UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
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The ONE Group Hospitality, Inc.
(Name of Registrant as Specified In Its Charter)
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April 17, 2020
Dear Stockholders:
We appreciate your continued interest in The ONE Group.
I wanted to begin our letter this year by addressing the global coronavirus pandemic and the actions we have taken. Our top priority during the pandemic is the health, safety and well-being of all of our employees and guests, and we are strictly following all guidelines from the CDC, federal and local authorities.
From a liquidity perspective, we started 2020 with $12 million in cash and were pleased with the strong momentum the business had in the first ten weeks of 2020. In response to the uncertainties in the marketplace, we made difficult decisions in mid-March to reduce costs significantly and operate our restaurants exclusively using take-out and delivery options. We are pleased that we are continuing to reach customers in markets throughout the country, and we launched both STK Radio (www.STKradio.com) and Kona Grill Radio (www.KonaGrillradio.com) so our guests can bring our unique Vibe Dinning experience home along with our delicious food. This has only been possible through the amazing work by our frontline restaurant team and I am truly touched and impressed by their efforts.
Under normal circumstances, this letter would highlight our 2019 achievements. Specifically, how we increased our top line by 41%, generated a comparable sales increase at STK Restaurants of 8.3%, and delivered an impressive 36% increase in adjusted EBITDA. In 2019, we also opened two international licensed STKs, one domestic company-owned STK, and one F&B hospitality management deal. And of course, we completed the accretive acquisition of the Kona Grill brand and assets, which added 24 high performing domestic restaurants to our portfolio. We were particularly pleased with the 3.9% comparable sales increase for the twenty-four Kona Grill restaurants in the fourth quarter.
We are looking forward to the rebound in our business once the uncertainty surrounding coronavirus begins to subside, mandated restrictions are lifted and our restaurants resume full service operations. We will be ready when the time comes, and we know our customers are going to be ready for a great meal out! The events over the last couple weeks have re-iterated how resilient and strong our team is, and I truly believe in their ability to bring us quickly back when the right time comes.
We hope to soon be back on track with our long-term growth plan. Our development pipeline is intact, our marketing strategy is ready, and our team is prepared to deliver on our mission of executing to be the BEST restaurant in every market where we operate by delivering exceptional and unforgettable guest experiences to every guest, every time.
Cheers,
Manny
Emanuel P.N. Hilario
President and Chief Executive Officer
THE ONE GROUP HOSPITALITY, INC.
411 W. 14th
1624 Market Street, 2nd FloorSuite 311New York, New York 10014May 1, 2017
To Our Stockholders:
You are cordially invited to attend the 2017 annual meetingDenver, Colorado 80202
April 17, 2020
NOTICE OF 2020 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT
The Annual Meeting of
stockholdersStockholders of The ONE Group Hospitality, Inc.
to(“Company”) will be held at
STK Denver, 1550 Market St., Denver, CO 80202 at 11:00
a.m. EDTam MT on
Thursday, June 22, 2017 at STK, 26 Little West 12th Street, New York, NY 10014, 3rd Floor.Details regardingWednesday, May 27, 2020 for the meeting, the business to be conducted at the meeting, and information about The ONE Group Hospitality, Inc. that you should consider when you vote your shares are described in this proxy statement.
At the annual meeting, one person will be elected to our Board of Directors. In addition, we will ask stockholders to ratify the selection of Grant Thornton LLP as our independent registered public accounting firm for our fiscal year ending December 31, 2017, and to approve by an advisory vote the compensation of our named executive officers as disclosed in this proxy statement. The Board of Directors recommends the approval of each of the three proposals. Such other business will be transacted as may properly come before the annual meeting.
Under Securities and Exchange Commission rules that allow companies to furnish proxy materials to shareholders over the Internet, we have elected to deliver our proxy materials to the majority of our shareholders over the Internet. This delivery process allows us to provide shareholders with the information they need, while at the same time conserving natural resources and lowering the cost of delivery. On or about May 12, 2017, we will send to our stockholders an Important Notice Regarding the Availability of Proxy Materials (the “Notice”) containing instructions on how to access our proxy statement for our 2017 Annual Meeting of Shareholders and our 2016 annual report to shareholders. The Notice also provides instructions on how to vote online or by telephone and includes instructions on how to receive a paper copy of the proxy materials by mail.
We hope you will be able to attend the annual meeting. Whether you plan to attend the annual meeting or not, it is important that you cast your vote either in person or by proxy. You may vote over the Internet as well as by mail. When you have finished reading the proxy statement, you are urged to vote in accordance with the instructions set forth in this proxy statement. We encourage you to vote by proxy so that your shares will be represented and voted at the meeting, whether or not you can attend.
Thank you for your continued support of The ONE Group Hospitality, Inc. We look forward to seeing you at the annual meeting.
following purposes: | | Sincerely, |
| Item 1. |  |
| | Jonathan Segal |
| Chief Executive Officer |
THE ONE GROUP HOSPITALITY, INC.
411 W. 14th Street, 2nd Floor
New York, New York 10014
May 1, 2017
NOTICE OF 2017 ANNUAL MEETING OF STOCKHOLDERS
TIME: 11:00 a.m.
DATE: June 22, 2017
PLACE: STK, 26 Little West 12th Street, New York, NY 10014, 3rd Floor
PURPOSES:
| 1. | To elect onetwo Class I directordirectors to serve a three-year term expiring in 2020;2023; | |
| | Item 2. | | | To ratify the appointment of Grant Thornton LLPPlante Moran, P.C. as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2017;2020; | |
| | Item 3. | | | To approve by an advisory vote the compensation of our named executive officers, as disclosed in this proxy statement; and | |
| | Item 4. | | | To transact such other business that is properly presented at the annual meeting and any adjournments or postponements thereof. | |
WHO MAY VOTE:
You may vote if you were
We currently are not aware of any other business to be brought before the 2020 Annual Meeting of Stockholders (the “Annual Meeting”). Only holders of record owner of The ONE Group Hospitality, Inc. common stock at the close of business on May 3, 2017. A list of stockholders of recordApril 9, 2020 (the “record date”) will be availableentitled to vote at the annualAnnual Meeting or at any adjournment or postponement thereof.
Please submit a proxy as soon as possible so that your shares can be voted at the meeting
and, duringin accordance with your instructions. You may submit your proxy (1) by telephone, (2) through the
10 days priorInternet or (3) by mail. For specific instructions, please refer to the
annual meeting, at our principal executive offices located at 411 W. 14th Street, 2nd Floor, New York, New York 10014.All stockholders are cordially invited toaccompanying proxy card. If you attend the annual meeting.WhetherAnnual Meeting, you planmay revoke your proxy and vote in person.
This year, we are again taking advantage of Securities and Exchange Commission (“SEC”) rules that allow us to
attendfurnish proxy materials to our stockholders via the
annual meeting or not, we urge you to voteby following the instructions in the ImportantInternet. We will send a Notice Regarding theof Internet Availability of Proxy Materials that(the “Notice”) to holders of our common stock as of the record date on or about April 17, 2020. The Notice describes how you will receive and submit yourcan access our proxy by the Internetmaterials, including this Proxy Statement on or mail in order to ensure the presence of a quorum.You may change or revoke your proxy at any time before it is voted at the meeting.about April 17, 2020. | | | | | BY ORDER OF THE BOARD OF DIRECTORS |
|  |
| | Sonia Low | | | | |
| | Secretary |
TABLE OF CONTENTS
This Proxy Statement and accompanying proxy are first being made available or distributed to our stockholders on or about April 17, 2020.
THE ONE GROUP HOSPITALITY, INC.
411 W. 14th Street, 2nd Floor
New York, New York
10014
PROXY STATEMENT
FOR THE ONE GROUP HOSPITALITY, INC.2017 ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON JUNE 22, 2017— HIGHLIGHTS
This
proxy statement, along withsummary highlights certain information contained elsewhere in this Proxy Statement. This summary does not contain all the
accompanying notice of 2017 annual meeting of stockholders, contains information
aboutyou should consider. You should read the
2017 annual meeting of stockholders of The ONE Group Hospitality, Inc., including any adjournments or postponements of the annual meeting. We are holding the annual meeting at 11:00 a.m., local time, on Thursday, June 22, 2017, at STK, 26 Little West 12th Street, New York, NY 10014, 3rd Floor.In this proxy statement, we refer to entire Proxy Statement carefully before voting.
The ONE Group Hospitality, Inc. as “The ONE Group Hospitality, Inc.,” the “Company,” “we”Annual Meeting of Stockholders
| | Time and Date: | | | 11:00 a.m. May 27, 2020 | |
| | PLACE: | | | STK Denver, 1550 Market St., Denver, CO 80202 | |
| | Record Date: | | | April 9, 2020 | |
Proposals to be Voted on and “us.”This proxy statement relates to the solicitation of proxies byBoard Voting Recommendations
| | Proposal | | | | | | Board Recommendation | | | Page No. | |
| | Item 1 | | | Election of two Class I directors | | | FOR each nominee | | | [ ] | |
| | Item 2 | | | Ratification of the appointment of Plante Moran, P.C. as our independent registered public accounting firm for Fiscal 2020 | | | FOR | | | [ ] | |
| | Item 3 | | | Approval, by non-binding advisory vote, of the compensation of our named executive officers | | | FOR | | | [ ] | |
Corporate Governance
Board of Directors and Committees
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Classified Board of Directors — three classes of directors serve a three-year term with one class elected annually.
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60% of our directors are independent.
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Fully independent Audit Committee, Compensation Committee and Corporate Governance and Nominating Committee
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Executive sessions of non-employee directors held at each regularly scheduled quarterly board meeting.
Stockholder Interests
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No rights or “poison pill” plan
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Annual vote to ratify independent auditors.
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Hedging, pledging and short sales of company stock are prohibited.
Executive Compensation
Emanuel P. N. Hilario, Director and President and Chief Executive Officer
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Base Salary earnings —
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Prior Year Incentive Plan Payout
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Long Term Incentive Plan Payout
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Long term Incentive Plan Grant
Compensation Highlights
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Say-on-pay proposal approved by over 99% of stockholders voting at 2019 meeting
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Performance metrics aligned with business strategy and stockholder value creation
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Target compensation is risk-based on financial performance measures.
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CEO — 50% at risk, based financial performance measures
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Average NEO — 35% at risk, based on financial measures
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Incentive Compensation plan and practices include good corporate governance features such as:
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Recommended Senior Executive Management team goals are presented to the Compensation Committee by the CEO prior to the beginning of the fiscal period
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The Compensation Committee evaluates the recommended goals and approves.
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Performance goals are established and weighted 75% weighted to Company financial performance and 25% to individual performance goal
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No excise tax gross-up on executive severance plan
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Double-trigger change-in-control provisions in executive severance plan
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Three-year performance period for
use at the annual meeting.On or about May 12, 2017, we will send the Important Notice Regarding the Availability of Proxy Materials to all stockholders entitled to vote at the annual meeting.
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Independent compensation consultant
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Annual compensation risk assessment
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE
SHAREHOLDER STOCKHOLDER MEETING TO BE HELD ON
JUNE 22, 2017MAY 27, 2020
This proxy statement and our 20162019 annual report to stockholders are available for viewing, printing and downloading athttp://www.togrp.com/proxy.html.To vote your shares, please follow the instructions contained on yourthe Notice or proxy card; youcard. You can also elect to receive future distributions of our proxy statements and annual reports to stockholders by electronic delivery by following the instructions contained on yourthe proxy card.
Additionally, you can find a copy of our Annual Report on Form 10-K, which includes our financial statements, for the fiscal year ended December 31, 2016,2019, on the website of the Securities and Exchange Commission, or the SEC, atwww.sec.gov,or in theunder “SEC Filings” section ofin the “Investor Relations” section of our website atwww.togrp.com. You may also obtain a printed copy of our Annual Report on Form 10-K including our financial statements, free of charge from us by sending a written request to: Sonia Low,Corporate Secretary, The ONE Group Hospitality, Inc., 411 West 14th Street, 2nd Floor, New York, New York 10014.1624 Market St., Suite 311, Denver, CO 80202. Exhibits to the Annual Report on Form 10-K will be provided upon written request and payment of an appropriate processing fee.
IMPORTANT INFORMATION ABOUT THE ANNUAL MEETING AND VOTING
Why is the Company Soliciting My Proxy?
The Board of Directors (the
“Board of Directors”“Board”) of The ONE Group Hospitality, Inc. is soliciting your proxy to vote at the
20172020 annual meeting of stockholders to be held at STK
26 Little West 12th Street, New York, NY 10014, 3rd Floor,Denver, 1550 Market St., Denver, CO 80202 on
Thursday, June 22, 2017Wednesday, May 27, 2020 at 11:00 a.m. and any adjournments of the
meeting, which we refer to as the annual meeting. The proxy statement
along with the accompanying Notice of 2017 Annual Meeting of Stockholders summarizes the purposes of the meeting and the information you need to know to vote at the annual meeting.
We have made available to you on the Internet or have sent you this proxy statement, the Notice of
20172020 Annual Meeting of Stockholders, the proxy card and a copy of our Annual Report on Form 10-K for the fiscal year ended December 31,
2016,2019, because you owned shares
of common stock of The ONE Group Hospitality, Inc.
common stock, par value $0.0001 per share (the “common stock”) on the record date. The Company
intends to commence distribution ofwill distribute the Important Notice Regarding the Availability of Proxy Materials, which we refer to throughout this proxy statement as the Notice, and, if
applicable,necessary, the proxy materials to stockholders on or about
May 12, 2017.April 17, 2020.
Why Did I Receive a Notice in the Mail Regarding the Internet Availability of Proxy Materials Instead of a Full Set of Proxy Materials?
As permitted by the rules of the SEC we may
We furnish our proxy materials to
most of our stockholders by providing access to
such documentsthe materials on the Internet, rather than mailing printed
copies of these materials to each stockholder. Most stockholders will not receive printed copies of the proxy materials unless they request them.copies. We believe that this process
should expediteexpedites stockholders’ receipt of proxy materials,
lowerlowers the costs of the annual meeting and
help to conserveconserves natural resources. If you received a Notice by mail or electronically, you will not receive a printed or email copy of the proxy materials, unless you request one by following the instructions included in the Notice.
Instead, theThe Notice instructs you
ashow to
how you may access and review all of the proxy materials and submit your proxy on the Internet. If you requested a paper copy of the proxy materials, you may
authorize the voting ofinstruct how your shares
will be voted by following the instructions on the proxy
card, in addition to the other methods of voting described in this proxy statement.card.
Only stockholders who owned our common stock at the close of business on
May 3, 2017,April 9, 2020, are entitled to vote at the annual meeting. On
this recordthat date, there were
25,057,26529,042,852 shares of our common stock outstanding and entitled to vote.
Our common stock is our only class of voting stock.You do not need to attend the annual meeting to vote your shares. Shares represented by valid proxies, received
in time for the annual meeting and not revoked prior to the annual meeting, will be voted at the annual meeting. For instructions on how to change or revoke your proxy, see “May I Change or Revoke My Proxy?” below.
How Many Votes Do I Have?
Each share of our common stock that you own entitles you to one vote.
Whether
or not you plan to attend the annual meeting,
or not, we urge you to vote by proxy. All shares represented by valid proxies that we receive through this solicitation, and that are not revoked, will be voted in accordance with your instructions on the proxy card or as instructed via Internet. You may specify whether your shares should be voted for or withheld for the nominee for director and whether your shares should be voted for, against or abstain with respect to each of the other proposals. If you properly submit a proxy without giving specific voting instructions, your shares will be voted in accordance with the
Board of Directors’Board’s recommendations as noted below. Voting by proxy will not affect your right to attend the annual meeting. If your shares are registered directly in your name through our stock transfer agent, Continental Stock Transfer & Trust Company, Inc. (“Continental”), or you have stock certificates registered in your name, you may vote:
By Internet. Follow the instructions included in the Notice or, if you received printed materials, in the proxy card to vote by Internet.Internet;
•
By mail. If you received a proxy card by mail, you can vote by mail by completing, signing, dating and returning the proxy card as instructed on the card. If you sign the proxy card but do not specify how you want your shares voted, they will be voted in accordance with the Board of Directors’Board’s recommendations as noted below.below; or
•
In person at the meeting. If you attend the meeting, you may deliver a completed proxy card in person or you may vote by completing a ballot, which will be available at the meeting.meeting
Internet voting facilities for stockholders
Stockholders of record
will be available 24 hours a day and will closemay vote via the Internet at
7:00any time up to 11:59 p.m. Eastern Time on
June 21, 2017.May 26, 2020.
If your shares are held in “street name” (held in the name of a bank, broker or other holder of record), you will receive instructions from the holder of record. You must follow the instructions from the holder of record
in order for your shares to be voted. Internet voting also will be offered to stockholders owning shares
through certain banks and brokers. If your shares are not registered in your own name and you plan to vote your shares in person at the annual meeting, you should contact your broker or agent to obtain a legal proxy or broker’s proxy card and bring it to the annual meeting in order to vote.
How Does the Board
of Directors Recommend That I Vote on the Proposals?
The Board
of Directors recommends that you vote as follows:
•
“FOR” the election of the nomineenominees for director;
•
“FOR” the ratification of the selection of Grant Thornton LLPPlante Moran, P.C. as our independent registered public accounting firm for our fiscal year ending December 31, 2017;2020; and
•
“FOR” the advisory vote on the compensation of our named executive officers as disclosed in this proxy statement.statement;
We are not aware of any other matters that needed to be acted on at the annual meeting. If any other matter is presented at the annual meeting, your proxy provides that your shares will be voted by the proxy holder listed in the proxy in accordance with his best judgment.
At the time this proxy statement was first made available, we knew of no matters that needed to be acted on at the annual meeting, other than those discussed in this proxy statement. May I Change or Revoke My Proxy?
If you give us your proxy, you may change or revoke it at any time before the annual meeting. You may change or revoke your proxy in any one of the following ways:
•
if you received a proxy card, by signing a new proxy card with a date later than your previously delivered proxy and submitting it as instructed above;
•
by re-voting on the Internet as instructed above;
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by notifying The ONE Group Hospitality, Inc.’s Secretary in writing before the annual meeting that you have revoked your proxy; or
•
by attending the annual meeting in person and voting in person. Attending the annual meeting in person will not in and of itself revoke a previously submitted proxy. You must specifically request at the annual meeting that it be revoked.
Your most current vote, whether by Internet or proxy card, is the one that will be counted.
What if I Receive More Than One Notice or Proxy Card?
You may receive more than one Notice or proxy card if you hold shares of our common stock in more than one account, which may be in registered form or held in street name. Please vote in the manner described above under “How Do I Vote?” for each account to ensure that all of your shares are voted.
Will My Shares be Voted if I Do Not Vote?
If your shares are registered in your name or if you have stock certificates, they will not be counted if you do not vote as described above under “How Do I Vote?” If your shares are held in street name and you do not provide voting instructions to the bank, broker or other nominee that holds your shares as described
above, the bank, broker or other nominee that holds your shares has the authority to vote your unvoted shares only on the ratification of the appointment of our independent registered public accounting firm (Proposal 2 of this proxy statement) without receiving instructions from you.
Therefore, we encourage you to provide voting instructions to your bank, broker or other nominee. This ensures your shares will be voted at the annual meeting and in the manner you desire. A “broker non-vote” will occur if your broker cannot vote your shares on a particular matter because it has not received instructions from you and does not have discretionary voting authority on that matter or because your broker chooses not to vote on a matter for which it does have discretionary voting authority.Your bank, broker or other nominee does not have the ability to vote your uninstructed shares in the election of the director. Therefore, if you hold your shares in street name it is critical that you cast your vote if you want your vote to be counted for the election of the director (Proposal 1 of this proxy statement). In
the past, if you held your shares in street name and you did not indicate how you wanted your shares to be voted in the election of directors, your bank, broker or other nominee was allowed to vote your shares on your behalf in the election of directors as it deemed appropriate. In addition, your bank, broker or other nominee is prohibited from voting your uninstructed shares on any matters related to executive compensation. Thus, ifIf you hold your shares in street name and you do not instruct your bank, broker or other nominee how to vote, in the election of directors or on matters related to executive compensation, no votes will be cast on these proposalsany other proposal on your behalf.
What Vote is Required to Approve Each Proposal and How are Votes Counted?
| | Proposal 1: Elect DirectorDirectors | | | The nomineenominees for director who receivesreceive the most votes (also known as a “plurality” of the votes cast) will be elected. You may vote either FOR all the nomineenominees or WITHHOLD your vote from any one or more of the nominee.nominees. Votes that are withheld will not be included in the vote tally for the election of the directors. Brokerage firms do not have authority to vote customers’ unvoted shares held by the firms in street name for the election of the directors. As a result, any shares not voted by a customer will be treated as a broker non-vote. Such broker non-votes will have no effect on the results of this vote. | |
| | | |
| Proposal 2: Ratify Selection of Independent Registered Public Accounting Firm | | | The affirmative vote of a majority ofvotes cast “for” must exceed the votes cast by the stockholders present or represented by proxy and entitled to vote at the annual meeting is required“against” to ratify the selection of our independent registered public accounting firm. Abstentions will have no effect on the results of this vote. Brokerage firms have authority to vote customers’ unvoted shares held by the firms in street name on this proposal. If a broker does not exercise this authority, such broker non-votes will have no effect on the results of this vote. We are not required to obtain the approval of our stockholders to select our independent registered public accounting firm. However, if our stockholders do not ratify the selection of Grant Thornton LLPPlante Moran, P.C. as our independent registered public accounting firm for 2017,2020, our Audit Committee of our Board of Directors will reconsider its selection. |
| | |
| | Proposal 3: Approve an Advisory Vote on the Compensation of our Named Executive Officers | | | The affirmative vote of a majority ofvotes cast “for” must exceed the votes cast by the stockholders present or represented by proxy and entitled“against” to vote at the annual meeting is required to approve on an advisory basis, the compensation of our named executive officers, as described in this proxy statement. Abstentions will have no effect on the results of this vote. Brokerage firms do not have authority to vote customers’ unvoted shares held by the firms in street name on this proposal. As a result, any shares not voted by a customer will be treated as a broker non-vote. Such broker non-votes will have no effect on the results of this vote.officers. Although the advisory vote is advisory and non-binding, the Compensation Committee and the Board of Directors will review the voting results and take them into consideration when making future decisions regarding executive compensation. | |
Proxy holders will vote your shares as you instruct. Abstentions and broker non-votes do not affect the vote on any of the proposals.
