DEF 14A 1 stly20230501_def14a.htm FORM DEF 14A stly20230501_def14a.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

 

WASHINGTON, DC 20549

 

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

Filed by the Registrant ☒

Filed by a Party other than the Registrant  ☐

Check the appropriate box:

 

☐

Preliminary Proxy Statement

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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

☒

Definitive Proxy Statement

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Definitive Additional Materials

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Soliciting Material Pursuant to § 240.14a-12

 

HG Holdings, Inc.

(Name of Registrant as Specified in its Charter)

 

Payment of Filing Fee (Check the appropriate box):

 

☒

No fee required.
   

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Fee paid previously with preliminary materials
   

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Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11.

 

 
 

 

HG Holdings, Inc.

2115 E. 7th St., Suite 101

Charlotte, North Carolina 28204

 

 

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

 

To be held June 13, 2023

 

NOTICE IS HEREBY GIVEN that the 2023 Annual Meeting of Stockholders of HG Holdings, Inc. (the “Annual Meeting”) will be held at 2115 East 7th Street, Suite 101, Charlotte, NC 28204, on 13, June, 2023, at 1:00 P.M. Eastern Time, for the following purposes:

 

 

(1)

To consider and vote upon the election of one director to serve until our 2026 annual meeting of stockholders;

 

 

(2)

To consider and act on an advisory vote regarding the approval of compensation paid to our named executive officers for the year ended December 31, 2022;

 

 

(3)

To consider and act on an advisory vote regarding the frequency of the advisory vote regarding the approval of compensation paid to our named executive officers; and

 

 

(4)

To transact such other business as may properly be brought before the meeting or any adjournment thereof.

 

The stockholders of record of our common stock at the close of business on May 1, 2023 are entitled to notice of and to vote at the Annual Meeting or any adjournment thereof.

 

Only stockholders and persons holding proxies from stockholders may attend the Annual Meeting. If your shares are registered in your name and you wish to attend the Annual Meeting, you must bring a form of photo identification to the Annual Meeting. If your shares are held in "street name" by your broker, bank or other nominee and you wish to attend the Annual Meeting, you must bring a proxy or letter from that broker, bank or other nominee that confirms you are the beneficial owner of those shares, together with a form of photo identification. All stockholders are cordially invited to attend the Annual Meeting.

 

Even if you plan to attend the Annual Meeting in person, we request that you mark, date, sign and return your proxy as soon as possible so that your shares may be certain of being represented and voted at the Annual Meeting. You may also vote by phone or on the Internet by following the instructions on the enclosed proxy card. Any proxy given by a stockholder may be revoked by that stockholder at any time prior to the voting of the proxy.

 

  By Order of the Board of Directors,
     
    /s/ Justin H. Edenfield
    Justin H. Edenfield
    Secretary

 

 

May 2, 2023

 

 
 

 

HG Holdings, Inc.

2115 E. 7th St., Suite 101

Charlotte, North Carolina 28204

 

PROXY STATEMENT

 

ANNUAL MEETING OF STOCKHOLDERS

June 13, 2023

 

This proxy statement is furnished in connection with the solicitation of proxies by the board of directors of HG Holdings, Inc. (“we,” “us,” “our,” or the “Company”) for use at the Annual Meeting of Stockholders to be held on 13, June, 2023, at 1:00 P.M. Eastern Time, at 2115 East 7th Street, Suite 101, Charlotte, NC 28204 and any adjournment thereof (the “Annual Meeting”).

 

The matters to be considered and acted upon at the Annual Meeting are described in the foregoing notice of the meeting and this proxy statement. This proxy statement, our Annual Report on Form 10-K for the year ended December 31, 2022 (the “2022 Annual Report”) and the enclosed proxy card are being made available on or about May 12, 2023 to all holders of record of our common stock on May 1, 2023 (the “Record Date”).

 

We will bear the cost of preparing, assembling and mailing the proxy, this proxy statement, and other material enclosed and of all clerical and other expenses of solicitations. In addition to the solicitation of proxies by use of the mails, our directors, officers and employees may solicit proxies by telephone, e-mail, personal interview or other means. We will also request brokerage houses and other custodians, nominees and fiduciaries to forward soliciting material to the beneficial owners of our common stock held of record by those parties and will reimburse those parties for their expenses in forwarding soliciting material.

 

 

IMPORTANT NOTICE REGARDING AVAILABILITY OF PROXY MATERIALS: This proxy statement, the 2022 Annual Report and the proxy card are available on the Internet at https://www.cstproxy.com/hgholdingsinc/2023. The information contained on this website is not part of, or incorporated by reference in, this proxy statement.

 

 

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QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING

 

Q:

Why am I receiving materials in connection with the Annual Meeting?

 

A:

As permitted by the Securities and Exchange Commission (“SEC”), we are furnishing to stockholders our notice of annual meeting of stockholders, proxy statement and 2022 Annual Report primarily over the Internet. These materials are being made available to you because our board of directors is soliciting your proxy to vote your shares of our common stock at the Annual Meeting. This proxy statement includes information that we are required to provide to you under SEC rules and is designed to assist you in voting.

 

Q:

What is a proxy?

 

A:

A proxy is a person who votes the shares of stock of another person who could not attend a meeting. The term “proxy” also refers to the proxy card or other method of appointing a proxy. When you submit your proxy, you are appointing Justin H. Edenfield and Steven A. Hale II, each of whom is one of our officers, as your proxies, and you are authorizing each of them to vote your shares of common stock at the Annual Meeting. The appointed proxies will vote your shares of common stock as you instruct, unless you submit your proxy without instructions. If you submit your proxy without instructions, they will vote your shares (i) FOR the director nominee, (ii) FOR approval, on an advisory (non-binding) basis, of the compensation paid to the Company’s named executive officers for the year ended December 31, 2022, and (iii) for 1 YEAR on the advisory (non-binding) proposal on the frequency of the advisory (non-binding) vote on the compensation paid to our named executive officers. With respect to any other proposals to be voted upon, they will vote in accordance with the recommendation of our board of directors or, in the absence of such a recommendation, in their discretion. It is important for you to submit your proxy via the Internet (or by mail if you requested and received a printed copy of the proxy materials) or by phone as soon as possible whether or not you plan on attending the Annual Meeting.

 

Q:

Who is entitled to attend and vote at the Annual Meeting?

 

A:

Anyone who is a stockholder of record of our common stock at the close of business on May 1, 2023, the Record Date, or holds a valid proxy for the Annual Meeting from a stockholder of record as of the Record Date, is entitled to attend and vote at the Annual Meeting. If your shares are held in "street name" by your broker, bank or other nominee and you wish to attend the Annual Meeting, you must bring a proxy or letter from that broker, bank or other nominee that confirms you are the beneficial owner of those shares, together with a form of photo identification.

 

Q:

How many shares of common stock are entitled to vote at the Annual Meeting?

 

A:

As of the Record Date, there were 2,870,162 shares of our common stock outstanding and entitled to vote at the Annual Meeting. You are entitled to one vote for each share of common stock you held as of the close of business on the Record Date. Votes may not be cumulated in the election of directors.

 

Q:

What constitutes a quorum?

