; and Vice President and General Manager for Apple Computer, Inc.’s Eastern Operations. He also spent 20 years at IBM Corporation, where he held a variety of sales, marketing and executive positions. Since January, 2010, Mr. Copperman has served as a director and the chairman of the compensation committee of the board of directors of Meru Networks, Inc., a publicly traded company that engages in the development and marketing of a virtualized wireless LAN solution. Since April, 2013, Mr. Copperman also serves as a director of Virtual Piggy Inc., a publicly traded company that is an innovator in facilitating safe youth payments on the Internet. Mr. Copperman also served as a director and the chairman of the compensation committee of EDGAR Online, Inc., a leading provider of financial data, analytics and disclosure management solutions to help corporations and institutional investors facilitate compliance and management of regulatory disclosure filings from August 2011 until August 2012, when EDGAR Online was acquired by RR Donnelley and Sons.
Mr. Copperman also served as a director and the chairman of the compensation committee of the board of directors of Metastorm Inc., a privately held, global provider of enterprise architecture modeling, business process analysis and business process management software, from 2001 until February, 2011, when Metastorm was acquired by Open Text Corporation. Mr. Copperman also previously served as a director and a member of the audit, compensation and nominating and governance committees of the board of directors of Avocent Corporation, a publicly traded company that delivers IT operations management solutions, from 2002 until December, 2009, at which time Avocent Corporation was acquired by Emerson Electric Co. In addition, Mr. Copperman previously served as a director and a member of the audit and nominating and governance committees and the chairman of the compensation committee of the board of directors of AXS-One Inc., a publicly traded company that provides high performance records compliance management solutions, from 2006 until June, 2009, when AXS-One Inc. was acquired by Unify Corporation. From 2001 until 2008, Mr. Copperman also served as a director and a member of the audit and nominating and governance committees of the board of directors of Epicor Software Corporation, a publicly held company that designs, develops, markets and supports enterprise application software solutions and services. He also served on the board of directors of America Online from 1989 to 1993 as it became a public company. Mr. Copperman received a Bachelor of Science in Mechanical Engineering from Rutgers University and served as a Captain in the U.S. Army.
Mr. Copperman possesses extensive business, operating and executive expertise, and has a diversified background of managing and operating several companies, primarily in the technology industry. Among other things, Mr. Copperman has served as the chief executive officer of a major distributor, and possesses skills in the areas of executive management, leadership, corporate governance, strategic planning and mergers and acquisitions. Mr. Copperman’s experience as a board member of various public companies, including as member or chairman of their compensation committees, provides him with insight and perspective into current best practices at the board of directors and compensation committee levels and enables him to be an effective contributing member of the Board.
Michael P. Monaco. Mr. Monaco has served as a director of the Company since June, 2001. Mr. Monaco also serves as a member of each of the Audit Committee, Compensation Committee and Nominating Committee of the Board, and is the Chairman of the Audit Committee. Mr. Monaco is a Senior Managing Director at CDG Group, LLC, a New York-based firm specializing in restructurings, mergers and acquisitions and crisis and turnaround management. He served as Chairman and Chief Executive Officer of Accelerator, LLC, a provider of outsource services, from 2000 to 2001. He served as a Vice Chairman of Cendant Corporation from 1996 to 2000 and as Chief Executive Officer of the Direct Marketing Division of Cendant from 1998 to 2000. Mr. Monaco served as the Executive Vice President and Chief Financial Officer of the American Express Company from 1990 to 1996. Mr. Monaco currently serves as a director of The International Securities Exchange, which operates a leading options exchange in the United States. Mr. Monaco previously served as a director of Washington Group International, Inc. (“WGI”), a publicly traded company which provides integrated engineering, construction and management services to businesses and governments around the world, from 2002 until November, 2007, when WGI was acquired by URS Corporation, and also served as chairman of the audit committee of WGI’s board of directors. Mr. Monaco received a Bachelor of Science degree in Accounting from Villanova University and a Master of Business Administration degree from Fairleigh Dickinson University. Mr. Monaco is also a Certified Public Accountant.
As a result of his role as Executive Vice President and Chief Financial Officer of the American Express Company, as well as the other positions of financial oversight and responsibility that he has held during his career, Mr. Monaco, Chairman of our Audit Committee, has significant experience in public company accounting, risk management, disclosure and financial system management and has been determined to be an “audit committee financial expert” under the rules and regulations of the SEC. Mr. Monaco’s prior experiences demonstrate his leadership capability and business acumen. Mr. Monaco also has other public company board experience, including specific experience serving on audit committees.