We will keep all the proxies, ballots and voting tabulations private. We only let our Inspectors of Election, Continental, examine these documents. Management will not know how you voted on a specific proposal unless it is necessary to meet legal requirements. We will, however, forward to management any written comments you make on the proxy card or otherwise provide.
Where Can I Find the Voting Results of the Annual Meeting?
The preliminary voting results will be announced at the annual meeting, and we will publish preliminary, or final results if available, in a Current Report on Form 8-K within four business days of the annual meeting. If final results
How are unavailable atProxies Solicited for the time we fileAnnual Meeting?
The Company is soliciting proxies for the
Form 8-K, then we will file an amended report on Form 8-K to disclose the final voting results within four business days after the final voting results are known.What Are the Costs of Soliciting these Proxies?
annual meeting. We will pay all of the costs of soliciting these proxies. Our directors and employees may solicit proxies in person or by telephone, fax or email. We will pay these employees and directors no additional compensation for these services. We will ask banks, brokers and other institutions, nominees and fiduciaries to forward these proxy materials to their principals and to obtain authority to execute proxies. We will then reimburse them for their expenses.
What Constitutes a Quorum for the Annual Meeting?
The presence, in person or by proxy, of the holders of a majority of the voting power of all outstanding shares of our common stock entitled to vote at the annual meeting is necessary to constitute a quorum at the annual meeting. Votes of stockholders of record who are present at the annual meeting in person or by proxy, abstentions, and broker non-votes are counted for purposes of determining whether a quorum exists.
Attending the Annual Meeting
The annual meeting will be held at 11:00 a.m. on Thursday, June 22, 2017, at STK, 26 Little West 12th Street, New York, NY 10014, 3rd Floor. When you arrive at STK, signs will direct you to the appropriate meeting rooms. You need not attend the annual meeting in order to vote.
Householding of Annual Disclosure Documents
SEC rules concerning the delivery of annual disclosure documents allow us or your broker to send a single Notice or, if applicable, a single set of our proxy materials to any household at which two or more of our stockholders reside, if we or your broker believe that the stockholders are members of the same family. This practice, referred to as “householding,”
benefits both you and us. It reduces the volume of duplicate information received at your household and helps to reduce our expenses. The rule applies to our Notices, annual reports, proxy statements and information statements. Once you receive notice from your broker or from us that communications to your address will be “householded,” the practice will continue until you are otherwise notified or until you revoke your consent to the practice. Stockholders who participate in householding will continue to have access to and utilize separate proxy voting instructions.
If your household received a single Notice or, if applicable, a single set of proxy materials this year, but you would prefer to receive your own copy, please contact our transfer agent, Continental, by calling them at (212) 509-4000.
If you do not wish to participate in “householding” and would like to receive your own Notice or, if applicable, a set of our proxy materials in future years, follow the instructions described below. Conversely, if you share an address with another Company stockholder and together both of you would like to receive only a single Notice or, if applicable, a set of proxy materials, follow these instructions:
•
If your shares of The ONE Group Hospitality, Inc. shares are registered in your own name, please contact our transfer agent, Continental, and inform them of your request by writing them at 17 Battery Place,1 State Street, New York, New York 10004.
•
If a broker or other nominee holds your The ONE Group Hospitality, Inc. shares, please contact the broker or other nominee directly and inform them of your request. Be sure to include your name, the name of your brokerage firm and your account number.
Electronic Delivery of Company Stockholder Communications
Most stockholders can elect to view or receive copies of future proxy materials over the Internet instead of receiving paper copies in the mail.
You can choose this option and save the Company the cost of producing and mailing these documents by:
•
following the instructions provided on your proxy card; or
•
following the instructions provided when you vote over the Internet.
ELECTION OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENTThe following table sets forthDIRECTORS
(Proxy Item 1)
Our Board has the discretion to set the size of the Board from time to time, and has set the number of
shares of our common stock beneficially owned as of April 28, 2017, by (i) each person known by us to be the beneficial owner of more than 5% of the outstanding shares of our common stock, (ii) each of our directors
and named executive officers and (iii) all current officers and directors as a group. Unless otherwise indicated in the table, the persons and entities named in the table have sole voting and sole investment power with respect to the shares set forth opposite the stockholder’s name, subject to community property laws, where applicable.Beneficial ownership is determined in accordance with the rules of the SEC and includes voting or investment power with respect to the securities. Shares of our common stock that may be acquired by an individual or group within 60 days of April 28, 2017, pursuant to the exercise of options, are deemed to be outstanding for the purpose of computing the percentage ownership of such individual or group, but are not deemed to be outstanding for the purpose of computing the percentage ownership of any other person shown in the table.
Percentage ownership calculations for beneficial ownership are based on 25,057,265 shares outstanding as of April 28, 2017. Except as indicated in footnotes to this table, we believe that the stockholders named in this table have sole voting and investment power with respect to all shares of our common stock shown to be beneficially owned by them, based on information provided to us by such stockholders. Unless otherwise indicated, the address for each director and executive officer listed is: 411 West 14th Street, 2nd Floor, New York, NY 10014.
| Name and Address of Beneficial Owner | | Amount and
Nature of
Beneficial
Ownership(1) | | | Percentage of
Common Stock
Beneficially
Owned
(%) | |
| Jonathan Segal(2) | | | 7,325,053 | | | | 28.96% | |
| Samuel Goldfinger(3) | | | 382,531 | | | | 1.52% | |
| Celeste Fierro(4) | | | 551,994 | | | | 2.19% | |
| Alejandro Munoz-Suarez(5) | | | 25,000 | | | | * | |
| Michael Serruya(6) | | | 266,258 | | | | 1.06% | |
| Eugene M. Bullis | | | 23,347 | | | | * | |
| Nicholas Giannuzzi | | | 500,989 | | | | 2.00% | |
| Emanuel Hilario | | | 22,167 | | | | * | |
All current executive officers and directors as a group
(7 individuals)(2) (3) (4) (6) | | | 9,072,339 | | | | 35.91% | |
| 5% Stockholders: | | Number of
Shares
Beneficially
Owned | | Percentage of
Common Stock
Beneficially
Owned
(%) |
Kanen Wealth Management LLC(5) 5850 Coral Ridge Drive, Suite 309 Coral Springs, FL 33076 | | 1,952,593 | | 7.8% |
| * | Represents less than 1% of the issued and outstanding shares. |
| (1) | All securities are beneficially owned directly by the persons listed on the table (except as otherwise indicated). |
| (2) | Includes (i) 156,952 shares of common stock held by Modern Hotels (Holdings) Limited, of which Mr. Segal is the Managing Director, (ii) 386,166 shares of common stock held by the Jonathan Segal 2012 Family Trust, of which Mr. Segal is a trustee, (iii) 1,000,000 shares of common stock held by the Jonathan Segal 2016 Family Trust #2; and (iv) options to purchase 238,205 shares of common stock that are exercisable within 60 days of April 28, 2017. Does not include options and restricted stock units to purchase 967,606 shares of common stock which have not vested. |
| (3) | Includes 251,504 shares of common stock held by the TOG Liquidating Trust, of which Mr. Goldfinger serves as Trustee and options to purchase 129,027 shares of common stock that are exercisable within 60 days of April 28, 2017. Mr. Goldfinger disclaims beneficial ownership of the securities owned by the TOG Liquidating Trust. |
(4) | Includes options to purchase 150,000 shares of common stock that are exercisable within 60 days of April 28, 2017. |
| |
(5) | Includes options to purchase 25,000 shares of common stock that are exercisable within 60 days of April 28, 2017. |
| |
(6) | Includes 197,712 shares of common stock held by MOS Holdings Inc., an entity owned by Mr. Serruya. |
| |
(7) | Based solely on a Schedule 13D filed with the SEC on April 12, 2017 by Kanen Wealth Management LLC, a Florida limited liability company and registered investment advisor (“KWM”) and David L. Kanen, the managing member, sole investment advisor representative and Chief Compliance Officer for KWM. KWM, in its role as investment manager for customer accounts (collectively, the “Accounts”), has discretionary voting and dispositive power over the shares of common stock held in the Accounts pursuant to investment advisory agreements. Mr. Kanen, as the managing member of KWM, may be deemed to share voting and dispositive power over such shares of common stock with KWM. KWM, as the general partner of The Philotimo Fund LLC, and MR. Kanen, as the managing member of KWM, may be deemed to share voting and dispositive power over the shares of common stock held by The Philotimo Fund LLC. |
MANAGEMENT AND CORPORATE GOVERNANCE
The Board of Directors
Our certificate of incorporation and bylaws provide that our business is to be managed by or under the direction of our Board of Directors.at five. Our Board of Directors is divided into three classes for purposes of election.classes. One class is elected at each annual meeting of stockholders to serve for a three-year term. Pursuant to our certificate of incorporation and bylaws, our Board of Directors recently decided to reduce the size of our Board of Directors from six to five directors. We currently have five directors sitting on the Board, of Directors, classified into three classes as follows: (1) Michael SerruyaEugene M. Bullis constitutes a class with a term ending at the 20172021 annual meeting; (2) Eugene M. Bullis and Nicholas L. Giannuzzi constitute a class with a term ending at the 2018 annual meeting; and (3) Jonathan Segal and Emanuel P.N. Hilario constitute a class with a term ending at the 20192022 annual meeting. Richard E. Perlman,meeting; and (3) Michael Serruya and Dimitrios Angelis constitute a former director, resigned from his position asclass with a member of the Board of Directors on April 20, 2017, prior to the expiration of his term ending at the 20172020 annual meeting.
On April 25, 2017,March 23, 2018, we entered into a letter agreement with David Kanen and Kanen Wealth Management LLC (collectively, the “Kanen Group”) pursuant to which we agreed that, provided that the Kanen Group beneficially owns at least 10% of our outstanding common stock, the Kanen Group has the right to nominate one Class I director with a term expiring in 2020. Pursuant to this agreement, the Board appointed Dimitrios Angelis as a Class I director with a term expiring at our 2020 annual meeting of stockholders.
On March 24, 2020, our Board
of Directors accepted the recommendation of the Nominating and Governance Committee and voted to nominate
Dimitrios Angelis and Michael Serruya for election at the annual meeting for a term of three years to serve until the
20202023 annual meeting of
stockholders, and until his successor has been elected and qualified, subject, however, to such director’s earlier death, resignation, retirement, disqualification or removal.Set forth below are the namesstockholders.
Required Vote
A plurality of the persons nominatedshares voted for each nominee at the annual meeting is required to elect such nominee as a director.
Recommendation
THE BOARD RECOMMENDS THE ELECTION OF DIMITRIOS ANGELIS AND MICHAEL SERRUYA AS DIRECTORS, AND PROXIES SOLICITED BY THE BOARD WILL BE VOTED IN FAVOR OF THEM UNLESS A STOCKHOLDER HAS INDICATED OTHERWISE ON THE PROXY.
Qualifications Required for All Directors
In assessing potential directors, including those recommended by stockholders, The Board of Directors and directors whose terms do not expire this year, their ages, their offices inthe Nominating and Governance Committee consider a variety of factors, including the evolving needs of the Board of Directors and the Company if any, their principal occupationsas well as other criteria established by the Board of Directors. These include the potential director’s judgement, independence, business and educational background, stature, public service, conflicts of interest, ethics and ownership of Company stock, as well as his or employment for at leasther level of commitment to stockholder value creation and his or her ability and willingness to devote sufficient time to serve on the past five years,Board of Directors and to the lengthaffairs of their tenure as directorsthe Company. The Board of Directors and the namesNominating and Governance Committee require that each director be a recognized person of other public companieshigh integrity with a proven record of success in whichhis or her field.
Board Diversity
The Board of Directors also believes that diversity and inclusion are important considerations in board composition. When considering director qualifications, the Board of Directors and the Nominating and Governance Committee evaluate the entirety of each director’s credentials, including factors such persons holdas diversity of background, experience, skill, age, race, ethnicity and gender. Although the Board of Directors does not have a written diversity policy, the Nominating and Governance Committee evaluates the current composition of the Board with a view toward having the Board reflect a diverse mix of skills, experiences, backgrounds and opinions. Depending on the current composition of the Board of Directors, the Nominating and Governance Committee may weigh certain factors, including those relating to diversity, more or have held directorships during the past five years. Additionally, information about the specific experience, qualifications, attributes or skills that led toless heavily when evaluating a potential candidate.
Experience, Qualifications and Skills Represented on our Board of Directors’ conclusion atDirectors
In addition to the
timegeneral qualifications highlighted above, in light of
filing of this proxy statement that each person listed below should serve as a director is set forth below:Name | | Age | | Positions |
Jonathan Segal | | 56 | | Chief Executive Officer, President and Director |
Eugene M. Bullis(1) | | 71 | | Director |
Nicholas Giannuzzi | | 50 | | Director |
Emanuel Hilario(1) | | 49 | | Director |
| (1) | Member of our audit, compensation and nominating and governance committees. |
Our Board of Directors has reviewed the materiality of any relationship that each of our directors has with The ONE Group Hospitality, Inc., either directly or indirectly. Based upon this review,Company’s current needs and its business strategy, our Board of Directors has determinedidentified particular expertise, qualifications and skills that are important to be represented on our Board as a whole. The Board of Directors believes it is valuable to have a mix of individuals with expertise as senior executives in the followingareas of operations, finance, marketing and sales, hospitality, human resources, compensation and talent management; individuals with enterprise-level information technology expertise; and individuals with expertise in domestic and international market development, corporate strategy, corporate governance and risk management. The Board of Directors also believes it is important that a meaningful number of our directors have operating knowledge of the industry in which the Company operates, general management experience or experience serving as a public company director. As a group, the members of the Board of Directors reflect the diverse mix of skills, experiences, backgrounds, and perspectives that the Board believes is optimal to foster an effective decision-making environment.
Our Board of Directors is comprised of individuals who collectively possess the particular experiences we consider important to be represented on our Board of Directors as a whole. The table below highlights the primary reasons each individual was selected as a director nominee relative to our desired criteria for a diverse, well-balanced Board of Directors and the particular expertise, qualifications and skills we believe should be represented on our Board of Directors. Our directors have experience and expertise beyond those noted below. The table is intended to highlight the specific, unique characteristics which lead to each individuals selection as a nominee and the collective strength of our Board’s experience and expertise.
| | | | | | | Emanuel Hilario | | | | Jonathan Segal | | | | Dimitrios Angelis | | | | Eugene Bullis | | | | Michael Serruya | | |
| | | Director Since | | | | 2017 | | | | 2013 | | | | 2018 | | | | 2014 | | | | 2013 | | |
| | | Age | | | | 52 | | | | 59 | | | | 50 | | | | 74 | | | | 56 | | |
| | | Gender | | | | M | | | | M | | | | M | | | | M | | | | M | | |
| | | Senior Operating Executive Expertise | | | | ✓ | | | | ✓ | | | | ✓ | | | | ✓ | | | | ✓ | | |
| | | Senior Financial Executive Expertise | | | | ✓ | | | | | | | | | | | | ✓ | | | | | | |
| | | Senior Marketing/Sales Executive Expertise | | | | ✓ | | | | | | | | | | | | | | | | | | |
| | | Senior HR / Compensation / Talent Development Expertise | | | | ✓ | | | | | | | | ✓ | | | | ✓ | | | | ✓ | | |
| | | Hospitality | | | | ✓ | | | | ✓ | | | | | | | | | | | | ✓ | | |
| | | Operating Knowledge of Company’s Industry | | | | ✓ | | | | ✓ | | | | | | | | | | | | ✓ | | |
| | | Public Company Directorship Experience | | | | ✓ | | | | ✓ | | | | ✓ | | | | ✓ | | | | ✓ | | |
| | | Enterprise Level Information Technology Expertise | | | | ✓ | | | | | | | | ✓ | | | | ✓ | | | | | | |
| | | Domestic and International Market Development Expertise | | | | ✓ | | | | ✓ | | | | ✓ | | | | ✓ | | | | ✓ | | |
| | | Corporate Strategy Development Expertise | | | | ✓ | | | | ✓ | | | | ✓ | | | | ✓ | | | | ✓ | | |
| | | Corporate Governance Expertise | | | | ✓ | | | | ✓ | | | | ✓ | | | | ✓ | | | | ✓ | | |
| | | Risk Management Expertise | | | | ✓ | | | | | | | | ✓ | | | | ✓ | | | | ✓ | | |
The following paragraphs provide information about each director background, including positions held, principal occupation and business expertise for the past five years, and the names of other publicly traded companies for which he currently serves as a director or has served as a director during the past five years. For information about the number of shares of common stock beneficially owned by each director, see “Certain Information Regarding Security Holders.” The are “independent directors” as defined byno family relationships among any of the directors and executive officers of The NASDAQ Stock Market (“NASDAQ”): Michael Serruya, Eugene M. Bullis and ONE Group Hospitality, Inc.
Emanuel
Hilario.Jonathan SegalP.N. Hilario — President, Chief Executive Officer President and Director
Jonathan Segal,
Emanuel P.N. Hilario, age 56,52, has served as a Class III member of our Board since April 10, 2017. Mr. Hilario has served as President and Chief Executive Officer of the Company since October 30, 2017. From 2015 until October 2017, Mr. Hilario served as Chief Financial Officer of Sizzling Platter, a restaurant management company operating over 400 franchised restaurants in the United States, Mexico, and China under the brand names of Red Robin, Sizzler, Little Caesars, Dunkin Donuts, and Wingstop. Before joining Sizzling Platter, Mr. Hilario served as Chief Operating Officer for Einstein Noah Restaurant Group, Inc. from 2013 to 2014 and served as its Chief Financial Officer from 2010 to 2013. He previously served as Chief Financial Officer for McCormick & Schmick’s Seafood Restaurants, Inc. from April 2004 through May 2009 and also served on its Board as a Director from May 2007 to July 2009. For the preceding four years, he served as Chief Financial Officer of Angelo and Maxie’s, Inc. While there, from 2002 to 2004, he managed day-to-day operations of the Angelo and Maxie’s steakhouse concept. Mr. Hilario began his career at McDonald’s and has held various financial roles within the company. He received a Bachelor of Science and Commerce degree from Santa Clara University in 1990.
Mr. Hilario has served on the Board of Directors of TransAct Technologies Incorporated (Nasdaq: TACT), a global leader in software-driven technology and printing solutions for high-growth markets, since 2019.
•
Director Qualifications: We believe Mr. Hilario’s qualifications to serve on the Board include his extensive knowledge and experience in the restaurant industry and as an executive in public companies, his knowledge of licensing and franchising of restaurants, as well as his years of working at fine dining concepts and managing food and beverage hospitality operations.
Jonathan Segal — Executive Chairman of the Board of Directors and Director of Business Development
Jonathan Segal, age 59, has served as a Class III member of our Board since October 16, 2013. Mr. Segal brings over 35 years of experience in developing and operating hotels, bars and hospitality projects to the Company. Mr. Segal
has served as Chief Executive Officer of the Company
since hefrom 2004 until October 30, 2017. He co-founded
itthe Company in 2004 in order to open ONE, a pioneering restaurant in the Meatpacking District of New York. Mr. Segal began his career in the hospitality industry at age 16 with his family’s company, currently known as The Modern Group in Jersey, Channel Islands, U.K., formerly the largest leisure company in the Channel Islands. In June 2013, Jonathan won an Ernst
&Young& Young Entrepreneur of the Year 2013 New York award and was a finalist for the national award in November 2013.
| • | Director Qualifications: We believe Mr. Segal’s qualifications to serve on the Board of Directors include his role as founder and Chief Executive Officer of the Company, his extensive knowledge and experience in the restaurant industry and his leadership, strategic guidance and operational vision. |
Director Qualifications: We believe Mr. Segal’s qualifications to serve on the Board include his role as founder and former Chief Executive Officer of the Company, his extensive knowledge and experience in the restaurant industry and his leadership, strategic guidance and operational vision.
Michael Serruya —
Non-Executive Chairman and Director
Michael Serruya, age
52,56, has served as
Non-Executive Chairman and a Class I member of our Board
of Directors since October 27,
2013.2013 and as Non-Executive Chairman of our Board from October 27, 2013 until October 30, 2017. Mr. Serruya
is co-founder, past Chairman, President, Chief Executive Officer and director of CoolBrands. Mr. Serruya served as Co-President and Co-Chief Executive Officer of CoolBrands from 1994 to 2000, as Co-Chairman of CoolBrands in 2005, as President and Chief Executive Officer of CoolBrands from 2006 until its merger with Swisher Hygiene in November 2010. Mr. Serruyahas served as a director of
CoolBrandsSecond Cup Inc. since
1994 until the merger with Swisher Hygiene in November 2010.2017. Mr. Serruya was also President, Chief Executive Officer and Chairman of CoolBrands’ predecessor, Yogen Früz World-Wide Inc. Mr. Serruya was Chairman and Chief Executive Officer of Kahala Brands until July 2016 and is currently Chairman and Chief Executive Officer of Serruya Private Equity.
| • | Director Qualifications: We believe Mr. Serruya’s qualifications to serve on the Board of Directors include his business experience, including a diversified background as an executive and in operational roles in both public and private companies, and as a board member of several public companies, gives him a breadth of knowledge and valuable understanding of our business. |
•
Director Qualifications: We believe Mr. Serruya’s qualifications to serve on the Board include his business experience, including a diversified background as an executive and in operational roles in both public and private companies, and as a board member of several public companies, gives him a breadth of knowledge and valuable understanding of our business.