 

A:

A quorum consists of the presence, in person or by proxy, of stockholders holding a majority of the outstanding stock of the Company entitled to vote at the Annual Meeting. There must be a quorum present in order for the Annual Meeting to be a duly held meeting at which business can be conducted. If you submit your proxy, even if you abstain from voting, then you will still be considered part of the quorum. Broker non-votes will not be considered part of the quorum.

 

Q:

What may I consider and vote on?

 

A:

You may consider and vote on:

 

 

(1)

the election of one director to serve until our 2026 annual meeting of stockholders;

 

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(2)

the approval, on an advisory (non-binding) basis, of the compensation paid to the Company’s named executive officers for the year ended December 31, 2022;

 

 

(3)

the approval, on an advisory (non-binding basis), of the frequency of the advisory (non-binding) vote on the compensation paid to the Company’s named executive officers; and

 

 

(4)

such other business as may properly be brought before the meeting or any adjournment thereof.

 

Q:

How does the board of directors recommend I vote on the proposals?

 

A:

The board of directors recommends that you vote:

 

 

(1)

FOR the election of Jeffrey S. Gilliam as a director to serve until our 2026 annual meeting of stockholders;

 

 

(2)

FOR the approval of the compensation paid to the Company’s named executive officers for the year ended December 31, 2022; and

 

 

(3)

for 1 YEAR for the frequency of the advisory (non-binding) vote on the compensation paid to the Company’s named executive officers.

 

Q:

How can I vote at the Annual Meeting?

 

A:

If you are a stockholder of record, you have the right to vote at the Annual Meeting, and any previous proxies that you authorized will be superseded by the vote that you cast at the Annual Meeting. You may also attend the Annual Meeting without revoking any previously authorized proxy.

 

 

If your shares are held in “street name,” you will receive instructions from your broker, bank or other nominee describing how to vote your shares at the Annual Meeting. If your shares are held in “street name,” you are invited to attend the Annual Meeting but you must bring a proxy or letter from your broker, bank or other nominee that confirms you are the beneficial owner of those shares, together with a form of photo identification.

 

Q:

How can I vote my shares without attending the Annual Meeting?

 

A:

You can vote your shares without attending the Annual Meeting by submitting a proxy in advance of the Annual Meeting to authorize how your shares are voted at the Annual Meeting. Stockholders have the following options for submitting their votes by proxy:

 

 

●

via the Internet at www.cstproxyvote.com by accessing the website and following the instructions indicated on the proxy card;

 

 

●

by phone by calling 1 (866) 894-0536 to reach a toll-free, automated touchtone voting line; have your proxy card in hand and then follow the instructions provided; or

 

 

●

by mail by completing, signing, dating and returning the proxy card accompanying the proxy materials if you received a printed copy of the proxy materials by mail.

 

 

We encourage you to submit your proxy via the Internet, since it is quick, convenient and provides a cost savings to us. When you submit a proxy via the Internet prior to the date of the Annual Meeting, you will authorize how your shares will be voted at the Annual Meeting and your vote is recorded immediately. There is no risk that postal delays will cause your vote to arrive late and, therefore, not be counted. The granting of proxies electronically is permitted by Section 212(c)(2) of the Delaware General Corporation Law.

 

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If you are a stockholder of record, submitting your proxy via Internet, by phone or by mail will not affect your right to vote should you decide to attend the Annual Meeting. As described below under “What if I submit my proxy and then change my mind?,” attending and voting at the Annual Meeting will revoke your proxy submitted via Internet, by phone or by mail prior to the Annual Meeting.

 

 

If your shares are held in “street name,” you will receive instructions from your broker, bank or other nominee describing how to vote your shares.

 

Q:

What is the deadline for voting my shares?

 

A:

If you are a stockholder of record and submit your proxy by Internet, phone or mail, your proxy must be received by 11:59 p.m. Eastern Time on June 12, 2023 in order for your shares to be voted at the Annual Meeting. If your shares are held in “street name,” you must provide voting instructions by the deadline provided in the materials you receive from your broker, bank or other nominee.

 

Q:

What if I submit my proxy and then change my mind?

 

A:

You have the right to change or revoke your proxy at any time before the Annual Meeting by:

 

 

(1)

delivering a written revocation to Justin H. Edenfield, our Secretary, before the Annual Meeting at 2115 E. 7th Street, Suite 101, Charlotte, North Carolina 28204 so that it is received no later than June 12, 2023;

 

 

(2)

attending the Annual Meeting in person and voting as described above under “How can I vote at the Annual Meeting?” Attendance at the Annual Meeting will not by itself constitute revocation of a proxy; or

 

 

(3)

submitting another, later dated, proxy by Internet, telephone or mail on a later date prior to the deadline specified above under “What is the deadline for voting my shares?”

 

 

Only the most recent proxy vote will be counted, and all others will be discarded regardless of the method of voting.

 

Q:

What are the voting requirements to elect the director nominee?

 

A:

With regard to the election of directors, you may vote “FOR” the director nominee or you may “WITHHOLD” from voting on the director nominee. Under our bylaws, all elections of directors shall be decided by plurality vote. Plurality voting simply means that the director candidate getting the highest number of votes cast “FOR” his election at the Annual Meeting will be elected. Proxies marked “WITHHOLD” and “broker non-votes” are not considered votes cast for the foregoing purpose, and will not affect the outcome of this proposal. If you submit a proxy card with no further instructions, your shares will be voted in accordance with the recommendation of our board of directors.

 

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Q:

What are the voting requirements for the advisory (non-binding) proposal regarding the compensation paid to our named executive officers for the year ended December 31, 2022?

 

A:

You may vote “FOR,” “AGAINST” or “ABSTAIN” on the advisory (non-binding) proposal regarding the compensation paid to our named executive officers for the year ended December 31, 2022. Approval of the advisory (non-binding) vote on the compensation paid to our named executive officers for the year ended December 31, 2022 (“say on pay”) requires the affirmative vote of a majority of the shares represented, in person or by proxy, at the Annual Meeting and entitled to vote on the proposal. Abstentions will have the same legal effect of a vote “AGAINST” this proposal. Broker non-votes will have no impact on this proposal. As an advisory vote, this proposal is not binding upon us. However, the compensation and benefits committee of our board of directors, which is responsible for designing and administering our executive compensation program, values the opinions expressed by our stockholders and will consider the outcome of the vote when making future compensation decisions.

 

Q:

What are the voting requirements for the advisory (non-binding) proposal on the frequency of future stockholder say on pay votes?

 

A:

You may vote “1 YEAR,” “2 YEARS,” “3 YEARS” or “ABSTAIN” on the proposal regarding an advisory (non-binding) vote on the frequency of future stockholder say on pay votes. Our board of directors will consider the option that receives the highest number of votes as the recommended choice of the stockholders. Abstentions and broker non-votes will have no impact on this proposal. As an advisory vote, this proposal is not binding upon us. Our board of directors will consider the outcome of the vote when determining the frequency of holding future stockholder say on pay votes.

 

Q:

How will voting on any other business be conducted?

 

A:

Although we are not aware of any business to be considered at the Annual Meeting other than the election of one director, the advisory (non-binding) proposal regarding the compensation paid to our named executive officers for the year ended December 31, 2022, and the advisory (non-binding) proposal regarding the frequency of the vote on the compensation paid to our named executive officers, your submitted proxy gives authority to Justin H. Edenfield and Steven A. Hale II, and each of them, to vote on any matters in accordance with the recommendation of our board of directors or, in the absence of such a recommendation, in their discretion.

