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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant x Filed by a Party other than Registrant ¨
Check the appropriate box:
¨ | Preliminary Proxy Statement | |
¨ | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2) | |
x | Definitive Proxy Statement | |
¨ | Definitive Additional Materials | |
¨ | Soliciting Material under §240.14a-12 |
GLOBALSCAPE, INC.
(Name of Registrant as Specified in Its Charter)
(Name of Persons(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
x | No fee required. |
¨ | Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11 |
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(2) | Aggregate number of securities to which transaction applies: |
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¨ | Fee paid previously with preliminary materials. |
¨ | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. |
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Notice of 2013
Annual Meeting
of Stockholders
Proxy Statement
And
Form 10-K
For the year end December 31, 2012
4500 Lockhill-Selma Rd, Suite 150 San Antonio, TX 78249
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To Our Stockholders,
Craig A. Robinson (President and CEO) | GlobalSCAPE achieved record revenue for the third consecutive year during
During my four years as part of the GlobalSCAPE team, we have transitioned |
contracts with GlobalSCAPE, integrating additional capabilities from our portfolio, and retaining our
professional services to assist with implementation and operation of our solutions. Our global network of
resellers and distributors has become more fully integrated with our sales operations, allowing us to expand
our international market footprint, especially in Europe, Asia, and Latin America.
While managing this transition, we have made the investments necessary to remain competitive and
responsive to significant market trends. For example, using derivatives of our award winning software solutions,
we have developed hosted and managed secure file transfer solutions that allow us to sustain profitable
operations in the high-growth cloud services industry. We also have acquired and developed secure content
mobility capabilities that we believe will drive future revenue growth as the use of mobile devices continues to
proliferate at an exponential rate, including within enterprises.
I am honored to serve as President and CEO of GlobalSCAPE, building on the significant progress made in
prior years under the leadership of my predecessors. For fiscal 2013 and beyond, I am focused on leading
continued top-line revenue growth while also managing costs to generate additional cash from operations and
significantly enhance bottom-line profit. I thank you for your continued support and look forward to meeting you
at the Annual Meeting of Stockholders.
Sincerely,
Craig A. Robinson
President and Chief Executive Officer
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GlobalSCAPE, Inc.
4500 Lockhill-Selma Rd, Suite 150
San Antonio, Texas 78249
(210) 308-8267
April 26, 2012
Dear Stockholders:
You are cordially invited to attend the 2013 Annual Meeting of Stockholders of GlobalSCAPE, Inc. to be held at GlobalSCAPE’s headquarters, 4500 Lockhill-Selma Road, Suite 150, San Antonio, TX 78249, on Monday, June 10, 2013 at 9:00 a.m. If you cannot attend the annual meeting, you may vote over the Internet or, if you received a paper copy of the proxy materials, you may follow the instructions on the proxy card.
The agenda for this year’s annual meeting includes:
• | The annual election of directors. |
• | Ratification of the selection of Grant Thornton LLP as our independent registered public accounting firm for 2013. |
• | Advisory votes on executive compensation and the frequency of such votes in the future. |
Please refer to the Proxy Statement for detailed information about each of the proposals and the annual meeting.
Every stockholder vote is important. Even if you do not plan to attend the annual meeting, we hope you will vote as soon as possible. You may vote by signing your Proxy Card and mailing it in accordance with the instructions on the card. If you prefer, you may vote over the Internet or by telephone following the instructions on your Proxy Card. You may revoke your proxy at any time before it is voted. Of course, you may also vote in person at the stockholders meeting if you are the stockholder of record.
Sincerely,
Craig A. Robinson
President and Chief Executive Officer
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GlobalSCAPE, Inc.
4500 Lockhill-Selma Rd, Suite 150
San Antonio, Texas 78249
(210) 308-8267
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held June 10, 2013
To the Stockholders of GlobalSCAPE, Inc.:
The 2013 Annual Meeting of Stockholders of GlobalSCAPE, Inc. (the “Company”) will be held at the Company’s office located at 4500 Lockhill-Selma Road, Suite 150, San Antonio, Texas 78249, on June 10, 2013 at 9:00 a.m., local time, for the following purposes:
1. | To elect the following two directors to serve for a term of three years: |
Phillip M. Renfro
Frank M. Morgan
2. | To ratify the appointment of Grant Thornton LLP as the Company’s independent registered public accounting firm for the year ending December 31, 2013. |
3. | To approve, by advisory vote, a resolution on executive compensation. |
4. | To recommend, by advisory vote, the frequency of future advisory votes on executive compensation. |
5. | To transact any other business that may properly come before the meeting or any adjournment thereof, including a motion to adjourn or postpone the meeting. |
The foregoing items of business are described more fully in the Proxy Statement accompanying this notice.
The Company’s Board of Directors has fixed the close of business on April 19, 2013, as the record date for determining the stockholders entitled to receive notice of, and to vote at, the Annual Meeting and any adjournment thereof.
STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON.
By Order of the Board of Directors, | ||||
Craig A. Robinson | ||||
April 26, 2013 | President and Chief Executive Officer |
San Antonio, Texas
Important Notice Regarding Availability of Proxy Materials For Our Annual Meeting of Stockholders to be Held On June 10, 2013
This Proxy Statement, the form of proxy card and our Annual Report on Form 10-K for the fiscal year ended December 31, 2012, including financial statements, are available on the Internet at http://proxydocs.com/gsb.
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GlobalSCAPE, Inc.
Proxy Statement
For
Annual Meeting of Stockholders
To Be Held Monday, June 10, 2013
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Relationship of Salary and Annual Incentive Compensation to Total Compensation | 21 | |||
Employment Agreements and Potential Payments Upon Termination or Change in Control | 21 | |||
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PROPOSAL TWO RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | 26 | |||
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STOCKHOLDER PROPOSALS TO BE PRESENTED AT NEXT ANNUAL MEETING | 30 | |||
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General
This Proxy Statement is furnished in connection with the solicitation by the Board of Directors of GlobalSCAPE, Inc. (“GlobalSCAPE” or the “Company”) of proxies from the stockholders of GlobalSCAPE to be used at GlobalSCAPE’s 2013 Annual Meeting of Stockholders. In accordance with Securities and Exchange Commission rules, instead of mailing a printed copy of our Proxy Statement, annual report and other materials relating to the Annual Meeting to stockholders, we intend to mail a Notice of Internet Availability of Proxy Materials, which advises that the proxy materials are available on the Internet to stockholders. We intend to commence distribution of the Notice of Internet Availability on or about April 26, 2013. Stockholders receiving a Notice of Internet Availability by mail will not receive a printed copy of proxy materials unless they so request. Instead, the Notice of Internet Availability will instruct stockholders as to how they may access and review proxy materials on the Internet. Stockholders who receive a Notice of Internet Availability by mail who prefer to receive a printed copy of our proxy materials, including a proxy card or voting instruction card, should follow the instructions for requesting these materials included in the Notice of Internet Availability.
This process is designed to expedite stockholders’ receipt of proxy materials, lower the cost of the annual meeting, and help conserve natural resources. If you previously elected to receive our proxy materials electronically, you will continue to receive these materials by e-mail unless you elect otherwise. However, if you prefer to receive printed proxy materials, please follow the instructions included in the Notice of Internet Availability.
Date, Time, Place of Annual Meeting
GlobalSCAPE’s 2013 Annual Meeting of Stockholders will be held at 9:00 a.m., Central Daylight Time, on June 10, 2013, at GlobalSCAPE’s office at 4500 Lockhill-Selma Road, Suite 150, San Antonio, Texas 78249. Please call us at (210) 308-8267, ext. 100, if you need assistance with directions to our office.
Record Date, Shares Entitled to Vote, Quorum
GlobalSCAPE’s Board of Directors has fixed the close of business on April 19, 2013 as the record date for GlobalSCAPE stockholders entitled to notice of and to vote at the annual meeting. As of the record date, there were 18,445,516 shares of GlobalSCAPE common stock outstanding, which were held by approximately 1,923 holders of record. Stockholders are entitled to one vote for each share of GlobalSCAPE common stock held as of the record date.
The holders of a majority of the outstanding shares of GlobalSCAPE common stock issued and entitled to vote at the annual meeting must be present in person or by proxy to establish a quorum for business to be conducted at the annual meeting. Whether you attend the meeting in person, sign and return the proxy card or vote via the Internet or telephone, your shares will be counted as present at the meeting. Abstentions and broker non-votes are included for purposes of determining whether a quorum is present at the annual meeting. If you own shares through a bank or broker in street name, you may instruct your bank or broker how to vote your shares. A “broker non-vote” occurs when you fail to provide your bank or broker with voting instructions and the bank or broker does not have the discretionary authority to vote your shares on a particular proposal because the proposal is not a routine matter under the New York Stock Exchange rules. Please consider the following voting matters specific to each proposal on the ballot:
• | Proposal 1 (election of directors) is not considered a routine matter under current New York Stock Exchange rules. Your bank or broker will not have discretionary authority to vote your shares held in street name on this item. A broker non-vote may also occur if your broker fails to vote your shares for any reason. |
• | Proposal 2 (ratification of the appointment of our independent registered public accounting firm) is considered a routine matter under the New York Stock Exchange rules. Your bank or broker will have discretionary authority to vote your shares held in street name on that Proposal. |
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• | Proposal 3 is an advisory vote and must receive the affirmative vote of the holders of a majority of the total votes cast on the proposal. Non-votes are not considered votes cast “for” or “against” this proposal and will have no effect. |
• | Proposal 4 (frequency of future advisory votes on executive compensation) is an advisory vote and must receive the affirmative vote of the holders of a majority of the total votes cast on the proposal. Non-votes are not considered votes cast “for” or “against” this proposal and will have no effect. |
If sufficient votes for approval of the matters to be considered at the annual meeting have not been received prior to the meeting date, GlobalSCAPE may postpone or adjourn the annual meeting in order to solicit additional votes. The form of proxy being solicited by this Proxy Statement provides the authority for the proxy holders, in their discretion, to vote the stockholders’ shares with respect to a postponement or adjournment of the annual meeting. At any postponed or adjourned meeting, proxies received pursuant to this Proxy Statement will be voted in the same manner described in this Proxy Statement with respect to the original meeting.
Stockholders of Record and Beneficial Owners
Many of our stockholders hold their shares through a stockbroker, bank, or other agent rather than directly in their own names. As summarized below, there are some distinctions between shares held of record and those owned beneficially.