Eugene M. Bullis — Director
Eugene M. Bullis, age 71,74, has served as a Class II member of our Board of Directors since August 12, 2014. Mr. Bullis has served as ChairmanChair of the Audit Committee of Ambac Financial Group, Inc. from May 2013 to May 2016, and has served as a Member of the Board of Governors of The Doctors Company since
December 2010. From November 2015 to November 2016, Mr. Bullis served as the Executive Vice President and Interim Chief Financial Officer of The Hanover Insurance Group, Inc., where he held the same position from 2007 until retirement in 2010. Prior to joining The Hanover Insurance Group, Inc., Mr. Bullis served as Executive Vice President and Chief Financial Officer of Conseco, Inc. from May 2002 to May 2007. Previously, Mr. Bullis served in a number of senior financial officer roles primarily in technology-related businesses, including Chief Financial Officer of Wang Laboratories, Inc. Mr. Bullis began his career with a predecessor firm of what is now Ernst & Young LLP, where he advanced to audit partner. Mr. Bullis received an A.B. in Business Administration from Colby College in 1967.
| • | Director Qualifications: We believe Mr. Bullis’ qualifications to serve on the Board of Directors include his considerable financial experience, including his background in audit and his familiarity with compliance, finance and regulatory requirements, as well as his experience as an executive in both public and private companies and as a board member of public companies. |
Nicholas L. Giannuzzi
Director Qualifications: We believe Mr. Bullis’ qualifications to serve on the Board include his considerable financial experience, including his background in audit and his familiarity with compliance, finance and regulatory requirements, as well as his experience as an executive in both public and private companies and as a board member of public companies.
Dimitrios Angelis — Director
Nicholas L. Giannuzzi,
Dimitrios Angelis, age 50, has served as a Class
III member of our Board
since March 28, 2018. Mr. Angelis is a practicing corporate attorney and founded Pharma Tech Law in January 2019, having previously held several general counsel positions. Mr. Angelis is also co-founder and chairman of Sparta Biopharma Inc., a private medical device company, and Gendeep, Inc., a private technology company. In addition, Mr. Angelis currently sits on several private boards and advises technology and life science companies on a wide range of matters. Mr. Angelis was on the Board of Directors
since October 16, 2013. Sinceof OTI Inc. (NASDAQ: OTIV) from December
2010, Mr. Giannuzzi has2012 to August 2015, including having served as
Managing PartnerChairman of
The Giannuzzi Group LLP, a premier boutique law firm specializing in the
representationBoard and CEO of
fast-growing, independent companies in the hospitality, food and beverage industries.OTI America, Inc. Prior to
forming The Giannuzzi Group,his business leadership role at On Track Innovations, he served as General Counsel and Corporate Secretary at Wockhardt, Inc. from October 2012 to December 2013, Senior Counsel at Dr. Reddy’s Laboratories, Inc. (NYSE: RDY) from October 2008 to October 2012, where he won the chairman’s award for individual excellence. Mr.
GiannuzziAngelis also served as Chief Legal Officer at Osteotech, Inc. (NYSE: OSTE) from February to October 2008. Mr. Angelis was
corporate counsel at Actavis Inc. from August 2004 to November 2007. He began his career at Mayer, Brown, LLP. Mr. Angelis currently serves as a
partner at Donovan & Giannuzzidirector of Digirad Corporation (NASDAQ: DRAD) and AmeriHoldings (NASDAQ: AMRH). He holds a Bachelor of Arts degree from
1996 through 2010 and an associate at Winthrop, Stimson, Putnam & RobertsBoston College, a Master of Arts from
1992 to 1996. Mr. Giannuzzi received a B.A. from HarvardCalifornia State University,
in 1989 and a
J.DJuris Doctorate from New York University School of
Law in 1992.Law.
•
Director Qualifications: We believe Mr. GiannuzziAngelis’ qualifications to serve on the Board include his 19 years of legal and corporate governance experience, including his background and experience as an executive, entrepreneur, and board member of several public companies.
Information about our other Executive Officers
The following table sets forth certain information regarding our executive officers who are not also directors.
| Name | | | Age | | | Positions | |
| Tyler Loy | | | 40 | | | Chief Financial Officer | |
| Linda Siluk | | | 62 | | | Chief Administrative Officer | |
Tyler Loy — Chief Financial Officer
Tyler Loy has served as
outside general counsel to Glaceau, the
owner of the Vitaminwater and Smartwater brands from the formation of the company until the sale of the company in 2007 to Coca-Cola for over $4 billion. He also served in the same capacity on behalf of Town Sports International, the parent company of New York Sports Clubs from 1997 to 2010, providing legal assistance and guidance to the company in connection with its growth from six health clubs to approximately 160. In the last year, Mr. Giannuzzi has overseen the sale of KRAVE Jerky to The Hershey Company, the partial sale of Suja Juice to The Coca-Cola Company, the acquisition of Wallaby Yogurt by WhiteWave Foods and he is currently working on multiple sales transactions for the firm’s other food and beverage clients. | • | Director Qualifications: We believe Mr. Giannuzzi’s qualifications to serve on our Board of Directors include his long-standing familiarity with our business and its strategic challenges, his prior experience serving in director roles at private companies, and his substantial and varied experience providing legal and strategic advisory services to complex organizations, including those in hospitality and consumer brands. |
Emanuel P.N. Hilario — Director
Emanuel P.N. Hilario, age 49, has recently joined as a Class III member of our Board of Directors as of April 10, 2017. Since 2015, Mr. Hilario has served as Chief Financial Officer of Sizzling Platter,the Company since April 1, 2019. Mr. Loy served as the Company’s Vice President of Strategy from September 24, 2018 until April 1, 2019. From 2016 to 2018, Mr. Loy was the Vice President of Finance at Pacific Bells, a restaurant management company operatingfranchisee of approximately 400 franchised restaurants in the United States, Mexico,300 Taco Bell and China under the brand names of Red Robin, Sizzler, Little Caesars, Dunkin Donuts, and Wingstop.Buffalo Wild Wings restaurants. Before joining Sizzling Platter,Pacific Bells, Mr. Hilario served as Chief Operating Officer forLoy worked at Einstein Noah Restaurant Group, Inc. (NASDAQ “BAGL”) from 20132011 to 20142016 and servedheld various finance and sales leadership roles culminating as its Chief Financial Officer from 2010 to 2013. He previously served as Chief Financial Officer forthe Vice President of Catering. Mr. Loy began his career at McCormick & Schmick’s Seafood Restaurants, Inc. (NASDAQ “MSSR”) where he held various position in operations and finance from April 2004 through May 2009 and also served on its Board of Directors as2000 to 2011. Mr. Loy graduated in 2007 with a DirectorBA in Business Administration with a Finance Concentration from May 2007 to July 2009. For the preceding four years, heWashington State University.
Linda Siluk — Chief Administrative Officer
Linda Siluk has served as
the Chief Administrative Officer of the Company since April 1, 2019 and served as Interim Chief Financial Officer of
Angelo and Maxie’s, Inc. While there,the Company from
2002May 16, 2017 until April 1, 2019. Prior to
2004, he managed day-to-day operations ofjoining the
Angelo and Maxie’s steakhouse concept. Mr. Hilario began his career at McDonald’s and has held various financial roles within the company. He received a Bachelor of Science and Commerce degree from Santa Clara University in 1990. | • | Director Qualifications: We believe Mr. Hilario’s qualifications to serve on our Board of Directors include his extensive experience in the restaurant industry, knowledge of licensing and franchising of restaurants, as well as his years of working at fine dining concepts and managing food and beverage hospitality operations.
|
Committees of the Board of Directors and Meetings
Meeting Attendance. During the fiscal year ended December 31, 2016 the Board of Directors met a total of 22 times, and the various committees of the Board of Directors met a total of 11 times. No director attended fewer than 75% of the total number of meetings of the Board of Directors and of committees of the Board of Directors on which he or sheCompany, Ms. Siluk served during fiscal 2016. The Board of Directors has adopted a policy under which each member of the Board of Directors is strongly encouraged but not required to attend each annual meeting of our stockholders. Jonathan Segal, Nicholas Giannuzzi, Richard Perlman, Michael Serruya and Eugene Bullis attended our annual meeting of stockholders held in 2016.
Audit Committee. Our Audit Committee met five times during fiscal 2016. This committee currently has three members, Messrs. Bullis (Chairman), Serruya and Hilario. Our Audit Committee’s role and responsibilities are set forth in the Audit Committee’s written charter and include the authority to retain and terminate the services of our independent registered public accounting firm. In addition, the Audit Committee reviews annual financial statements, considers matters relating to accounting policy and internal controls and reviews the scope of annual audits. All members of the Audit Committee satisfy the current independence standards promulgated by the SEC and by NASDAQ, as such standards apply specifically to members of audit committees. The Board of Directors has determined that Mr. Bullis is an “audit committee financial expert,” as the SEC has defined that term in Item 407 of Regulation S-K. Please also seeSenior Vice President and Chief Accounting Officer for Fairway Group Holdings, Corp. from June 2015 to February 2017, as the report of the Audit Committee set forth elsewhere in this proxy statement.
A copy of the Audit Committee’s written charter is publicly available on our websiteVice President and Finance and Chief Accounting Officer from October 2011 to June 2015, and as Senior Project Manager from August 2009 to October 2010. Prior to her experience atwww.togrp.com .
Compensation Committee. Our Compensation Committee met five times during fiscal 2016. This committee currently has three members, Messrs. Hilario (Chairman), Bullis and Serruya. Our Compensation
Committee’s role and responsibilities are set forth in the Compensation Committee’s written charter and includes reviewing, approving and making recommendations regarding our compensation policies, practices and procedures to ensure that legal and fiduciary responsibilities of the Board of Directors are carried out and that such policies, practices and procedures contribute to our success. Our Compensation Committee also administers our 2013 Employee, Director and Consultant Equity Incentive Plan. The Compensation Committee is responsible for the determination of the compensation of our Chief Executive Officer, and shall conduct its decision making process with respect to that issue without Fairway, Ms. Siluk served as the Chief ExecutiveFinancial Officer present. All members ofat Drug Fair from October 2008 to May 2009. From September 2006 to April 2008, Ms. Siluk was the Compensation Committee qualify as independent under the definition promulgated by NASDAQ.
In establishing compensation amounts for executives, the Compensation Committee seeks to provide compensation thatSenior Vice President, Finance at Ann Taylor. Ms. Siluk received her B.S. in Business Administration from Montclair State College. Ms. Siluk is competitive in light of current market conditions and industry practices. Accordingly, the Compensation Committee will annually review market data which is comprised of proxy-disclosed data from peer companies and information from nationally recognized published surveys for the restaurant industry, adjusted for size. The market data helps the committee gain perspective on the compensation levels and practices at the peer companies and to assess the relative competitiveness of the compensation paid to the Company’s executives. The market data thus guides the Compensation Committee in its efforts to set executive compensation levels and program targets at competitive levels for comparable roles in the marketplace. The Compensation Committee then takes into account other factors, such as the importance of each executive officer’s role to the Company, individual expertise, experience, and performance, retention concerns and relevant compensation trends in the marketplace, in making its final compensation determinations.
The Compensation Committee’s independent compensation consultant during fiscal year 2016 was Frederic W. Cook & Co. (“Cook & Co.”). Cook & Co. was engaged by, and reported directly to, the Compensation Committee, which has the sole authority to hire or fire Cook & Co. and to approve fee arrangements for work performed. Cook & Co. assisted the Compensation Committee in fulfilling its responsibilities under its charter, including advising on implementing incentive compensation program changes. The Compensation Committee authorized Cook & Co. to interact with management on behalf of the Compensation Committee, as needed in connection with advising the Compensation Committee, and Cook & Co. was included in discussions with management.
It is the Compensation Committee’s policy that the Chair of the Compensation Committee or the full Compensation Committee pre-approve any additional services provided to management by an independent compensation consultant.
The Compensation Committee reviews the performance of each named executive officer in light of the above factors and determines whether the named executive officer should receive any increase in base salary or receive a discretionary equity award based on such evaluation. During fiscal year 2016, the Compensation Committee did not adhere to a formula or other quantitative measures with respect to compensation but rather relied on qualitative and subjective evaluations to determine the appropriate levels of compensation for our named executives.
A copy of the Compensation Committee’s written charter is publicly available on our website atwww.togrp.com.
Nominating and Governance Committee. Our Nominating and Governance Committee met one time during fiscal 2016 and has three members, Messrs. Serruya (Chairman), Bullis and Hilario. The Nominating and Governance Committee’s role and responsibilities are set forth in the Nominating and Governance Committee’s written charter and include evaluating and making recommendations to the full Board of Directors as to the size and composition of the Board of Directors and its committees, evaluating and making recommendations as to potential candidates, and evaluating current Board members’ performance. All members of the Nominating and Governance Committee qualify as independent under the definition promulgated by NASDAQ.
If a stockholder wishes to nominate a candidate for director who is not to be included in our proxy statement, it must follow the procedures described in “Stockholder Proposals and Nominations For Director” at the end of this proxy statement.
In addition, under our current corporate governance policies, the Nominating and Governance Committee may consider candidates recommended by stockholders as well as from other sources such as other directors or officers, third party search firms or other appropriate sources. For all potential candidates, the Nominating and Governance Committee may consider all factors it deems relevant, such as a candidate’s personal integrity and sound judgment, business and professional skills and experience, independence, knowledge of the industry in which we operate, possible conflicts of interest, diversity, the extent to which the candidate would fill a present need on the Board of Directors, and concern for the long-term interests of the stockholders. In general, persons recommended by stockholders will be considered on the same basis as candidates from other sources.
certified public accountant. 12
If a stockholder wishes to propose a candidate for consideration as a nominee by the Nominating and Governance Committee under our corporate governance policies, it should submit such recommendation in writing to: The ONE Group Hospitality, Inc., c/o Corporate Secretary, Nominating and Governance Committee, 411 W. 14th Street, 2nd Floor, New York, NY 10014.
The Nominating and Governance Committee considers issues of diversity among its members in identifying and considering nominees for director, and strives where appropriate to achieve a diverse balance of backgrounds, perspectives, experience, age, gender, ethnicity and country of citizenship on the Board of Directors and its committees.
A copy of the Nominating and Governance Committee’s written charter is publicly available on the Company’s website atwww.togrp.com.
CORPORATE GOVERNANCE
Board Leadership Structure and Role in Risk Oversight
Our Board
of Directors consists of five members.
In accordance with
theour Amended and Restated Certificate of Incorporation, our Board
of Directors is divided into three classes with staggered three-year terms. At each annual general meeting of stockholders, the successors to directors whose terms then expire will be elected to serve from the time of election and qualification until the third annual meeting following election. The authorized number of directors may be changed by resolution of the
Board of Directors.Board. Vacancies on the Board
of Directors can be filled by resolution or a majority vote of the remaining directors then in office, even if less than a quorum, or by a sole remaining director of the
Board of Directors.Board. Our principles of corporate governance give the Board
of Directors the authority to choose whether the roles of
Non-ExecutiveExecutive Chairman of the Board
of Directors and Chief Executive Officer are held by one person or two
people.persons. Our principles also give the Board
of Directors the authority to change this policy if it deems it best for the Company at any time. Currently, two separate individuals serve in the positions of Chief Executive Officer and
Non-ExecutiveExecutive Chairman of the Board of
Directors of the Company.
We believe that our current leadership structure is optimal for the Company at this time.Our Board
of Directorscurrently has three independent members and two non-independent members, one of
which serves aswhom is our Chief Executive Officer. We believe that the number of independent, experienced directors that make up our Board
of Directors, along with the independent oversight of the Board of Directors by the Non-Executive Chairman, benefits our Company and our
shareholders.stockholders. All of our independent directors have demonstrated leadership in other organizations and are familiar with board of director processes.
Messr.
Messrs. Serruya
and Angelis are Class I directors and their term will expire at our 2020 annual meeting of stockholders. Mr. Bullis is a Class
III director and his term will expire at our
2017 annual meeting of stockholders. Messr. Perlman was a former Class I director who resigned prior his term expiring at our 2017 annual meeting of stockholders of the Company. Messrs. Bullis and Giannuzzi are the Class II directors and their terms will expire at our 20182021 annual meeting of stockholders. Messrs.
Hilario and Segal
and Hilario are
the Class III directors and their
termsterm will expire at
the 2019our 2022 annual meeting of stockholders.
The division of our Board of Directors into three classes with staggered three-year terms may delay or prevent a change of our management or a change in control. Our management is principally responsible for defining the various risks facing the Company, formulating risk management policies and procedures, and managing our risk exposures on a day-to-day basis. The
Board of Directors’Board’s principal responsibility in this area is to ensure that sufficient resources, with appropriate technical and managerial skills, are provided throughout the Company to identify, assess and facilitate processes and practices to address material risk and to monitor our risk management processes by informing itself concerning our material risks and evaluating whether management has reasonable controls in place to address the material risks. The involvement of the Board
of Directors in reviewing our business strategy is an integral aspect of
the Board of Directors’its assessment of management’s tolerance for risk and also its determination of what constitutes an appropriate level of risk for the Company.
While
Although the full Board
of Directors has overall responsibility for risk oversight, the Board
of Directors may elect to delegate oversight responsibility related to certain
risks committees, which in turn would then report on the matters discussed at the committee level to the full
Board of Directors.Board. For instance, an audit committee could focus on the material risks facing the Company, including operational, market, credit,
liquidity and legal risks and a compensation committee could be charged with reviewing and discussing with management whether our compensation arrangements are consistent with effective controls and sound risk management.
Our Board has reviewed the direct and indirect relationship that each of our directors has with The ONE Group Hospitality, Inc., and has determined that the following members of the Board are “independent directors” as defined by The NASDAQ Stock Market (“NASDAQ”): Dimitrios Angelis, Eugene M. Bullis and Michael Serruya.
Stockholder Communications to the Board of Directors
Generally, stockholders who have questions or concerns should contact our Investor Relations contact at 646-624-2400. However, any stockholders who wish to address questions regarding our business directly with the Board,
of Directors, or any individual director, should direct his or her questions in writing to the Board
of Directors at The ONE Group Hospitality, Inc.,
411 W. 14th Street, 2nd Floor, New York, NY 10014,1624 Market St. Suite 311, Denver, CO 80202 Attn:
Security Holder Communication.Corporate Secretary. Communications will be distributed to the Board,
of Directors, or to any individual director or directors as appropriate, depending on the facts and circumstances outlined in the communications. Items that are unrelated to the duties and responsibilities of the Board
of Directors may be excluded, such
as:as junk mail and mass mailings,
resumes and
other forms of job inquiries,
surveys,
and solicitations or advertisements.
In addition, any material that is unduly hostile, threatening, or illegal in nature may be excluded, provided that any communication that is filtered out will be made available to any outside director upon request.
Employee, Officer and Director Hedging.
Our insider trading policy, which applies to all employees, officers and directors, prohibits transactions that hedge or offset decreases in the value of Company securities.
Committees of the Board of Directors and Meetings
The Board of Directors has established an Audit Committee, a Compensation Committee, a Nominating and Governance Committee, each of which operates pursuant to a written charter this is available on our website at www.togrp.com.