 

Q:

Where can I find more information?

 

A:

We file annual, quarterly and current reports, proxy statements and other information with the SEC. You may read and copy any reports, statements or other information we file with the SEC on the website maintained by the SEC at http://www.sec.gov.

 

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PROPOSAL 1

ELECTION OF DIRECTORS

 

Our board of directors has set the number of our directors at three, one of whom is our Chief Executive Officer, Steven A. Hale II, and two of whom are independent. Our directors are divided into three classes with staggered terms. The term of one director, Jeffrey S. Gilliam, is expiring at the Annual Meeting and our board of directors has nominated [Mr. Gilliam for re-election] to serve a three-year term expiring at our 2026 annual meeting of stockholders. At the Annual Meeting, you and the other stockholders will vote on the [re-election of Mr. Gilliam] to our board of directors.

 

Nominee for Election for a Three-Year Term Ending 2026

 

Jeffrey S. Gilliam, 65, has been a director since February 2015. Mr. Gilliam has served as managing member of Willow Oak Advisory Group, LLC (“Willow Oak Advisory Group”), a provider of business advisory services, since January 2016. Related to his duties with Willow Oak Advisory Group, Mr. Gilliam served as President of Columbus Industries, Inc. (a division of Filtration Group) from August 2019 until February 2022. Mr. Gilliam was a director of the Finley Group, a corporate advisory firm, from August 2012 until January 2016. Mr. Gilliam served as President of Toter, Incorporated (a division of Wastequip, LLC), a manufacturer of automated cart systems, from October 2008 until August 2012, and as Vice President Finance (Chief Financial Officer) from June 2002 until October 2008. Our corporate governance and nominating committee and our board of directors concluded that Mr. Gilliam is qualified to serve as a director by reason of his strong background in the manufacturing sector and his financial experience as a chief financial officer.

 

Mr. Gilliam was appointed to our board of directors in February 2015 pursuant to an agreement dated February 12, 2015 with Hale Partnership Fund, LP and Talanta Fund, L.P. (collectively with their affiliates, the “Hale-Talanta Group”), which had nominated two candidates for election to our board of directors at the 2015 annual meeting of stockholders. Under this agreement, we appointed Mr. Gilliam to our board of directors for a term expiring at the 2017 annual meeting of stockholders and the Hale-Talanta Group withdrew its nominations.

 

Vote Required

 

Under our bylaws, all elections of directors shall be decided by plurality vote. This means that, of the votes cast in person or by proxy at the Annual Meeting, the nominee receiving the highest number of “FOR” votes at the Annual Meeting will be elected as a director. Proxies marked “WITHHOLD” and broker non-votes will not count as votes for or against the nominee and will have no effect on the election of the director nominee. Our stockholders do not have the right to cumulate their votes for directors.

 

 

The shares represented by proxy will be voted as specified by the stockholder. If the stockholder does not specify a choice, the shares will be voted “FOR” the election of the nominee listed on the proxy card, except that in the event the nominee should not continue to be available for election, the proxies will be voted for the election of such other person as our board of directors may recommend. As of the date of this proxy statement, our board of directors has no reason to believe that the nominee will be unable or unwilling to serve.

 

Recommendation

 

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE ELECTION OF JEFFREY S. GILLIAM AS A DIRECTOR.

 

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Directors Whose Terms Do Not Expire this Year

 

Peter M. Sherman, 61, has been a director since December 2020. Mr. Sherman has served as Chief Risk Officer of Capitala Group, a lower middle market lender and equity investor, since February 2018. Mr. Sherman has also served as founder of Sherman Capital Management, a special situation investing and restructuring consulting firm for institutional investors, since July 2016. Mr. Sherman was a partner in Brevet Capital Management, a middle market direct lending hedge fund, from June 2014 to June 2016. Mr. Sherman was elected to our board of directors in December 2020 upon the recommendation of our Chairman and Chief Executive Officer and was reelected by the Company’s stockholders at the 2021 annual meeting of stockholders. Our corporate governance and nominating committee and our board of directors concluded that Mr. Sherman is qualified to serve as a director by reason of his experience in principal finance and debt capital markets, special situation restructuring, and as a capital provider to lower to middle market companies through his role as a chief risk officer. Mr. Sherman’s term as director expires at the 2024 annual meeting of stockholders.

 

Steven A. Hale II, 39, has been a director since February 2017 and has served as Chairman of our board of directors since November 2017. He has also served as our Chief Executive Officer since March 2018. Since March 2019, Mr. Hale has served as Chairman and Chief Executive Officer of HC Government Realty Trust, Inc. (“HC Realty”), an internally-managed real estate investment trust focused on acquiring, developing, financing, owning and managing build-to-suit or renovate-to-suit, single-tenant properties leased primarily to the U.S. government and administered by the U.S. General Services Administration or directly by the federal government agencies or sub-agencies occupying such properties. We currently own approximately 33.9% of the voting interest of HC Realty and HC Realty may be considered to be an affiliate of the Company. Mr. Hale is also the founder and sole manager of Hale Partnership Capital Management, LLC (“HPCM”), an asset management firm that serves as the investment manager to certain privately held investment partnerships. Mr. Hale has held his position with HPCM since 2010. From 2007 to 2010, prior to founding HPCM, Mr. Hale was an associate director with Babson Capital Management, LLC, an asset management firm, where he had responsibility for coverage of distressed debt investments across a variety of industries. From 2005 to 2007, Mr. Hale was a leveraged finance analyst with Banc of America Securities. Our corporate governance and nominating committee and our board of directors concluded that Mr. Hale is qualified to serve as a director by reason of his experience as our Chief Executive Officer, his experience with asset management and his indirect ownership of approximately 35% of our outstanding shares of common stock. Mr. Hale’s term as a director expires at the 2025 annual meeting of stockholders.

 

Mr. Hale was initially elected to our board of directors pursuant to the terms of an agreement dated January 30, 2017 with Hale Partnership Fund, LP, and related parties (collectively, the “Hale Group”), a stockholder group that, as of the date of the agreement, owned approximately 10% of our outstanding shares of common stock and which had nominated two candidates for election to our board of directors at the 2017 annual meeting of stockholders. Under this agreement, we appointed Mr. Hale to our board of directors and the Hale Group withdrew its nominations and agreed, among other things, to vote in favor of the election of Messrs. Hale and Gilliam as directors at the 2017 annual meeting of stockholders for a term that expired at the 2020 annual meeting of stockholders.

 

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CORPORATE GOVERNANCE

 

The Board of Directors

 

We operate under the direction of our board of directors. Our board of directors has determined that all current directors, with the exception of Mr. Hale, who serves as our Chief Executive Officer, are “independent directors” as that term is defined in the rules of The NASDAQ Stock Market (which we have adopted for purposes of determining such independence even though we are not listed on a national securities exchange).

 

Our board of directors met five times during 2022. During 2022, each of our incumbent directors attended at least 75% of the total meetings of the board of directors and the committees of the board of directors on which he served. Our board of directors has adopted a policy that all directors should attend our annual meeting of stockholders. All directors attended our 2022 annual meeting of stockholders.