Robert J. Farrell. Mr. Farrell has served as President and Chief Executive Officer and a director of Kewill, Ltd., a privately held, global enterprise software company that provides supply chain execution solutions, since October, 2012. Mr. Farrell served as President and Chief Executive Officer and a director of
EDGAR Online, Inc., a formerly publicly traded company and a leading provider of financial data, analytics and disclosure management solutions to help corporations and institutional investors facilitate compliance and management of regulatory disclosure filings, from March, 2011 to September, 2012, after which EDGAR Online was acquired by RR Donnelly and Sons. He served as Chairman and Chief Executive Officer and a director of Metastorm, Inc., a privately held, global provider of enterprise architecture modeling, business process analysis and business process management software, from July, 2002 to February, 2011, when Metastorm was acquired by Open Text Corporation. Mr. Farrell also served as President of the Americas Region for Mercator Software, Inc., a provider of Enterprise Application Integration (EAI) software, from June, 2001 to July, 2002; as Chief Operating Officer of LeadingSide, Inc., an international provider of knowledge management technology and solutions, from December, 1999 to April, 2001; and as Executive Vice President of International Operations of Computer Horizons Corp., a provider of information technology solutions and services, from July, 1996 to December, 1999. Earlier in his career, he held positions at several large organizations, including E. F. Hutton & Co., American Express Company and Grumman Data Systems Corporation. Mr. Farrell also has served as a director and a member of the compensation committee of the board of directors of Folio Dynamics, Inc., a privately held “software as a service” (SaaS) provider of investment management programs and wealth management platform solutions, since August, 2012.
Mr. Farrell is a senior level software and technology executive with vast international business and technical experience. He has held diverse and significant P&L (profit & loss) responsibility, traveling the globe to interact with many of the world’s renowned organizations to drive and build valuable and successful business operations. As the key executive and a director of both public and private companies, Mr. Farrell has been the architect and implementer of strategies that create customer, stockholder and employee value. Mr. Farrell possesses skills in the areas of strategic planning, P&L (profits and loss) management, mergers and acquisitions, business development, research and development, marketing and sales. We believe that Mr. Farrell’s diverse background and experience as an executive and a director of both public and privatenot-for-profit companies, give him the qualifications and skills to enable him to serve as an effective contributing member of the Board.
Kenneth S. Ehrman.Michael Brodsky. See narrative description underMr. Brodsky has served as Executive Chairman of Selectica, Inc., a publicly traded cloud-based contract management and configuration software solutions provider (“Selectica”), since December, 2013, as Chief Executive Officer of Selectica from August, 2013 until December, 2013, and as a director of Selectica since October, 2010. Mr. Brodsky also has served as the caption “Executive Officers,” below.Managing Partner of Vajra Asset Management, LLC, an investment management firm, since January, 2013 and as a partner of Spring Valley Partners, LLC, a consulting services firm which is currently inactive, since July, 2013. From October, 2010 until March, 2012, Mr. Brodsky served as the Co-Chief Executive Officer of Federated Sports & Gaming Inc., a poker entertainment company (“Federated”). In June, 2012, Pinnacle Entertainment, Inc., a publicly held owner, operator and developer of casinos and related hospitality and entertainment facilities, acquired the assets of Federated. Mr. Brodsky served as the Chairman and Chief Executive Officer and as a director of Youbet.com, Inc., a formerly publicly traded provider of an online horse racing and betting site (“Youbet”), from April, 2008 to June, 2010, when Youbet was acquired by Churchill Downs Incorporated, a publicly traded provider of racetracks, casinos, off-track betting and online wagering services (“Churchill Downs”). Mr. Brodsky served as a member of the board of directors of Churchill Downs following the acquisition of Youbet.com until June, 2012. From June, 2005 until August, 2011, Mr. Brodsky served as managing partner of New World Opportunity Partners, LLC, an investment firm. Mr. Brodsky has served as a director of Genesis Land Development Corporation, a residential land developer and home builder in Calgary, Canada with shares
listed on the Toronto Stock Exchange, since June, 2012, as a director of Trans World Corporation, a publicly traded company that owns and operates casinos in the Czech Republic, since September, 2013, and as a director of AltiGen Communications, Inc., a provider of Microsoft-based communications solutions, with shares listed on the OTCQX over-the-counter market, since February, 2013. Mr. Brodsky received a Bachelor of Arts degree from Syracuse University, a law degree from Northwestern University School of Law and a Masters in Business Administration from the JL Kellogg Graduate School of Management School of Business at Northwestern University.
Mr. Brodsky possesses extensive business, operating and executive expertise. Among other things, Mr. Brodsky has served as the Chief Executive Officer of several companies, and possesses skills in executive management and leadership. We believe Mr. Brodsky’s management and leadership skills and experience, as a member of the board of directors of various companies will enable him to be an effective contributing member of the Board.
Ron Konezny has served as Vice President, Global Transportation and Logistics of PeopleNet Communications Corporation (“PeopleNet”), an onboard computing and carrier fleet communications provider and division of Trimble Navigation Limited, a publicly held provider of technology solutions for field and mobile worker productivity (“Trimble”), since September, 2013, and as Chief Executive Officer of PeopleNet since 2007. Mr. Konezny served as General Manager of Trimble's Global Transportation and Logistics division from August, 2011, when Trimble acquired PeopleNet, to September, 2013. Mr. Konezny has served in several positions with PeopleNet since he co-founded it in 1994, including Chief Operating Officer and Chief Financial Officer from 2001 to 2007 and Chief Technology Officer from 1996 to 2007. Mr. Konezny has previously served on the Boards of Directors of the National Private Truck Council Institute and the Truckload Carriers Association. Mr. Konezny received a Bachelor of Arts degree from Northwestern University.