Meeting Attendance. During the fiscal year ended December 31, 2019, the Board met a total of nine times, and the various committees of the Board met a total of seven times.. Each director attended more than 75% of the total number of meetings of the Board of Directors and the committees of the Board of Directors on which such director served. The Board has adopted a policy under which each member of the Board is strongly encouraged but not required to attend each annual meeting of our stockholders. Jonathan Segal, Michael Serruya, Emanuel P.N. Hilario, Dimitrios Angelis, and Eugene M. Bullis attended our annual meeting of stockholders in 2019.
| | Audit Committee | | | | |
| | Members | | | This committee currently has three members, Messrs. Bullis (Chair), Angelis and Serruya. All members of the Audit Committee satisfy the current independence standards promulgated by the SEC and by NASDAQ, as such standards apply specifically to members of audit committees. The Board has determined that Mr. Bullis is an “audit committee financial expert,” as defined in Item 407 of Regulation S-K. A copy of the Audit Committee’s written charter is publicly available on our website at www.togrp.com. | |
| | Number of Meetings Last Year | | | Four | |
| | Primary Functions | | | Our Audit Committee’s role and responsibilities are set forth in the Committee’s written charter and include the authority to retain and terminate the services of our independent registered public accounting firm. In addition, the Audit Committee reviews annual financial statements, considers matters relating to accounting policy and internal controls and reviews the scope of annual audits. | |
| | Compensation Committee. | | | | |
| | Members | | | This committee currently has three members, Messrs. Angelis (Chair), Bullis and Serruya. All members of the Compensation Committee qualify as independent under the definition promulgated by NASDAQ. | |
| | Number of Meetings Last Year | | | Two | |
| | Primary Functions | | | Our Compensation Committee’s role and responsibilities are set forth in the Compensation Committee’s written charter and include reviewing, approving and making recommendations regarding our compensation policies, practices and procedures to ensure that legal and fiduciary responsibilities of the Board are carried out and that such policies, practices and procedures contribute to our success. Our Compensation Committee also administers our 2019 Amended and | |
| | | | | Restated Stock Incentive Plan (“Equity Incentive Plan”). The Compensation Committee is responsible for the determination of the compensation of our Chief Executive Officer, and his compensation without the Chief Executive Officer present. | |
| | | | | In establishing compensation amounts for executives, the Compensation Committee seeks to provide compensation that is competitive in light of current market conditions and industry practices. Accordingly, the Compensation Committee annually reviews market data comprising proxy-disclosed data from peer companies and information from nationally recognized published surveys for the restaurant industry, adjusted for size. The market data helps the committee gain perspective on the compensation levels and practices at the peer companies and to assess the relative competitiveness of the compensation paid to the Company’s executives. The market data guides the Compensation Committee in its efforts to set executive compensation levels and program targets at competitive levels for comparable roles in the marketplace. The Compensation Committee then takes into account other factors, such as the importance of each executive officer’s role to the Company, individual expertise, experience, and performance, retention concerns and relevant compensation trends, in making its final compensation determinations. | |
| | | | | The Compensation Committee’s independent compensation consultant during fiscal year 2019 was Frederic W. Cook & Co. (“Cook & Co.”). Cook & Co. was previously engaged by, and reported directly to, the Compensation Committee, which has the sole authority to hire or fire Cook & Co. and to approve fee arrangements for work performed. Cook & Co. assisted the Compensation Committee in fulfilling its responsibilities under its charter, including advising on equity incentive compensation grants to employees, including officers. The Compensation Committee authorized Cook & Co. to interact with management on behalf of the Compensation Committee, as needed in connection with advising the Compensation Committee, and Cook & Co. was included in discussions with management. | |
| | | | | It is the Compensation Committee’s policy that the Chair of the Compensation Committee or the full Compensation Committee pre-approve any additional services provided to management by an independent compensation consultant. | |
| | | | | The Compensation Committee reviews the performance of each named executive officer in light of the above factors and determines whether the named executive officer should receive any increase in base salary or receive a discretionary equity award based on such evaluation. During 2019, the Compensation Committee did not adhere to a formula or other quantitative measures with respect to compensation but rather relied on qualitative and subjective evaluations to determine the appropriate levels of compensation for our named executive officers. | |
| | | | | A copy of the Compensation Committee’s written charter is publicly available on our website at www.togrp.com. | |
| | Nominating and Governance Committee. | |
| | Members | | | Our Nominating and Governance Committee currently has two members, Messrs. Serruya (Chair) and Bullis. The Nominating and Governance Committee’s role and responsibilities are set forth in the Nominating and Governance Committee’s written charter and include evaluating and making recommendations to the full Board as to the size and composition of the Board and its committees, evaluating and making recommendations as to potential candidates for election to the Board, and evaluating current Board members’ performance. All members of the Nominating and Governance Committee qualify as independent under the definition promulgated by NASDAQ. | |
| | Number of meetings Last Year: | | | One | |
| | Primary Functions | | | If a stockholder wishes to nominate a candidate for director who is not to be included in our proxy statement, it must follow the procedures described in “Stockholder Proposals and Nominations For Director” at the end of this proxy statement. | |
| | | | | In addition, under our current corporate governance policies, the Nominating and Governance Committee may consider candidates recommended by stockholders as well as from other sources such as other directors and officers, third party search firms or other appropriate sources. For all potential candidates, the Nominating and Governance Committee may consider all factors it deems relevant, such as a candidate’s personal integrity and sound judgment, business and professional skills and experience, independence, knowledge of the industry in which we operate, possible conflicts of interest, diversity, the extent to which the candidate would fill a present need on the Board, and concern for the long-term interests of the stockholders. In general, persons recommended by stockholders will be considered on the same basis as candidates from other sources. If a stockholder wishes to propose a candidate for consideration as a nominee by the Nominating and Governance Committee under our corporate governance policies, it should submit such recommendation in writing to: The ONE Group Hospitality, Inc., c/o Corporate Secretary, Nominating and Governance Committee, 1624 Market St., Suite 311, Denver, CO 80202. | |
| | | | | The Nominating and Governance Committee considers issues of diversity among its members in identifying and considering nominees for director, and strives where appropriate to achieve a diverse balance of backgrounds, perspectives, experience, age, gender, ethnicity and country of citizenship on the Board and its committees. | |
| | | | | A copy of the Nominating and Governance Committee’s written charter is publicly available on the Company’s website at www.togrp.com. | |
CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS
Our Audit Committee reviews all transactions in excess of $120,000 between us and a related person, which includes nominees for directors, directors and executive officers and their immediate families and stockholders who beneficially own more than five percent of our outstanding shares of common stock. For its review, the Audit Committee obtains relevant information, including through the review of director and officer questionnaires. In some circumstances, the authority to review and approve or disapprove a transaction is delegated to our Audit Committee chair. The Audit Committee or its chair may approve a related party transaction only after a determination that the transaction is in, or not inconsistent with, the best interests of us and our stockholders, taking into account necessary facts and circumstances. These facts and circumstances will typically include the benefits of the transaction to us; the impact on a director’s independence if the related party is a director, an immediate family member of a director or an entity in which a director is a partner, stockholder or executive officer; the availability of other sources for comparable products or services; the terms of the transaction; and the terms of comparable transactions that would be available to unrelated third parties or to employees generally. No member of the Audit Committee may participate in any review, consideration or approval of any related party transaction with respect to which the member or the member’s immediate family has an interest.
Lease Guarantees
Mr. Segal is the Executive
OfficersChairman of the Board, the Director of Business Development and a principal stockholder of the Company. As of April 9, 2020, Mr. Segal beneficially owned approximately 25.4% of our issued and outstanding common stock. Mr. Segal is a limited personal guarantor of the leases for the Bagatelle New York premises with respect to JEC II, LLC’s payment and performance under the lease.
Personal Interests in Subsidiaries
Mr. Segal currently owns 100% of Hip Hospitality, LLC, which owns 10% of Bagatelle America, LLC (“Bagatelle America”). Bagatelle America is the Manager of Bagatelle Little West 12th LLC, which owns and operates the Bagatelle restaurant in New York City. As Manager, Bagatelle America receives an annual management fee of 5% of the Adjusted Gross Revenue (as defined in the management agreements with each subsidiary). Bagatelle America is also the holder of the trademark for “Bagatelle,” which it licenses royalty-free to Bagatelle La Cienega, LLC and Bagatelle Little West 12th LLC.
Director Nominations
We have arrangements with two stockholders — Argyle Street Management Limited and David Kanen and Kanen Wealth Management LLC (collectively, the “Kanen Group”) — under which each of those stockholders may nominate a director for election to our Board (a “Designee”), subject to continued share ownership. Those arrangements are described above under “MANAGEMENT AND CORPORATE GOVERNANCE, Board of Directors”. The Kanen Group also agreed to certain customary standstill provisions until the earliest to occur of (i) the end of the term for which a Designee is appointed (or such longer period as the Designee or, in certain circumstances, a replacement director selected pursuant to the agreement, continues to serve on the Board) and (ii) five business days after such date, if any, that the Kanen Group provides written notice to the Company that the Company materially breached any of its commitments under its agreement and where the Company has not cured such breach within 15 business days after such written notice. The standstill provisions generally prohibit the Kanen Group and its affiliates from taking specified actions during the standstill period with respect to the Company and its securities, including, among others: (i) soliciting or participating in the solicitation of proxies; (ii) joining any other “group” or becoming party to any voting arrangement or agreement; (iii) seeking or encouraging others to submit nominations for the election or removal of directors; or (iv) calling any meeting of stockholders, including by written consent, subject to certain conditions. During the standstill period, the Kanen Group has also agreed to vote its shares in favor of the Company’s nominees of existing directors for election to the Board and in accordance with any recommendations of the Board on certain other matters.
2019 DIRECTOR COMPENSATION
Each non-employee director in 2019 received stock grants equal to $50,000 at the fair market value on June 4, 2019, and $50,000 in director fees for the fiscal year ended December 31, 2019. The Company reimburses all directors for reasonable expenses incurred traveling to and from Board meetings. The Company does not pay employee directors any compensation for services as a director. Non-employee directors who serve as chair of any committees earn an additional $10,000 per annum for such services.
The following table sets forth certain information regardingthe compensation paid or earned for the fiscal year ended December 31, 2019 to our executive officers who are not alsonon-employee directors. We have employment agreements with Jonathan Segal
| Name | | | Fees Earned or
Paid in Cash ($) | | | Stock Awards ($) | | | Total | |
| Dimitrios Angelis | | | | $ | 60,000 | | | | | $ | 50,000 | | | | | $ | 110,000 | | |
| Eugene Bullis | | | | $ | 60,000 | | | | | $ | 50,000 | | | | | $ | 110,000 | | |
| Michael Serruya | | | | $ | 60,000 | | | | | $ | 50,000 | | | | | $ | 110,000 | | |
(1)
Each non-employee director in 2019 was paid a director’s fee of $50,000 for the fiscal year ended December 31, 2019. A $10,000 committee chair fee was paid to Michael Serruya, Chair of the Nominating and
Samuel Goldfinger. Celeste Fierro is an at-will employee.Name | | Age | | Positions |
Samuel Goldfinger | | 48 | | Chief Financial Officer |
Celeste Fierro | | 49 | | Senior Vice President of Marketing, Sales and Events |
Sam Goldfinger — Chief Financial Officer
Samuel Goldfinger, age 48, has served as Chief Financial OfficerGovernance Committee, Dimitrios Angelis, Chair of the Compensation Committee and Eugene M. Bullis, Chair of the Audit Committee.
(2)
Each non-employee director in 2019 received 15,823 shares of common stock of the Company at the fair market value on June 14, 2019.
2020 Compensation
For 2020, each of our non-employee directors will receive their compensation in the form of common stock to help the Company conserve cash during the period when operations are affected by COVID-19. On the first business day following each quarterly board meeting, each non-employee director will receive a number of shares of Company common stock equal to $27,500 divided by the closing share price on the trading day immediately before the award date. We believe this decision by our Board reflects their confidence in the Company and its ability to survive the effects of COVID-19 and thrive when the Company’s operations are able to return to normal.
RATIFICATION OF APPOINTMENT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
(Proxy Item 2)
The Audit Committee has appointed Plante Moran, P.C. as our independent registered public accounting firm for the fiscal year ending December 31, 2020. Plante Moran has been the Company’s independent registered public accounting firm since April 2011, having previously servedthe review of the third quarter in 2018. We expect that representatives of Plante Moran will be present at the annual meeting, will be able to make a statement if they so desire, and will be available to respond to appropriate questions.
In deciding to appoint Plante Moran, the Audit Committee reviewed auditor independence issues and existing commercial relationships with Plante Moran and concluded that Plante Moran has no commercial relationship with the Company that would impair its independence for the fiscal year ending December 31, 2020.
Effective October 4, 2018, the Audit Committee approved the engagement of Plante & Moran, PLLC as the Company’s independent registered public accounting firm for the Company’s fiscal year ending December 31, 2018 and approved the dismissal of Grant Thornton LLP (“Grant Thornton”) as the Company’s independent registered public accounting firm. Subsequently, Plante & Moran, PLLC informed the Company that, because the Company was headquartered in the State of New York and because, under State of New York licensing requirements, all owners of the accounting firm were required to be certified public accountants or public accountants, the audit engagement would be with Plante Moran, P.C., an entity affiliated with Plante & Moran, PLLC. Plante Moran, P.C. is licensed to perform audit services in the State of New York and is separately registered with the Public Company Accounting Oversight Board. After receiving assurances that the Company’s audit engagement team would remain the same, the Audit Committee terminated the engagement of Plante & Moran, PLLC and approved the engagement of Plante Moran, P.C. as the Company’s independent registered public accounting firm on March 22, 2019. Although the Company relocated its corporate headquarters to Denver, CO, in 2019 Plante Moran P.C. remained the Company’s auditor.
Neither Grant Thornton nor Plante & Moran, PLLC issued an audit report on the Company’s consolidated financial statements in the past two fiscal years.
During the fiscal years ended December 31, 2018 and December 31, 2019 up to and including the date of the dismissal (the “Specified Period”), there were no disagreements (as described in Item 304(a)(1)(iv) of Regulation S-K and the related instructions) between the Company and either of Grant Thornton or Plante & Moran, PLLC on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which, if not resolved to the auditing firm’s satisfaction, would have caused the auditing firm to make reference thereto in its report on the financial statements for such years.
During the Specified Period, there were no “reportable events” (as defined in Item 304(a)(1)(v) of Regulation S-K). Material weaknesses in the Company’s internal controls over financial reporting identified by Grant Thornton for the fiscal year ended December 31, 2017 were discussed by the Company’s Audit Committee with Grant Thornton and Grant Thornton was authorized to respond fully to the inquiries of Plante & Moran, PLLC and Plante Moran, P.C. with respect to the weaknesses.
The Company did not consult with Plante Moran, P.C. prior to its engagement regarding (i) the application of accounting principles to a consultantspecific completed or proposed transaction, or the type of audit opinion that might be rendered on the Company’s financial statements, and neither a written report was provided to the Company from April 2010nor oral advice was provided that the newly appointed auditor concluded was an important factor in reaching a decision as to April 2011. the accounting, auditing or financial reporting issue; or (ii) any matter that was either subject of a disagreement or a reportable event as defined and described in paragraph (a)(1)(iv) and (a)(1)(v) of Item 304 of Regulation S-K.
The following table presents fees for professional audit services rendered (a) by Plante Moran, P.C. for services rendered during the year ended December 31, 2018 and December 31, 2019 (b) by Grant Thornton for services rendered by Grant Thornton during the fiscal year ended December 31, 2018.
| | | | 2019 | | | 2018 | |
| Audit fees(1) | | | | | | | | | | | | | |
| Current Auditors (Plante Moran) | | | | $ | 301,214 | | | | | $ | 20,000 | | |
Previous Auditors (Grant Thornton)(2) | | | | | 116,000 | | | | | | 622,707 | | |
| Audit related fees | | | | | 40,000 | | | | | | — | | |
| Tax fees | | | | | — | | | | | | — | | |
| All other fees | | | | | — | | | | | | — | | |
| Total | | | | $ | 457,214 | | | | | $ | 642,707 | | |
(1)
Audit fees consisted of audit work performed in the preparation and audit of the annual financial statements, review of quarterly financial statements, as well as work that generally only the independent auditor can reasonably be expected to provide, such as the provision of consents and comfort letters in connection with the filing of registration statements, Current Reports on Form 8-K and related amendments and statutory audits.
(2)
In 2019, audit fees for the previous auditor included transition work related to the change in primary audit firms and consents provide for various registration statements .
Policy on Audit Committee Pre-Approval of Audit and Permissible Non-audit Services of Independent Public Accountant
Consistent with SEC policies regarding auditor independence, the Audit Committee has responsibility for appointing, setting compensation and overseeing the work of our independent registered public accounting firm. In recognition of this responsibility, the Audit Committee has established a policy to pre-approve all audit and permissible non-audit services provided by our independent registered public accounting firm.
Prior to joiningengagement of an independent registered public accounting firm for the next year’s audit, management will submit an aggregate of services expected to be rendered during that year for each of four categories of services to the Audit Committee for approval.
1.
Audit services include audit work performed in the preparation of financial statements, as well as work that generally only an independent registered public accounting firm can reasonably be expected to provide, including comfort letters, statutory audits, and attest services and consultation regarding financial accounting and/or reporting standards.
2.
Audit-Related services are for assurance and related services that are traditionally performed by an independent registered public accounting firm, including due diligence related to mergers and acquisitions, employee benefit plan audits, and special procedures required to meet certain regulatory requirements.
3.
Tax services include all services performed by an independent registered public accounting firm’s tax personnel except those services specifically related to the audit of the financial statements, and includes fees in the areas of tax compliance, tax planning, and tax advice.
4.
Other Fees are those associated with services not captured in the other categories. The Company generally does not request such services from January 2009our independent registered public accounting firm.
Prior to engagement, the Audit Committee pre-approves these services by category of service. The fees are budgeted and the Audit Committee requires our independent registered public accounting firm and management to report actual fees versus the budget periodically throughout the year by category of service. During the year, circumstances may arise when it may become necessary to engage our independent registered public accounting firm for additional services not contemplated in the original pre-approval. In those instances, the Audit Committee requires specific pre-approval before engaging our independent registered public accounting firm.
The Audit Committee may delegate pre-approval authority to one or more of its members. The member to whom such authority is delegated must report, for informational purposes only, any pre-approval decisions to the Audit Committee at its next scheduled meeting.
In the event the stockholders do not ratify the appointment of Plante Moran, P.C. as our independent registered public accounting firm, the Audit Committee will reconsider its appointment.
Required Vote
The affirmative vote of a majority of the votes cast by the stockholders present or represented by proxy and entitled to vote at the annual meeting affirmatively or negatively at the annual meeting is required to ratify the appointment of the independent registered public accounting firm.
Recommendation
THE BOARD OF DIRECTORS RECOMMENDS A VOTE TO RATIFY THE APPOINTMENT OF PLANTE MORAN, P.C. AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM, AND PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE VOTED IN FAVOR OF SUCH RATIFICATION UNLESS A STOCKHOLDER INDICATES OTHERWISE ON THE PROXY.
CERTAIN INFORMATION REGARDING SECURITY HOLDERS
The following table sets forth the number of shares of our common stock beneficially owned as of April 2011,9, 2020, by (i) each person known by us to be the beneficial owner of more than 5% of the outstanding shares of our common stock, (ii) each of our directors and named executive officers and (iii) all current officers and directors as a group.
Beneficial ownership is determined in accordance with the rules of the SEC and includes voting or investment power with respect to the securities. Shares of our common stock that may be acquired by an individual or group within 60 days of April 9, 2020, pursuant to the exercise of options, are deemed to be outstanding for the purpose of computing the percentage ownership of such individual or group, but are not deemed to be outstanding for the purpose of computing the percentage ownership of any other person shown in the table.
Percentage ownership calculations for beneficial ownership are based on 29,042,852 shares outstanding as of April 9, 2020. Except as indicated in footnotes to this table, we believe that the stockholders named in this table have sole voting and investment power with respect to all shares of our common stock shown to be beneficially owned by them, based on information provided to us by such stockholders. The address for each director and executive officer listed is 1624 Market St., Suite 311, Denver, CO 80202.
| Name | | | Number of
Shares | | | Number of
Shares Subject
to Options
within 60 days of
April 9, 2020 | | | Number of
Shares Subject
to RSUs | | | Total(1) | | | Percent | |
| Jonathan Segal | | | | | 7,010,349(2) | | | | | | 476,416 | | | | | | — | | | | | | 7,486,765 | | | | | | 25.4% | | |
Kanen Wealth Management, LLC
5850 Coral Gables Drive, Suite 309
Coral Springs, FL 33076 | | | | | 4,814,012 | | | | | | — | | | | | | — | | | | | | 4,814,012(3) | | | | | | 16.6% | | |
Twinleaf Management, LLC
131 Brookwood Lane
New Canaan, CT 06840 | | | | | 1,681,354 | | | | | | — | | | | | | — | | | | | | 1,681,354(4) | | | | | | 5.8% | | |
| Emanuel P. N. Hilario | | | | | 512,830 | | | | | | 222,667 | | | | | | — | | | | | | 735,497 | | | | | | 2.5% | | |
| Tyler Loy | | | | | 34,933 | | | | | | — | | | | | | — | | | | | | 34,933 | | | | | | * | | |
| Linda Siluk | | | | | 20,143 | | | | | | — | | | | | | 7,000 | | | | | | 27,143 | | | | | | * | | |
| Michael Serruya | | | | | 340,722 | | | | | | — | | | | | | — | | | | | | 340,722(5) | | | | | | 1.2% | | |
| Eugene Bullis | | | | | 112,811 | | | | | | — | | | | | | — | | | | | | 112,811 | | | | | | * | | |
| Dimitrios Angelis | | | | | 57,390 | | | | | | — | | | | | | — | | | | | | 57,390 | | | | | | * | | |
All current executive officers and directors
as a group (7 individuals) | | | | | 8,089,178 | | | | | | 699,083 | | | | | | 7,000 | | | | | | 8,795,261 | | | | | | 29.6% | | |
*
Represents less than 1% of the issued and outstanding shares.
(1)
All securities are beneficially owned directly by the persons listed on the table (except as otherwise indicated).
(2)
Includes (i) 156,952 shares of common stock held by Modern Hotels (Holdings) Limited, of which Mr. Goldfinger wasSegal is the Managing Director, (ii) 386,166 shares of common stock held by the Jonathan Segal 2012 Family Trust, of which Mr. Segal is a co-founder, operating partnertrustee, and (iii) 1,000,000 shares of common stock held by the Jonathan Segal 2016 Family Trust #2, of which Mr. Segal is a trustee.
(3)
Based solely on (i) a Schedule 13D/A filed with the SEC on July 22, 2019 by Kanen Wealth Management LLC, a Florida limited liability company (“KWM”), and David L. Kanen, the managing member for KWM, and (ii) a Form 4 filed with the SEC on April 4, 2019, by Mr. Kanen, KWM and The Philotimo Fund LLC (“Philotimo”). KWM, in its role as investment manager for customer accounts, has discretionary voting and dispositive power over the shares of common stock held in the accounts. Mr. Kanen, as the managing member of KWM, may be deemed to share voting and dispositive power over such shares of common stock with KWM. KWM, as the boardgeneral partner of directors
Philotimo, and Mr. Kanen, as the managing member of Next Course Financial Group,KWM, may be deemed to share voting and dispositive power over the shares of common stock held by Philotimo. Mr. Kanen, as the managing member of KWM, may be deemed the beneficial owner of the shares owned by KWM and Philotimo. As of April 9, 2020, KWM directly owned 2,948,775 shares, Philotimo directly owned 1,845,000 shares, and Mr. Kanen directly owned 20,237 Shares.