 

Committee Information

 

Our board of directors currently has three standing committees: an audit committee, a compensation and benefits committee and a corporate governance and nominating committee. Each of these committees has a written charter, current copies of which can be found at our website, www.hgholdingsinc.net. The information contained on this website is not part of, or incorporated by reference in, this proxy statement.

 

Audit Committee. The audit committee presently consists of Messrs. Gilliam (Chair) and Sherman. Our board of directors has determined that Messrs. Gilliam and Sherman each meet the current independence requirements contained in the rules of The NASDAQ Stock Market, including the additional independence requirements applicable to audit committee members. Our board of directors has also determined that Mr. Gilliam qualifies as an “audit committee financial expert” as that term is defined in regulations promulgated by the SEC. The primary purpose of the audit committee is to assist our board of directors in fulfilling its responsibilities to oversee management regarding the Company’s accounting and financial reporting process, the Company’s internal controls over financial reporting and disclosure controls and procedures, the annual independent audit of the Company’s financial statements, and the Company’s compliance with legal and regulatory requirements. The audit committee also serves as direct liaison with our independent public accountants and is responsible for the selection or discharge of our accountants. The board of directors has adopted a written charter for the audit committee, a current copy of which is available on the Company’s website at http://www.hgholdingsinc.net/corporate-governance/. The audit committee met five times during 2022.

 

Compensation and Benefits Committee. The compensation and benefits committee presently consists of Messrs. Sherman (Chair) and Gilliam. Our board of directors has determined that Messrs. Sherman and Gilliam each meet the current independence requirements contained in the rules of The NASDAQ Stock Market, including the additional independence requirements applicable to compensation committee members. The primary purpose of the compensation and benefits committee is to (i) assist our board of directors in discharging its oversight responsibilities with respect to compensation of our executives and (ii) administer designated executive compensation plans of the Company. The compensation and benefits committee has not delegated its authority to any other person. The board of directors has adopted a written charter for the compensation and benefits committee, a current copy of which is available on the Company’s website at http://www.hgholdingsinc.net/corporate-governance/. The compensation and benefits committee met once during 2022.

 

Corporate Governance and Nominating Committee. The corporate governance and nominating committee presently consists of Messrs. Sherman (Chair) and Gilliam. Our board of directors has determined that Messrs. Sherman and Gilliam each meet the current independence requirements contained in the rules of The NASDAQ Stock Market. The primary purpose of the corporate governance and nominating committee is to (i) recommend to our board of directors director nominees to be presented at the annual meeting of stockholders and nominees to fill vacancies on the board of directors, whether caused by retirement, resignation, death, increase in the number of authorized directors or otherwise; (ii) identify individuals qualified to become members of the board of directors; and (iii) develop and recommend to the board of directors corporate governance policies applicable to the Company. The board of directors has adopted a written charter for the corporate governance and nominating committee, a current copy of which is available on the Company’s website at http://www.hgholdingsinc.net/corporate-governance/. The corporate governance and nominating committee met once during 2022.

 

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Nominations for Director

 

Selection of Directors

 

Unless otherwise provided by Delaware law and our bylaws, our corporate governance and nominating committee is responsible for recommending director nominees to our board of directors and our board of directors is responsible for presenting director nominees to be voted on at the annual meeting of stockholders, provided that any vacancy on the board of directors may be filled only by a majority vote of the remaining directors in office, even if the remaining directors do not constitute a quorum.

 

The corporate governance and nominating committee does not have a formal policy with respect to qualifications or diversity of members of the board of directors. The corporate governance and nominating committee may consider those factors it deems appropriate in evaluating director nominees made either by the board of directors or stockholders, including judgment, skill, strength of character, experience with businesses and organizations comparable in size or scope to the Company, experience and skills relative to other members of the board of directors, specialized knowledge or experience, and diversity. Depending upon the current needs of the board of directors, certain factors may be weighed more or less heavily. In considering candidates for the board of directors, the corporate governance and nominating committee evaluates the entirety of each candidate’s credentials.

 

The corporate governance and nominating committee will consider recommendations made by stockholders for director nominees who meet the criteria set forth above. Any stockholder wishing to recommend a candidate for consideration by the corporate governance and nominating committee should send a written statement addressed to our Secretary at our principal executive offices identifying the candidate and providing relevant qualifications and biographical information. When selecting nominees to recommend to the board of directors, the corporate governance and nominating committee evaluates all candidates, including candidates recommended by stockholders, equally.

 

Stockholder Nominations of Directors

 

Our bylaws provide that a stockholder entitled to vote in the election of directors may nominate (without the recommendation of the corporate governance and nominating committee or the board of directors) one or more persons for election as a director only if advance written notice is given. Written notice of such stockholder’s intent to make such nomination must be received by our Secretary or deposited in the U.S. mail, postage prepaid, to our Secretary not later than 120 days in advance of the anniversary date of our proxy statement for the previous year’s Annual Meeting. Any stockholder wishing to nominate one or more persons as director must submit the following information in writing:

 

 

(i)

the name and address of the stockholder who intends to make the nomination;

 

 

(ii)

a representation that the stockholder is a stockholder of record entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to nominate the person or persons specified in the notice;

 

 

(iii)

a description of all arrangements or understandings between the stockholder and each nominee and any other person or persons (naming such person or persons) pursuant to which any nomination is to be made by the stockholder;

 

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(iv)

such other information regarding each nominee as would be required to be included in a proxy statement filed pursuant to the proxy rules of the SEC, had the nominee been nominated by our board of directors; and

 

 

(v)

the consent of each proposed nominee to serve as one of our directors if so elected.

 

The chairman of the meeting may refuse to acknowledge the nomination of any person not made in compliance with the foregoing procedure.

 

By requiring advance notice of stockholder nominations, this bylaw affords the corporate governance and nominating committee and our board of directors the opportunity to consider the qualifications of the proposed nominees and, to the extent deemed necessary or desirable by the board of directors, to inform stockholders about these qualifications. The bylaw does not give our board of directors any power to approve or disapprove a stockholder’s nomination for election of directors. However, it may have the effect of precluding a contest for the election if its procedures are not followed, and therefore may discourage or deter a stockholder from conducting a solicitation of proxies to elect the stockholder’s own slate of directors.

 

Board Leadership Structure

 

Our board of directors does not have a policy on whether or not the roles of chief executive officer and chairman of the board should be separate. Our board of directors believes that it should be free to choose the leadership structure from time to time that is in the best interests of the Company and our stockholders. Our current chairman was an independent, non-employee director until he became chief executive officer effective March 2, 2018 in connection with the sale of substantially all our assets at the time. The board of directors believes the leadership structure combining the roles of chairman and chief executive officer is currently most effective and promotes our strategy to profitably grow our core title insurance and settlement services business.

 

Risk Management

 

Our board of directors has an active role, as a whole and through its committees, in overseeing management of our risks. We undertake at least annually a risk assessment to identify and evaluate risks and to develop plans to manage them effectively. This assessment is reviewed with the audit committee. Our board of directors and audit committee also regularly review information regarding our strategy, financial position and operations, as well as risks associated with each. In addition, the compensation and benefits committee is responsible for oversight of potential risks related to compensation programs and policies.