• | Stockholder of Record. If your shares are registered directly in your name with our transfer agent, American Stock Transfer and Trust Company, LLC, you are considered the stockholder of record with respect to those shares. Access to our proxy materials is being provided directly to you by us. As a stockholder of record, you have the right to grant your voting proxy directly to us or to vote in person at the meeting. |
• | Beneficial Owner. If your shares are held in a stock brokerage account or by a bank, you are considered the beneficial owner of the shares held in “street name.” Access to these proxy materials is being provided by your broker who is considered the stockholder of record with respect to those shares. As the beneficial owner, you have the right to direct your broker on how to vote and are also invited to attend the meeting. However, since you are not the stockholder of record, you may not vote these shares in person at the meeting. Your broker or nominee has enclosed a voting instruction card for your use. |
Attendance and Voting by Proxy
If you are a stockholder whose shares are registered in your name, you may vote your shares by one of the following four methods:
• | Vote in person, you may vote in person at the Annual Meeting. We can give you a proxy card or a ballot when you arrive, if requested. |
• | Vote by Internet, by going to the web address, http://www.proxypush.com/gsb, and following the instructions for Internet voting. |
• | Vote by Telephone,866-390-5419 |
• | Vote by Mail, by completing, signing, dating, and mailing the proxy card mailed to you in the envelope provided. If you vote by Internet, please do not mail your proxy card. |
The deadline for voting electronically on the Internet is 11:59 p.m., Eastern Time, on June 9, 2013. If you vote by mail, your signed proxy card must be received before the annual meeting to be counted at the annual meeting.
If your shares are held in “street name” (through a broker, bank, or other agent), you should have received a separate voting instruction form or you may vote by telephone or on the Internet as instructed by your broker or bank.
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PLEASE NOTE THAT IF YOUR SHARES ARE HELD OF RECORD BY A BROKER, BANK OR OTHER AGENT AND YOU WANT TO VOTE AT THE MEETING, YOU MUST FIRST OBTAIN A LEGAL PROXY ISSUED IN YOUR NAME FROM THE RECORD HOLDER. YOU WILL NOT BE PERMITTED TO VOTE IN PERSON AT THE MEETING WITHOUT THE LEGAL PROXY.
The proxies identified on the back of the proxy card will vote the shares of which you are stockholder of record in accordance with your instructions. If you sign and return your proxy card without giving specific voting instructions, the proxies will vote your shares as follows:
• | “FOR” the nominated slate of directors. |
• | “FOR” the ratification of the selection of Grant Thornton LLP as GlobalSCAPE’s independent registered public accounting firm for the fiscal year ending December 31, 2013. |
• | “FOR” approval, on an advisory basis, of the compensation of GlobalSCAPE’s executives named in the Summary Compensation Table in this Proxy Statement. |
• | “FOR” a frequency of three (3) years for future advisory votes on executive compensation. |
The giving of a proxy will not affect your right to vote in person if you decide to attend the meeting.
If any matters other than those addressed on the proxy card are properly presented for action at the Annual Meeting, the persons named in the proxy card will have the discretion to vote on those matters in their best judgment unless authorization is withheld.
Whether you vote by Internet, by telephone, or by mail, you may change or revoke your proxy before it is voted at the meeting by:
• | Submitting a new proxy card bearing a later date. |
• | Voting again by the Internet at a later time. |
• | Giving written notice before the meeting to our Secretary at the address set forth on the cover of this Proxy Statement stating that you are revoking your proxy. |
• | Attending the meeting and voting your shares in person. |
Please note that your attendance at the meeting will not alone serve to revoke your proxy.
Election of Directors
Directors are elected by a plurality of the votes of the holders of shares of common stock present in person or by proxy and entitled to vote on the election of directors. Under Delaware law, votes that are withheld from a director’s election will be counted toward a quorum but will not affect the outcome of the vote on the election of a director. Abstentions and broker non-votes will not be taken into account in determining the outcome of the election. Unless otherwise instructed or unless authority to vote is withheld, the enclosed proxy card will be voted FOR election of each of the director nominees
Ratification of Appointment of Independent Registered Public Accounting Firm
With respect to Proposal Two, the ratification of the appointment of the Company’s independent registered public accounting firm, an abstention is treated as entitled to vote and, therefore, has the same effect as voting “against” the proposal. Since this proposal is considered a “routine” matter, brokers will be permitted to vote on
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behalf of their clients if no voting instructions are furnished. Unless otherwise instructed or unless authority to vote is withheld, the enclosed proxy card will be voted FOR the ratification of Grant Thornton LLP as the Company’s independent registered public accounting firm for fiscal year 2013.
Advisory Vote on Executive Compensation
With respect to Proposal Three, the advisory vote on executive compensation, an abstention from voting will have the same effect as a vote against this proposal, and broker non-votes will have no effect on the outcome of this proposal. Brokers, as nominees for the beneficial owner, may not exercise discretion in voting on this matter and may only vote on this proposal as instructed by the beneficial owner of the shares. The outcome of this proposal is advisory in nature and is non-binding.
Advisory Vote on Frequency of Future Advisory Votes on Executive Compensation
With respect to Proposal Four, the frequency of future advisory votes on executive compensation, an abstention from voting will have the same effect as a vote against this proposal, and broker non-votes will have no effect on the outcome of this proposal. Brokers, as nominees for the beneficial owner, may not exercise discretion in voting on this matter and may only vote on this proposal as instructed by the beneficial owner of the shares. The outcome of this proposal is advisory in nature and is non-binding.
Other Matters
The required vote to approve any matter other than the election of directors is the affirmative vote by the holders of a majority of the total number of shares of common stock present in person or by proxy and entitled to vote on the matter.
Important Note Regarding NYSE Rules
If a broker does not receive instructions from the beneficial owner of shares held in street name for certain types of proposals, the broker must indicate on the proxy that it does not have authority to vote such shares (a “broker non-vote”) as to such proposals. Under the rules of the New York Stock Exchange, if your broker does not receive instructions from you, your broker willnot be able to vote your shares in the election of directors, the advisory vote on executive compensation or the advisory vote on the frequency of future advisory votes on executive compensation.Therefore, it is important that you provide voting instructions to your broker.
Proxies will be solicited by mail and the Internet. Proxies may also be solicited personally, or by telephone, fax, or other means by the directors, officers, and employees of GlobalSCAPE. Directors, officers, and employees soliciting proxies will receive no extra compensation but may be reimbursed for related out-of-pocket expenses. GlobalSCAPE will make arrangements with brokerage houses and other custodians, nominees, and fiduciaries to send the proxy materials to beneficial owners. GlobalSCAPE will, upon request, reimburse these brokerage houses, custodians, and other persons for their reasonable out-of-pocket expenses in doing so. GlobalSCAPE will pay the cost of solicitation of proxies.
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ELECTION OF DIRECTORS
GlobalSCAPE’s Articles of Incorporation divide the Board of Directors into three classes of directors serving staggered three-year terms, with one class to be elected at each annual meeting of stockholders. At this year’s meeting, two Class I directors are to be elected for a term of three years, to hold office until the expiration of their term in 2016, or until a successor shall have been elected and shall have qualified. The nominees are Phillip M. Renfro and Frank M. Morgan. Both Mr. Renfro and Mr. Morgan are currently Class I directors. Neither nominee is an officer of GlobalSCAPE.
Assuming the presence of a quorum, the nominees for director who receive the most votes will be elected. The enclosed form of proxy provides a means for stockholders to vote for or to withhold authority to vote for the nominees for director. If a stockholder executes and returns a proxy, but does not specify how the shares represented by such stockholder’s proxy are to be voted, such shares will be voted FOR the election of the nominee for director. In determining whether this item has received the requisite number of affirmative votes, abstentions, and broker non-votes will not be counted and will have no effect.
The Board of Directors recommends a vote “FOR” the election of the nominees to the Board of Directors.
The following table sets forth the name and age of the nominee as of the mailing date of this Proxy Statement, the principal occupation of the nominee during at least the past five years, and the year each began serving as a director of GlobalSCAPE:
Name | Age | |||||
Phillip M. Renfro | 69 | Mr. Renfro is a retired partner of the law firm of Fulbright and Jaworski, L.L.P., where from 1983 to 2005, he was division head of the Corporate, Business, and Banking Section in the firm’s San Antonio, Texas office. Prior to his career in corporate law, from 1980 to 1983, he was President and CEO of Resco International, Inc., an oil field service Company. From 2004 to 2009, Mr. Renfro served on the board of Enzon Pharmaceuticals, Inc., a publicly-traded biotech company, where he was also a member of the Audit Committee and the Governance and Nominating Committee. The Company believes that Mr. Renfro’s legal, financial and business experience, including a diversified background of managing and directing companies, give him the qualifications and skills to serve as a director. In addition, as a former member of Enzon’s audit committee and as a corporate and securities attorney, Mr. Renfro has extensive financial reporting and corporate governance experience. Mr. Renfro’s term as director of GlobalSCAPE expires in 2013. | ||||
Frank M. Morgan | 64 | Mr. Morgan is currently Executive Director, Cyber Security, for Mantech International’s MCTS Group. From 2005 to 2010, Mr. Morgan served as the Vice President and General Manager of the Information Systems Business Unit and Intelligence Solutions Division, of L-3 Communications Services Group, managing offices in Reston, Virginia, Colorado Springs, Colorado, and San Antonio, Texas. He held a similar position with Titan Corporation from 2001 to 2005 before its acquisition by L-3. From 1996 to 2001, Mr. Morgan worked for BTG, Inc. (acquired by Titan Corp.), a publicly traded software development Company and computer security product value-added reseller. As Vice President of federal sales, Mr. Morgan was responsible for marketing security products across the federal government. Mr. Morgan spent 30 years in the Air Force, retiring in 1996 as a Colonel. His assignments included three tours at the Pentagon in both |
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Name | Age | |||
operations and acquisitions. He holds a B.S. in Aeronautical Engineering from the Air Force Academy, a M.S. in Human Resources Management from the University of Utah, and a M.A. in National Security and Strategic Studies from the Naval War College. Mr. Morgan’s business experience, particularly his experience in the software industry and in government sales, provides valuable insight to our board. Mr. Morgan’s term as director of GlobalSCAPE expires in 2013. |
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THE INDIVIDUALS NOMINATED ABOVE AS DIRECTORS.
Directors with Terms Expiring in 2014 and 2015
The following table sets forth the name and age of each director as of the mailing date of this Proxy Statement, the principal occupation of each director during at least the past five years and the year each began serving as a director of GlobalSCAPE.
Name | Age | |||||
Thomas W. Brown | 69 | Mr. Brown has been an independent stockbroker and investment advisor in San Antonio since 1995. He entered the securities brokerage business in 1967 after receiving an M.B.A. from Southern Methodist University. In recent years, he has also been involved in the real estate development business in San Antonio in addition to stock and bond investments. Mr. Brown currently serves as a member and Chairman of the Board of Directors of the Company and has served in such capacity since June 2002. Mr. Brown is an experienced investor and our largest stockholder. Mr. Brown’s term as a director of GlobalSCAPE expires in 2015. | ||||
David L. Mann | 63 | Mr. Mann has been in the real estate development and home building business since his graduation from Southern Methodist University in 1975 where he earned a B.B.A. For the past twenty years, he has worked exclusively in the San Antonio, Texas market. Mr. Mann currently serves as a member of the Board of Directors of GlobalSCAPE and has served in such capacity since June 2002. Mr. Mann has broad business and finance experience and is our second largest stockholder. Mr. Mann’s term as a director of GlobalSCAPE expires in 2014. | ||||
Craig A. Robinson | 49 | For more information, see below under “Executive Officers.” |
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The following table sets forth the name, age, and position of each of our executive officers as of the mailing date of this Proxy Statement and the principal occupation of each executive officer during the past five years. Throughout this Proxy Statement, we refer to these persons collectively as our named executive officers, or NEOs.