(4)
Based solely on a Schedule 13G filed with the SEC on January 15, 2020, by Twinleaf Management, LLC, a
company which provides financial and business development servicesConnecticut limited liability company. The shares are allocated across eleven discretionary client accounts. Such clients have the right to
development stage companies, primarily inreceive or the
hospitality industry. From August 2007 until December 2008, Mr. Goldfinger waspower to direct the
chief financial officer and an operating partnerreceipt of
Fourth Wall Restaurants, LLC, a company that manages upscale restaurants located in New York City, includingdividends from, or the
original Smith & Wollensky, Maloney & Porcelli, Quality Meats, Park Avenue and The Post House. From 1997 to 2007, Mr. Goldfinger was the chief financial officer, secretary and treasurer of Smith & Wollensky Restaurant Group, Inc., a publicly traded company listed on NASDAQ until it was taken private in 2007, where he was responsible for overseeing the company’s finance, information technology, human resource, purchasing, project development and public company reporting functions. At its peak, the company operated 16 restaurants throughout the country, with system-wide sales in excess of $160 million. In 2007, Mr. Goldfinger managed the entire process forproceeds from the sale of,
Smith & Wollensky Restaurant Group, Inc.such securities. No client account contains an interest relating to
an outside investor group. From 1990 to 1997, Sam was a practicing CPA working at the public accounting firm Goldstein Golub Kessler & Co. where he became a senior manager in the audit department with a focus on the hospitality industry. Mr. Goldfinger received his Bachelor of Science degree in accounting from the State University of New York — Binghamton in 1990. On April 18, 2017, Mr. Goldfinger notified us of his intent to resign as Chief Financial Officer. His resignation is effective as of May 26, 2017 and Mr. Goldfinger will assist in the transitionmore than five percent of the
Chief Financial Officer role for six weeks following his departure.common stock. Spencer Grimes, as managing member of Twinleaf Management LLC, may be deemed to beneficially own the shares of common stock. Celeste Fierro — Senior Vice President
(5)
Includes 197,712 shares of
Marketing, Sales and EventsCeleste Fierro, age 49, has served as Senior Vice President of Marketing, Sales and Events of the Company since February 19, 2014. Prior to that time and since 2004, Ms. Fierro served as Senior Vice President of Operations, and in such capacity oversaw all operations of the Company. Ms. Fierro was a founding partner of the Company in 2004 along withcommon stock held by MOS Holdings Inc., an entity owned by Mr. Segal. Prior to joining the Company, Ms. Fierro was an event planner in New York City and founded Cititaste Events, a company which planned events for clients and events such as the Annual All-Star Games of Major League Baseball, the National Football League, the Pro-Bowl, the Cystic Fibrosis Foundation and American Express.
EXECUTIVE OFFICER
AND DIRECTOR COMPENSATION
Summary Compensation Table
The following table shows the total compensation paid or accrued during the last two fiscal years ended December 31, 20152018 and 20162019 to (i) our President and Chief Executive Officer and (ii) our next threetwo most highly compensated executive officers who earned more than $100,000 and served as executive officers during the fiscal year ended 20162019. In addition, we have disclosed the compensation for our Chief Financial Officer, who was appointed to that office in April 2019.
| Name and Principal Position | | | Year | | | Salary(1) | | | Bonus | | | Stock
Awards(2) | | | Option
Awards | | | Non Equity
Incentive Plan
Compensation(2) | | | Other(5) | | | Total | |
Emanuel P. N. Hilario
President and Chief Executive
Officer | | | | | 2019 | | | | | $ | 506,730 | | | | | $ | 125,000 | | | | | $ | 575,000(3) | | | | | $ | 100,000(4) | | | | | $ | 674,375 | | | | | $ | 0 | | | | | $ | 1,981,105 | | |
| | | | 2018 | | | | | $ | 458.654 | | | | | $ | 0 | | | | | $ | 0 | | | | | $ | 0 | | | | | $ | 156,938 | | | | | $ | 0 | | | | | $ | 615,592 | | |
Jonathan Segal
Director of Business Development | | | | | 2019 | | | | | $ | 356,731 | | | | | $ | 0 | | | | | $ | 0 | | | | | $ | 0 | | | | | $ | 219,844 | | | | | $ | 25,000 | | | | | $ | 601,575 | | |
| | | | 2018 | | | | | $ | 356,731 | | | | | $ | 0 | | | | | $ | 0 | | | | | $ | 0 | | | | | $ | 109,594 | | | | | $ | 0 | | | | | $ | 466,325 | | |
Tyler Loy
Chief Financial Officer | | | | | 2019 | | | | | $ | 241,346 | | | | | $ | 90,000 | | | | | $ | 43,800(5) | | | | | $ | 0 | | | | | $ | 84,875 | | | | | $ | 0 | | | | | $ | 460,021 | | |
| | | | 2018 | | | | | $ | 51,033 | | | | | $ | 0 | | | | | $ | 0 | | | | | $ | 0 | | | | | $ | 11,835 | | | | | $ | 0 | | | | | $ | 62,868 | | |
Linda Siluk
Chief Administrative Officer | | | | | 2019 | | | | | $ | 263,269 | | | | | $ | 24,000 | | | | | $ | 87,600(6) | | | | | $ | 0 | | | | | $ | 77,049 | | | | | $ | 0 | | | | | $ | 451,918 | | |
| | | | 2018 | | | | | $ | 336,594 | | | | | $ | 0 | | | | | $ | 0 | | | | | $ | 0 | | | | | $ | 60,390 | | | | | $ | 0 | | | | | $ | 396,984 | | |
(1)
The amount presented for salary for each of 2018 and 2019 includes the payment of 53 weeks of salary.
(2)
In 2018, 25% of incentive compensation was paid in restricted stock units that vest no the one-year anniversary of the grant, and 75% was paid in cash. For amounts earned in 2019, each of our executives elected to take the nonequity incentive compensation in the form of stock to help us conserve cash in light of the effect of COVID-19 on our business. We have reported the cash value of the awards under “Nonequity Incentive Plan Compensation.” We believe this is appropriate, and consistent with Instruction 2 to Regulation S-K Item 402(n)(2)(iii) and (iv), because the cash payments were payable only upon the achievement of performance measures set in advance and were serving as executive officers asnot discretionary.
(3)
Composed of
such date.Summary Compensation Table
| Name and Principal Position | | Year | | Salary | | | Bonus | | | Stock Awards(1) | | | Option
Awards(2) | | | Total | |
Jonathan Segal(3)
Chief Executive Officer | | 2016 | | $ | 575,000 | | | $ | 0 | | | $ | 409,750 | | | $ | 530,000 | | | $ | 1,514,750 | |
| | | 2015 | | $ | 575,000 | | | $ | 0 | | | $ | 0 | | | $ | 0 | | | $ | 575,000 | |
| | | | | | | | | | | | | | | | | | | | | | | |
Samuel Goldfinger(4)
Chief Financial Officer | | 2016 | | $ | 350,000 | | | $ | 0 | | | $ | 409,750 | | | $ | 265,000 | | | $ | 1,024,750 | |
| | | 2015 | | $ | 350,000 | | | $ | 0 | | | $ | 0 | | | $ | 0 | | | $ | 350,000 | |
| | | | | | | | | | | | | | | | | | | | | | | |
Alejandro Munoz-Suarez(5)
Former Chief Operating Officer | | 2016 | | $ | 365,000 | | | $ | 50,000 | (6) | | $ | 0 | | | $ | 250,000 | | | $ | 665,000 | |
| | | | | | | | | | | | | | | | | | | | | | | |
Celeste Fierro(7)
Senior Vice President of Marketing, Sales and Events | | 2016 | | $ | 275,000 | | | $ | 0 | | | $ | 341,250 | | | $ | 0 | | | $ | 616,250 | |
| | | 2015 | | $ | 250,000 | | | $ | 4,808 | (8) | | $ | 0 | | | $ | 0 | | | $ | 254,808 | |
(1) | These amounts represent the aggregate grant date fair value for stock awards 2015 and 2016, respectively, computed in accordance with FASB ASC Topic 718. These amounts do not correspond to the actual value that will be recognized by the named executive officers. The grant date fair value of the options assuming the maximum potential value is achieved was $409,750 for Jonathan Segal, $409,750 for Mr. Goldfinger and $341,250 for Ms. Fierro.
|
(2) | The amounts in this column represent the aggregate grant date fair value of stock options granted to the named executive officer in the applicable fiscal year computed in accordance with FASB ASC Topic 718. These amounts do not correspond to the actual value that will be recognized by the named executive officers. The grant date fair value of the performance-based options is determined based on the probable outcome of such performance conditions as of the grant date.
The grant date fair value of the performance-based options assuming the maximum potential value is achieved was $530,000 for Mr. Segal in 2016. For Mr. Segal, we estimated the fair value of 500,000 stock options granted on April 8, 2016 using a Black-Scholes option pricing model utilizing the following assumptions: (i) expected volatility: 37%, (ii) expected term of option: 6.5 years, (iii) risk-free interest rate: 1.41%, (iv) expected dividend yield: 0%, and (v) weighted average grant date fair value: $1.06.
The grant date fair value of the stock options assuming the maximum potential value is achieved was $265,000 for Mr. Goldfinger in 2016. For Mr. Goldfinger, we estimated the fair value of 250,000 stock options granted on April 8, 2016 using a Black-Scholes option pricing model utilizing the following assumptions: (i) expected volatility: 37%, (ii) expected term of option: 6.5 years, (iii) risk-free interest rate: 1.41%, (iv) expected dividend yield: 0%, and (v) weighted average grant date fair value: $1.06.
The grant date fair value of the stock options assuming the maximum potential value is achieved was $275,000 for Mr. Munoz-Suarez in 2016. For Mr. Munoz-Suarez, we estimated the fair value of 250,000 stock options granted on April 1, 2016 using a Black-Scholes option pricing model utilizing the following assumptions: (i) expected volatility: 37%, (ii) expected term of option: 6.5 years, (iii) risk-free interest rate: 1.41%, (iv) expected dividend yield: 0%, and (v) weighted average grant date fair value: $1.10.
|
(3) | Mr. Segal was appointed our Chief Executive Officer on October 16, 2013. |
(4) | Mr. Goldfinger was appointed our Chief Financial Officer on October 16, 2013. On April 18, 2017, Mr. Goldfinger notified us of his intent to resign as Chief Financial Officer. His resignation is effective as of May 26, 2017. |
(5) | Mr. Munoz-Suarez was appointed our Chief Operating Officer on April 1, 2016. Effective April 21, 2017, Mr. Munoz-Suarez resigned as Chief Operating Officer. |
| |
(6) | Amount reflects a one-time sign-on bonus of $50,000. |
(7) | Ms. Fierro was appointed our Senior Vice President of Marketing, Sales and Events on February 19, 2014. |
| |
(8) | Amount reflects a one-time discretionary bonus of $4,808. |
150,600 restricted stock units awarded on February 18, 2019 which vest ratably in annual installments over three years and 42,088 shares of issued in connection with the completion of the Kona Grill acquisition in November 2019. (4)
Composed of an option to purchase 68,000 shares of common stock awarded on February 18, 2019 which vests ratably in annual installments over three years.
(5)
Composed of 15,000 restricted stock units awarded March 26, 2019 which vest ratably in annual installments over three years.
(6)
Composed of 30,000 restricted stock units awarded March 26, 2019 which vest ratably in annual installments over three years.
(7)
Relocation reimbursement for move from New York City to Denver
Employment Agreements with Executive Officers
President and Chief Executive Officer
Jonathan Segal currently
| | HILARIO AGREEMENT HIGHLIGHTS: | |
| | Employment Agreement Highlights | |
| | Date of Agreement: | | | September 3, 2019 | |
| | Term of Agreement: | | | Four Years | |
| | Base Salary: | | | $500,000 | |
| | Bonus Rate: | | | 100% | |
| | Separation Highlights: | |
| | Accrued Obligations | |
| | 18 Months of Monthly Salary (paid monthly) | |
| | Monthly Target Bonus Amount paid for 18 months | |
| | Immediate Vesting of any Equity having vest dates 18 months in the future. | |
| | Cobra payments for 18 months | |
Emanuel P.N. Hilario serves as our President and Chief Executive Officer pursuant to an employment agreement dated October 16, 2013.September 3, 2019 (“Hilario Agreement”). The agreementHilario Agreement provides for a term of four (4) years, with thesuch term automatically extending for additional one yearone-year periods unless either party provides ninety (90)90 days written notice of a rejection of the renewal prior to the commencement of the renewal term. Mr. Segal initially receivedHilario receives an annual base salary of $450,000, which increased$500,000, and thereafter he is entitled to $575,000 on January 1, 2015, following review and approval by the Compensation Committee of the Board of Directors, and in the future he shall receive such increases (but no decreases) in his base salary as determined by the Company’s Board of Directors or Compensation Committee of the Board of Directors may approve in its sole discretion from time to time, but not less than annually.Committee. In addition, Mr. SegalHilario is eligible to receive a bonusincentive compensation for each calendar year during the term of the agreementHilario Agreement in an amount targeted at seventy five percent (75%)100% of Mr. Segal’shis then-effective annual base salary, based in part upon achievement of individual and corporate performance objectives as determined by the Board of Directors.Board. Mr. Segal shallHilario will be eligible to receive a bonus in excess of the targeted bonustarget if Companythe Company’s performance exceeds 100% of the targeted goals, and a bonusan amount below the target amount shallwill be payablepaid if actual performance equals at least equals a minimum threshold, each as approved by the Board of Directors in consultation with Mr. Segal at the time theHilario when annual performance goals are established. Whether Mr. SegalHilario receives a bonusincentive compensation, and the amount of any such bonus,the incentive compensation, will be determined by the Board of Directors in its sole and absolute discretion, except that any portion of the bonusincentive compensation that the Board of Directors determines to be based on the targeted goals will be considered non-discretionary and payable based on achievement of suchthe goals. Mr. Segal did not receive a bonus in 2014 because performance targeted goals were not met. Mr. Segal also did not receive a bonus in 2015 or in 2016. On October 16, 2013, the Company closed a merger transaction (the “Merger”) with The One Group, LLC (“One Group”) pursuant to an Agreement and Plan of Merger, dated as of October 16, 2013, by and among the Company (formerly known as Committed Capital Acquisition Corporation), CCAC Acquisition Sub, LLC a Delaware limited liability company and certain other parties thereto. On the effective date of the Merger, Mr. Segal was granted stock options to purchase 1,022,104 shares of common stock at an exercise price of $5.00 per share, such amount being the fair market value at the time of grant. Of this amount, options to purchase 228,088 shares were forfeited on February 27, 2016, upon the expiration of the Company’s publicly traded warrants (the “Warrants”). The options are subject to and governed by the terms of the 2013 Employee, Director and Consultant Equity Incentive Plan (the “2013 Plan”) and a stock option agreement, which stock option agreement provides that (i) 50% of the options shall vest ratably over the first five anniversaries of the effective date of the employment agreement and remain exercisable for one year following termination of employment (the “Time-Based Options”) and (ii) 50% of the options shall vest upon the achievement of certain targeted annual milestones over a five year period commencing with the 2014 fiscal year (“Milestones”) determined by the Board of Directors (“Milestones Options”). In addition, on April 8, 2016, Mr. Segal was granted (i) 150,000 restricted stock units; and (ii) options to purchase 500,000 shares of common stock. These restricted stock units and options will vest upon the closing price of our common stock reaching $5.00, $5.50 and $6.00, with 33% vesting at each specified stock price, provided that: (i) the closing price of the stockHilario is at or above the relevant specified stock price for ten consecutive trading days in a single quarter, with such vesting to occur only on the last day of the quarter; (ii) Mr. Segal is employed by the Company on that date; and (iii) that notwithstanding the foregoing, such shares will not vest until the first anniversary of the grant date. In the event that the Company elects from time to time during the term of employment to award to all of its senior management and executives options to purchase shares of the Company’s stock pursuant to any stock option plan or similar program, Mr. Segal is entitledeligible to participate in any such stock optionthe Company’s 401(k) plan, or similar programhealth plans and other benefits on a basis consistent with the participation ofsame terms as other senior management and executives ofsalaried employees.
Noncompetition; Non-Solicitation
Under the
Company. Mr. Segal is also provided with a car and driver allowance under his agreement.Chief Financial Officer
Samuel Goldfinger currently serves as our Chief Financial Officer pursuant to an employment agreement dated October 16, 2013. Samuel Goldfinger has resigned effective as of May 26, 2017. The agreement providesHilario Agreement, for a termperiod of two (2) years with the term automatically extending for additional one year periods unless either party provides ninety (90) days written notice prior to the commencement of the renewal term. Mr. Goldfinger received an initial annual base salary of $300,000 which was increased to $350,000 effective January 1, 2015 following review and approval by the Compensation Committee of the Board of Directors, and may be increased (but not decreased) as the Board of Directors or Compensation Committee of the Board of Directors may approve in its sole discretion from time to time, but not less than annually. In addition, Mr. Goldfinger is eligible to receive an annual bonus in an amount targeted at fifty percent (50%) of Mr. Goldfinger’s then-effective annual base salary, based in part upon achievement of individual and corporate performance objectives as determined by the Board of Directors. Mr. Goldfinger shall be eligible to receive a bonus in excess of the targeted bonus if Company
performance exceeds 100% of the targeted goals, and a bonus below the target amount shall be payable if actual performance at least equals a minimum threshold, each as approved by the Board of Directors in consultation with Mr. Goldfinger at the time the annual performance goals are established. Whether Mr. Goldfinger receives a bonus and the amount of any such bonus, will be determined by the Board of Directors in its sole and absolute discretion, except that any portion of the bonus that the Board of Directors determines to be based on the targeted goals will be considered non-discretionary and payable based on achievement of such goals. Mr. Goldfinger received a discretionary bonus of $37,500 in 2014 and did not receive a bonus in 2015 or in 2016. On the effective date of the Merger, Mr. Goldfinger was granted stock options to purchase 511,052 shares of common stock at an exercise price of $5.00 per share, such amount being the fair market value at the time of grant. Of this amount, options to purchase 114,044 shares were forfeited on February 27, 2016, upon the expiration of the Warrants. The options are subject to and governed by the terms of the 2013 Plan and a stock option agreement, which stock option agreement provides that (i) 50% of the options shall vest ratably over the first five anniversaries of the effective date of the employment agreement and remain exercisable for one year following termination of employment (the “Time-Based Options”) and (ii) 50% of the options shall vest upon the achievement of certain targeted annual milestones over a five year period commencing with the 2014 fiscal year (“Milestones”) determined by the Board of Directors (“Milestones Options”). On April 8, 2016, Mr. Goldfinger was granted (i) 75,000 restricted stock units to vest over time, with 50% vesting two years from the grant date and 50% vesting three years from the grant date; (ii) 75,000 restricted stock units to vest upon the closing price of our common stock reaching $5.00, $5.50 and $6.00, with 33% vesting at each specified stock price, provided that: (a) the closing price of the stock is at or above the relevant specified stock price for ten consecutive trading days in a single quarter, with such vesting to occur only on the last day of the quarter; (b) Mr. Goldfinger is employed by the Company on that date; and (c) that notwithstanding the foregoing, such shares will not vest until the first anniversary of the grant date. In addition, on April 8, 2016, Mr. Goldfinger was granted (i) options to purchase 125,000 shares of common stock to vest over time, with 50% vesting on the second anniversary of the grant date and 50% vesting on the third year anniversary of the grant date; and (ii) options to purchase 125,000 shares of common stock to vest upon the closing price of our common stock reaching $5.00, $5.50 and $6.00, with 33% vesting at each specified stock price, provided that: (a) the closing price of the stock is at or above the relevant specified stock price for ten consecutive trading days in a single quarter, with such vesting to occur only on the last day of the quarter; (b) Mr. Goldfinger is employed by the Company on that date; and (c) that notwithstanding the foregoing, such shares will not vest until the first anniversary of the grant date. In the event that the Company elects from time to time during the term of employment to award to all of its senior management and executives options to purchase shares of the Company’s stock pursuant to any stock option plan or similar program, Mr. Goldfinger is entitled to participate in any such stock option plan or similar program on a basis consistent with the participation of other senior management and executives of the Company.
Under the employment agreements, Mr. Segal is prohibited for the longer of (i) the four-year anniversary of the effective date of the Merger, and (ii) the two-year anniversary of18 months after the date on which his employment terminatesis terminated for any reason, and Mr. GoldfingerHilario is prohibited for 12 months after termination for any reason from (a) engaging in any competing businessCompeting Business within any geographic area where the Company or its subsidiaries conducts, or plans to conduct, business at the time of his termination, (b) persuading or attempting to persuade any customer, prospective customerCustomer, Prospective Customer or supplierSupplier to cease doing business with an interested partyInterested Party or reduce the amount of business it does with an interested party,Interested Party, (c) persuading or attempting to persuade any service providerService Provider to cease providing services to an interested party, andInterested Party, or (d) soliciting for hire or hiring for himself or for any third party any service providerService Provider unless such person’s employment was terminated by the Company or any of its affiliates or such person responded to a “blind advertisement.”
Each employment agreement terminates uponadvertisement”. All capitalized terms in this paragraph have the earliest to occur of: (i)respective meanings set forth in the death of the employee; (ii) a termination by the Company by reason of the disability of the employee; (iii) a termination by the Company with or without cause; (iv) a termination by the employee with or without good reason; (v) a termination of the agreement by reasons of a change of control of the Company; and (vi) expiration of the agreement.