 

Hedging

 

The Company has not adopted any practices or policies regarding the ability of our employees (including officers) or directors, or any of their designees, to purchase financial instruments (including prepaid variable forward contracts, equity swaps, collars, and exchange funds), or otherwise engage in transactions, that hedge or offset, or are designed to hedge or offset, any decrease in the market value of our common stock either granted to the employee or director by the Company as part of the compensation of the employee or director, or held, directly or indirectly, by the employee or director.

 

Stockholder Communications

 

Our board of directors welcomes communications from stockholders and has adopted a procedure for receiving and addressing them. Stockholders may send written communications to the entire board of directors or to individual directors by addressing them to our Secretary at the following address: HG Holdings, Inc., 2115 E. 7th St., Suite 101, Charlotte, North Carolina 28204.

 

10
 

 

Review of Transactions with Related Persons

 

Under our code of conduct and audit committee charter, the audit committee must approve any transaction involving related persons which requires disclosure in our proxy statement under applicable rules of the SEC. Under the audit committee charter, the audit committee is responsible for reviewing these transactions and has the power to approve or disapprove these transactions. Other than the transaction set forth below, there were no such transactions since the beginning of our last fiscal year and none are currently proposed.

 

On August 5, 2022, Bradley G. Garner resigned as our Principal Financial and Accounting Officer; Secretary. In connection with Mr. Garner’s resignation, the Company and Mr. Garner entered into a consulting agreement dated August 5, 2022 (the “Consulting Agreement”) under which Mr. Garner agreed to provide certain transition and consulting services to the Company through December 31, 2022. The Consulting Agreement also contained customary provisions relating to intellectual property and work product rights being assigned to the Company as well as customary confidentiality provisions owed from Mr. Garner to the Company. Under the Consulting Agreement, the Company agreed to pay Mr. Garner $10,416 per month and Mr. Garner was entitled to a cash payment of $125,000, payable in two equal installments on August 31, 2022 and January 1, 2023.

 

Delinquent Section 16(a) Reports

 

The Securities Exchange Act of 1934, as amended (the “Exchange Act”), requires our executive officers and directors, and any persons owning more than 10% of our common stock, to file certain reports of ownership and changes in ownership with the SEC. Based solely on our review of the copies of the Forms 3, 4 and 5 we have received, and written representations from certain reporting persons that no Forms 5 were required to be filed by those persons, we believe that all executive officers, directors and 10% stockholders complied with these filing requirements.

 

Director Compensation

 

Our board of directors has approved a policy for compensation of non-employee directors providing that each non-employee director receives annual cash compensation in the amount of $35,000. The corporate governance and nominating committee reviews director compensation annually and, as part of that process, typically has for review publicly available director compensation information for other comparable companies. Our board of directors approves director compensation. Pursuant to the agreement under which he was elected to our board of directors, Mr. Hale has agreed to serve as a director without compensation.

 

The following table sets forth information concerning the compensation of directors for the year ended December 31, 2022.

 

DIRECTOR COMPENSATION

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2022

 

  

Name

  

Fees

Earned or

Paid

in Cash ($)

    

Stock

Awards ($)

(1)

    

Total ($)

  

STEVEN A. HALE II

     —       —       —  

PETER M. SHERMAN

     35,000       —       35,000  

JEFFREY S. GILLIAM

     35,000       —       35,000  

                             

(1)

At December 31, 2022, Messrs. Sherman and Gilliam held no stock options or restricted shares of common stock.

 

11
 

 

EXECUTIVE COMPENSATION

 

Executive Compensation Program

 

Our named executive officers for 2022 were Steven A. Hale II, our Chairman and Chief Executive Officer, Justin H. Edenfield, our Principal Financial and Accounting Officer; Secretary, effective as of August 5, 2022, and Brad G. Garner, our former Principal Financial and Accounting Officer; Secretary, who resigned from such role on August 5, 2022 (collectively the “Named Executive Officers”).

 

During 2022, our executive compensation program had two major components: salary and a cash bonus which neither of our executive officers received in the year. The program was designed to promote our strategy of profitably growing our core title insurance and settlement services business.

 

Our executive compensation program is administered by the compensation and benefits committee of our board of directors.

 

Salary and Bonus. Our Named Executive Officers received the following cash compensation in 2022, prorated for the period of time such Named Executive Officer served as an executive officer of the Company in 2022:

 

 

●

Steven A. Hale II received an annual salary of $125,000,

 

 

●

Justin H. Edenfield received an annual salary of $122,115 as prorated and $300,000 non-prorated, and

 

 

●

Bradley G. Garner received an annual salary of $74,519.

 

Long-Term Incentives. Our Named Executive Officers did not receive any restricted stock awards in 2022.

 

Summary Compensation Table

 

The following table sets forth compensation received by the Named Executive Officers for the years ended December 31, 2022 and 2021.

 

SUMMARY COMPENSATION TABLE

 

Name and Principal

Position

Year

  

Salary

($)

    

Bonus

($)

    

Stock

Awards

($)

    

Option

Awards

($)

    

Non-Equity

Incentive Plan

Compensation

    

All Other

Compensation

($)

    

Total

($)

  
                                                           

STEVEN A. HALE II,

2022

     125,000    

[_____]

    

[_____]

    

[_____]

    

[_____]

    

[_____]

       125,000  

Chairman and Chief Executive Officer

2021

     125,000      —      —      —      —      —       125,000  
                                                           

JUSTIN H. EDENFIELD,

Principal Financial and Accounting Officer; Secretary

2022

     122,115    

[_____]

    

[_____]

    

[_____]

    

[_____]

    

[_____]

       122,115  
                                                           

BRAD G. GARNER,

2022

     74,519    

[_____]

    

[_____]

    

[_____]

    

[_____]

    

[_____]

       74,519  

Former Principal Financial and Accounting

2021

     125,000      —      —      —      —      —       125,000  
Officer; Secretary                                                

 

12
 

 

Outstanding Equity Awards at Fiscal Year-End Table

 

The following table sets forth information concerning the year-end number and value of unexercised options, restricted stock that has not vested and equity incentive plan awards for each of the Named Executive Officers.

 

OUTSTANDING EQUITY AWARDS

AT DECEMBER 31, 2022 FISCAL YEAR-END

 

    Option Awards     Stock Awards          

Name

  

Number of Securities Underlying Unexercised Options (#) Exercisable

    

Number of Securities Underlying Unexercised Options (#) Unexercisable

    

Option

Exercise

Price ($)

    

Option

Expiration

Date

    

Number

of

Shares

of Stock

That

Have

Not

Vested

(#)

    

Market

Value of

Shares

of Stock

That

Have

Not

Vested

($)

    

Equity

Incentiv

Plan

Awards:

Number of Unearned

Shares

That Have

Not

Vested

(#)

    

Equity

Incentive

Plan

Awards:

Market

Value of

Unearned

Shares

That Have

Not

Vested

($)

  
                                                                 

STEVEN A. HALE II,

Chairman and Chief Executive Officer

     —        —       —       —       —        —       —  (1)     —  
                                                                 

JUSTIN H. EDENFIELD,

Principal Financial and Accounting Officer; Secretary

     —        —        —       —       —        —       —       —  
                                                                 

BRAD G. GARNER,

Former Principal Financial and Accounting Officer; Secretary

     —        —        —       —       —        —       —       —  

____________

 

(1)

On June 28, 2022, 27,777 restricted shares of common stock granted to Mr. Hale on June 28, 2019 vested and 6,944 restricted shares of common stock granted to Mr. Garner on June 28, 2019 vested. As of December 31, 2022, there were no outstanding equity awards.