Mr. Konezny possesses extensive business, operating and executive expertise. Through his executive positions with PeopleNet, Mr. Konezny has acquired skills in executive management and leadership. Specifically, in his positions as Chief Executive Officer, Chief Operating Officer and Chief Financial Officer of PeopleNet, Mr. Konezny led PeopleNet’s growth, profitability, and solution innovation. He also led PeopleNet's technology team and platform vision, which resulted in the first internet-based solution in the market, patented OTAP (over-the-air-programming), email messaging, handheld integration, Vehicle Management engine data interface, eDriver Logs, Automated Fuel Tax, and Automated Workflow. We believe Mr. Konezny’s management and leadership skills and technological background will enable him to be an effective contributing member of the Board.
Tony Trousset. Tony Trousset has served as the Managing Member of Atlas Technology Group LLC, a privately held company which provides independent mergers and acquisitions and corporate finance advice to technology companies and technology-focused private equity firms (“Atlas Technology”), since he founded Atlas Technology in November 2009. From 2005 until 2008, Mr. Trousset served as Global Head of Software Investment Banking and Co-Head of the West Coast Technology Investment Banking Group at Lehman Brothers Holdings, Inc., a then global financial services firm. From 2001 until 2005, Mr. Trousset served as Global Head of Software Investment Banking at UBS AG, a global financial services firm. During 2005, Mr. Trousset served as Vice President and Head of Corporate Development at SAS Institute, Inc., a privately held provider of business analytics software and services. Mr. Trousset has served as a member of the Board of Directors of the San Francisco Symphony since 2008. Mr. Trousset received a Bachelor of Arts degree from Stanford University in Political Science and Master of Arts degree from Stanford University in Education.
Mr. Trousset has worked in the technology industry for over 18 years as an investment banker, venture capitalist and corporate executive. He has significant experience with mergers and acquisitions in the technology sector. We believe that Trousset’s background and business acumen, give him the qualifications and skills to enable him to serve as an effective contributing member of the Board.
Executive Officers
Kenneth S. Ehrman. Mr. Ehrman is one of our founders and has served as a director ofSee narrative description under the Company as well as our President since our inception in 1993. Mr. Ehrman also previously served as our Chief Operating Officer from June, 2000 to March, 2010. Since September, 2012, Mr. Ehrman has served as a member of the board of directors of Financial Services, Inc., a privately held provider of data processing solutions for banking. He graduated from Stanford University in 1991 with a Bachelor of Science in Industrial Engineering. Upon his graduation, and until our inception, Mr. Ehrman worked as a production manager with Echelon Corporation. Mr. Ehrman is the brother of Michael L. Ehrman, our Chief Technology Officer.caption “Director Nominees,” above.
Michael L. Ehrman. Mr. Ehrman serves as our Chief Technology Officer, a position he has held since March, 2010. Mr. Ehrman previously served as our Executive Vice President of Engineering from August, 1999, until March, 2010. Prior to that, he served as our Executive Vice President of Software Development since joining us in 1995. Mr. Ehrman graduated from Stanford University in 1994 with a Master of Science in Engineering-EconomicsEngineering - Economics Systems as well as a Bachelor of Science in Computer Systems Engineering. Upon his graduation in 1994, Mr. Ehrman was employed as a consultant for Andersen Consulting in New York. Mr. Ehrman is the brother of Kenneth S. Ehrman, our President and a member of our Board.
Jeffrey M. Jagid. See narrative description under the caption “Directors and Director Nominees,” above.
Brett Kilpatrick. Mr. Kilpatrick has served as our Executive Vice President of Worldwide Sales since March, 2012.2012 and on May 13, 2014, resigned from such position, effective as of June 6, 2014. From October, 2010 until March 2012, Mr. Kilpatrick served as our Vice President of Sales and in such capacity, was responsible for the sales of our Vehicle Management Systems. Prior to joining the Company, Mr. Kilpatrick was the Managing Partner and Chief Executive Officer of AnalytiCare, LLC, a start-up company that provides business intelligence, analytics, and data licensing in a Software as a Service (SaaS) offering to the healthcare market. Prior to that, he served as the Chief Executive Officer of Panoratio Worldwide from 2005 to 2008. Mr. Kilpatrick has also served as the Vice President of Worldwide Sales at
Determine, Inc. (acquired by Selectica), and the Chief Executive Officer of Alterian, Inc. Mr. Kilpatrick also has held executive and management positions with several public companies over the course of his career, including AvantGo, Oracle, Accenture, IONA Technologies and Versant. Mr. Kilpatrick earned a Bachelor of Science Degree in Biology from Purdue University.
Ned Mavrommatis. Mr. Mavrommatis has served as our Chief Financial Officer since joining us in August, 1999, as our Treasurer since June, 2001, and as our Corporate Secretary since November, 2003. Prior to joining us, Mr. Mavrommatis was a Senior Manager at the accounting firm of Eisner LLP (currently known as EisnerAmper LLP). Mr. Mavrommatis received a Master of Business Administration in finance from New York University’s Leonard Stern School of Business and a Bachelor of Business Administration in accounting from Bernard M. Baruch College, The City University of New York. Mr. Mavrommatis is also a Certified Public Accountant.