Set forth below is a description of the potential payments we will need to make upon termination of Messrs. Segal’s or Goldfinger’s employment as provided in their employment agreements.
Hilario Agreement.
Termination
by us for Cause or by Executive Without Good ReasonIf the executive’s employmentHilario Agreement is terminated by the Company for cause, (as defined in the agreement), or by the executive without good reason, (as definedor due to his death or disability, the Company must pay him or his estate any earned but unpaid salary, any unpaid portion of the bonus from the prior year, any accrued vacation time, any vested benefits he may have under any employee benefit plan, and any unpaid expense reimbursement accrued through the date of termination (the “Hilario Accrued Obligations”).
If the Hilario Agreement is terminated (i) by the Company without cause or (ii) by the executive for good reason, the Company must pay Mr. Hilario: (1) the Hilario Accrued Obligations earned through the date of termination;(2) an amount of his base salary equal to his current base salary over an 18 month period, such payments to be made in accordance with Company’s normal payroll practices, less all customary and required taxes and employment-related deductions; (3) an amount of his incentive compensation equal to a monthly amount equal to one-twelfth of the target bonus for an 18 month period, based on year-to-date performance as determined by the Board in good faith, payable when other senior executives receive their annual bonuses for such year, and in no event later than March 15 of the year following the year in which the termination occurs (to the extent milestones for such bonus have not yet been agreed upon as of the termination, reference will be made to the milestones established for the prior year); (4) any equity awards that vest over time and are unvested as of the termination date will be accelerated such that the portion of the equity awards that would have vested in the agreement), wefollowing 18 month period will vest as of the termination date; and (5) an amount equal to the “COBRA” premium for as long as Mr. Hilario, and if applicable, Mr. Hilario’s dependents are eligible for COBRA, subject to a maximum of 18 months.
Notwithstanding anything in the Hilario Agreement to the contrary, if Mr. Hilario’s employment is terminated within 24 months following a change of control and upon the fulfillment of certain other conditions, Mr. Hilario is entitled to receive his severance in a lump sum.
Director of Business Development
| | SEGAL AGREEMENT HIGHLIGHTS: | |
| | Employment Agreement Highlights | |
| | Date of Agreement: | | | October 30, 2017 | |
| | Term of Agreement: | | | | |
| | Initial | | | Three Years | |
| | Renewal Term | | | Renewable for one-year terms | |
| | Base Salary: | | | $350,000 | |
| | Prior Salary: | | | $575,000 | |
| | Bonus Rate: | | | 75% | |
| | Separation Highlights: | |
| | Accrued Obligations | |
| | 24 Months of Monthly Salary (paid monthly) | |
| | During the Initial Term = the greater of current monthly salary or the prior monthly salary | |
| | After the Initial Term = current monthly salary | |
| | Pro Rata Bonus Amount for the Year during which the separation takes place | |
Jonathan Segal serves as our Director of Business Development pursuant to an amended and restated employment agreement dated October 30, 2017 (“Segal Agreement”). The Segal Agreement provides for a term of three years, with such term automatically extending for additional one-year periods unless either party provides 90 days written notice prior to the commencement of the renewal term. Mr. Segal initially received an annual base salary of $350,000, and thereafter he is entitled to receive such increases (but no decreases) in his base salary as the Board or compensation committee thereof may approve in its sole discretion from time to time, but not less than annually. In addition, Mr. Segal is eligible to receive incentive compensation for each calendar year during the term of the Segal Agreement in an amount targeted at 75% of his then-effective annual base salary, based in part upon achievement of individual and corporate performance objectives as determined by the Board. Mr. Segal will be eligible to receive a bonus in excess of the target if the Company’s performance exceeds 100% of the targeted goals, and an amount below the target amount will be payable if actual performance equals at least a minimum threshold, each as approved by the Board in consultation with Mr. Segal at the time the annual performance goals are established. Whether Mr. Segal receives incentive compensation, and the amount of any such incentive compensation, will be determined by the Board in its sole discretion, except that any portion of the incentive compensation that the Board determines to be based on targeted goals will be considered non-discretionary and payable based on achievement of such goals. Mr. Segal is eligible to participate in the Company’s 401(k) plan, health plans and other benefits on the same terms as other salaried employees.
Noncompetition; Non-Solicitation
Under the Segal Agreement, for a period of 24 months after the date on which his employment is terminated for any reason, Mr. Segal is prohibited from (a) engaging in any Competing Business within any geographic area where the Company or its subsidiaries conducts, or plans to conduct, business at the time of his termination, (b) persuading or attempting to persuade any Customer, Prospective Customer or Supplier to cease doing business with an Interested Party or reduce the amount of business it does with an Interested Party, (c) persuading or attempting to persuade any Service Provider to cease providing services to an Interested Party, or (d) soliciting for hire or hiring for himself or for any third party any Service Provider unless such person’s employment was terminated by the Company or any of its affiliates or such person responded to a “blind advertisement”. All capitalized terms in this paragraph have the respective meanings set forth in the Segal Agreement.
Termination
If the Segal Agreement is terminated by the Company for cause, or by Mr. Segal without good reason, the Company must pay him any earned but unpaid salary, any unpaid portion of the bonus from the prior year, any accrued vacation time, any vested benefits he may have under any employee benefit plan, and any unpaid expense reimbursement accrued through the date of termination (the
“Accrued“Segal Accrued Obligations”).
Termination by us Without Cause or by Executive for Good Reason
If the
executive’s employmentSegal Agreement is terminated (i) by
usthe Company without cause or (ii) by the executive for good reason,
(as defined inthen the
agreement), then weCompany must pay
the executiveMr. Segal: (1) the
Segal Accrued Obligations earned through the date of
termination,termination; (2) an amount of his base salary equal to
(i) his current base salary
in the case of Mr. Segal over a 24
month period or (ii) his current base salary in the case of Mr. Goldfinger over a 12 month period, such payments to be made in accordance with Company’s normal payroll practices, less all customary and required taxes and employment-related
deductions,deductions; (3)
an amount of his bonus compensation equal to a pro rata portion of the bonus for the year in which the termination occurs, based on year-to-date performance as determined by the Board
ofDirectors in good faith, payable when other senior executives receive their annual bonuses for such year, and in no event later than March 15 of the year following the year in which the termination occurs (to the extent milestones for such bonus have not yet been agreed upon as of the termination, reference will be made to the milestones established for the prior year); and (4) an amount equal to the COBRA“COBRA” premium for as long as the executiveMr. Segal and, if applicable, the executive’sMr. Segal’s dependents are eligible for COBRA, subject to a maximum of 18 months in the case ofmonths.
If Mr.
Segal and 12 months in the case of Mr. Goldfinger. Payments under item (2) – (4) above are sometimes referred to in this section as “Severance.” All unvested Time-Based Options held by the executive will immediately vest in full following termination. The Severance and acceleration of any unvested Time-Based Options is expressly conditioned on the executive’s executing and delivering to the Company of a mutual release of claims.In the agreements, the term “cause” is defined generally as follows: (i) commits a material breach of any material term of the agreement or any material Company policy or procedure of which the executive had prior knowledge; provided that if such breach is curable in not longer than 45 days (as determined by the Board of Directors in its reasonable discretion), the Company shall not have the right to terminate the executive’s employment for cause pursuant hereto unless the executive, having received written notice of the breach from Company specifically citing this breach), fails to cure the breach within a reasonable time; (ii) is convicted of, or pleads guilty or nolo contendere to, a felony (other than a traffic-related felony) or any other crime involving dishonesty or moral turpitude; (iii) willfully engages in illegal conduct or gross misconduct that is materially and demonstrably injurious to the Company; (iv) engages in fraud, misappropriation, dishonesty (or in the case of Mr. Goldfinger, “material dishonesty”) or embezzlement in connection with the business, operations or affairs of Company (including without limitation any business done with clients or vendors); or (v) fails to cure, within 45 days after receiving written notice from Company specifically citing the breach, any material injury to the economic or ethical welfare of Company caused by executive’s gross malfeasance, misfeasance, repeated misconduct or repeated inattention to the executive’s duties and responsibilities under the agreementprovided that, in the case of Mr. Segal only, his cessation of employment shall not be deemed to be for “Cause” unless and until there shall have been delivered to the executive a copy of a resolution duly adopted by the affirmative vote of not less than a majority of the entire membership of the Board of Directors (not including the executive) at an in person meeting of the Board of Directors called and held for such purpose (after reasonable notice is provided to the executive and the executive is given an opportunity, together with counsel, to be heard before the Board of Directors), finding that, in the opinion of the Board of Directors, acting in good faith, a reasonable factual basis exists for the conclusion that executive is guilty of the conduct described in the agreement as “Cause” and specifying the particulars thereof in detail.
In the agreements, the term “good reason” is defined generally as: (i) a significant adverse and non-temporary change, diminution or reduction, for any reason, in the executive’s current authority, title, reporting relationship or duties, excluding for this purpose any action not taken in bad faith and that is remedied by the Company not more than thirty (30) days after receipt of written notice thereof given by executive; (ii) in the case of Mr. Segal only, his removal from the position of Chief Executive Officer of the Company or his removal from or failure to be elected to membership on the Board of Directors; (iii) a reduction in executive’s base salary; (iv) in the case of Mr. Goldfinger only, a material reduction in employee welfare and retirement benefits applicable to the executive, other than any reduction in employee welfare and retirement benefits generally applicable to Company employees or as equally applied to executives in connection with an extraordinary decline in the Company’s fortunes; (v) a reduction in the indemnification protection provided to the executive in the agreement or within the Company’s organizational documents; (vi) the Board of Directors continuing, after reasonable notice from executive, to direct executive either: (I) to take any action that in the executive’s good-faith, considered and informed judgment violates any applicable legal or regulatory requirement, or (II) to refrain from taking any action that in the executive’s good-faith, considered and information judgment is mandated by any applicable legal or regulatory requirement; (vii) the Board of Directors requiring the executive to relocate outside of the New York City metropolitan area (exclusive of incidental travel for or on behalf of the Company); or (viii) a material breach by the Company of the agreement. If circumstances arise giving the executive the right to terminate the agreement for “Good Reason,” the executive must within 90 days notify the Company in writing of the existence of such circumstances, and the Company has 45 days from receipt of such notice within which to investigate and remedy the circumstances, after which 45 days the executive has an additional 45 days within which to
exercise the right to terminate for “Good Reason.” If the executive does not timely do so the right to terminate for “Good Reason” lapses and is deemed waived, and the executive will not thereafter have the right to terminate for “Good Reason” unless further circumstances occur giving rise independently to a right to terminate for “Good Reason.”
Termination due to Death or Disability
If the executive’sSegal’s employment is terminated as a result of his death or disability, wethe Company must pay him or his estate, as applicable, (1) the Segal Accrued Obligations earned through the date of termination and (2) a portion of the bonus that the executivehe would have been eligible to receive for days employed by the Company in the year in which the executive’shis death or disability occurs, determined by multiplying (x) the bonus based on the actual level of achievement of the applicable performance goals for such year, by (y) a fraction, the numerator of which is the number of days up to and including the date of termination, and the denominator of which is 365, such amount to be paid in the same time and the same form as the bonus otherwise would be paid. In the event of the death or disability, of the executive, vested options held by the executiveMr. Segal may be exercised by him or his survivors, as applicable, to the extent exercisable at the time of death for a period of one year from the time of death or disability.
For purposes of the agreement, “disability” shall mean the absence of the executive from the executive’s duties with the Company on a full-time basis for 180 consecutive business days as a result of incapacity due to mental or physical illness, which is determined to be total and permanent by a physician selected by the Company or its insurers and reasonably acceptable to the executive or the executive’s legal representative.
Termination upon a Change of Control
In the event the executive’s
If Mr. Segal’s employment is terminated within
twelve (12)12 months following a
Changechange in
Control (as defined below) bycontrol and upon the fulfillment of certain other conditions, then (1) notwithstanding the vesting and exercisability schedule in any stock option agreement between the Company
without Cause or by the executive (with or without Good Reason), then (1)and Mr. Segal, all unvested stock options
then outstanding granted by the Company to
the executive pursuant to such agreement shallMr. Segal will immediately vest and become exercisable and
shall remain exercisable for not less than 360 days
thereafter;thereafter, and (2)
the executive shallMr. Segal will be entitled to receive
the Severance;provided ,however, that in lieu of receiving the severance payments of base salaryhis severance; provided,
for in the agreement, (i) in the case of Mr. Segal, he shall be entitled to receive, within thirty (30) days from termination of employment, a lump sum amount equal to $100 less than three times the executive’s “annualized includable compensation for the base period” (as defined in Section 280G of the Internal Revenue Code of 1986), and (ii) in the case of Mr. Goldfinger, he shall be entitled to receive, within thirty (30) days from termination of employment, a lump sum amount equal to eighteen (18) months of his then-effective base salary and, provided that Mr. Goldfinger has not secured alternate employment by the eighteen (18) month anniversary of his termination of employment, an additional lump sum amount equal to six (6) months of his base salary in effect on the date of termination of employment, paid on the nineteen (19) month anniversary of the date of termination of employment;provided ,further ,however, , that if such lump sum severance payment, either alone or together with other payments or benefits, either cash or non-cash, that the executive has the right to receive from the Company, including, but not limited to, accelerated vesting or payment of any deferred compensation, options, stock appreciation rights or any benefits payable to the executive under any plan for the benefit of employees, would constitute an “excess parachute payment” (as defined in Section 280G of the Internal Revenue Code of 1986), then such lump sum severance payment or other benefit
shallwill be reduced to the largest amount that will not result in receipt by the executive of an excess parachute payment. The determination of the amount of the payment described in this subsection
shallwill be made by the Company’s independent auditors at the sole expense of the Company. For purposes of clarification the value of any options described above will be determined by the Company’s independent auditors using a Black-Scholes valuation methodology.
For purposes of
Chief Financial Officer
Tyler Loy has served as the
agreement, a “Change in Control” shall be deemed to occur (i) when any “person” as defined in Section 3(a)(9) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and as used in Section 13(d) and 14(d) thereof, including a “group” as defined in Section 13(d) of the Exchange Act, but excluding the executive, the Company or any subsidiary or any affiliateChief Financial Officer of the Company
(determinedsince April 1, 2019. Mr. Loy served as
of the date of the agreement) or any employee benefit plan sponsored or maintained by the Company or any subsidiary of the Company (including any trustee of such plan acting as trustee), becomes the “beneficial owner” (as defined in Rule 13(d)(3) under the Exchange Act) of securities of the Company representing 15%or more of the combined voting power of the Company’s then outstanding securities; or (ii) when, during any periodVice President of twenty-four (24) consecutive months,Strategy from September 24, 2018 until April 1, 2019. Effective April 1, 2019. Mr. Loy’s base annual salary was $250,000 and he was eligible to receive a cash bonus for each calendar year of 40% of his base salary plus an amount equal to one week of salary upon the individuals who, at the beginningachievement of such period, constitute the Boardcertain mutually agreed upon objectives. If Mr. Loy’s employment is terminated in connection with a change of Directors (the “Incumbent Directors”) ceasecontrol for anya reason other than death to constitute at least a majority thereof; provided, however, that (x)cause, the mere addition of independent directors solely to satisfy listing criteria of NASDAQ or a registered stock exchange shall not be deemed a ChangeCompany will pay Mr. Loy his salary for 26 weeks following the termination in Control and (y) a director who was not a director at the beginning of such twenty-four (24) month period shall be deemed to have satisfied such twenty-four (24) month requirement (and be an Incumbent Director) if such director was elected by, or on the recommendation of oraccordance with the approval of, at least two-thirds ( 2/3) of the directors who then qualified as Incumbent Directors either actually (because they were directors at the beginning of such twenty-four (24) month period) or through the operation of this proviso; or (iii) the occurrence of a transaction requiring stockholder approval for the acquisition of the Company by an entity other than the Company or a subsidiary or an affiliated company of the Company through purchase of assets, or by merger, or otherwise.
Company’s payroll practices.
Chief
OperatingAdministrative Officer
Alejandro Munoz-Suarez (Former Interim Chief Financial Officer)
Linda Siluk has served as our Chief OperatingAdministrative Officer since April 1, 2019. Before that, she served as our Interim Chief Financial Officer from May 16, 2017. Effective April 1, 2016 to April 21, 2017. Mr. Munoz-Suarez2019, Ms. Siluk’s base annual salary as Chief Administrative Officer was an at-will-employee. Mr. Munoz-Suarez received an initial annual base salary of $365,000$230,000, and a one-time sign-on bonus of $50,000. In addition, Mr. Munoz-Suarezshe was eligible to receive an annuala cash bonus infor each calendar year targeted at 40% of her base salary plus an amount targeted at fifty percent (50%)equal to one week of Mr. Munoz-Suarez’s then-effective annual base salary, based in part upon achievement of individual and corporate performance objectives as determined by the BoardBoard. If Ms. Siluk’s employment is terminated in connection with a change of Directors. On April 1, 2016, Mr. Munoz-Suarez was granted 250,000 non-qualified stock options to purchase 250,000control for a reason other than cause, the Company will pay Ms. Siluk her salary for 26 weeks following the termination in accordance with the Company’s payroll practices.
Outstanding Equity Awards at Fiscal Year-End
| | | | Option Awards | | | Stock Awards | |
| Name | | | Number of
Securities
Underlying
Unexercised
Options
Exercisable | | | Number of
Securities
Underlying
Unexercised
Options
Unexercisable | | | Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options | | | Option
Exercise
Price | | | Option
Exercise
Expiration | | | Number of
Shares or
Units of
Stock that
Have Not
Vested | | | Market
Value of
Shares or
Unites of
Stock that
Have Not
Vested | | | Equity
Incentive
Plan
Awards:
Number of
Unearned
Shares,
Units or
Other
Rights That
Have Not
Vested | | | Equity
Incentive
Plan
Awards:
Market or
Payout
Value of
Unearned
Shares,
Units or
Other
Rights That
Have Not
Vested | |
| Emanuel P. N. Hilario | | | | | 200,000(1) | | | | | | 100,000 | | | | | | — | | | | | $ | 1.42 | | | | | | 10/30/2027 | | | | | | 163,678(6) | | | | | $ | 595,788 | | | | | | | | | | | | | | |
| | | | | | — | | | | | | 68,000(2) | | | | | | — | | | | | $ | 2.99 | | | | | | 02/18/2029 | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Jonathan Segal | | | | | 397,0008(3) | | | | | | — | | | | | | — | | | | | $ | 5.00 | | | | | | 10/16/2023 | | | | | | 9,133(7) | | | | | $ | 33,244 | | | | | | 150,000(10) | | | | | $ | 546,000 | | |
| | | | | | 79,402(4) | | | | | | — | | | | | | — | | | | | $ | 5.00 | | | | | | 10/16/2023 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| | | | | | — | | | | | | — | | | | | | 500,000(5) | | | | | $ | 2.73 | | | | | | 04/08/2026 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| Tyler Loy | | | | | — | | | | | | — | | | | | | — | | | | | | | | | | | | | | | | | | 47,986(8) | | | | | $ | 174,669 | | | | | | | | | | | | | | |
| Linda Siluk | | | | | — | | | | | | — | | | | | | — | | | | | | | | | | | | | | | | | | 56,033(9) | | | | | $ | 194,995 | | | | | | | | | | | | | | |
(1)
The option for 300,000 shares of our common stock, with 125,000 vestingvests ratably over three years beginning October 30, 2017.
(2)
The option for 68,000 shares vests ratably over three years beginning February 18, 2019.
(3)
The option for 511,052 shares vested ratably over five years beginning on April 1, 2017 and 125,000 vesting over five years beginningOctober 16, 2013. However, on April 1, 2017February 27, 2016, 114,044 of the option shares were forfeited upon the expiration of the Company’s publicly traded warrants.
(4)
Up to 20% of the option for 511,052 shares will vest upon the achievement of certain annual
targeted milestones. Mr. Munoz-Suarez resigned fromperformance milestones to be set by the Company
effective April 21, 2017. Following his departure,each year for a five-year period commencing with the
role2014 fiscal year. However, on February 27, 2016, 114,044 of
Chief Operating Officer will be temporarily eliminated as partthe option shares were forfeited upon the expiration of the Company’s
increased emphasis on licensing growth opportunities.Senior Vice Presidentpublicly traded warrants.
(5)
The option for 500,000 shares will vest upon the last day of
Marketing, Sales and EventsCeleste Fierro has served as our Senior Vice President of Marking, Sales and Events since February 19, 2014. Ms. Fierro is an at-will-employee. For the years ended December 31, 2014 and December 31, 2015, Ms. Fierro’s annual salary was $250,000 and she received a bonus of $4,808. On June 5, 2014, Ms. Fierro received 250,000 non-qualified stock options to purchase 250,000 sharesquarter in which the closing price of our common stock reaches $5.00, $5.50 and $6.00 for ten consecutive trading days in the quarter, with 33% vesting at each respective price.
(6)
The RSUs for 150,600 shares vest ratably over three years beginning on February 18, 2019 and the RSU for 13,078, granted on March 29, 2019, vests on its one-year anniversary.
(7)
The RSUs for 9,133 shares granted on March 29, 2019, vests on the one-year anniversary of grant.
(8)
The RSUs for 40,000 shares vests ratably over five years beginning on June 5, 2015. On May 11, 2016, Ms. Fierro’s annual salary was raised to $275,000November 8, 2018. The RSUs for 15,000 shares vest ratably over three years beginning on March 26, 2019 and the RSUs for 986, granted on March 29, 2017, she received a one-time discretionary bonus of $17,0672019 vest on its one-year anniversary.