 

Pay Versus Performance

 

The following table presents the Company’s pay versus performance disclosure as required by the SEC.

 

Year(1)

  

Summary

Compensation

Table Total for

EO ($) (2)

  

Compensation

Actually Paid to

PEO ($) (3)

  

Average

Summary

Compensation

Table Total for

Non-PEO

Named

Executive

Officers ($) (4)

  

Average

Compensation

Actually Paid to

Non-PEO

Named

Executive

Officers ($) (5)

  

Value of

Initial Fixed

$100

Investment

Based on

Total

Shareholder

Return ($) (6)

  

Company

Reported Net

Income ($)

2022

  

125,000

  

30,003

  

98,317

  

86,443

  

$110.06

  

3,659,000

2021

  

125,000

  

273,714

  

125,000

  

162,176

  

$184.75

  

2,760,000

 

 

(1)

Our principal executive officer (“PEO”) for the years ended December 31, 2022 and 2021 was Steven A. Hale II, our Chairman and Chief Executive Officer. Our non-PEO named executive officers for the year ended December 31, 2022 were Justin H. Edenfield, our Principal Financial and Accounting Officer; Secretary, and Brad G. Garner, our former Principal Financial and Accounting Officer; Secretary. Our non-PEO named executive officer for the year ended December 31, 2021 was Mr. Garner.

 

13
 

 

 

(2)

Amounts reported in this column represent the total compensation reported in the Summary Compensation Table for the applicable year in which Mr. Hale served as our PEO.

 

 

(3)

To calculate compensation actually paid, adjustments were made to the amounts reported in the Summary Compensation Table for the applicable year. A reconciliation of the adjustments for Mr. Hale is set forth following the footnotes to this table.

 

 

(4)

For 2022, represents the average of the total compensation reported in the Summary Compensation Table for Mr. Edenfield and Mr. Garner. For 2021, represents the total compensation reported in the Summary Compensation Table for Mr. Garner.

 

 

(5)

For 2022, represents the average of the compensation actually paid to Mr. Edenfield and Mr. Garner. For 2021, represents the compensation actually paid to Mr. Garner. To calculate compensation actually paid, adjustments were made to the amounts reported in the Summary Compensation Table for the applicable year. A reconciliation of the adjustments for Mr. Edenfield and Mr. Garner is set forth following the footnotes to this table.

 

 

(6)

Total Shareholder Return is calculated assuming a $100 investment in the Company on December 31, 2020, calculated through the end of 2021 or 2022, as the case may be, based on the Company’s closing stock price on the OTCQB.

 

Reconciliation of Compensation Actually Paid Adjustments

 

Year

Summary

Compensation

Table Total

($)

Minus

Grant Date

Fair Value

of Stock

Awards

Granted in

Fiscal Year

($)

Plus Fair

Value at

Fiscal Year-

End of

Outstanding

and

Unvested

Stock

Awards

Granted in

Fiscal Year

($)

Plus/(Minus)

Change in

Fair Value

of

Outstanding

an

Unvested

Stock

Awards

Granted in

Prior Fiscal

Years

($) (1)

Plus Fair

Value at

Vesting of

Stock

Awards

Granted in

Fiscal Year

that Vested

During

Fiscal Year

($)

Plus/(Minus)

Change in

Fair Value

as of

Vesting

Date of

Stock

Awards

Granted in

Prior Years

for which

Applicable

Vesting

Conditions

Were

Satisfied

During the

Fiscal Year

($) (2)

Minus Fair

Value as of

Prior Fiscal

Year-End of

Stock

Awards

Granted in

Prior Fiscal

Year that

Failed to

Meet

Applicable

Conditions

During

Fiscal Year

($)

Equals

Compensation

Actually Paid

($)
        Mr. Hale        

2022

125,000

---

---

---

---

(94,997)

---

30,003

2021

125,000

---

---

148,714

---

---

---

273,714
                 
        Mr. Edenfield        

2022

122,115

---

---

---

---

---

---

122,115
                 
        Mr. Garner        

2022

74,519

---

---

---

---

(23,748)

---

50,771

2021

125,000

---

---

37,176

---

---

---

162,176

 

14
 

 

 

(1)

For 2021, represents the change in fair value from December 31, 2020 to December 31, 2021 of (i) 27,777 restricted shares of common stock granted to Mr. Hale on June 28, 2019, which vested on June 28, 2022, and (ii) 6,944 restricted shares of common stock granted to Mr. Garner on June 28, 2019, which vested on June 28, 2022. The fair value as of December 31, 2021 reflects the Company’s common stock closing price on the OTCQB of $11.75 per share on December 31, 2021. The fair value as of December 31, 2020 reflects the Company’s common stock closing price on the OTCQB of $6.36 per share on December 31, 2020, as adjusted for the Company’s July 15, 2021 1-for-12 reverse stock split (the “Reverse Stock Split”).

 

 

(2)

Represents the change in fair value from December 31, 2021 to June 28, 2022 of (i) 27,777 restricted shares of common stock granted to Mr. Hale on June 28, 2019, which vested on June 28, 2022, and (ii) 6,944 restricted shares of common stock granted to Mr. Garner on June 28, 2019, which vested on June 28, 2022. The fair value as of June 28, 2022 reflects the Company’s common stock closing price on the OTCQB of $8.33 per share on June 28, 2022. The fair value as of December 31, 2021 reflects the Company’s common stock closing price on the OTCQB of $11.75 per share on December 31, 2021.

 

15
 

 

PROPOSAL 2

ADVISORY VOTE ON EXECUTIVE COMPENSATION (SAY-ON-PAY)

 

General Information

 

The Dodd-Frank Wall Street Reform and Consumer Protection Act requires us to periodically seek a non-binding advisory vote from our stockholders to approve the compensation as disclosed under “Executive Compensation,” including tabular disclosures and narrative sections accompanying the tabular disclosures in this proxy statement. Since the required vote is advisory, the result of the vote is not binding upon the board of directors. However, the compensation and benefits committee and our board of directors value the opinions of our stockholders and will take into account the results of the advisory “say-on-pay” vote when setting executive compensation policies and decisions. At the 2022 annual meeting of stockholders, approximately 99.1% of shares represented at the annual meeting and entitled to vote on the proposal approved, on an advisory basis, the compensation paid to our named executive officers for the fiscal year ended December 31, 2021.

 

Our board of directors has adopted a policy for an annual “say-on-pay” advisory vote and, at our 2017 annual meeting of stockholders, our stockholders voted in favor of holding an annual “say-on-pay” advisory vote. In accordance with this policy, stockholders are being asked to vote on the advisory “say-on-pay” proposal at the Annual Meeting.

 

Vote Required

 

Approval of this proposal requires the affirmative vote of a majority of the shares represented, in person or by proxy, at the Annual Meeting and entitled to vote on the proposal. Abstentions will have the same legal effect as a vote “AGAINST” this proposal. Broker non-votes will not count as votes for or against this proposal and will have no effect on the determination of this proposal.