Name | Age | Position | ||||||
Craig A. Robinson | 49 | President and Chief Executive Officer | Mr. Robinson serves as GlobalSCAPE’s President and Chief Executive Officer. He has more than 25 years of experience in operations, information technology, information assurance, and R&D. Mr. Robinson is responsible for integrating and enhancing GlobalSCAPE’s business and technical operations across all functions and markets. He has held executive positions for leading companies including Symantec where he sequentially served in several leadership roles, including VP of Managed Security Services; VP of Solution Delivery; and VP of Worldwide Product Marketing. In addition, he has held senior leadership positions at AXENT Technologies (VP of Operations for consulting subsidiary SNCi), META Security Group (COO and CTO), Trident Data Systems (Commercial President and CIO), and prior to joining GlobalSCAPE as Chief Operating Officer in October 2008, Synteras (General Manager), a government contracting company providing IT consulting services from February 2007 to October 2008. Mr. Robinson became our Chief Operating Officer in October 2008, our President in December 2011 and our Chief Executive Officer in March 2013. Mr. Robinson was also elected to our Board of Directors in March 2013 with a term expiring in 2015. His executive experience spans companies ranging from start-ups to multi-billion dollar corporations in the commercial and government sectors. Mr. Robinson holds undergraduate and graduate degrees in engineering, both from Stanford University. He is a co-author of the referenceSecureInternetPractices (Auerbach Publications). | |||||
James W. Albrecht, Jr. | 58 | Chief Financial Officer | Mr. Albrecht has served as GlobalSCAPE’s Chief Financial Officer since July 2012. He is responsible for our finance, accounting and treasury activities. Before joining GlobalSCAPE, from 2008 to 2012, Mr. Albrecht was Chief Executive Officer and Chief Financial Officer of Photoreflect.com, an Internet-based company that provided an online display and selling portal for professional photographers. From 1995 to 2008, Mr. Albrecht was Chief Financial Officer of Introgen Therapeutics, Inc., a biotechnology company developing gene therapies for the treatment of cancer, where he was part of the team that managed that company’s initial public offering in 2000 and subsequent trading and reporting as a public company listed on NASDAQ. He began his career at Arthur Andersen LLP where he served clients for eleven years. Mr. Albrecht regularly lectures as a faculty member at The University of Texas at Austin where he received a B.B.A. in Accounting. |
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Name | Age | Position | ||||||
William E. Buie | 57 | Executive Vice President of Sales and Marketing | Mr. Buie has served as GlobalSCAPE’s Executive Vice President of Sales and Marketing since April 2010. Mr. Buie is responsible for GlobalSCAPE’s inbound sales, corporate sales, reseller/channel program, and marketing activities. Before joining GlobalSCAPE, Mr. Buie was the Senior Vice President of Alliance, Channel and Systems Integrator Sales for Fujitsu, a $55 billion global IT services, hardware and software provider, from November 2008 to January 2010. Prior to Fujitsu, from April 2003 to November 2008, Mr. Buie was the Vice President of Global Strategic Partner Sales for Symantec, managing nearly $1 billion in annual revenue representing more than 25% of the Company’s annual total revenue. Prior to Symantec, Mr. Buie was the president and COO of Allure Fusion Media, focused on maximizing the company’s pioneering advantage in digital media software. Previously, Mr. Buie was the Executive Vice President of OneChem, Ltd., an application service provider to the chemical industry and before that Mr. Buie served as marketing director for IBM’s Webshere software and as the director of worldwide channel sales for IBM Software. Mr. Buie holds a B.A. degree in Journalism from the University of Missouri and attended Wharton School of Business, Finance for Executives. | |||||
Doug Conyers | 37 | Senior Vice President of Engineering | Mr. Conyers was named as GlobalSCAPE’s Senior Vice President of Engineering in March 2011 and has been employed by GlobalSCAPE since March 2007. Mr. Conyers is responsible for product management, software development, and quality assurance. Prior to joining GlobalSCAPE in March 2007, he held positions as Chief Architect and Director of Systems Engineering, and Senior Software Engineer for SecureLogix Corp., an information security company. Before that, he held software engineering positions with both the Southwest Research Institute and Paradigm Simulations. Mr. Conyers has a B.S. in Computer Science from Trinity University. | |||||
James L. Bindseil | 48 | Vice President, Client Support Services | James L. Bindseil joined GlobalSCAPE in 2010 and currently serves as Vice President, Client Support Services. He is responsible for leading the technical support of all GlobalSCAPE product lines as well as the technical delivery of all Managed Solutions.
Mr. Bindseil has more than 20 years of experience leading and delivering IT professional services and support for all sizes of both domestic and international businesses. Prior to joining GlobalSCAPE, from January 2009 to July 2010, Mr. Bindseil served as Vice President of Solutions Engineering and Marketing for Enterprise Business Services at Fujitsu America. Previously, from July 1999 to December 2008, he was Senior Global Technical Director for the Security Services line of business at Symantec. He also served honorably in the United States Marine Corps. |
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Name | Age | Position | ||||
Mr. Bindseil graduated with honors from the University of Phoenix with a Bachelor of Arts degree in Management and has an Associate of Arts degree in Mathematics,. He also has professional certifications from Hewlett Packard, Cisco Systems, and Microsoft, and is a Certified Information Systems Security Professional (CISSP). | ||||||
Chris A. Hopen | 47 | President, Tappin, Inc. | Chris Hopen joined GlobalSCAPE in 2011 and currently serves as President of Tappin, Inc. He is responsible for integrating and enhancing Tappin’s business and technical operations across all functions.
Mr. Hopen brings more than 20 years of experience as an engineering leader and technologist in networking and security. Prior to establishing TappIn in May 2009, from 1996 to 2007, Mr. Hopen was the co-founder and Chief Technical Officer for Aventail Corporation, which was acquired by SonicWall (SNWL) in 2007. Mr. Hopen served as VP at SonicWall until June 2008. Mr. Hopen pioneered the SSL-VPN market and technology solution space. His accomplishments include network security-related patents and Internet Engineering Task Force (IETF) publications as well as being named one of the top 50 IT executives in the service provider sector by InfoWorld. Mr. Hopen holds a B.S. in Computer Science, Mathematics and Economics from Western Washington University and actively works with the W.W.U. School of Business and Computer Science Advisory Board. |
During the fiscal year ended December 31, 2012, the Board of Directors held six meetings. Separate from the full Board of Directors’ meetings, there were six Audit Committee meetings, six Compensation Committee meetings and one Nominating and Governance Committee meeting. During 2012, each director attended at least 75% of all Board and applicable Committee meetings. During 2012, our directors, received compensation for service to GlobalSCAPE as a director. See “Executive Compensation – Compensation of Directors.” GlobalSCAPE encourages, but does not require, directors to attend the annual meeting of stockholders. At GlobalSCAPE’s 2012 Annual Meeting, three members of the Board were present.
The Board believes it is in the best interests of the Company to separate the roles of Chief Executive Officer and Chairman of the Board. This structure ensures a greater role for the directors in the oversight of management and the Company and promotes active participation of the directors in setting meeting agendas and establishing Board priorities and procedures. Further, this structure permits the chief executive officer to focus on the management of the Company’s day-to-day operations.
A majority of the members of the Board of Directors, as well as all members of the Audit, Compensation, and Nominating and Governance Committees, are “independent,” as currently defined by the Securities and Exchange Commission and the listing standards of the NYSE MKT LLC.
Committees of the Board of Directors
GlobalSCAPE has standing Audit, Compensation, and Nominating and Governance Committees.
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The Audit Committee is a separately-designated audit committee established in accordance with Section 3(a)(58)(A) of the Exchange Act. The Audit Committee, which consists of Messrs. Mann, Morgan, and Renfro, met six times during 2012. The Board has determined that Mr. Renfro, as defined by SEC rules, is an audit committee financial expert. Mr. Renfro serves as the Audit Committee Chairman. The Audit Committee aids management in the establishment and supervision of our financial controls, evaluates the scope of the annual audit, reviews audit results, makes recommendations to our Board regarding the selection of our independent registered public accounting firm, consults with management and our independent registered public accounting firm prior to the production of financial statements to stockholders and, as appropriate, initiates inquiries into aspects of our financial affairs. The Audit Committee Report, which begins on page 27, more fully describes the activities and responsibilities of the Audit Committee.
The Compensation Committee, which consists of Messrs. Mann, Morgan, and Renfro, met six times during 2012. The Compensation Committee’s role is to establish and oversee GlobalSCAPE’s compensation and benefit plans and policies, administer its stock option plans, and review and approve annually all compensation decisions relating to GlobalSCAPE’s executive officers. In the fourth quarter of each year, our President submits to the Compensation Committee his recommendations for salary adjustments and long-term equity incentive awards for the following fiscal year based upon his subjective evaluation of individual performance and his subjective judgment regarding each executive officer’s salary and equity incentives, for each executive officer except himself. The Compensation Committee reviews and discusses the recommendations and has the sole authority to determine the President’s base salary, bonus, and equity incentives.
The agenda for meetings of the Compensation Committee is determined by its Chairman, Mr. Mann. At each meeting, the Compensation Committee meets in executive session. The Compensation Committee’s Chairman reports the Committee’s recommendations on executive compensation to the Board. The Company’s personnel support the Compensation Committee in its duties and, along with the President, may be delegated authority to fulfill certain administrative duties regarding the compensation programs. The Compensation Committee has authority under its charter to retain, approve fees for and terminate advisors, consultants, and agents as it deems necessary to assist in the fulfillment of its responsibilities.
In 2012, the Compensation Committee engaged Robert Edwards as consultant to advise the Committee with respect to incentive compensation awards to the NEOs. At the time of his engagement by the Compensation Committee, Mr. Edwards had also been engaged by the Company to perform certain financial accounting duties while the Company was conducting a search for a new chief financial officer. The Company paid Mr. Edwards a total of $156,000 for his services in 2012, of which $5,000 was attributable to his services to the Compensation Committee and the remainder was attributable to financial accounting services.
The Nominating and Governance Committee, which consists of Messrs. Mann, Morgan, and Renfro met once during 2012. The primary function of the Nominating and Governance Committee is to assist the Board in identifying, screening, and recruiting qualified individuals to become Board members and determining the composition of the Board and its committees, including recommending nominees for annual stockholders meetings or to fill vacancies on the Board.