(9)
The RSUs for
her performance in overseeing certain catering events, which increased sales of the Company. In addition, on April 8, 2016, Ms. Fierro was granted 125,000 restricted stock units vesting35,000 shares vests ratably over five years beginning on
April 8,May 16, 2017.
2013 Employee, Director The RSUs for 30,000 shares vest ratably over five years beginning on March 26, 2019 and Consultant Equity Incentive Plan
In October 2013, our Board of Directors approved the 2013 Plan. Unless sooner terminated by our Board of Directors or our stockholders,RSUs for 5,033, granted on March 29, 2019 vest on its one-year anniversary.
(10)
The RSUs for 100,000 shares will vest upon the
2013 Plan will expire on October 16, 2023. Under our 2013 Plan, we may grant incentive stock options, non-qualified stock options, restricted stock grants and other stock based awards to employees, consultants and directors who, in the opinionlast day of the
Board of Directors, arequarter in
a position to make a significant contribution to our long-term success. The purpose of these awards is to attract and retain key individuals, further align employee and stockholder interests, and to closely link compensation with Company performance. The 2013 Plan provides an essential component ofwhich the
total compensation package, reflecting the importance that we place on aligning the interests of key individuals with those of our stockholders. All employees, directors and consultants of the Company and its affiliates are eligible to participate in the 2013 Plan.The maximum number of sharesclosing price of our common stock that may be delivered in satisfaction of awards under the 2013 Plan is 4,773,922 shares. This number is subject to adjustmentreaches $5.00, $5.50 and $6.00 for ten consecutive trading days in the event of a stock split, stock dividend, combination, recapitalization or other change in our capitalization.
Shares of our common stock to be issued under the 2013 Plan may be authorized but unissued shares of our common stock or previously issued shares acquired by us. Any shares of our common stock underlying awards that otherwise expire, terminate, or are forfeited prior to the issuance of stock will again be available for issuance under the 2013 Plan.
quarter, with 33% vesting at each respective price. Stock Options. Stock options granted under the 2013 Plan may either be incentive stock options, which are intended to satisfy the requirements of Section 422 of the Code, or non-qualified stock options, which are not intended to meet those requirements. Incentive stock options may be granted to employees of the Company and its affiliates. Non-qualified options may be granted to employees, directors and consultants of the Company and its affiliates. The exercise price of a stock option may not be less than 100% of the fair market value of our common stock on the date of grant. If an incentive stock option is granted to an individual who owns more than 10% of the combined voting power of all classes of our capital stock, the exercise price may not be less than 110% of the fair market value of our common stock on the date of grant and the term of the option may not be longer than five years.
Award agreements for stock options include rules for exercise of the stock options after termination of service. Options may not be exercised unless they are vested, and no option may be exercised after the end of the term set forth in the award agreement. Generally, stock options will be exercisable for three months after termination of service for any reason other than Cause, except in the case of death or total and permanent disability in which such options may be exercised for 12 months after termination of service.
Restricted Stock. Restricted stock is common stock that is subject to restrictions, including a prohibition against transfer and a substantial risk of forfeiture, until the end of a “restricted period” during which the grantee must satisfy certain vesting conditions. If the grantee does not satisfy the vesting conditions by the end of the restricted period, the restricted stock is forfeited.
During the restricted period, the holder of restricted stock has the rights and privileges of a regular stockholder, except that the restrictions set forth in the applicable award agreement apply. For example, the holder of restricted stock may vote and receive dividends on the restricted shares; but he or she may not sell the shares until the restrictions are lifted.
Other Stock-Based Awards. The 2013 Plan also authorizes the grant of other types of stock-based compensation including, but not limited to stock appreciation rights, phantom stock awards, and stock unit awards.
Plan Administration. The 2013 Plan will be administered by our Compensation Committee. Our Compensation Committee will have full power and authority to determine the terms of awards granted pursuant to this plan, including:
which employees, directors and consultants shall be granted options and other awards;
the number of shares subject to each award;
the vesting provisions of each award;
the termination or cancellation provisions applicable to awards; and
all other terms and conditions upon which each award may be granted in accordance with the 2013 Plan.
In addition, the administrator may, in its discretion, amend any term or condition of an outstanding award, provided (i) such term or condition as amended is permitted by the 2013 Plan, and (ii) any such amendment shall be made only with the consent of the participant to whom such award was made, if the amendment is adverse to the participant; and provided, further, that without the prior approval of our stockholders, stock awards will not be repriced, replaced or regranted through cancellation or by lowering the exercise price of a previously granted award.
Stock Dividends and Stock Splits. If our common stock shall be subdivided or combined into a greater or smaller number of shares or if we issue any shares of common stock as a stock dividend, the number of shares of our common stock deliverable upon exercise of an option issued or upon issuance of an award shall be appropriately increased or decreased proportionately, and appropriate adjustments shall be made in the purchase price per share to reflect such subdivision, combination or stock dividend.
29
Corporate Transactions. Upon a merger or other reorganization event, our Board of Directors, may, in its sole discretion, take any one or more of the following actions pursuant to our 2013 Plan, as to some or all outstanding awards:
provide that all outstanding options shall be assumed or substituted by the successor corporation;
upon written notice to a participant provide that the participant’s unexercised options will terminate immediately prior to the consummation of such transaction unless exercised by the participant;
in the event of a merger pursuant to which holders of our common stock will receive a cash payment for each share surrendered in the merger, make or provide for a cash payment to the participants equal to the difference between the merger price times the number of shares of our common stock subject to such outstanding options, and the aggregate exercise price of all such outstanding options, in exchange for the termination of such options; or
provide that outstanding awards shall be assumed or substituted by the successor corporation, become realizable or deliverable, or restrictions applicable to an award will lapse, in whole or in part, prior to or upon the merger or reorganization event.
Notwithstanding the foregoing, in the event such merger or other reorganization event also constitutes a change of control under the terms of the 2013 Plan, then all stock options outstanding on the date of the merger or other reorganization event shall be deemed vested at such time.
Under the terms of the 2013 Plan, a change of control means the occurrence of any of the following events: (i) any “Person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) becomes the “Beneficial Owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 50% or more of the total voting power represented by the Company’s then outstanding voting securities (excluding for this purpose any such voting securities held by the Company or its affiliates or by any employee benefit plan of the Company) pursuant to a transaction or a series of related transactions which the Board of Directors does not approve; (ii) (A) a merger or consolidation of the Company whether or not approved by the Board of Directors, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or the parent of such corporation) more than 50% of the total voting power represented by the voting securities of the Company or such surviving entity or parent of such corporation, as the case may be, outstanding immediately after such merger or consolidation; or (B) the sale or disposition by the Company of all or substantially all of the Company’s assets in a transaction requiring stockholder approval; or (iii) a change in the composition of the Board of Directors, as a result of which fewer than a majority of the directors are Incumbent Directors. “Incumbent Directors” are defined under the 2013 Plan as directors who either (A) were directors of the Company as of October 16, 2013, (B) are elected, or nominated for election, to the Board of Directors with the affirmative votes of at least a majority of the Incumbent Directors at the time of such election or nomination (but shall not include an individual whose election or nomination is in connection with an actual or threatened proxy contest relating to the election of directors to the Company) or (C) were appointed in connection with the consummation of the Merger.
Amendment and Termination. The 2013 Plan may be amended by our stockholders. It may also be amended by our Board of Directors, provided that stockholder approval will be required for any amendment to the 2013 Plan to the extent such approval is required by law, including the Internal Revenue Code of 1986, as amended, or applicable stock exchange requirements. Any amendment approved by the Board of Directors which the Board of Directors determines is of a scope that requires stockholder approval shall be subject to obtaining such stockholder approval. No such amendment may adversely affect the rights under any outstanding award without the holder’s consent. In addition, if any stock market on which the Company’s common stock is traded amends its corporate governance rules so that such rules no longer require stockholder approval of “material amendments” of equity compensation plans, then, from and after the effective date of such an amendment to such rules, no amendment of the 2013 Plan which (i) materially increases the number of shares to be issued under the 2013 Plan (other than to reflect a reorganization, stock split, merger, spin off or similar transaction); (ii) materially increases the benefits to participants, including any
material change to: (a) permit a repricing (or decrease in exercise price) of outstanding options, (b) reduce the price at which awards may be offered, or (c) extend the duration of the 2013 Plan; (iii) materially expands the class of participants eligible to participate in the 2013 Plan; or (iv) expands the types of awards provided under the 2013 Plan shall become effective unless stockholder approval is obtained.
On April 8, 2016, based upon the recommendation of our Compensation Committee, our Board of Directors adopted Amendment No. 1 to the 2013 Plan (the “Amendment”). The Amendment to the 2013 Plan was adopted to revise and clarify the effect of certain corporate transactions on awards granted (or to be granted) under the 2013 Plan.
Outstanding Equity Awards at Fiscal Year-End
The following table provides information as to equity awards held by each of the named executive officers of the Company at December 31, 2016.
| | Option Awards | | Stock Awards | |
| Name | Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable | | Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable | | | Equity
Incentive
Plan Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options
(#) | | | Option
Exercise
Price
($) | | Option
Expiration
Date | | Number of Shares or Units of Stock That Have Not Vested (#) | | Market Value of Shares or Units of Stock That Have Not Vested ($) | | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | | | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) | |
| Jonathan Segal | | 238,205 | | | 158,803 | (1) | | | — | | | $ | 5.00 | | 10/16/2023 | | | — | | | — | | | 150,000 | (11) | | $ | 333,000 | |
| | | — | | | — | | | | 158,803 | (6) | | $ | 5.00 | | 10/16/2023 | | | | | | | | | | | | | | |
| | | | | | | | | | 500,000 | (7) | | $ | 2.73 | | 4/8/2026 | | | | | | | | | | | | | | |
| Samuel Goldfinger | | 119,102 | | | 79,402 | (2) | | | — | | | $ | 5.00 | | 10/16/2023 | | | — | | | — | | | 75,000 | (12) | | $ | 166,500 | |
| | | 9,925 | | | — | | | | 89,327 | (8) | | $ | 5.00 | | 10/16/2023 | | | | | | | | | 75,000 | (13) | | $ | 166,500 | |
| | | — | | | — | | | | 125,000 | (9) | | $ | 2.73 | | 4/8/2026 | | | | | | | | | | | | | | |
| | | — | | | 125,000 | (3) | | | — | | | | 2.73 | | 4/8/2026 | | | | | | | | | | | | | | |
| Alejandro Munoz-Suarez | | — | | | 125,000 | (4) | | | — | | | $ | 2.83 | | 4/1/2026 | | | | | | | | | | | | | | |
| | | — | | | — | | | | 125,000 | (10) | | $ | 2.83 | | 4/1/2026 | | | | | | | | | | | | | | |
| Celeste Fierro | | 100,000 | | | 150,000 | (5) | | | — | | | $ | 4.85 | | 06/05/2024 | | | | | | | | | 125,000 | (14) | | $ | 277,500 | |
(1) | The option vests ratably over five years beginning on October 16, 2014. Pursuant to the time-based stock options granted on October 16, 2013, under the 2013 Plan, 114,044 unexercised options were forfeited on February 27, 2016, upon the expiration of the Company’s publicly traded warrants. |
(2) | The option vests ratably over five years beginning on October 16, 2014. Pursuant to the time-based stock options granted on October 16, 2013, under the 2013 Plan, 57,022 unexercised options were forfeited on February 27, 2016, upon the expiration of the Company’s publicly traded warrants. |
| |
(3) | The option vests ratably over two years beginning on April 8, 2018. |
| |
(4) | The option vests ratably over five years beginning on April 1, 2017. |
(5) | The option vests ratably over five years beginning on June 5, 2015. |
(6) | Up to 20% of the option will vest upon the achievement of certain annual performance milestones to be set by the Company each year for a five year period commencing with the 2014 fiscal year. Pursuant to the performance-based stock options granted on October 16, 2013, under the 2013 Plan, 114,044 unexercised options were forfeited on February 27, 2016, upon the expiration of the Company’s publicly traded warrants. |
| |
(7) | The option will vest upon the last day of the quarter in which the closing price of our common stock reaches $5.00, $5.50 and $6.00 for ten consecutive trading days in the quarter, with 33% vesting at each respective price, no earlier than April 8, 2017. |
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(8) | Up to 20% of the option will vest upon the achievement of certain annual performance milestones to be set by the Company each year for a five year period commencing with the 2014 fiscal year. Pursuant to the performance-based stock options granted on October 16, 2013, under the 2013 Plan, 57,022 unexercised options were forfeited on February 27, 2016, upon the expiration of the Company’s publicly traded warrants.
|
| |
(9) | The option will vest upon the last day of the quarter in which the closing price of our common stock reaches $5.00, $5.50 and $6.00 for ten consecutive trading days in the quarter, with 33% vesting at each respective price, no earlier than April 8, 2017. |
| |
(10) | The option will vest upon the achievement of certain annual targeted milestones as determined by our Board of Directors. |
(11) | The restricted stock unit will vest upon the last day of the quarter in which the closing price of our common stock reaches $5.00, $5.50 and $6.00 for ten consecutive trading days in the quarter, with 33% vesting at each respective price, no earlier than April 8, 2017. |
| |
(12) | The restricted stock unit will vest ratably over two years beginning on April 8, 2018. |
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(13) | The restricted stock unit will vest upon the last day of the quarter in which the closing price of our common stock reaches $5.00, $5.50 and $6.00 for ten consecutive trading days in the quarter, with 33% vesting at each respective price, no earlier than April 8, 2017. |
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(14) | The restricted stock unit will vest ratably over five years beginning on April 8, 2017. |
Compensation of Directors
Each non-employee director in 2016 received fully vested stock grants equal to $40,000 at the fair market value on August 11, 2016, and $40,000 in director fees for the fiscal year ended December 31, 2016, in accordance with the 2013 Plan. For the fiscal year ending December 31, 2016, the annual payment of directors’ fees was $80,000 per annum payable half in cash and half in options or restricted stock. The exercise price of options or restricted stock will equal or exceed the fair market value of the common stock on the date of grant and shall vest in full on such date. The Company will reimburse all directors for reasonable expenses incurred traveling to and from Board of Directors meetings. The Company does not pay employee directors any compensation for services as a director. Non-employee directors who serve as chairman of committees will earn an additional $10,000 per annum for such services.
| Name | Fees Earned
or Paid in
Cash
($)(1) | | Restricted
Stock
Awards
($)(2) | | Total
($) | |
| Michael Serruya | $ | 50,000 | | $ | 40,000 | | $ | 90,000 | |
| Richard E. Perlman(3) | $ | 50,000 | | $ | 40,000 | | $ | 90,000 | |
| Nicholas Giannuzzi | $ | 40,000 | | $ | 40,000 | | $ | 80,000 | |
| Eugene M. Bullis | $ | 50,000 | | $ | 40,000 | | $ | 90,000 | |
(1) | Each non-employee director in 2016 was paid a directors’ fee of $40,000 for the fiscal year ended December 31, 2016. |
(2) | Each non-employee director in 2016 received fully vested stock grants of 15,267 shares of common stock of the Company at the fair market value on August 11, 2016 in accordance with the 2013 Plan. The amounts in the “Restricted Stock Awards” column reflect the aggregate grant date fair value of restricted stock granted during the year computed in accordance with the provisions of FASB ASC Topic 718. For a description of these restricted stock awards, see the first paragraph of this “Compensation of Directors” section. |
| |
(3) | On April 20, 2017, Richard E. Perlman resigned from his position as a member of the Board of Directors.
|
Family Relationships
There are no family relationships among our directors or executive officers.
Involvement in Certain Legal Proceedings
To our knowledge, there have been no events under any bankruptcy act, no criminal proceedings and no federal or state judicial or administrative orders, judgments or decrees or findings, no violations of any federal or state securities law, and no violations of any federal commodities law material to the evaluation of the ability and integrity of any director (existing or proposed) or executive officer (existing or proposed) of the Company during the past ten (10) years.
EQUITY COMPENSATION PLAN INFORMATION
The following table sets forth information as of December 31, 2016,2019, with respect to compensation plans under which equity securities of the Company are authorized for issuance. For a description
| Plan Category | | | Number of
securities to be
issued upon
exercise of
outstanding
options, warrants
or rights
(a) | | | Weighted-average
exercise price
of outstanding options,
warrants
and rights
(b) | | | Number of
securities
remaining
available for
future issuance
under equity
compensation
plans
(excluding
securities
reflected in
column (a))
(c)(1) | |
| Equity compensation plans approved by security holders | | | | | 2,761,519 | | | | | $ | 2.90 | | | | | | 2,583,283 | | |
| Equity compensation plans not approved by security holders | | | | | — | | | | | | — | | | | | | — | | |
(1)
In addition to issuing securities upon the exercise of
the terms of the Company’s 2013 Plan, please see “Executive Compensation — 2013 Employee, Directoroptions, warrants or rights, under our 2019 Amended and
ConsultantRestated Equity Incentive
Plan.”| Plan Category | Number of
securities to be
issued upon exercise
of outstanding
options, warrants
and rights | | Weighted-average
exercise price
of outstanding options, warrants
and rights | | Number of
securities remaining
available for
future issuance
under equity compensation plans
(excluding securities
reflected in
column (a)) | |
| Equity compensation plans approved by security holders | | 2,573,262 | | $ | 3.85 | | | 2,200,730 | |
| Equity compensation plans not approved by security holders — | | — | | | — | | | — | |
Plan, we may grant stock (with our without restrictions) and other stock-based awards to employees, consultants and directors.
REPORT OF AUDIT COMMITTEE
The Audit Committee of the Board,
of Directors, which consists entirely of directors who meet the independence and experience requirements of The NASDAQ Stock Market, has furnished the following
report:report.
The Audit Committee assists the Board of Directors in overseeing and monitoring the integrity of our financial reporting process, compliance with legal and regulatory requirements and the quality of internal and external audit processes. This committee’sThe Audit Committee’s role and responsibilities are set forth in ourthe charter adopted by the Board, of Directors, which is available on our website atwww.togrp.com. This committeeThe Audit Committee reviews and reassesses our charter annually and recommends any changes to the Board of Directors for approval. The Audit Committee is responsible for overseeing our overall financial reporting process, and for the appointment, compensation, retention, and oversight of the work of Grant Thornton LLP.Plante Moran, P.C. In fulfilling its responsibilities for the financial statements for fiscal year December 31, 2016,2019, the Audit Committee took the following actions: •
Reviewed and discussed the audited financial statements for the fiscal year ended December 31, 20162019 with management and Grant Thornton LLP,Plante Moran, P.C., our independent registered public accounting firm;
| • | Discussed with Grant Thornton LLP the matters required to be discussed in accordance with Auditing Standard No. 16 — Communications with Audit Committees; and |
•
Discussed with Plante Moran, P.C. the matters required to be discussed in accordance with Auditing Standard No. 1301, Communications with Audit Committees; and
•
Received written disclosures and the letter from Grant Thornton LLPPlante Moran, P.C. regarding its independence as required by applicable requirements of the Public Company Accounting Oversight Board, regarding Grant Thornton LLP communications with the Audit Committee and the Audit Committee further discussed with Grant Thornton LLPPlante Moran, P.C. their independence.
The Audit Committee also considered the status of pending litigation, taxation matters and other areas of oversight relating to the financial reporting and audit process that the committee determined appropriate.
Based on the Audit Committee’s review of the audited financial statements and discussions with management and
Grant Thornton LLP,Plante Moran, P.C., the Audit Committee recommended to the Board
of Directors that the audited financial statements be included in our Annual Report on Form 10-K, for the fiscal year ended December 31,
20162019 for filing with the SEC.
| Members of The ONE Group Hospitality, Inc. |
| Audit Committee |
| |
| Eugene M. Bullis |
| Richard E. Perlman (former member) |
| Michael Serruya |
Members of The ONE Group Hospitality, Inc.Audit Committee Eugene M. Bullis
Michael Serruya
Dimitrios Angelis
DELINQUENT SECTION 16(a)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCEREPORTS
Section 16(a) of the Securities Exchange Act of 1934
as amended (the “Exchange Act”), requires our directors, executive officers and beneficial owners of more than 10% of our common stock to file with the SEC initial reports of ownership and reports of changes in the ownership of our common stock and other equity securities. Such persons are required to furnish us copies of all Section 16(a) filings.
Based solely upon a review of the copies of the forms furnished to us, our records reflect
that all reports which wereone report required to be filed
in 2019 pursuant to Section 16(a) of the
Securities Exchange Act
of 1934, as amended, werewas not filed on a timely
basis, except that six reports covering six transactions were filed late by Alejandro Munoz-Suarez, Samuel Goldfinger, Jonathan Segal and Celeste Fierro.CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS
Mr. Segal is the Chief Executive Officer, a director and a principal stockholder of the Company. As of April 28, 2017, Mr. Segal beneficially owned approximately 29% of our issued and outstanding common stock.