 

The shares represented by proxy will be voted as specified by the stockholder. If the stockholder does not specify a choice, the shares will be voted “FOR” approval of the compensation paid to our Named Executive Officers for the year ended December 31, 2022.

 

Recommendation

 

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” APPROVAL OF THE COMPENSATION PAID TO OUR NAMED EXECUTIVE OFFICERS FOR THE YEAR ENDED DECEMBER 31, 2022, AS STATED BY THE FOLLOWING RESOLUTION:

 

“RESOLVED, that the stockholders approve, on an advisory basis, the compensation awarded by the Company to the named executive officers, as disclosed under “Executive Compensation,” including the tabular disclosures and other narrative executive compensation disclosures in the proxy statement for the 2023 Annual Meeting of Stockholders, as required by the rules of the Securities and Exchange Commission.”

 

16
 

 

PROPOSAL 3

ADVISORY VOTE ON THE FREQUENCY OF THE ADVISORY VOTE ON EXECUTIVE COMPENSATION (SAY-ON-PAY FREQUENCY)

 

General Information

 

In accordance with the Dodd-Frank Wall Street Reform and Consumer Protection Act and Section 14A of the Exchange Act, we are requesting our stockholders vote, on an advisory (non-binding) basis, on how frequently they would like to cast an advisory vote on the compensation of our named executive officers. By voting on this proposal, stockholders may indicate whether they would prefer an advisory vote on named executive officer compensation annually, every two years or every three years.

 

Our stockholders voted on a similar proposal in 2017 with a large majority voting to hold an advisory “say on pay” vote annually, as then recommended by our board of directors. Our board of directors is again recommending that the advisory “say on pay” vote be held on an annual basis. Our board of directors believes that conducting an advisory ‘‘say on pay’’ vote annually is the most appropriate for the Company. This frequency will continue to enable stockholders to annually express their views on our executive compensation program in a timely manner, based on the most recent information presented in our proxy statement. An annual advisory vote on executive compensation helps ensure ongoing stockholder communication with our compensation and benefits committee and our board of directors on executive compensation and corporate governance matters.

 

The vote on the frequency of the executive compensation vote is advisory, and therefore not binding on the Company, our board of directors or our compensation and benefits committee. Our board of directors and our compensation and benefits committee value the opinions of our stockholders and to the extent there is any significant vote on the frequency of the executive compensation vote for either of annually, every two years or every three years, our board of directors will consider our stockholders’ concerns in making its determination regarding the frequency of the executive compensation vote. Unless and until our board of directors determines otherwise, the next say-on-pay frequency vote will occur at our 2029 annual meeting of stockholders, since this vote is required to be held every six years.

 

Vote Required

 

Our board of directors will consider the option that receives the highest number of votes as the recommended choice of the stockholders. Abstentions and broker non-votes will have no effect on the determination of this proposal.

 

The shares represented by proxy will be voted as specified by the stockholder. If the stockholder does not specify a choice, the shares will be voted for “1 YEAR” on the frequency of future stockholder say-on-pay votes.

 

Recommendation

 

THE BOARD OF DIRECTORS RECOMMENDS A VOTE TO HOLD AN ADVISORY (NON-BINDING) VOTE ON THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS ON AN ANNUAL BASIS BY SELECTING “1 YEAR” AS YOUR CHOICE.

 

17
 

 

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

 

The following table sets forth certain information with respect to the beneficial ownership of our common stock as of March 29, 2023 by each stockholder we know to be the beneficial owner of more than 5% of our outstanding common stock, by each director, by each of our Named Executive Officers and by all directors and executive officers as a group. Unless otherwise set forth below, the address of each stockholder listed in the following table is 2115 E. 7th Street, Suite 101, Charlotte, North Carolina 28204. Percentages are based on 2,870,162 shares of common stock outstanding as of March 29, 2023.

 

Name

  

Amount and

Nature

of Beneficial

Ownership

      

Percent
of Class

    

Solas Capital Management, LLC

  

1,165,051

   (a)     40.6%    

Hale Partnership Fund, L.P. and related parties

  

974,968

   (b)     34.0%    

Jeffrey S. Gilliam

     4,165           (c)

Steven A. Hale II

  

1,002,745

   (d)     34.9%    

Bradley G. Garner

     7,091           (c)

Peter M. Sherman

     8,702           (c)

Justin H. Edenfield

     ---         ---    

All directors and executive officers as a group (4 persons)

  

1,015,612

   (d)     35.4%    

_______________________

(a)

The beneficial ownership information for Solas Capital Management, LLC (“Solas”) is based upon the Schedule 13D/A filed with the SEC on June 29, 2020 by Solas and its managing member, Frederick Tucker Golden (“Golden”), but such beneficial ownership information has been adjusted for the Company’s Reverse Stock Split. The Schedule 13D/A indicates that Solas and Golden each have shared voting and dispositive power over all of the reported shares. The business address of Solas and Golden is 1063 Post Road, 2nd Floor, Darien, Connecticut 06820.

(b)

The beneficial ownership information reported is based upon the Schedule 13D/A filed with the SEC on July 2, 2020 (prior to the Reverse Stock Split) by HPCM, Hale Partnership Capital Advisors, LLC, Hale Partnership Fund, L.P., MGEN II - Hale Fund, L.P., Clark - Hale Fund, L.P., and Steven A. Hale II and Forms 4 filed with the SEC on November 26, 2021, December 3, 2021, December 10, 2021 and December 17, 2021. HPCM and Steven A. Hale II each have shared voting and dispositive power over all of the reported shares. Steven A. Hale II also has sole voting power over 27,777 shares. Hale Partnership Capital Advisors, LLC has shared voting and dispositive power over 835,642 shares; Hale Partnership Fund, L.P. has shared voting and dispositive power over 703,019 shares, MGEN II - Hale Fund, L.P. has shared voting and dispositive power over 30,245 shares, and Clark - Hale Fund, L.P. has shared voting and dispositive power over 97,678 shares; a Managed Account for which HPCM serves as the investment manager has shared and dispositive power over 139,326 shares. In addition, the Dickinson-Hale Fund, L.P. has shared voting and dispositive power over 2,800 shares and Smith-Hale Fund, L.P. has shared and dispositive power over 1,900 shares. The Forms 4 indicate HPCM is the General Partner of Dickinson-Hale Fund, L.P. and Smith-Hale Fund, L.P. The principal business and principal office address for each of the aforementioned parties is 2115 E. 7th St., Charlotte, North Carolina 28204.

(c)

1% or less.

(d)

Includes 974,968 shares over which Mr. Hale shares voting and dispositive power as a result of his service as managing member of HPCM. See note (b) above.

 

18
 

 

INDEPENDENT PUBLIC AUDITORS

 

Fees and Services

 

The audit committee has appointed Cherry Bekaert LLP (“CB”) to serve as our independent public auditors for the fiscal year ending December 31, 2023.

 

Representatives of CB are expected to be present at the Annual Meeting. These representatives will have the opportunity to make a statement if they desire to do so and are expected to be available to respond to appropriate questions.

 

The following table sets forth the fees, including reimbursement of expenses, billed by, or expected to be billed by, CB for services to the Company in the fiscal years ended December 31, 2022 and December 31, 2021, all of which were pre-approved by the audit committee.