Each of the Board’s committees has a written charter. Copies of the charters are available for review on the Company’s website atwww.globalscape.com on the Investor Relations page.
The Company has a risk management program overseen by its president and chief executive officer and the chief financial officer. Material risks are identified and prioritized by management, and each prioritized risk is referred to a Board committee or the full Board for oversight. For example, strategic risks are referred to the full Board while financial risks are referred to the Audit Committee.
The Board regularly reviews information regarding the Company’s credit, liquidity, and operations, as well as the risks associated with each and annually reviews the Company’s risk management program as a whole. The
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Compensation Committee periodically reviews the most important risks to the Company to ensure that compensation programs do not encourage excessive risk taking. While each committee is responsible for specific risks and overseeing the management of such risks, the entire Board of Directors is regularly informed through committee reports about such risks.
GlobalSCAPE has adopted a Code of Ethics that applies to all of its employees, including the president and chief executive officer and its chief financial officer. This Code is a statement of GlobalSCAPE’s high standards for ethical behavior, legal compliance, and financial disclosure. It is applicable to all directors, officers, and employees. A copy of the Code of Ethics can be found in its entirety on GlobalSCAPE’s website atwww.globalscape.com. Should there be any changes to, or waivers from, GlobalSCAPE’s Code of Ethics, those changes or waivers will be posted immediately on our website at the address noted above.
Stockholder Communications with Board
The Board of Directors has a process by which stockholders may communicate with the Board of Directors. Any stockholder desiring to communicate with the Board of Directors may do so in writing by sending a letter addressed to The Board of Directors, c/o The Corporate Secretary. The Corporate Secretary has been instructed by the Board to promptly forward communications so received to the members of the Board of Directors.
The Nominating and Governance Committee is the standing committee responsible for determining the slate of director nominees for election by stockholders, which the committee recommends for consideration by the Board. All director nominees are approved by the Board prior to annual proxy material preparation and are required to stand for election by stockholders at the next annual meeting. For positions on the Board created by a director’s leaving the Board prior to the expiration of his current term, whether due to death, resignation, or other inability to serve, Article III of the Company’s Amended and Restated Bylaws provides that a director elected by the Board to fill a vacancy shall be elected for the unexpired term of his predecessor in office. In March 2013, the Board elected Mr. Robinson to fill the Board vacancy resulting from the retirement of James R. Morris from his position as Chief Executive Officer and as a Board member in November 2012. Mr. Robinson’s term on the Board expires in 2015.
The Nominating and Governance Committee does not currently use any third-party search firm to assist in the identification or evaluation of Board member candidates. The Nominating and Governance Committee may engage a third party to provide such services in the future, as it deems necessary or appropriate at the time in question.
The Nominating and Governance Committee determines the required selection criteria and qualifications of director nominees based upon the needs of the Company at the time nominees are considered. A candidate must possess the ability to apply good business judgment and must be in a position to properly exercise his duties of loyalty and care. Candidates should also exhibit proven leadership capabilities, high integrity, experience with a high level of responsibility within their chosen fields, and have the ability to quickly understand complex principles of, but not limited to, business and finance. Candidates with potential conflicts of interest or who do not meet this criteria will be identified and disqualified. The Nominating and Governance Committee will consider these criteria for nominees identified by the Committee, by stockholders, or through some other source. When current Board members are considered for nomination for reelection, the Nominating and Governance Committee also takes into consideration the member’s prior Board contributions, performance, and meeting attendance records.
The Nominating and Governance Committee will consider qualified candidates for possible nomination that are recommended by stockholders, for possible nomination. Stockholders wishing to make such a recommendation may do so by sending the following information to the Nominating and Governance Committee, c/o Corporate Secretary at the address listed above: (1) name of the candidate with brief biographical information and résumé; (2) contact information for the candidate and a document evidencing the candidate’s willingness to
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serve as a director if elected; and (3) a signed statement as to the submitting stockholder’s current status as a stockholder and the number of shares currently held. Any such nomination must comply with the advance notice provisions of our Amended and Restated Bylaws. These provisions are summarized under “Stockholder Proposals to be Presented at Next Annual Meeting” on page 30 of this document.
The Nominating and Governance Committee conducts a process of making a preliminary assessment of each proposed nominee based upon the résumé and biographical information, an indication of the individual’s willingness to serve and other background information. This information is evaluated against the criteria set forth above as well as the specific needs of the Company at that time. Based upon a preliminary assessment of the candidate(s), those who appear best suited to meet the needs of the Company may be invited to participate in a series of interviews, which are used for further evaluation. The Nominating and Governance Committee uses the same process for evaluating all nominees, regardless of the original source of the information. The Company does not have a formal policy with regard to the consideration of diversity in identifying director nominees, but the Nominating and Governance Committee strives to nominate directors with a variety of complementary skills so that, as a group, the Board will possess the appropriate talent, skills, and expertise to oversee the Company’s businesses.
No candidates for director nominations were submitted to the Nominating and Governance Committee by any stockholder in connection with the 2013 Annual Meeting.
Composition of the Board of Directors
The Company believes that its Board as a whole should encompass a range of talent, skill, diversity, experience and expertise enabling it to provide sound guidance with respect to the Company’s operations and business goals. In addition to considering a candidate’s background and accomplishments, candidates are reviewed in the context of the current composition of the Board and the evolving needs of the Company. The Company’s policy is to have at least a majority of its directors qualify as “independent” as determined in accordance with the listing standards of the NYSE MKT LLC and Rule 10A-3 of the Exchange Act. The Nominating and Governance Committee identifies candidates for election to the Board of Directors, reviews their skills, characteristics and experience, and recommends nominees for director to the Board for approval.
The Nominating and Governance Committee seeks directors with strong reputations and experience in areas relevant to the strategy and operations of the Company, particularly in the high technology industry and complex business and financial dealings. We believe that each nominee and current director has gained experience in core management skills, such as strategic and financial planning, public company financial reporting, corporate governance, risk management, and leadership development. Many of our directors also have experience serving on boards of directors and board committees of other companies, as well as charitable organizations and private companies. The Nominating and Governance Committee also believes that each nominee and current director has other key attributes that are important to an effective board including integrity, demonstrated high ethical standards, sound judgment, analytical skills, the ability to engage management and each other in a constructive and collaborative fashion, diversity of background, experience and thought, and the commitment to devote significant time and energy to service on the Board and its Committees.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding ownership of our common stock as of April 19, 2013 by (i) each person known by GlobalSCAPE to be the beneficial owner of more than 5% of the outstanding shares of common stock, (ii) each director of GlobalSCAPE, (iii) the President and Chief Executive Officer, (iv) each of the named executive officers of GlobalSCAPE, and (v) all executive officers and directors of GlobalSCAPE as a group. Unless otherwise indicated in the footnotes below, each of the named persons has sole voting and investment power with respect to the shares shown as beneficially owned.
Applicable percentage ownership is based on 18,445,516 shares of common stock outstanding at April 19, 2013. In computing the number of shares of common stock beneficially owned by a person and the percentage ownership of that person, we deemed to be outstanding all shares of common stock subject to options or restricted stock held by that person that are currently exercisable or will vest or are exercisable within 60 days of April 19, 2013.
The address of each beneficial owner listed in the table below is c/o GlobalSCAPE, Inc., 4500 Lockhill-Selma Rd, Suite 150, San Antonio, Texas, 78249.
Shares Beneficially Owned | ||||||||||||||||
Name of Beneficial Owner | Common Shares Currently Held (# of shares) | Common Shares That May Be Acquired within 60 Days of April 19, 2013 (# of shares) | Total Beneficial Ownership (# of shares) | Percentage of Class | ||||||||||||
Thomas W. Brown | 5,788,103 | (1)(2) | 20,000 | 5,808,103 | 31.49 | % | ||||||||||
David L. Mann | 1,967,024 | (2) | 20,000 | 1,987,024 | 10.77 | % | ||||||||||
Phillip M. Renfro | 134,520 | (2) | 20,000 | 154,520 | * | |||||||||||
Frank M. Morgan | 114,520 | (2) | 20,000 | 134,520 | * | |||||||||||
Craig A. Robinson | 567,800 | (3) | — | 567,800 | 3.08 | % | ||||||||||
James W. Albrecht, Jr. | — | — | — | * | ||||||||||||
William E. Buie | 183,785 | (4) | 51,000 | 234,785 | * | |||||||||||
Doug Conyers | 243,610 | (5) | — | 243,610 | * | |||||||||||
James Bindseil | 69,300 | (6) | — | 69,300 | * | |||||||||||
Chris Hopen | 41,250 | (7) | — | 41,250 | * | |||||||||||
All directors and executive officers as a group (10 persons) | 9,109,912 | 131,000 | 9,240,912 | 49.44 | % |
* | Denotes ownership of less than 1%. |
(1) | Includes 650 shares owned by Mr. Brown’s spouse. Mr. Brown disclaims beneficial ownership of the shares owned by his spouse. |
(2) | Includes options to purchase 60,000 shares of common stock. |
(3) | Includes options to purchase 452,800 shares of common stock. |
(4) | Includes options to purchase 108,900 shares of common stock. |
(5) | Includes options to purchase 235,900 shares of common stock. |
(6) | Includes options to purchase 69,300 shares of common stock. |
(7) | Includes options to purchase 41,250 shares of common stock. |
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Equity Compensation Plan Information
The following table provides aggregate information regarding grants under all equity compensation plans of GlobalSCAPE through December 31, 2012.
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 Available for Future Issuance under Equity Compensation Plans (Excluding securities Reflected in Column (A)) | |||||||||
(A) | (B) | (C) | ||||||||||
Equity compensation plans approved by security holders | 3,650,095 | $ | 1.91 | 1,906,840 |
Section 16(a) Beneficial Ownership Reporting Compliance
GlobalSCAPE believes, based solely on its review of the copies of Section 16(a) forms furnished to it and written representations from executive officers and directors (and its ten percent stockholders), that all Section 16(a) filing requirements were fulfilled on a timely basis, except that each of Messrs. Brown, Mann , Morgan and Renfro reported on a Form 4 filed on April 4, 2013 the grant of 20,000 restricted shares under the 2006 Non-Employee Directors Long-term Equity Incentive Plan following the 2012 annual meeting which should have been reported on a Form 5 filed in February 2013.
In making this disclosure, GlobalSCAPE has relied solely on written representations of its directors and executive officers (and its ten percent stockholders) and copies of the reports that they have filed with the SEC.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Robert Langenbahn, who is one of our Business Development Managers, earned $254,734 in base salary and commissions in 2012. Mr. Langenbahn is the son-in law of Thomas W. Brown, our Chairman of the Board. Mr. Langenbahn’s compensation plan is comparable to and consistent with other GlobalSCAPE employees who hold a similar position.