Related Party Indebtedness
On October 20, 2011, we, and our subsidiaries One 29 Park Management, LLC, STK — Las Vegas, LLC and STK Atlanta, LLC, entered into a credit agreement with Herald National Bank (now BankUnited, N.A.)basis.. The delinquent Form 4 for a revolving credit linepurchase of upshares was completed on February 13, 2020 for Tyler Loy, the Company’s Chief Financial Officer to $3,000,000.00. We pledged collateral securing our and the other borrowers’ obligations to Herald National Bank (now BankUnited, N.A.) under the loan agreement, including the pledge of our equity interests in the other borrowers. Interest on amounts borrowed under the agreement accrues and is payable onreport a monthly basis at an annual rate equal to the greater of (i) the prime rate plus 1.75% or (ii) 5.0% and is payable monthly in arrears. Principal is repayable in nine consecutive monthly payments beginning on the first day of the fourth month following the date of each advance under the credit agreement. In connection with our entering into the credit agreement, Mr. Segal, RCI II, Ltd. and Talia, Ltd each entered into subordination agreements with Herald National Bank (now BankUnited, N.A.). In addition, Mr. Segal personally guaranteed this loan from Herald National Bank (now BankUnited, N.A.), and in exchange, we agreed to pay him a 3% annual “guaranty fee.” On January 24, 2013, the parties entered into Amendment No. 1 to the credit agreement, which extended the commitment period under the agreement until April 30, 2015 and the final maturity date until April 30, 2015, increased the commitment under the agreement to $5,000,000.00, and added additional subsidiaries as borrowers. As of December 31, 2013, the amounts borrowed by us that were outstanding under this line of credit were $4,316,865. On October 15, 2013, we entered into an amendment to the credit facility whereby BankUnited agreed, upon effectiveness of the Merger, to the release and termination of the Jonathan Segal guarantee and pledge, certain subordination agreements of Jonathan Segal and related entities and the release of the assignment of the proceeds of the key-man life insurance policy on the life of Mr. Segal. The amendment also imposed certain post-closing obligations on us, including executing a guarantee in favor of BankUnited unconditionally guaranteeing all of the obligations of the borrowers and the pledge of all of the membership interests of One Group owned by the Company. This post-closing obligation was met on October 25, 2013 when we entered into the Pledge Agreement and Guarantee Agreement with BankUnited, N.A. On June 3, 2014, we entered into Amendment No. 3 to the credit agreement to adjust the commitment termination date to October 31, 2014 and the maturity date to October 31, 2015, on August 6, 2014, we entered into Amendment No. 4 and Addendum to the credit agreement to, among other things, increase available borrowings under the credit agreement to $9.1 million, as well as update certain definitions, add additional subsidiaries as borrowers, remove the advance ratio covenant and add a debt service coverage ratio calculation and on October 31, 2014, we entered into Amendment No. 5 and Addendum to the credit agreement to add one additional subsidiary as a borrower. On December 17, 2014, we entered into a Term Loan Agreement with BankUnited, N.A. in the amount of $7,475,000 maturing December 1, 2019 (the “Term Loan Agreement”). The Term Loan Agreement replaced the existing credit agreement which was terminated and the aggregate principal amount of the existing loans outstanding of $6,395,071 was converted into the Term Loan Agreement. On June 2, 2015, we entered into a second term loan agreement (“Second Term Loan Agreement”) with BankUnited, N.A., wherein BankUnited, N.A. agreed to make multiple advances to the Borrowers in the aggregate principal amount of up to $6,000,000 maturing on September 1, 2020. The amounts outstanding under the Term Loan Agreement and the Second Term Loan Agreement as of April 28, 2017, are approximately $4,500,000 and $5,000,000 respectively.
Lease Guarantees
Mr. Segal is a limited personal guarantor of the leases for the STK Miami premises with respect to certain covenants under the lease relating to construction of the new premises and helping the landlord obtain a new liquor license for the premises in the event of termination of the lease. Mr. Segal is a limited personal guarantor of the leases for the Bagatelle New York premises with respect to JEC II, LLC’s payment and performance under the lease.
Personal Interests in Subsidiaries
Mr. Segal currently owns 85% of Hip Hospitality LLC, which owns 50% of Bagatelle America, LLC (“Bagatelle America”). Mr. Giannuzzi also currently owns 5% of Bagatelle America. Bagatelle America is the Manager of our Bagatelle Little West 12th LLC subsidiary, which owns and operates our Bagatelle — NY restaurant. As Manager, Bagatelle America receives an annual management fee of 5% of the Adjusted Gross Revenue (as defined in the management agreements with each subsidiary). Bagatelle America is also the holder of the trademark for “Bagatelle,” which it licenses royalty free to Bagatelle La Cienega, LLC and Bagatelle Little West 12th LLC.
Mr. Segal also owns 100% of TGF Holdings, LLC, which owns 10% of W15 Properties, LLC. W15 Properties, LLC is a holding company for the property that currently accommodates the 408 Venture.
Related Party Services
Prior to the Merger, Nicholas Giannuzzi and Triple GGG, LLC (an entity managed by Nicholas Giannuzzi) were principal stockholders of the Company. Mr. Giannuzzi is the managing partner of The Giannuzzi Group, LLP, a law firm that provides legal services to the Company and its subsidiaries. In 2015 and 2016, we paid The Giannuzzi Group, LLP approximately $547,000 and $503,700 for legal services rendered, respectively. In addition, The Giannuzzi Group, LLP subleases its office space from the Company, for which it currently pays the Company $15,500 per month. The sublease expires in August 2021.
Frederick Contini, Vice President of Development & Construction at the Company, is the owner of Duprat Construction, a general contracting and project management company that provides construction services to the Company and its subsidiaries. In 2015 and 2016, we paid Duprat Construction approximately $12,200,000 and $5,900,000 for construction services, respectively.
Policy for Approval of Related Person Transactions
Our Audit Committee was established in November 2013, is comprised of independent directors and will review and approve all related-party transactions entered into after committee was established.
Pursuant to the written charter of our audit committee, the audit committee is responsible for reviewing and approving, prior to our entry into any such transaction, all transactions in which we are a participant and in which any parties related to us, including our executive officers, our directors, beneficial owners of more than 5% of our securities, immediate family members of the foregoing persons and any other persons whom our Board of Directors determines may be considered related parties under Item 404 of Regulation S-K, has or will have a direct or indirect material interest.
In reviewing and approving such transactions, the audit committee shall obtain, or shall direct our management to obtain on its behalf, all information that the committee believes to be relevant and important to a review of the transaction prior to its approval. Following receipt of the necessary information, a discussion shall be held of the relevant factors if deemed to be necessary by the committee prior to approval. If a discussion is not deemed to be necessary, approval may be given by written consent of the committee. This approval authority may also be delegated to the chairman of the audit committee in some circumstances.
The audit committee or its chairman, as the case may be, shall approve only those related party transactions that are determined to be in, or not inconsistent with, the best interests of us and our stockholders, taking into account all available facts and circumstances as the committee or the chairman determines in good faith to be necessary in accordance with principles of Delaware law generally applicable to directors of a Delaware corporation. These facts and circumstances will typically include, but not be limited to, the benefits of the transaction to us; the impact on a director’s independence in the event the related party is a director, an immediate family member of a director or an entity in which a director is a partner, stockholder or executive officer; the availability of other sources for comparable products or services; the terms of the transaction; and the terms of comparable transactions that would be available to unrelated third parties or to employees generally. No member of the audit committee shall participate in any review, consideration or approval of any related party transaction with respect to which the member or any of his or her immediate family members has an interest.
ELECTION OF DIRECTOR
(Notice Item 1)
On April 25, 2017, the Board of Directors nominated Michael Serruya for election at the annual meeting. The Board of Directors currently consists of five members, classified into three classes as follows: Michael Serruya constitutes a class with a term ending at the upcoming annual meeting; Eugene M. Bullis and Nicholas Giannuzzi constitute a class with a term ending in 2018; and Jonathan Segal and Emanuel Hilario constitute a class with a term which expires in 2019; At each annual meeting of stockholders, directors are elected for a full term of three years to succeed those directors whose terms are expiring.
The Board of Directors has voted to nominate Michael Serruya as a Class I director for election at the annual meeting for a term of three years to serve until the 2020 Annual Meeting of Stockholders, and until his respective successor is elected and qualified subject, however, to such director’s earlier death, resignation, retirement, disqualification or removal. The Class II directors (Eugene M. Bullis and Nicholas Giannuzzi) and the Class III directors (Jonathan Segal and Emanuel Hilario) will serve until the Annual Meetings of Stockholders to be held in 2018 and 2019, respectively, and until their respective successors have been elected and qualified, subject, however, to such directors’ earlier death, resignation, retirement, disqualification or removal.
Unless authority to vote for this nominee is withheld, the shares represented by the enclosed proxy will be votedFOR the election as director of Michael Serruya. In the event that the nominee becomes unable or unwilling to serve, the shares represented by the enclosed proxy will be voted for the election of such other person as the Board of Directors may recommend in that nominee’s place. We have no reason to believe that the nominee will be unable or unwilling to serve as a director.
Required Vote
A plurality of the shares voted for the nominee at the Meeting is required to elect such nominee as a director.
Recommendation
THE BOARD OF DIRECTORS RECOMMENDS THE ELECTION OF MICHAEL SERRUYA AS DIRECTOR, AND PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE VOTED IN FAVOR THEREOF UNLESS A STOCKHOLDER HAS INDICATED OTHERWISE ON THE PROXY.
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
(Notice Item 2)
The Audit Committee has appointed Grant Thornton LLP, as our independent registered public accounting firm, to audit our financial statements for the fiscal year ending December 31, 2017. In connection with the closing of the Merger, Grant Thornton LLP, which was the independent registered public accounting firm for One Group prior to the Merger, became the independent registered public accounting firm for us, and Rothstein Kass was dismissed effective on the date of the closing of the Merger (October 16, 2013), as our independent registered public accounting firm. Grant Thornton LLP audited our financial statements for the fiscal year ended December 31, 2016. We expect that representatives of Grant Thornton LLP will be present at the annual meeting, will be able to make a statement if they so desire, and will be available to respond to appropriate questions.
In deciding to appoint Grant Thornton LLP, the Audit Committee reviewed auditor independence issues and existing commercial relationships with Grant Thornton LLP and concluded that Grant Thornton LLP has no commercial relationship with the Company that would impair its independence for the fiscal year ending December 31, 2017.
The following table presents fees for professional audit services rendered by Grant Thornton LLP for the auditpurchase of the Company’s annual financial statements for the years ended December 31, 2016 and December 31, 2015, and fees billed for other services rendered by Grant Thornton LLP during those periods.
| | 2016 | | 2015 | |
| Audit fees:(1) | $ | 431,972 | | $ | 506,229 | |
| Audit related fees: | | — | | | — | |
| Tax fees: | | — | | | — | |
| All other fees: | | — | | | — | |
| Total | $ | 431,972 | | $ | 506,229 | |
| (1) | Audit fees consisted of audit work performed in the preparation and audit of the annual financial statements, review of quarterly financial statements, as well as work that generally only the independent auditor can reasonably be expected to provide, such as the provision of consents and comfort letters in connection with the filing of registration statements, Current Reports on Form 8-K and related amendments and statutory audits. |
Policycommon stock on Audit Committee Pre-Approval of Audit and Permissible Non-audit Services of Independent Public Accountant
Consistent with SEC policies regarding auditor independence, the Audit Committee has responsibility for appointing, setting compensation and overseeing the work of our independent registered public accounting firm. In recognition of this responsibility, the Audit Committee has established a policy to pre-approve all audit and permissible non-audit services provided by our independent registered public accounting firm.
Prior to engagement of an independent registered public accounting firm for the next year’s audit, management will submit an aggregate of services expected to be rendered during that year for each of four categories of services to the Audit Committee for approval.
1.Audit services include audit work performed in the preparation of financial statements, as well as work that generally only an independent registered public accounting firm can reasonably be expected to provide, including comfort letters, statutory audits, and attest services and consultation regarding financial accounting and/or reporting standards.
2.Audit-Relatedservices are for assurance and related services that are traditionally performed by an independent registered public accounting firm, including due diligence related to mergers and acquisitions, employee benefit plan audits, and special procedures required to meet certain regulatory requirements.
32
3.Tax services include all services performed by an independent registered public accounting firm’s tax personnel except those services specifically related to the audit of the financial statements, and includes fees in the areas of tax compliance, tax planning, and tax advice.
4.Other Fees are those associated with services not captured in the other categories. The Company generally does not request such services from our independent registered public accounting firm.
Prior to engagement, the Audit Committee pre-approves these services by category of service. The fees are budgeted and the Audit Committee requires our independent registered public accounting firm and management to report actual fees versus the budget periodically throughout the year by category of service. During the year, circumstances may arise when it may become necessary to engage our independent registered public accounting firm for additional services not contemplated in the original pre-approval. In those instances, the Audit Committee requires specific pre-approval before engaging our independent registered public accounting firm.
The Audit Committee may delegate pre-approval authority to one or more of its members. The member to whom such authority is delegated must report, for informational purposes only, any pre-approval decisions to the Audit Committee at its next scheduled meeting.
In the event the stockholders do not ratify the appointment of Grant Thornton LLP as our independent registered public accounting firm, the Audit Committee will reconsider its appointment.
Required Vote
The affirmative vote of a majority of the votes cast by the stockholders present or represented by proxy and entitled to vote at the annual meeting affirmatively or negatively at the annual meeting is required to ratify the appointment of the independent registered public accounting firm.
Recommendation
THE BOARD OF DIRECTORS RECOMMENDS A VOTE TO RATIFY THE APPOINTMENT OF GRANT THORNTON LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM, AND PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE VOTED IN FAVOR OF SUCH RATIFICATION UNLESS A STOCKHOLDER INDICATES OTHERWISE ON THE PROXY.
ADVISORY VOTE ON APPROVAL OF EXECUTIVE COMPENSATION AS DISCLOSED
IN THIS PROXY STATEMENT
We are seeking your advisory vote as required by Section 14A of the Securities Exchange Act of 1934
as amended, on the approval of the compensation of our named executive officers as described in the Executive Officer and Director Compensation section of this proxy statement in the compensation tables and related disclosures. Because your vote is advisory, it will not be binding on our Compensation Committee or our
Board of Directors.Board. However, the Compensation Committee and the Board will review the voting results and take them into consideration when making future decisions regarding executive compensation. We have determined to hold an advisory vote to approve the compensation of our named executive officers annually, and the next such advisory vote will occur at the
20182020 Annual Meeting of Stockholders.
Our Compensation Program and Philosophy
The objective of the compensation program for our named executive officers is to motivate and reward fairly those individuals who perform over time at or above the levels that we expect and to attract, as needed, and retain individuals with the skills necessary to achieve our objectives. Our compensation program is also designed to reinforce a sense of ownership and to link compensation to the Company’s performance as well as the performance of each of our named executive officers.
We rely on qualified, highly skilled and talented employees who have experience in the restaurant and hospitality industries to execute our business plan and strategy. Thus, our compensation program is patterned in a manner similar to companies in these industries in order to attract and retain talented employees who may have other opportunities in these industry areas.
Our compensation program consists of these general elements:
•
a fixed portion of compensation to retain and provide a base level of compensation to our named executive officers; and
•
a performance element to incentivize our named executive officers to achieve superior corporate performance.
In determining the total amount and mixture of the compensation for each of our named executive officers, the Compensation Committee subjectively considers the overall value to us of each named executive officer in light of numerous factors, including, but not limited to, the following:
•
our competitive position;
•
our financial performance and the contribution of each individual to our financial performance;
•
individual performance, including past and expected contribution to our corporate goals and execution of our business plan and strategy; and
•
our long-term needs and operational goals, including attracting and retaining key management personnel.
In 2016, Mr. Segal, Mr. Goldfinger and Mr. Munoz-Suarez did not receive bonuses. For additional information about compensation arrangements, see “Executive Officer and Director Compensation — Employment Agreements with Executive Officers.”
The Compensation Committee and the Board
of Directors believe that these policies and procedures are effective in implementing our compensation philosophy and objectives and in achieving our goals.
NEO Compensation in 2019
We believe the aggregate compensation paid to our NEOs in 2019 was appropriate, that compensation appropriately weighted performance measures, and that discretionary stock awards made in connection with our successful acquisition of Kona Grill were appropriate.
Mr. Hilario’s compensation package for the first three years was the amount we believed was equitable to hire him as our Chief Executive Officer and comprised base salary, 50% bonus potential and the grant of stock, RSUs and options. See “Employment Agreements with Executive Officers — President and Chief Executive Officer.”
For 2019, our NEOs were eligible to earn a percentage of their base salary upon attaining specified performance measures as follows: Mr. Hilario — 100%; Mr. Loy — 40%; Mr. Segal 75%; Ms. Siluk — 40%. Each of Mr. Hilario, Mr. Segal, Mr. Loy and Ms. Siluk received incentive bonuses based on the attainment of Bonus Adjusted EBITDA relative to the Bonus Adjusted EBITDA Target of $14.5 million consolidated (75% allocation), and the attainment of prescribed individual goals (25% allocation). Each component is further adjusted by the individual’s goal performance factor. The Fiscal 2019 EBITDA target was met.
The goals for 2019 for the executive team were as follows:
Grow Sales
•
Increase average reputation scores, secret shopper scores and likely to recommend scores
•
Increase same store sales by 4%
Improve Restaurant Profitability
•
Sales per man hour target of $95.00
•
Reduce employee turnover
Reduce General and Administrative Expenses (in dollars and as a percent of total revenues)
Capital Light Growth
•
Open STKs on time and on budget
•
Open at least 5 STK or hospitality venues
•
Keep 15 active STK and hospitality deals in the pipeline
Other Administrative Goals
•
Achieve accelerated financial reporting and forecasting cycle
•
Reduce costs in legal and audit functions
For additional information about compensation arrangements, see “Executive Officer and Director Compensation — Summary Compensation Table.”
2019 Performance
We believe our compensation structure, including our bonus structure, appropriately compensated our executive officers and both contributed to and reflected our improved financial performance in 2019 compared to 2018, including:
•
Total GAAP revenues increased 41.0% to $120.7 million compared to $85.6 million;
•
Domestic comparable sales at STK restaurants rose 8.3%;
•
GAAP income from operations was $5.8 million compared to a loss from operations of $2.7 million;
•
GAAP net income attributable to The ONE Group Hospitality, Inc. was $20.8 million or $0.70 net income per share compared to GAAP net income of $3.3 million or $0.12 net income per share;
•
Adjusted EBITDA (a non-GAAP measure which is reconciled to income from operations in our annual report to stockholders) increased 36% to $14.3 million compared to $10.5 million; and
•
Total G&A decreased 350 basis points to 9.5% from 13.0% as a percentage of revenues.
2020 Compensation
Fundamentally, our goals for 2020 are in line with goals established in 2019 and those are to grow the business profitably through increased sales, reduced expenses with profitable, capital light growth. Our goals remain the same despite radically different worldwide conditions as the coronavirus (COVID 19) situation develops. We have engaged the leadership team in supporting the deliver and take-out models and will have our restaurants ready to return strong when our dining rooms reopen. Thus far in 2020, our workforce has been reduced to a small team and other spending cutbacks have been put in place. Bonuses will be deferred until results return to 80% of 2019 results.
Say-on-Pay Vote
Because your vote is advisory, it will not be binding on our Compensation Committee or our Board,
of Directors, nor will it directly affect or otherwise limit any compensation or award arrangements that have already been granted to any of our named executive officers. However, the Compensation Committee and the Board
of Directors will review the voting results and take them into consideration when making future decisions regarding executive compensation. In accordance with the rules recently adopted by the SEC, the following resolution, commonly known as a “say-on-pay” vote, is being submitted for a stockholder vote at the
20172020 annual meeting:
“RESOLVED, that the compensation paid to the named executive officers of The ONE Group Hospitality, Inc., as disclosed pursuant to the compensation disclosure rules of the SEC, including the compensation tables and the related material disclosed in this proxy statement, is hereby APPROVED.”
The affirmative vote of a majority of the votes cast by the stockholders present or represented by proxy and entitled to vote at the annual meeting affirmatively or negatively at the annual meeting is required to approve, on an advisory basis, this resolution.
THE BOARD
OF DIRECTORS RECOMMENDS A VOTE TO APPROVE THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS, AND PROXIES SOLICITED BY THE BOARD
OF DIRECTORS WILL BE VOTED IN FAVOR OF SUCH APPROVAL UNLESS A STOCKHOLDER INDICATES OTHERWISE ON THE PROXY.
CODE OF CONDUCT AND ETHICS
We have adopted a code of conduct and ethics that applies to all of our employees, including our chief executive officer and chief financial and accounting officer. The text of the code of conduct and ethics is postedavailable on our website atwww.togrp.com. We intend to publicly disclose any amendment to and is incorporated by reference as an exhibit to our Annual Report on Form 10-K. Disclosure regarding any amendments to, or waivers from, provisionswaiver of the codeCode of conductConduct and ethics that apply toEthics on our directors, principal executive and financial officers will be included in a Current Report on Form 8-K within four business days following the date of the amendment or waiver, unless website posting or the issuance of a press release of such amendments or waivers is then permitted by the rules of NASDAQ.website.
The Board
of Directors knows of no other business which will be presented to the annual meeting. If any other business is properly brought before the annual meeting, proxies will be voted in accordance with the judgment of the persons named therein.
STOCKHOLDER PROPOSALS AND NOMINATIONS FOR DIRECTOR
To be considered for inclusion in the proxy statement relating to our 20182021 Annual Meeting of Stockholders, we must receive stockholder proposals (other than for director nominations) no later than March 23, 2018 and no earlier than February 22, 2018.December 12, 2020. To be considered for presentation at the 20182021 Annual Meeting, although not included in the proxy statement, proposals (including director nominations that are not requested to be included in our proxy statement) must be received no later than March 23, 2018the close of business on February 26, 2021 and no earlier than February 22, 2018.the opening of business on January 26, 2021. Proposals that are not received in a timely manner will not be voted on at the 20182021 Annual Meeting. If a proposal is received on time, the proxies that management solicits for the meeting may still exercise discretionary voting authority on the proposal under circumstances consistent with the proxy rules of the SEC. All stockholder proposals should be marked for the attention of Security Holder Communication, Boardthe Secretary of Directors at The ONE Group Hospitality, Inc., 411 W. 14th Street, 2nd Floor, New York, NY 10014.New York, New York 100141624 Market St., Suite 311, Denver, CO 80202.
Denver, Colorado 80202May 1, 2017April 17, 2020
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