 

   

2022

    

2021

  

Audit Fees

   $ 70,000     $ 61,500  

Audit-Related Fees

     —       —  

Tax Fees

     —       —  

All Other Fees

     —    

‐‐—

  

Total

   $ 70,000     $ 61,500  

 

Audit Fees. These fees relate to professional services rendered for the audit of our annual financial statements and reviews of our Quarterly Reports on Form 10-Q.

 

Pre-Approval Policies and Procedures

 

The audit committee has established a policy to pre-approve all audit, audit-related, tax and other services proposed to be provided by our independent accountants before engaging the accountants for that purpose. Consideration and approval of these services generally occur at the audit committee’s regularly scheduled meetings. In order to address situations where it is impractical to wait until the next scheduled meeting, the audit committee has delegated the authority to approve non-audit services not in excess of $25,000 individually or in the aggregate to the chairman of the audit committee. Any services approved pursuant to this delegation of authority are required to be reported to the full audit committee at the next regularly scheduled meeting.

 

AUDIT COMMITTEE REPORT

 

The primary purpose of the audit committee is to assist our board of directors in fulfilling its responsibilities to oversee management regarding the Company’s accounting and financial reporting process, the Company’s internal controls over financial reporting and disclosure controls and procedures, the annual independent audit of the Company’s financial statements, and the Company’s compliance with legal and regulatory requirements. Management is responsible for preparing the Company’s financial statements and assessing the effectiveness of the Company’s internal control over financial reporting. The independent accountants are responsible for performing an independent audit of the Company’s financial statements in accordance with generally accepted auditing standards and for issuing a report thereon. In addition, the independent accountants also express their opinion on the Company’s internal control over financial reporting. The audit committee is directly responsible for the appointment, compensation and oversight of the work of the Company’s independent accountants.

 

In this context, the audit committee has met and held discussions with management and the independent accountants. Management represented to the audit committee that the Company’s financial statements were prepared in accordance with generally accepted accounting principles, and the audit committee has reviewed and discussed the financial statements with management and the independent accountants.

 

19
 

 

The audit committee discussed with the independent accountants the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board (the “PCAOB”) and the SEC. In addition, the audit committee has received the written disclosures and the letter from the independent accountants required by applicable requirements of the PCAOB regarding the independent accountants’ communications with the audit committee concerning independence, and has discussed with the independent accountants the independent accountants’ independence from the Company and management. The audit committee has also considered whether the provision of non-audit services by the independent accountants is compatible with maintaining the independent accountants’ independence.

 

In reliance on the reviews and discussions referred to above, the audit committee recommended to the board of directors that the audited financial statements be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, for filing with the SEC.

 

The members of the audit committee are:

 

Jeffrey S. Gilliam, Chairman

Peter M. Sherman

 

OTHER BUSINESS

 

Management knows of no other business which will be presented for consideration at the Annual Meeting, but should any other matters be brought before the meeting, it is intended that the persons named in the accompanying proxy will vote such proxy in accordance with the recommendation of our board of directors or, in the absence of such a recommendation, at their discretion.

 

ADDITIONAL INFORMATION

 

Voting Procedures

 

Votes will be tabulated by one or more Inspectors of Elections. With respect to the election of directors, the nominee receiving the greatest number of votes cast will be elected. The say-on-pay advisory resolution approving the compensation paid to our Named Executive Officers will be adopted if this proposal receives the affirmative vote of the holders of at least a majority of the shares of our outstanding common stock represented at the Annual Meeting, in person or by proxy, and entitled to vote on the proposal. With respect to the say-on-pay frequency proposal, our board of directors will consider the option that receives the highest number of votes as the recommended choice of the stockholders. The approval of any other matters properly brought before the meeting will require the affirmative vote of the holders of at least a majority of the shares of our outstanding common stock represented at the Annual Meeting, in person or by proxy, and entitled to vote on the subject matter.

 

If a stockholder, present in person or by proxy, abstains on any matter, the stockholder’s shares will not be voted on such matter. An abstention with respect to the election of directors or the say-on-pay frequency proposal will have no effect on the outcome of such proposal. An abstention with respect to the say-on-pay proposal will have the same legal effect as a vote “AGAINST” such proposal.

 

If you hold your shares in street name and you do not provide your broker with timely voting instructions on the election of directors, the say-on-pay proposal or the say-on-pay frequency proposal, rules governing voting of proxies by brokers will not permit your brokerage firm to vote your shares on such matters. Consequently, without your voting instructions on the election of directors, the say-on-pay proposal or the say-on-pay frequency proposal, a “broker non-vote” with respect to that matter will occur. Broker non-votes will have no effect on the outcome of the election of directors, the say-on-pay proposal or the say-on-pay frequency proposal.

 

A majority of the shares entitled to vote, represented in person or by proxy, will constitute a quorum for the transaction of business at the Annual Meeting. Shares for which the holder has elected to abstain or to withhold the proxies’ authority to vote on a matter will count toward a quorum. Broker non-votes will not count toward a quorum.

 

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Internet Availability of Proxy Materials

 

Under rules adopted by the SEC, we are furnishing proxy materials on the Internet and sending a Notice of Internet Availability of Proxy Materials (the “Notice”) to our stockholders. The Notice includes instructions on how to access the proxy materials on the Internet and instructions on how to access the proxy card to vote over the Internet. Paper copies of the proxy materials are available to stockholders upon request. We provide instructions on the Notice on how to request paper copies.

 

Stockholder Proposals for 2024 Annual Meeting

 

Any stockholder desiring to present a proposal to the stockholders at the 2024 annual meeting of stockholders and who desires that such proposal be included in our proxy statement and proxy card relating to that meeting, must transmit such proposal to our Secretary so that it is received at our principal executive offices on or before February 13, 2024. All such proposals should comply with applicable SEC regulations.

 

Any stockholder desiring to present any other matter (other than the nomination of a director) in person before an annual meeting of stockholders is required by our bylaws to notify our Secretary in writing no later than the close of business on the 60th day prior to the one-year anniversary of the immediately preceding annual meeting. For the 2024 annual meeting of stockholders, written notice must be delivered no later than the close of business on April 15, 2024. Any such notice must include the information required by Article II, Section 12 of our bylaws. Any stockholder desiring to nominate persons for election as directors at an annual meeting of stockholders must provide written notice to our Secretary as described under “Corporate Governance—Nominations for Director” above. For the 2024 annual meeting of stockholders, such written notice must be delivered no later than February 13, 2024.

 

With respect to stockholder proposals that are not included in the proxy statement for the Annual Meeting, the persons named in the proxy solicited by our board of directors for the Annual Meeting will be entitled to exercise the discretionary voting power conferred by such proxy under the circumstances specified in Rule 14a-4(c) under the Exchange Act, including with respect to proposals we receive after April 21, 2023.

 

In addition to satisfying the additional requirements under our bylaws, to comply with the universal proxy rules, stockholders who intend to solicit proxies in support of director nominees other than our nominees must provide notice that sets forth the information required by Rule 14a-19 under the Exchange Act no later than April 15, 2024.

 

 

 

  By Order of the Board of Directors,
     
    /s/ Justin H. Edenfield
    Justin H. Edenfield
    Secretary

 

May 2, 2023

 
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