Policy Related to Related-Person Transactions
Our Board of Directors has adopted a formal, written related-person transaction approval policy, setting forth GlobalSCAPE’s policies and procedures for the review, approval, or ratification of “related-person transactions.” For these purposes, a “related person” is a director, nominee for director, executive officer, or holder of more than 5% of our common stock, or any immediate family member of any of the foregoing. This policy applies to any financial transaction, arrangement, or relationship or any series of similar financial transactions, arrangements, or relationships in which GlobalSCAPE is a participant and in which a related person has a direct or indirect interest, other than the following:
• | Payment of compensation by GlobalSCAPE to a related person for the related person’s service in the capacity or capacities that give rise to the person’s status as a “related person”. |
• | Transactions available to all employees or all stockholders on the same terms. |
• | Purchases of supplies from GlobalSCAPE in the ordinary course of business at the same price and on the same terms as offered to our other customers, regardless of whether the transactions are required to be reported in GlobalSCAPE’s filings with the SEC. |
• | Transactions, which when aggregated with the amount of all other transactions between the related person and GlobalSCAPE, involve less than $5,000 in a fiscal year. |
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Our Audit Committee is required to approve any related person transaction subject to this policy before commencement of the related-person transaction, provided that if the related person transaction is identified after it commences, it shall be brought to the Audit Committee for ratification, amendment, or rescission. The Chairman of our Audit Committee has the authority to approve or take other actions with respect to any related-person transaction that arises, or first becomes known, between meetings of the Audit Committee, provided that any action by the Chairman must be reported to our Audit Committee at its next regularly scheduled meeting.
Our Audit Committee will analyze the following factors, in addition to any other factors the members of the Audit Committee deem appropriate, in determining whether to approve a related-person transaction:
• | Whether the terms are fair to GlobalSCAPE. |
• | Whether the transaction is material to GlobalSCAPE. |
• | The role the related person has played in arranging the related-person transaction. |
• | The structure of the related-person transaction. |
• | The interest of all related persons in the related-person transaction. |
Our Audit Committee may, in its sole discretion, approve or deny any related-person transaction. Approval of a related-person transaction may be conditioned upon GlobalSCAPE and the related person following certain procedures designated by the Audit Committee.
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Compensation Discussion & Analysis
We compensate our management through a combination of base salary, incentive bonuses and long-term equity based awards in the form of stock options and stock awards. This compensation is designed to be competitive with those of a group of companies which we have selected for comparative purposes in order to attract and retain our executive officers while also creating incentives which will align executive performance with the long-term interests of our stockholders.
This section discusses the principles underlying our executive compensation policies and decisions and the most important factors relevant to an analysis of these policies and decisions. It provides qualitative information regarding the manner and context in which compensation is awarded to and earned by our executive officers named in the Summary Compensation Table below, whom we sometimes refer to as our named executive officers, or NEOs, and places in perspective the data presented in the tables and narrative that follow.
Our Compensation Committee approves, implements, and monitors all compensation and awards to executive officers including the president and chief executive officer, chief financial officer, and the other NEOs. The Committee’s membership is determined by the Board of Directors and is composed of three non-management directors. The Committee has the authority to delegate any of its responsibilities to subcommittees as the Committee may deem appropriate in its sole discretion. During 2012, the Committee did not delegate any of its responsibilities.
The Committee periodically approves and adopts, or makes recommendations to the Board for, GlobalSCAPE’s compensation decisions (including the approval of grants of stock options to our NEOs). In the fourth quarter of each year, our president submits his recommendations for salary adjustments for the following year and long-term equity incentive awards based upon his subjective evaluation of individual and Company performance and his subjective judgment regarding each executive officer’s salary and long-term equity incentives, for each executive officer except himself, to the Compensation Committee. The Compensation Committee reviews and discusses the recommendations and has the sole authority to determine the President’s base salary, bonus, and equity incentives.
The Compensation Committee reviewed all components of compensation for our executive officers, including salary, bonuses, long-term equity incentives, the dollar value to the executive, and cost to GlobalSCAPE of all perquisites and all severance and change of control arrangements. Based on this review, the Compensation Committee determined that the compensation paid to our executive officers reflected our compensation philosophy and objectives.
Compensation Philosophy and Objectives
Our underlying philosophy in the development and administration of GlobalSCAPE’s annual, incentive, and long-term compensation plans is that our compensation system should be designed to attract and retain talented executives while also creating incentives that reward performance and align the interests of our NEOs with those of GlobalSCAPE’s stockholders. Key elements of this philosophy are:
• | Establishing base salaries that are competitive with the companies in our comparative group, within GlobalSCAPE’s budgetary constraints and commensurate with GlobalSCAPE’s salary structure. |
• | Rewarding our NEOs for outstanding Company-wide performance as reflected by financial measures, such as sales revenue or net income, or other goals, such as the consummation of an acquisition and product delivery as well as customer and employee satisfaction and compliance with regulatory requirements. |
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• | Providing equity-based incentives for our NEOs to ensure that they are motivated over the long term to respond to GlobalSCAPE’s business challenges and opportunities as owners rather than just as employees. |
Attracting and Retaining Executive Talent.
As a small Company, we recognize salary is one component in successfully attracting and retaining talented executives who will help our Company grow. Being mindful of our budgetary responsibilities, we generally set our base salaries at levels we believe are competitive relative to a comparison group consisting of Southwest Regional-based companies with similar common criteria such as number of employees, industry types, and revenue from Salary.com Professional for small businesses survey data. Salary.com Professional includes data from approximately 10,000 organizations and 2,000,000 incumbents representing 60 countries. The survey provides data on base salary, incentives, equity, and total compensation. This comparison allows us to create competitive total compensation packages for our executive team. Annual adjustments are considered and based on the Company’s ability to achieve pre-established revenue and profitability goals.
Rewarding Performance.
We reward outstanding performance with cash bonuses that are based on financial measures, such as sales revenue or net income, or other goals, such as the consummation of an acquisition or product delivery. For more information on our bonus program, refer to “Elements of Executive Compensation—Incentive Compensation.”
Aligning Executive and Stockholder Interests.
We believe that equity-based compensation provides an incentive to our NEOs to build value for our Company over the long term and aligns the interests of our NEOs and stockholders. We use stock options because we believe that options will generate value to the recipient only if our stock price increases during the term of the option. The stock options granted to our NEOs vest solely based on the passage of time, other than in the event of a change of control. We believe that time-vested equity awards encourage long-term value creation and executive retention because executives can realize value from such rewards only if they remain employed by us until the awards vest.
Elements of Executive Compensation
The compensation currently paid to GlobalSCAPE’s executive officers consists of three core elements:
• | Base salary. |
• | Bonuses under a performance-based, non-equity incentive plan. |
• | Stock option awards granted pursuant to our 2010 Employee Long-Term Equity Incentive Plan, which we refer to as the 2010 Employee Plan, plus other employee benefits available to all employees of GlobalSCAPE. |
We believe these elements support our underlying philosophy of attracting and retaining talented executives while remaining within our budgetary constraints, creating cash incentives that reward Company-wide and individual performance, and aligning the interests of our named executive officers with those of GlobalSCAPE’s stockholders by providing the named executive officers equity-based incentives to ensure motivation over the long term. We view the three core elements of compensation as related but distinct. Although we review total compensation, we do not believe that significant compensation derived from one component should increase or reduce compensation from another component. We determine the appropriate level for each component of compensation separately. We have not adopted any formal or informal policies or guidelines for allocating compensation among long-term incentives and annual base salary and bonuses, between cash and non-cash compensation, or among different forms of non-cash compensation. We consider the experience, tenure, and seniority of each named executive officer in making compensation decisions.
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GlobalSCAPE does not have any deferred compensation programs or supplemental executive retirement plans. No perquisites are provided to GlobalSCAPE’s executive officers that are not otherwise available to all employees of GlobalSCAPE. No perquisites are valued in excess of $10,000 per employee.
Base Salary. Being mindful of our budgetary responsibilities, the base salary for all GlobalSCAPE NEOs are targeted at levels we believe are competitive relative to aa comparative group of the companies in the Salary.com Professional survey. This approach enables us to attract and retain the necessary talent a small competitive company needs to grow. This salary structure is reviewed annually to ensure its competitiveness within our peer group.
Base salaries are reviewed annually. Adjustments are determined during the fourth quarter of each year initially by our President with final approval coming from the Compensation Committee. For 2012, base salary increases for Company employees, including NEOs, averaged 3.0%.
Incentive Compensation. The Compensation Committee believes that paying incentive compensation in the form of bonuses or commissions helps create financial incentives for our NEOs that are tied directly to goals that best reflect their respective duties and responsibilities or the achievement of certain goals. The Compensation Committee approves the plans under which bonuses and commissions are paid and may, at its discretion, modify the goals and objectives upon which these payments are based.
If certain target levels of revenue and earnings before interest, taxes, depreciation and amortization, or EBITDA, were achieved for 2012, Messrs. Robinson and Albrecht were eligible for annual bonuses for 2012 equal to 40% and 35% of their base salaries, respectively. If actual revenue and EBITDA fall below the target levels, the base bonuses are reduced on a sliding scale by specified percentages to a point where if less than 85% of the target levels of revenue and EBITA are achieved, no bonus is earned. If actual revenue and EBITDA exceed the target levels, the base bonuses are increased on a sliding scale by specified percentages of up to 200%. Mr. Robinson’s bonus eligibility is specified in his employment agreement. Mr. Albrecht’s bonus is not specified in his employment agreement and was prorated for the portion of the year that he was employed beginning July 10, 2012. On the basis of the Company’s performance during 2012, the Compensation Committee approved a bonus payment of $36,300 for Mr. Robinson and $13,700 for Mr. Albrecht.
Mr. Buie is paid a sales commission each quarter based upon the amount and product mix of sales invoiced. For 2012, he was paid a commission at rates ranging from 0.88% to 1.25% of sales invoiced. We paid Mr. Buie 203,451 under this program in 2012.
The bonus plans for NEOs are determined by the Compensation Committee using the objectives established for the President and Chief Executive Officer and the Chief Financial Officer and provide for other individual subjective factors.
Mr. Morris was not paid a bonus for 2012 as a result of his retirement from the Company in November 2012.
Long-Term Equity Incentive Plan. GlobalSCAPE’s 2010 Employee Long Term Equity Incentive Plan, or 2010 Employee Plan, was approved by our stockholders in 2010. This plan authorizes us to grant incentive stock options, non-qualified stock options, and shares of restricted stock to our NEOs, as well as to all employees of GlobalSCAPE. A total of 3,000,000 shares of common stock are reserved for issuance under this plan. We use stock options as a form of long-term compensation because we believe that stock options motivate our NEOs to exert their best efforts on behalf of our stockholders and align the interests of our NEOs with our stockholders. Vesting is accelerated in certain events described under “Employment Agreements and Potential Payments Upon Termination or Change in Control.”