Bankruptcies
Other than as set forth below, during the past ten years, a petition under the Federal bankruptcy laws or any state insolvency law has not been filed by or against, or a receiver, fiscal agent or similar officer has not been appointed by a court for the business or property of any of our directors, executive officers or nominees for election as director at the Annual Meeting, or any partnership in which he was a general partner at or within two years before the time of such filing, or any corporation or business association of which he was an executive officer at or within two years before the time of such filing. Mr. Brodsky served as the Co-Chief Executive Officer of Federated Sports & Gaming Inc. (“Federated”) from October, 2010 until his resignation from Federated, effective March 1, 2012. On February 28, 2012, Federated Sports filed a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Maryland. Mr. Brodsky served as the Co-Chief Executive Officer of Federated Heartland, Inc. (“Federated Heartland”) from October, 2010 until his resignation from Federated Heartland, effective March 1, 2012. On February 28, 2012, Federated Heartland filed a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Maryland.
CORPORATE GOVERNANCE AND BOARD MATTERS
General
Our Board is responsible for the management and direction of our Company and for establishing broad corporate policies. Members of the Board are kept informed of our business through various documents and reports provided by the Chief Executive Officer or in the absence of the Chief Executive Officer, the Interim Chief Executive Officer, and other corporate officers, and by participating in Board and committee meetings. Each director has access to all of our books, records and reports, and members of management are available at all times to answer their questions.
Currently, there are fivefour members ofon the Board.Board, with one vacancy due to Mr. Jagid’s resignation from the Board in March 2014. The Board is not classified or staggered, and all directors hold office until the next annual meeting of stockholders or until their respective successors are elected and qualified.
Director Independence
Our Board has determined that each of Lawrence S. Burstein, Harold D. Copperman, Robert J. Farrell and Michael P. Monaco satisfies the current “independent director” standards established by rules of The NASDAQ Stock Market LLC (“Nasdaq”Nasdaq”) and, as to the members of the Audit Committee of our Board, the additional independence requirements under applicable rules and regulations of the SEC. Thus, a majority of the Board is comprised of independent directors as required by the Nasdaq Rule 5605(b)(1) and therules. The Audit Committee of the Board is comprisedcomposed of threeMessrs. Burstein, Copperman and Monaco, each of whom is an independent directors as required bydirector in accordance with Nasdaq Rule 5605(c)(2). The Compensation Committee of the Board is composed of Messrs. Copperman, Farrell and Monaco, each of whom is an independent director in accordance with Nasdaq Rule 5605(d)(2). The Nominating Committee of the Board is composed of Messrs. Burstein, Copperman and Monaco, each of whom is independent in accordance with Nasdaq Rule 5605(e)(1)(B).
Our Board also has determined that Robert J. Farrell,each of Kenneth Brakebill, Michael Brodsky, Ron Konezny and Tony Trousset, a nominee for election as a director at our Annual Meeting, satisfies the current “independent director” standards established by the Nasdaq rules.
Board Leadership Structure
Our currentDuring our fiscal year ended December 31, 2013, our leadership structure iswas comprised of a combined Chairman of the Board and Chief Executive Officer, an independent lead director and active independent directors. Currently,During our fiscal year ended December 31, 2013, Jeffrey M. Jagid servesserved as our Chairman of the Board and Chief Executive Officer and Harold D. Copperman servesserved as the independent lead director. Effective as of March 2, 2014, Mr. Jagid resigned from his position as Chief Executive Officer of the Company and ceased to serve as Chairman of the Board. Effective as of March 21, 2014, Mr. Jagid resigned from the Board. Following Mr. Jagid's resignation from his position as Chief Executive Officer, the Board appointed Kenneth S. Ehrman as Interim Chief Executive Officer. Since Mr. Jagid’s resignation from the Board, our leadership structure has been comprised of an independent lead director and active independent directors.
The Board believes that thisa leadership structure, iswhich included a combined Chairman of the Board and Chief Executive Officer, an independent lead director, and active independent directors was the most effective for the Company at this time.during the fiscal year ended December 31, 2013. Because the Chief Executive Officer iswas closest to the many facets of our business, the Board believes that the Chief Executive Officer iswas in the best position to lead most effectively and to serve in the critical role of Chairman of the Board. In addition, as he isAs the Chief Executive Officer was directly involved in managing the Company, having a Chairman who also servesserved as Chief Executive Officer facilitatesfacilitated timely communication with the Board on critical business matters. Further, we believe that this combined leadership structure is appropriate for our Company because our Chairman and Chief Executive Officer (i) conveys a singular, cohesive message to our stockholders, employees, industry partners and the investment community and (ii) eliminates any ambiguity as to who is accountable for the Company’s performance. The lead director, among other things, worksworked with the Chairman to set and approve agendas and schedules for Board meetings, servesserved as a liaison between the Chairman and the non-employee directors, and presidespresided at any meetings of the Board at which the Chairman iswas not present, including executive sessions of the independent directors. Our directors and management team engage frequently and directly in the flow of information and ideas and we believe our combined leadership structure facilitates the quality, quantity and timeliness of the information flow and communication. The Board believes that there isthis leadership structures helped provide a well-functioning and effective balance between strong Company leadership, an independent lead director and oversight by active, independent directors, during the fiscal year ended December 31, 2013.
Since Mr. Jagid’s resignation from the Board, our leadership structure has been comprised of an independent lead director and active independent directors. The Board has reviewed our current leadership structure in light of the current composition of the Board. The lead director sets and approves agendas and schedules for Board meetings, and presides at the meetings of the Board. The Board believes this Board leadership structure is an appropriate structure for us and our stockholders at this time. This structure allows the Interim Chief Executive Officer to focus his energy on strategy and management of the company and the Board to focus on oversight of strategic planning and risk management of the company.
If the nominees for election as a director at the Annual Meeting are elected to serve as directors of the Company, then, immediately following the Annual Meeting, the Board will be composed of one management director and four active independent directors. We expect that following the Annual Meeting, the directors who then hold office will evaluate the composition of the Board and determine what leadership structure would be the most appropriate for our company and our stockholders. We also expect that following the Annual Meeting, the directors who then hold office will designate the directors who will serve on each of the Audit Committee, the Compensation Committee and the Nominating Committee of the Board.
Risk Oversight
The Board has the ultimate oversight responsibility for the risk management process and regularly reviews issues that present particular risk to us, including those involving competition, customer demands, economic conditions, planning, strategy, finance, sales and marketing, products, information technology, facilities and operations, supply chain, legal and environmental matters and insurance. The Board further relies on the Audit Committee for oversight of certain areas of risk management. In particular, the Audit Committee focuses on financial and enterprise risk exposures, including internal controls, and discusses with management and the Company’s independent registered public accounting firm our policies with respect to risk assessment and risk management, including risks related to fraud, liquidity, credit operations and regulatory compliance, and advises the internal audit function as to overall risk assessment of the Company.
While the Board oversees risk management, Company management is charged with managing risk. Management communicates routinely with the Board, committees of the Board and individual directors on significant risks that have been identified and how they are being managed. Directors are free to, and indeed frequently do, communicate directly with senior management.
The Company believes that its leadership structure, discussed above, supports the risk oversight function of the Board. While the Company has a combined Chairman and Chief Executive Officer, independentIndependent directors chair the various Board committees involved with risk oversight, there is frequent and open communication among management and directors, and all directors are actively involved in the risk oversight function. The Board believes that this approach provides appropriate checks and balances against undue risk-taking.
Board and Committee Meetings
The Board held eight19 meetings during our fiscal year ended December 31, 2012.2013. All of such meetings were attended, either in person or telephonically, by all of the members of the Board. Actions were also taken by the unanimous written consent of the members of the Board on three occasions during the fiscal year ended December 31, 2012.2013.
We have adopted a policy of encouraging, but not requiring, members of the Board to attend our annual meetings of stockholders. All of the members of the BoardMessrs. Burstein, Copperman and Monaco attended our 20122013 annual meeting of stockholders held on June 21, 2012.
Meetings of20, 2013 in person, and Mr. Farrell attended the non-management directors are held regularly throughout the year.meeting by telephone.
Committees of the Board
The standing committees of the Board include the Audit Committee, the Compensation Committee and the Nominating Committee.
Audit Committee
The Audit Committee, which is a separately designated standing audit committee established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is composed of Messrs. Burstein, Copperman and Monaco, each of whom is independent under Nasdaq Rule 5605(c)(2) and Rule 10A-3 under the Exchange Act.
The Board has determined that it has at least one “audit committee financial expert” serving on the Audit Committee. Mr. Monaco serves as the audit committee financial expert. Mr. Monaco also serves as the Chairman of the Audit Committee.
The Audit Committee held five meetings during the fiscal year ended December 31, 2012.2013. All of such meetings were attended, either in person or telephonically, by all of the members of the Audit Committee. The Audit Committee did not take any actionsacted by unanimous written consent on two occasions during the fiscal year ended December 31, 2012.2013.
The Board has adopted a written charter for the Audit Committee, a copy of which is publicly available on our website atwww.id-systems.com. The Audit Committee’s charter sets forth the responsibilities, authority and specific duties of the Audit Committee and is reviewed and reassessed annually. The information on our website is not a part of this Proxy Statement. The charter specifies, among other things, the structure and membership requirements of the Audit Committee, as well as the relationship of the Audit Committee to our independent registered public accounting firm and management.
In accordance with its written charter, the Audit Committee assists the Board in monitoring (i) the integrity of our financial reporting process including our internal controls regarding financial reporting, (ii) our compliance with legal and regulatory requirements and (ii) the independence and performance of our internal and external auditors, and serves as an avenue of communication among the independent registered public accounting firm, management and the Board.
The report of the Audit Committee appears on page 17 of this Proxy Statement.