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The purpose of the 2010 Employee Plan is to employ and retain qualified and competent personnel and to promote the growth and success of GlobalSCAPE, which can be accomplished by aligning the long-term interests of the NEOs with those of the stockholders by providing the NEOs an opportunity to acquire an equity interest in GlobalSCAPE. All grants are made with an exercise price equal to the closing price of our common stock on the date of grant. On their date of hire and generally each year thereafter, our NEOs are granted options to purchase shares. These options generally vest ratably over three years from the option grant date. Options granted on the date of hire and each year thereafter generally may each be for the purchase of up to an additional 100,000 shares of our common stock with the exact number determined at the Compensation Committee’s and the Board’s discretion and based upon input from our President. We do not time stock option grants in coordination with the release of material non-public information.
Other Employee Benefits. GlobalSCAPE’s NEOs are eligible to participate in all of our employee benefit plans, such as medical, dental, group life, and long-term disability insurance on the same basis as other employees. GlobalSCAPE’s NEOs are eligible to participate in our 401(k) plan on the same basis as other employees. GlobalSCAPE’s Board of Directors, at its sole discretion, may authorize GlobalSCAPE to make matching cash contributions (in part or in whole) each year to the 401(k) on behalf of our employees.
Impact of Regulatory Requirements
Deductibility of Executive Compensation. In 1993, the federal income tax laws were amended to limit the deductions a publicly-held company is allowed for compensation paid to the chief executive officer and to the four most highly compensated executive officers other than the chief executive officer. Generally, amounts paid in excess of $1.0 million to a covered executive, other than performance-based compensation, cannot be deducted. In order to constitute performance-based compensation for purposes of the tax law, stockholders must approve the performance measures. Since GlobalSCAPE does not anticipate that the compensation for any executive officer will exceed the $1.0 million threshold in the near term, stockholder approval necessary to maintain the tax deductibility of compensation at or above that level is not being requested. We will reconsider this matter if compensation levels approach this threshold in light of the tax laws then in effect. We will consider ways to maximize the deductibility of executive compensation, while retaining the discretion necessary to compensate executive officers in a manner commensurate with performance and the competitive environment for executive talent.
Policy on Recovery of Compensation. Our President and Chief Executive Officer and Chief Financial Officer are required to repay certain bonuses and stock-based compensation they receive if we are required to restate our financial statements as a result of misconduct as required by Section 304 of the Sarbanes-Oxley Act of 2002.
Risk Considerations in our Compensation Program
During 2012, the Compensation Committee reviewed the Company’s compensation policies and practices in response to current public and regulatory concern about the link between incentive compensation and excessive risk-taking by corporations. The Committee concluded that the Company’s compensation program does not motivate imprudent risk taking and that any risks taken resulting from compensation policies and practices are not reasonably likely to have a material adverse effect on the Company. In reaching this conclusion, the Committee determined the following:
• | The Company’s annual incentive compensation is based on balanced performance metrics that promote progress towards longer-term Company goals. |
• | The Company’s compensation programs are capped at reasonable levels, as determined by a review of the Company’s budgetary constraints, economic position and prospects, as well as the compensation offered by comparable companies. |
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• | The oversight of the Compensation Committee in the operation of incentive plans and the high level of board involvement in approving material use of Company resources adequately mitigates imprudent risk-taking. |
The Compensation Committee of GlobalSCAPE reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management. Accordingly, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement.
This report is submitted by the members of the Compensation Committee, which consists of the following directors:
• | David L. Mann (Chairman of the Compensation Committee) |
• | Frank M. Morgan |
• | Phillip M. Renfro |
The following table summarizes compensation that GlobalSCAPE paid to our Chief Executive Officers and the next two, most highly compensated NEOs for the fiscal years ended December 31, 2012 and 2011.
Name & Principal Position | Year | Salary | Option Awards (1) | Non-Equity Incentive Plan Compensation | All Other Compensation | Total | ||||||||||||||||||
Craig A. Robinson | 2012 | $ | 250,000 | $ | — | $ | 36,300 | $ | 4,900 | $ | 291,200 | |||||||||||||
President and Chief Executive | 2011 | 225,000 | 187,154 | 102,500 | 4,500 | 519,154 | ||||||||||||||||||
James R. Morris | 2012 | 241,346 | — | — | 295,212 | 536,558 | ||||||||||||||||||
Former Chief Executive Officer(3) | 2011 | 250,000 | 187,154 | 90,000 | 4,900 | 532,054 | ||||||||||||||||||
William E. Buie | 2012 | 175,000 | — | 203,451 | 3,500 | 381,951 | ||||||||||||||||||
Executive Vice President of Sales | 2011 | 175,000 | 35,091 | 182,774 | 3,500 | 396,365 | ||||||||||||||||||
James W. Albrecht, Jr.(4) | 2012 | 94,269 | 166,893 | 13,657 | — | 274,819 | ||||||||||||||||||
Chief Financial Officer | 2011 | — | — | — | — | — |
(1) | These amounts represent the aggregate grant date fair value of stock option awards for fiscal years 2012 and 2011 calculated as described in our accounting policy for stock-based compensation in footnote 2 to our Consolidated Financial Statements included in our Form 10-K filed with the Securities and Exchange Commission on March 28, 2013. These amounts do not represent the actual amounts paid to or realized by the named executive officer for these awards during fiscal years 2012 or 2011. The value as of the grant date for stock options is recognized over the period of service required for the grant to become vested. |
(2) | Mr. Robinson was our President and Chief Operating Officer until January 2013 at which time our Board of Directors appointed him President and Chief Executive Officer. Mr. Robinson assumed the responsibilities previously assigned to Mr. Morris immediately upon Mr. Morris’ resignation. |
(3) | Mr. Morris resigned as our Chief Executive Officer in November 2012. |
(4) | Mr. Albrecht’s salary is the amount he was paid from his July 10, 2012 date of hire. |
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Relationship of Salary and Annual Incentive Compensation to Total Compensation
The following table sets forth the relationship of salary and annual incentive compensation to total compensation for our NEOs for 2012.
Executive | Percentage of Salary to Total Compensation | Percentage of Annual Cash Incentive Payment to Total Compensation | ||||||
Craig A. Robinson | 85.50 | % | 12.47 | % | ||||
James R. Morris | 44.98 | % | 0.00 | % | ||||
William E. Buie | 45.82 | % | 53.27 | % | ||||
James W. Albrecht, Jr. | 34.30 | % | 4.97 | % |
Employment Agreements and Potential Payments Upon Termination or Change in Control
GlobalSCAPE has entered into employment agreements with each of our named executive officers pursuant to which each will receive compensation as determined from time to time by the Board in its sole discretion
The employment agreements for Messrs. Robinson, Conyers and Buie provide that the Company will employ them through December 31, 2014 and, among other terms and conditions, provide for the following payments if their employment with the Company terminates under certain circumstances prior to that date:
• | For Mr. Robinson, the Company will pay him an amount equal to his base salary in effect at the date of termination for eighteen months following the date of termination and, if terminated in connection with a Change in Control, an additional lump sum equal to 1.5 times his annual base salary. |
• | For Messrs. Conyers and Buie, the Company will pay each of them an amount equal to their base salary in effect at the date of termination for twelve months following the date of termination and, if terminated in connection with a Change in Control, an additional lump sum equal to 1.5 times their base annual salary. |
The employment agreements for Mr. Albrecht does not provide for any minimum term of employment and does not provide for any payment to him in the event of termination, except that if his employment is terminated in connection with a Change in Control, the Company will pay him a lump sum equal to his annual base salary. In the event there is a Change in Control but Mr. Albrecht is not terminated in connection with that event, a one year employment term commences as of the date of the Change in Control and is automatically renewed on each subsequent annual anniversary date for an additional one year period unless the agreement is cancelled by the Company at least 90 days prior to the end of any such one year term.
A Change in Control occurs under these employment agreements when:
• | Any “person” or “group” (as such terms are used in Section 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended) is or becomes the beneficial owner, directly or indirectly, of securities representing 50% or more of the combined voting power of the Company’s then outstanding securities. |
• | Any person or group makes a tender offer or an exchange offer for 50% or more of the combined voting power of the Company’s then outstanding securities. |
• | At any time during any period of two consecutive years, individuals who at the beginning of such period constituted the Board of Directors of the Company cease for any reason to constitute a majority of the board. |
• | The Company consolidates, merges or exchanges securities with any other entity where the stockholders of the Company immediately before the effective time of such transaction do not beneficially own, immediately after the effective time of such transaction, shares or other equity interests entitling such stockholders to a majority of all votes. |
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• | Any person or group acquires all or substantially all of the Company’s assets. |
All of our employment agreements provide for termination without any further payments due if the termination is for “cause”, with that term defined to include any one of the following events:
• | The continued failure by employee to substantially perform his duties with the Company (other than any such failure resulting from his incapacity due to disability or any such actual or anticipated failure resulting from termination by employee for Good Reason as defined below) after a written demand for substantial performance is delivered to employee by the Board, which specifically identifies the manner in which the Board believes that employee has not substantially performed his duties. |
• | Employee engages in conduct which is demonstrably and materially injurious to the Company or any of its affiliates, monetarily or otherwise. |
• | Employee commits fraud, bribery, embezzlement or other material dishonesty with respect to the business of the Company or any of its affiliates, or the Company discovers that employee has committed any such act in the past with respect to a previous employer. |
• | Employee is indicted for any felony or any criminal act involving moral turpitude, or the Company discovers that employee has been convicted of any such act in the past. |
• | Employee commits a breach of any of the covenants, representations, terms or provisions of the employment agreement. |
• | Employee violates any instructions or policies of the Company with respect to the operation of its business or affairs. |
• | Employee uses illegal drugs. |
“Good Reason,” as used above, means, without the officer’s express written consent, any of the following:
• | The material failure by the Company, without employee’s consent, to pay to employee any portion of his current compensation within ten (10) days of the date any such compensation payment is due. |
• | Employer commits a material breach of any of the covenants, representations, terms or provisions hereof, and such breach is not cured within thirty (30) days after written notice thereof to the Company, which notice shall identify in reasonable detail the nature of the breach and gives Company an opportunity to respond, excluding, however, failure to pay salary within ten (10) days as further provided in preceding bullet point. |
• | Any material diminution of employee’s title, function, duties, authority or responsibilities, including reporting requirements (this provision does not apply to Mr. Bindseil). |
• | A reduction in employee’s salary as in effect on the date of this Agreement or as may be increased from time to time (this provision does not apply to Messrs. Albrecht and Bindseil). |
• | A material reduction in the benefits that are in effect from time to time for employee. |
• | A relocation of the employee’s principal place of employment to a location which is beyond a 50 mile radius from San Antonio, Texas (this provision does not apply to Messrs. Albrecht and Buie). |
If, during the term of the employment agreement for each named executive officer or any extension thereof, an officer’s employment is terminated other than for cause or disability, by reason of the officer’s death or retirement, or by such officer for Good Reason, then such officer will be entitled to receive the following:
• | For Mr. Robinson, his annual base salary for a period of eighteen months. |
• | For Messrs. Conyers and Buie, each executive’s annual base salary for a period of twelve months, or, if after a change in control, a lump sum equal to 1.5 times each executive’s annual base salary. |
• | For Messrs. Albrecht and Bindseil, no additional salary payments are due. |
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If any lump sum payment to a named executive officer would individually or together with any other amounts paid or payable constitute an “excess parachute payment” within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended, and applicable regulations thereunder, the amounts to be paid will be increased so that each named executive officer, as the case may be, will be entitled to receive the amount of compensation provided in his contract after payment of the tax imposed by Section 280G.
In the event of a Change in Control, unvested options to purchase our common stock that have been awarded to our NEOs will become fully vest.
The table below contains information concerning termination and change in control payments to each of our named executive officers as if the event occurred on December 31, 2012.
Name & Principal Position | Benefit | Before Change in Control Termination Without Cause or for Good Reason | Change of Control(1) | After Change in Control Termination Without Cause or for Good Reason(2) | ||||||||||
Craig A. Robinson | Severance | $ | 375,000 | $ | 375,000 | $ | 750,000 | |||||||
President and Chief Operating Officer | Award Acceleration | $ | — | $ | — | $ | — | |||||||
Doug Conyers | Severance | $ | 170,000 | $ | 255,000 | $ | 425,000 | |||||||
Senior Vice President of Engineering | Award Acceleration | $ | — | $ | — | $ | — | |||||||
William E. Buie | Severance | $ | 175,000 | $ | 262,500 | $ | 437,500 | |||||||
Executive Vice President of Sales and Marketing | Award Acceleration | $ | — | $ | 5,568 | $ | 94,500 | |||||||
James W. Albrecht, Jr. | Severance | $ | — | $ | 215,000 | $ | 215,000 | |||||||
Chief Financial Officer | Award Acceleration | $ | — | $ | — | $ | — |
(1) | The amounts on the option acceleration row reflect the intrinsic value of equity awards and are based upon the closing price for a share of our common stock of $1.43 on December 31, 2012 minus the exercise price. If the number in this column is zero, the option exercise price of all options held by that NEO is greater than the closing price of our common stock used in determining this amount. |
We previously had an employment agreement with James R. Morris, our former Chief Executive Officer that ended commensurate with his retirement in November 2012.
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Outstanding Equity Awards at Fiscal-Year End
The table below contains certain information concerning outstanding option awards at December 31, 2012 for our named executive officers.
OPTION AWARDS | ||||||||||||||||
Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price ($/Share) | Option Expiration Date | ||||||||||||
Craig A. Robinson | 300,000 | — | $ | 1.15 | 10/6/2018 | |||||||||||
President and Chief Operating Officer | 100,000 | — | $ | 1.83 | 10/1/2019 | |||||||||||
52,800 | 107,200 | $ | 1.91 | 12/5/2021 | ||||||||||||
James R. Morris | 100,000 | — | $ | 1.83 | 12/31/2013 | |||||||||||
Former Chief Executive Officer | 300,000 | — | $ | 1.55 | 12/31/2013 | |||||||||||
— | ||||||||||||||||
James W. Albrecht, Jr. | — | 150,000 | $ | 2.10 | 7/10/2022 | |||||||||||
Chief Financial Officer | ||||||||||||||||
William E. Buie | 99,000 | 51,000 | $ | 1.35 | 4/12/2020 | |||||||||||
Executive Vice President of Sales and Marketing | 9,900 | 20,100 | $ | 1.91 | 12/5/2021 | |||||||||||
GlobalSCAPE does not sponsor any pension benefit plans. None of the NEOs contribute to such a plan.
Non-Qualified Deferred Compensation
GlobalSCAPE does not sponsor any non-qualified defined compensation plans or other non-qualified deferred compensation plans.
The Board of Directors has the authority to determine the amount of compensation to be paid to its members for their services as directors and committee members and to reimburse directors for their expenses incurred in attending meetings.
During 2012, each director received a monthly fee of $4,000. Mr. Brown also receives an additional fee of $1,000 per month for serving as Chairman of the Board of Directors. Employee directors are not compensated for their service as directors.
We provide stock-based compensation to our directors under the GlobalSCAPE, Inc. 2006 Non-Employee Directors Long-Term Equity Incentive Plan, or the 2006 Directors Plan. Under this plan, a maximum of 500,000 shares of GlobalSCAPE common stock may be awarded. At March 25, 2013, options to purchase a total of 160,000 shares were outstanding of which 160,000 were vested, and 80,000 unvested, restricted stock awards were outstanding all of which restricted stock awards will become fully vested in June 2013, subject to continuing service requirements.
The 2006 Directors Plan is administered by the Compensation Committee of the Board of Directors which sets the exercise price, term, and other conditions applicable to each stock option granted under the Plan. If options, as opposed to restricted stock shares, are awarded, the exercise share price shall be no less than 100% of
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the fair market value on the date of the award while the option terms and vesting schedules are at the discretion of the Compensation Committee. The 2006 Directors Plan provides that each year, at the first regular meeting of the Board of Directors immediately following GlobalSCAPE’s annual stockholder’s meeting, each non-employee director shall be granted or issued maximum awards of either (1) a grant of an option to purchase 20,000 shares of our common stock or (2) be issued 20,000 shares of restricted common stock for participation in Board and Committee meetings during the previous calendar year. In 2012, the Compensation Committee granted 20,000 shares of restricted stock, which vest in June 2013, to each of the directors except for Mr. Morris, who received no such shares as a result of him being both a director and an employee at that time.
The following table sets forth a summary of compensation for the fiscal year ended December 31, 2012 that GlobalSCAPE paid to each director. GlobalSCAPE does not sponsor a pension benefits plan, a non-qualified deferred compensation plan or a non-equity incentive plan for our directors and, accordingly, these columns have been omitted from the following table.
Director Compensation Table
Name | Fees Earned or Paid in Cash | Stock Awards (1) | All Other Compensation (2) | Total | ||||||||||||
Thomas W. Brown | $ | 60,000 | $ | 39,400 | $ | 12,054 | $ | 111,454 | ||||||||
David L. Mann | $ | 48,000 | $ | 39,400 | $ | 12,054 | $ | 99,454 | ||||||||
Frank M. Morgan | $ | 48,000 | $ | 39,400 | $ | 17,215 | $ | 104,615 | ||||||||
Phillip M. Renfro | $ | 48,000 | $ | 39,400 | $ | 10,696 | $ | 98,096 |
(1) | These amounts represent the aggregate grant date fair value of restricted awards calculated as described in our accounting policy for stock-based compensation in footnote 2 to our Consolidated Financial Statements included in our Form 10-K filed with the Securities and Exchange Commission on March 28, 2013. (2) Consists of premiums on health and dental insurance. |
Outstanding Equity Awards at Fiscal-Year End Table
The table below contains certain information concerning outstanding option and stock awards at December 31, 2012 for each of the directors.
Name | Option Awards | Stock Awards | ||||||
Thomas W. Brown | 40,000 | 20,000 | ||||||
David L. Mann | 40,000 | 20,000 | ||||||
Frank M. Morgan | 40,000 | 20,000 | ||||||
Phillip M. Renfro | 40,000 | 20,000 |
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RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
GlobalSCAPE’s Audit Committee has selected Grant Thornton LLP to serve as our independent registered public accounting firm for the fiscal year ending December 31, 2013. Although stockholder ratification is not required, the Board of Directors has directed that the selection of Grant Thornton LLP be submitted to the stockholders for ratification at the annual meeting. A representative of Grant Thornton LLP will be present at the annual meeting, will have an opportunity to make a statement if he desires to do so, and will be available to respond to appropriate questions.
The affirmative vote of the holders of a majority of the votes cast is required to ratify the selection of Grant Thornton LLP. In the event the stockholders fail to ratify the appointment, the Board may reconsider its appointment for this year. Even if the appointment is ratified, the Board, in its discretion, may, if circumstances dictate, direct the appointment of a different independent registered public accounting firm at any time during the year, if the Board determines that such a change would be in the Company’s and its stockholders’ best interests.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF THE SELECTION OF GRANT THORNTON LLP AS GLOBALSCAPE’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING DECEMBER 31, 2013.
PRINCIPAL AUDITOR FEES AND SERVICES
Audit Fees. The aggregate fees billed for professional services rendered by Grant Thornton in connection with their audits of our consolidated financial statements and reviews of the condensed financial statements included in our Quarterly Reports on Form 10-Q and services that were provided in connection with statutory and regulatory filings or engagements were $221,338 and $334,432 in 2012 and 2011, respectively.
Audit-Related Fees. There were no fees paid to Grant Thornton in 2012 or 2011 for services other than the audit or review of GlobalSCAPE’s financial statements.
Tax Fees. There were no tax fees paid to Grant Thornton in 2012 or 2011.
All Other Fees. There were no aggregate fees billed for other services, exclusive of the fees disclosed above relating to financial statement audit services, rendered by Grant Thornton during the years ended December 31, 2012 or December 31, 2011.
Consideration of Non-Audit Services Provided by the Independent Auditors. The Audit Committee has considered whether the services provided for non-audit services are compatible with maintaining Grant Thornton’s independence and has concluded that the independence of such firm has been maintained.
AUDIT COMMITTEE PRE-APPROVAL POLICY
The Audit Committee’s policy is to pre-approve all audit, audit-related and non-audit services provided by the independent auditors. These services may include audit services, audit-related services, tax services, and other services. The Audit Committee may also pre-approve particular services on a case-by-case basis. The independent auditors are required to periodically report to the Audit Committee regarding the extent of services provided by the independent auditors in accordance with such pre-approval. The Audit Committee may also delegate pre-approval authority to one or more of its members. Such member(s) must report any decisions to the Audit Committee at the next scheduled meeting.
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The Audit Committee reviews GlobalSCAPE’s financial reporting process on behalf of the Board of Directors. Management has the primary responsibility for the financial statements and the reporting process, including the system of internal controls. The Audit Committee is responsible for engaging independent auditors to perform an independent audit of GlobalSCAPE’s consolidated financial statements in accordance with generally accepted accounting principles and to issue reports thereon. The Committee reviews and oversees these processes, including oversight of (i) the integrity of GlobalSCAPE’s financial statements, (ii) GlobalSCAPE’s independent auditors’ qualifications and independence, (iii) the performance of GlobalSCAPE’s independent auditors, and (iv) GlobalSCAPE’s compliance with legal and regulatory requirements.