Compensation Committee
The Compensation Committee is composed of Messrs. Burstein, Copperman, Farrell and Monaco, each of whom is independent within the meaning of Nasdaq Rule 5605(a)(2). Mr. Copperman serves as the Chairman of the Compensation Committee. We expect that if Mr. Farrell, whom the Board has determined is independent within the meaning of Nasdaq Rule 5605(a)(2), is elected as a director at the Annual Meeting, the Board will reconstitute the Committee so that it will be composed of Messrs. Copperman, Monaco and Farrell.
The Compensation Committee held threefive meetings during the fiscal year ended December 31, 2012.2013. All of such meetings were attended, either in person or telephonically, by all of the members of the Compensation Committee. The Compensation Committee did not take any actionsacted by unanimous written consent on one occasion during the fiscal year ended December 31, 2012.2013. There were several informal discussions among the Compensation Committee during 2012.2013.
The Compensation Committee sets our executive officers’ annual compensation and long-term incentives, reviews management’s performance, development and compensation, determines option and other equity grants and administers our incentive plans. The Board has adopted a written charter for the Compensation Committee, a copy of which is publicly available on our website atwww.id-systems.com. The Compensation Committee’s charter sets forth the responsibilities, authority and specific duties of the Compensation Committee and is reviewed and reassessed annually. The charter specifies that the Compensation Committee has overall responsibility for evaluating and approving our director and officer compensation plans, policies and programs and for producing an annual report on executive compensation for inclusion in our annual report on Form 10-K or annual proxy statement, in accordance with applicable rules and regulations. The charter also specifies that the Compensation Committee may form and delegate authority to subcommittees of the Compensation Committee when appropriate; however, the Compensation Committee may not delegate authority to any other persons. As discussed below under “Compensation Discussion and Analysis,” for compensation decisions, the Compensation Committee considers recommendations relating to compensation for executive officers (other than our Chairman and Chief Executive Officer)Officer, if any) of our Chairman and Chief Executive Officer and includes him in its discussions with respect to such compensation, and considers compensation information provided by compensation consultants, if any, retained by the Compensation Committee for such purpose.
The Compensation Committee Process. Compensation Committee meetings typically involve a preliminary discussion with our Chairman and Chief Executive Officer prior to the Compensation Committee deliberating without any members of management present. For compensation decisions, including decisions regarding the grant of equity compensation relating to executive officers (other than our Chairman and Chief Executive Officer), the Compensation Committee considers the recommendations of our Chairman and
Chief Executive Officer and includes him in its discussions. The Compensation Committee may form and delegate authority to subcommittees of the Compensation Committee when appropriate.
Compensation Consultant. In November, 2011, the Compensation Committee engaged Compensation Resources, Inc. (“CRI”)CRI as its independent compensation consultant to assist the Compensation Committee in determining executive and non-employee director compensation for 2012. CRI conducted a competitive market analysis of our executive compensation and non-employee director compensation within comparable organizations, which included, among other things, a review and update of our peer group of companies identified for us by CRI in 2009. During 2012,With respect to compensation paid with respect to 2013, the Company paidCompensation Committee considered the compensation information provided by CRI approximately $12,000 in consulting fees directly related to these services. Neither CRI nor any of its affiliates provide any other services to the Company or its affiliates.2012.
The report of the Compensation Committee appears on page 18 of this Proxy Statement.
Nominating Committee
The Nominating Committee is composed of Messrs. Burstein, Copperman and Monaco, each of whom is independent within the meaning of Nasdaq Rule 5605(a)(2). Mr. Burstein serves as the Chairman of the Nominating Committee.
The Nominating Committee held one meeting during the fiscal year ended December 31, 2012.2013. Such meeting was attended, either in person or telephonically, by all of the members of the Nominating Committee. The Nominating Committee did not take any actions by unanimous written consent during the fiscal year ended December 31, 2012.2013.
The Board has adopted a written charter for the Nominating Committee, which is publicly available on our website atwww.id-systems.com. The Nominating Committee’s charter authorizes the committee to develop certain procedures and guidelines addressing certain nominating matters, such as procedures for considering nominations made by stockholders, minimum qualifications for nominees and identification and evaluation of candidates for the Board, and the Nominating Committee has adopted procedures addressing the foregoing.
Procedures for Considering Nominations Made by Stockholders. The Nominating Committee has adopted guidelines regarding procedures for nominations to be submitted by stockholders and other third parties, other than candidates who have previously served on the Board or who are recommended by the Board. These guidelines provide that a nomination must be delivered to our Corporate Secretary at our principal executive offices not later than the close of business on the 90th day nor earlier than the close of business on the 120th day prior to the first anniversary of the preceding year’s annual meeting;provided,however, that if the date of the annual meeting is more than 30 days before or more than 60 days after such anniversary date, notice to be timely must be so delivered not earlier than the close of business on the 120th day prior to such annual meeting and not later than the close of business on the later of the 90th day prior to such annual meeting or the close of business on the 10th day following the day on which public announcement of the date of such meeting is first made by the Company. The public announcement of an adjournment or postponement of an annual meeting will not commence a new time period (or extend any time period) for the giving of a notice as described above. The guidelines require a nomination notice to set forth as to each person whom the proponent proposes to nominate for election as a director: (i) all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors in an election contest, or is otherwise required, in each case pursuant to Regulation 14A under the Exchange Act (including such person’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected), and (ii) information that will enable the Nominating Committee to determine whether the candidate or candidates satisfy the criteria established pursuant to the charter for director candidates. The Nominating Committee’s policy is to consider all persons proposed to be nominated for election as a director in accordance with these procedures.