In this context, the Committee hereby reports as follows:
1. | The Audit Committee has reviewed and discussed the audited financial statements with GlobalSCAPE’s management. |
2. | The Audit Committee has discussed with the independent registered public accounting firm the matters required to be discussed by the Statement on Auditing Standards No. 61, as amended (Codification of Statements on Auditing Standards, AU 380), as adopted by the Public Company Accounting Oversight Board (“PCAOB”) in Rule 3200T. |
3. | The Audit Committee has received the written disclosures and the letter from the independent registered public accounting firm required by the PCAOB regarding the independent registered public accounting firm’s communications with the Audit Committee concerning independence, and has discussed with the independent registered public accounting firm its independence. |
4. | Based on the review and discussions referred to in paragraphs (1) through (3) above, the Audit Committee recommended to the Board, and the Board has approved, that the audited financial statements be included in GlobalSCAPE’s Annual Report on Form 10-K for the year ended December 31, 2012, for filing with the Securities and Exchange Commission. |
This report is submitted by the members of the Audit Committee.
Phillip M. Renfro (Chairman of the Audit Committee)
David L. Mann
Frank M. Morgan
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PROPOSAL THREE
ADVISORY VOTE ON EXECUTIVE COMPENSATION
GlobalSCAPE asks that you indicate your support for our executive compensation policies and practices as described in our Compensation Discussion and Analysis, accompanying tables and related narrative contained in this Proxy Statement beginning on page 16. Your vote is advisory and will not be binding on the Board of Directors; however, the Board of Directors will review the voting results and take them into consideration when making future decisions regarding executive compensation.
The Compensation Committee is responsible for executive compensation and works to structure a compensation plan that reflects GlobalSCAPE’s underlying compensation philosophy of aligning the interests of our executive officers with those of our stockholders. Key elements of this philosophy are:
• | Establishing base salaries that are competitive with the companies in our comparative group, within GlobalSCAPE’s budgetary constraints and commensurate with GlobalSCAPE’s salary structure. |
• | Rewarding our NEOs for outstanding, Company-wide performance as reflected by financial measures, such as sales revenue or net income, or other goals, such as the consummation of an acquisition and product delivery as well as customer and employee satisfaction and compliance with regulatory requirements. |
• | Providing equity-based incentives for our NEOs to ensure that they are motivated over the long term to respond to GlobalSCAPE’s business challenges and opportunities as owners rather than just as employees. |
The Board of Directors recommends a vote “FOR” the following resolution:
RESOLVED: That the stockholders approve, on an advisory basis, the compensation of GlobalSCAPE’s executives named in the Summary Compensation Table, as disclosed in this Proxy Statement pursuant to the executive compensation disclosure rules of the Securities and Exchange Commission, which disclosure includes the Compensation Discussion and Analysis, the compensation tables and other executive compensation disclosures and related material set forth in this Proxy Statement.
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PROPOSAL FOUR
FREQUENCY OF FUTURE ADVISORY VOTES ON EXECUTIVE COMPENSATION
The Dodd-Frank Wall Street Reform and Consumer Protection Act requires us to provide an advisory stockholder vote to determine how often to present the advisory stockholder vote to approve the compensation of our named executive officers (the “say-on-pay vote”). We must solicit your advisory vote on whether to have the say-on-pay vote every 1, 2, or 3 years. Stockholders may vote as to whether the say-on-pay vote should occur every 1, 2 or 3 years, or may abstain from voting on the matter. The frequency (every 1, 2 or 3 years) that receives the highest number of votes will be deemed to be the choice of the stockholders.
We value the opinion of our stockholders and welcome communication regarding our executive compensation policies and practices. After taking into account various considerations described below, we believe that a triennial vote will provide stockholders with the ability to express their views on our executive compensation policies and practices while providing us with an appropriate amount of time to consult with our stockholders and to consider their input.
Our executive compensation is administered by our Compensation Committee, as described in this Proxy Statement. Compensation decisions are complex and, with respect to our named executive officers, are disclosed in our Proxy Statement. We believe that establishing a three-year time frame for holding stockholder advisory votes on executive compensation will both enhance stockholder communication and provide the Compensation Committee time to consider, engage with and respond to stockholders’ expressed concerns or other feedback. In addition, we also believe that a triennial vote is consistent with our long-term business strategy and gives the Compensation Committee sufficient time to measure long-term performance.
Although, as an advisory vote, this proposal is not binding upon GlobalSCAPE or its Board of Directors, the Board will carefully consider the stockholder vote on this matter.
While you have the opportunity to vote for every 1, 2 or 3 years, or abstain from voting on the frequency of future say-on-pay votes, the Board of Directors recommends that you vote for a frequency of every 3 years.
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STOCKHOLDER PROPOSALS TO BE PRESENTED AT NEXT ANNUAL MEETING
You may submit proposals for consideration at future stockholder meetings. For a stockholder proposal to be considered for inclusion in our Proxy Statement for the annual meeting next year, the Corporate Secretary must receive the written proposal at our principal executive offices no later than December 12, 2013. Such proposals also must comply with SEC regulations under Rule 14a-8 regarding the inclusion of stockholder proposals in Company-sponsored proxy materials. Proposals should be addressed to:
GlobalSCAPE, Inc.
Attn: Corporate Secretary
4500 Lockhill-Selma Rd, Suite 150
San Antonio, TX 78249
For a stockholder proposal that is not intended to be included in our Proxy Statement under Rule 14a-8, the stockholder must provide the information required by our Bylaws and give timely notice to the Corporate Secretary in accordance with our Bylaws, which, in general require that the notice be received by the Corporate Secretary:
• | Not earlier than the close of business on February 20, 2014; and |
• | Not later than the close of business on March 22, 2014. |
If the date of the stockholder meeting is moved more than 30 days after the anniversary of our annual meeting for the prior year, then notice of a stockholder proposal that is not intended to be included in our Proxy Statement under Rule 14a-8 must be received no later than the 10th day following the date on which a notice of the date of the annual meeting is mailed or the date of the meeting is publicly announced.
We are a reporting company under the Securities Exchange Act of 1934, as amended, and file annual, quarterly, and special reports and other information with the SEC. You may read and copy any material that we file with the SEC at the SEC’s Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. You may obtain more information about the SEC’s Public Reference Room by calling 1-800-SEC-0330. The SEC also maintains an Internet site that contains all of these reports and other information regarding our Company and other issuers that file electronically with the SEC at http://www.sec.gov. We also post links to our SEC filings at our web site at http://www.globalscape.com.
You may request a copy of GlobalSCAPE’s annual, quarterly, and current reports, Proxy Statements, and other information at no cost, including our annual report on Form 10-K, including financial statements and schedules thereto, for the year ended December 31, 2012, by writing or telephoning GlobalSCAPE at the following address:
GlobalSCAPE, Inc.
Attn: Chief Financial Officer
4500 Lockhill-Selma, Suite 150
San Antonio, Texas 78249
(210) 308-8267
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As of the date of this Proxy Statement, the Board of Directors does not know of any other matter that will be brought before the annual meeting. However, if any other matter properly comes before the annual meeting, or any adjournment thereof, the person or persons voting the proxies will vote on such matters in accordance with their best judgment and discretion.
By Order of the Board of Directors, |
Craig A. Robinson |
President and Chief Executive Officer |
April 26, 2013
San Antonio, TX
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www.globalscape.com
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GLOBALSCAPE, INC. 4500 LOCKHILL SELMA RD, SUITE 150 SAN ANTONIO, TX 78249 Investor Address Line 1 Investor Address Line 2 Investor Address Line 3 Investor Address Line 4 Investor Address Line 5 John Sample 1234 ANYWHERE STREET ANY CITY, ON A1A 1A1 VOTE BY INTERNET - www.proxyvote.com Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years. VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you call and then follow the instructions. VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. NAME THE COMPANY NAME INC. - COMMON THE COMPANY NAME INC. - CLASS A THE COMPANY NAME INC. - CLASS B THE COMPANY NAME INC. - CLASS C THE COMPANY NAME INC. - CLASS D THE COMPANY NAME INC. - CLASS E THE COMPANY NAME INC. - CLASS F THE COMPANY NAME INC. - 401 K CONTROL # 000000000000 SHARES 123,456,789,012.12345 123,456,789,012.12345 123,456,789,012.12345 123,456,789,012.12345 123,456,789,012.12345 123,456,789,012.12345 123,456,789,012.12345 123,456,789,012.12345 PAGE 1 OF 2 TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: KEEP THIS PORTION FOR YOUR RECORDS DETACH AND RETURN THIS PORTION ONLY THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. The Board of Directors recommends you vote FOR the following: 1. Election of Directors Nominees 01 Phillip M. Renfro 02 Frank M. Morgan The Board of Directors recommends you vote FOR proposals 2 and 3. 2 To ratify the appointment of Grant Thornton LLP as the Company’s independent registered public accounting firm for the year ending December 31, 2013. 3 To approve, by advisory vote, a resolution on executive compensation. The Board of Directors recommends you vote 3 YEARS on the following proposal: 4 To recommend, by advisory vote, the frequency of future advisory votes on executive compensation. NOTE: To transact any other business that may properly come before the meeting or any adjournment thereof, including a motion to adjourn or postpone the meeting. To withhold authority to vote for any individual nominee(s), mark “For All Except” and write the number(s) of the nominee(s) on the line below. Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name, by authorized officer. Investor Address Line 1 Investor Address Line 2 Investor Address Line 3 Investor Address Line 4 Investor Address Line 5 John Sample 1234 ANYWHERE STREET ANY CITY, ON A1A 1A1 JOB # Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date SHARES CUSIP # SEQUENCE #
For Withhold For All All All Except For Against Abstain 0000177763_1 R1.0.0.51160 0000000000 0 2
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Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The Annual Report and Notice & Proxy Statement is/are available at www.proxyvote.com . GLOBALSCAPE, INC. Annual Meeting of Stockholders June 10, 2013 9:00 AM This proxy is solicited by the Board of Directors The undersigned hereby appoints Craig Robinson and James W. Albrecht, Jr., and each of them, proxies with power of substitution to vote on behalf of the undersigned all shares of common stock that the undersigned may be entitled to vote at the Annual Meeting of Stockholders of GlobalSCAPE, Inc. (the “Company”) on June 10, 2013, and all adjournments and postponements thereof, with all powers that the undersigned would possess if personally present, with respect to the following: The shares represented by this proxy will be voted as specified on the reverse side, but if no specification is made, this proxy will be voted FOR the following proposals: 1. To elect the following two Directors to serve for a term of three years: Phillip M. Renfro and Frank M. Morgan. 2. To ratify the appointment of Grant Thornton, LLP as the Company’s independent registered public accounting firm for the year ending December 31, 2013. 3. To approve, by advisory vote, a resolution on executive compensation. 4. To recommend, by advisory vote, the frequency of future advisory votes on executive compensation. The proxies are authorized to vote in their discretion as to all other matters that may come before this meeting and all matters incidental to the conduct of this Meeting. A majority of the proxies or substitutes at the meeting may exercise all the powers granted thereby. Continued and to be signed on reverse side 0000177763_2 R1.0.0.51160