Qualifications. The Nominating Committee has adopted guidelines describing the minimum qualifications for nominees and the qualities or skills that are necessary for directors to possess. Each nominee:
We believe that each member of our Board should possess the qualities of character, judgment, business acumen, diligence, lack of conflicts of interest, familiarity with our business and industry, ability to work collegially and ability to act in the best interests of all stockholders. While we do not have a formal diversity policy, we seek to have directors representing a range of experiences, qualifications, skills and backgrounds.
Identification and Evaluation of Candidates for the Board. Candidates to serve on the Board will be identified from all available sources, including recommendations made by stockholders of the Company. The Nominating Committee has a policy that there will be no differences in the manner in which the Nominating Committee evaluates nominees recommended by stockholders and nominees recommended by the Committee
or management, except that no specific process shall be mandated with respect to the nomination of any individuals who have previously served on the Board. The evaluation process for individuals other than existing members of the Board will include:
The Nominating Committee approved Robert J. Farrell, who does not currently serve on our Board,each of Kenneth Brakebill, Michael Brodsky, Kenneth S. Ehrman, Ron Konezny and Tony Trousset, as a nominee for election as a director at the Annual Meeting. Mr. Farrell wasMessrs. Brakebill, Brodsky, Ehrman and Trousset were recommended for such nomination by oneKenneth S. Ehrman, our President and Interim Chief Executive Officer and beneficial holder of approximately 5.80% of the outstanding shares of common stock of the Company, as of May 19, 2014, as reflected in the table under “Security Ownership of Certain Beneficial Owners and Management” beginning on page 33. Mr. Ehrman submitted a list of nominees for consideration by the Nominating Committee on April 15, 2014. The Board received from stockholders holding a significant number of the outstanding shares of our non-management directors.common stock, various communications in favor of Mr. Ehrman’s nominees.
Our Nominating Committee retained the services of Lancor, an executive search firm, to identify potential nominees for election as a director at the Annual Meeting. Based on certain capabilities and competencies that the Nominating Committee seeks in potential nominees, Mr. Konezny was identified by Lancor as a potential director nominee.
In connection with its evaluation of potential nominees for election at the Annual Meeting, the Nominating Committee conducted in person or telephonic interviews with each of the individuals nominated for election at the Annual Meeting. The Nominating Committee also engaged FTI Consulting, a business advisory firm, to conduct background searches on each of the individuals. We did not pay any fees to any
third parties other than Lancor and FTI Consulting to identify or evaluate, or assist in identifying or evaluating, potential nominees for election at the Annual Meeting.
Stock Ownership Guidelines. On April 29, 2009, the Board adopted stock ownership guidelines to further align the interests of our non-employee directors with the interests of our stockholders and to promote our commitment to sound corporate governance. Pursuant to these guidelines, each outside director is required to hold shares of our common stock with a value equal to three times the amount paid in cash to such director for services as a director (including for in-person and telephonic meetings of the Board and meetings of committees of the Board) during the fiscal year ended December 31, 2008 or, if all such meetings were not attended by such director during such year, the amount that would have been paid in cash to such director for services as a director had such director attended all such meetings. The ownership guideline value for each outside director initially was calculated with respect to the fiscal year ended December 31, 2008, was re-calculated with respect to the fiscal year ended December 31, 2012 and will be re-calculated with respect to each third fiscal year thereafter. Outside directors are required to achieve the applicable level of ownership within three (3) years of the later of the date the guidelines were adopted and the date the person first became an outside director. Under the stock ownership guidelines, the value of the shares of common stock held by each outside director will be determined on April 1st of each year based on the average for the twenty (20) consecutive trading days preceding and including such date of the reported last sale prices per share on the Nasdaq Global Market or other principal national securities exchange or inter-dealer quotation system on which our common stock is listed or admitted to trading. As of April 1, 2013,2014, each non-employee director had achieved his applicable level of ownership in accordance with the stock ownership guidelines.
Third Party Recommendations. In connection with the Annual Meeting, the Nominating Committee did not receive by January 6, 2014, the 120th calendar day before the date our proxy statement was released to security holders in connection with our 2013 Annual Meeting of Stockholders, any nominations from any stockholder or group of stockholders which owned more than 5% of our common stock for at least one year. As discussed above, Mr. Ehrman submitted a list of nominees for consideration by the Nominating Committee on April 15, 2014.
Director Compensation of Directors
General
All directors are entitled to reimbursement for travel and lodging and other reasonable out-of-pocket expenses incurred by them in connection with their attendance at Board and/or Board committee meetings or other activities on our behalf.
Employee Directors
Directors who are current officers or employees of the Company or any subsidiary of the Company do not receive any additional compensation for their service as members of either the Board or any committees of the Board.
Non-Employee Directors
Under our non-employee director compensation program that was implemented in June 2009 and remained in place until March 2012, non-employee directors were entitled to receive annual compensation having economic value of approximately $75,000, which included a cash retainer of $15,000 and equity grants with an economic value of approximately $60,000. The equity grant was comprised of 50% restricted stock
awards and 50% stock options determined based on the grant date Black-Scholes value of the stock options. In addition, a non-employee director could elect to receive all or a portion of the cash retainer in equity, provided that sufficient equity existed under the Company’s 2009 Non-Employee Director Equity Compensation Plan (the “2009 Plan”), which was adopted by the Board in April, 2009, and approved by our stockholders in June, 2009. In June, 2011, our stockholders also approved an amendment to the 2009 Plan, which increased the number of shares available for issuance under the 2009 Plan from 300,000 to 600,000.
In March, 2012, we changed our director compensation program for 2012, based on the recommendation of CRI, a compensation consultant engaged by the Compensation Committee in 2011, and other information provided by CRI, including compensation and survey data of a comparison group of companies that CRI considered as our peer group, as discussed belowabove under “Executive Compensation — Compensation Discussion and Analysis — Peer Group.Group,” Under the newwe adopted a non-employee director compensation program pursuant to which non-employee directors are entitled to receive annual compensation having economic value of approximately $70,000, which includes a cash retainer of $20,000 and restricted stock grants with an economic value of approximately $50,000. With respect to restricted stock awards, the number of shares issuable was calculated based on the average of the reported closing price per share of the stock on the Nasdaq Global Market for the twenty (20) consecutive trading days beginning after the Company’s announcement of its annual earnings for the prior year. In addition, each of the lead director and the chairperson of each of the committees of the Board is entitled to a supplemental cash retainer. Specifically, the lead director receives an additional $15,000 per year of service; the chairperson of the Audit Committee receives an additional $15,000 per year of service; the chairperson of the Compensation
Committee receives an additional $10,000 per year of service; and the chairperson of the Nominating Committee receives an additional $8,000 per year of service. In addition, if during the year, any director attends, in person or by telephone, more than eight meetings of the Board and/or any committee thereof, in the aggregate, such director will be entitled to receive for each additional meeting attended in person or by telephone a cash payment of $1,000 or $500, respectively.
As noted above, ourOur non-employee directors are entitled to participate in the Company’s 2009 Plan.Non-Employee Director Equity Compensation Plan (the “2009 Plan”), which was adopted by the Board in April, 2009, and approved by our stockholders in June, 2009. In June, 2011, our stockholders also approved an amendment to the 2009 Plan, which increased the number of shares available for issuance under the 2009 Plan from 300,000 to 600,000. As of April 25, 2013,May 19, 2014, a total of 272,913219,439 shares of our common stock remain reserved and available for issuance under the 2009 Plan, as amended. Non-employee directors are eligible to be awarded non-qualified stock options and shares of restricted stock under the 2009 Plan. A recipient of restricted stock under the 2009 Plan is entitled to vote such shares and would be entitled to dividends, if any, paid on such shares, but is not entitled to dispose of such shares until they have vested in accordance with the terms of the applicable award.
During the fiscal year ended December 31, 2012,2013, each of our non-employee directors (Messrs. Burstein, Copperman, Farrell and Monaco) was awarded 8,499 restricted shares of common stock, and Mr. Farrell was awarded a stock option to purchase 45,000 shares of common stock. All of these awards were made pursuant to the 2009 Plan. Each of thesethe restricted stock awards granted to Messrs. Burstein, Copperman and Monaco was granted on April 4, 2013 and vested in equal increments of 25% on a quarterly basis over the one-year period following the date of grant. The restricted stock award granted to Mr. Farrell was granted on June 20, 2013 and vested in equal increments of 25% on each of July 14, 2013, October 14, 2013, January 14, 2014 and April 14, 2014. The stock option vests in equal increments of 25% on an annual basis over the four-year period following the date of grant, which was March 29, 2012.June 20, 2013.
Our non-employee directors are not entitled to retirement, benefit or other perquisite programs.
The following table provides certain information with respect to the compensation paid to our non-employee directors during the fiscal year ended December 31, 2012.2013.
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| Name | Fees Earned or Paid in Cash ($) | Stock Awards ($)(1)(2)(3) | Option Awards ($)(4) | Total ($) | Fees Earned or Paid in Cash ($) | Stock Awards ($)(1)(2)(3) | Option Awards ($)(4)(5) | Total ($) | ||||||||||||||||||||||||
| Lawrence S. Burstein | 28,000 | 50,399 | — | 78,399 | $ | 28,000 | $ | 48,529 | — | $ | 76,529 | |||||||||||||||||||||
| Harold D. Copperman | $ | 45,000 | $ | 48,529 | — | $ | 93,529 | |||||||||||||||||||||||||
| Robert J. Farrell | $ | 20,000 | $ | 42,070 | $ | 79,290 | $ | 141,360 | ||||||||||||||||||||||||
| Michael P. Monaco | 35,000 | 50,399 | — | 85,399 | $ | 35,000 | $ | 48,529 | — | $ | 83,529 | |||||||||||||||||||||
| Harold D. Copperman | 45,000 | 50,399 | — | 95,399 | ||||||||||||||||||||||||||||
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