□
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Preliminary Proxy Statement
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□
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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□
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Definitive Additional Materials
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□
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Soliciting Material Pursuant to § 240.14a-12
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□ |
Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
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1)
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Title to each class of securities to which transaction applies:
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2)
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Aggregate number of securities to which transaction applies:
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3)
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Per unit price or other underlying value of transaction computed pursuant to Exchange Act
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4)
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Proposed maximum aggregate value of transaction:
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5)
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Total fee paid:
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□ |
Fee paid previously with preliminary materials.
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□ |
Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify
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1) | Amount Previously Paid: |
2) | Form, Schedule or Registration Statement No.: |
3) | Filing Party: |
4) | Date Filed: |
1.
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Election of six directors.
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2.
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Ratification of the appointment of HoganTaylor LLP as our independent registered public accounting firm for fiscal 2019.
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3.
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Any other business as may properly come before the shareholders at the meeting.
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Scott Francis, Vice President, Chief Accounting Officer and Secretary
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TABLE OF CONTENTS
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Page
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General Information About The Meeting And Voting
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Identification of Officers
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Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
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Proposal No. 1: Election of Directors
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Board of Directors
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Audit Committee
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Compensation Committee
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Corporate Governance and Nominating Committee
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Strategic Direction Committee
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Code of Ethics
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Certain Relationships and Related Transactions
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Section 16(a) Beneficial Ownership Reporting Compliance
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Compensation of Directors and Executive Officers
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Summary Compensation Table
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Proposal No. 2: Ratification of Appointment of Independent Registered Public
Accounting Firm
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Principal Accounting Fees and Services
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Shareholder Proposals for 2020 Annual Meeting
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Other Matters
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•
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each person known by us who beneficially owns more than 5% of any class of our voting stock;
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•
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each director and nominee for director;
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•
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each executive officer named in the Summary Compensation Table on page 15; and
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•
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our directors and executive officers as a group.
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Name and Address
Of Beneficial Owner
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Number of Shares of
Common Stock
Beneficially Owned (1)
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Percent
Of
Class (1)
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||||||||||
David E. Chymiak
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2,714,805
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(2) |
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26.1
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%
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1221 East Houston
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Broken Arrow, OK 74012
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Kenneth A. Chymiak
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1,984,367
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(3) |
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19.2
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%
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15512 Larsen Street
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Overland Park, KS
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Susan C. Chymiak
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1,984,367
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(4) |
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19.2
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%
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15512 Larsen Street
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Overland Park, KS
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Thomas A. Satterfield, Jr.
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991,000
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(5) |
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9.6
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%
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2609 Caldwell Mill Lane
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Birmingham, AL 35243
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Joseph E. Hart
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233,184
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(6) |
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2.2
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%
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Scott A. Francis
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142,370
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(7) |
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1.4
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%
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James C. McGill
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125,230
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(8) |
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1.2
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%
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Thomas J. Franz
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70,063
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*
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David W. Sparkman
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32,052
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*
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Donald E. Kinison
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33,334
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(9) |
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*
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|||||||
Kevin D. Brown
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‒
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(10) |
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*
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|||||||
Colby J. Empey
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‒
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(11) |
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*
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|||||||
All Executive Officers and Directors as a group (9 persons)
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3,351,038
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(12) |
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31.2
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%
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(1) |
Shares which an individual has the right to acquire within 60 days pursuant to the exercise of options are deemed to be outstanding for the purpose of computing the percentage ownership of such individual, but
are not deemed to be outstanding for the purpose of computing the percentage ownership of any other person shown in the table. Includes shares for which the person has sole voting and investment power, or has shared voting and investment
power with his/her spouse.
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(2) |
Includes 50,000 shares subject to stock options which are fully exercisable. Substantially all of these shares are pledged to the Company to secure the promissory note issued by the buyer in connection with the
sale of the Company’s cable television segment. See “Certain Relationships and Related Transactions.”
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(3) |
Of the shares beneficially owned by Mr. Chymiak, 1,796,000 are held of record by his spouse, Susan C. Chymiak as trustee of the Susan Chymiak Revocable Trust. Mr. Chymiak has sole voting and investment power
over those shares held of record by him. Mr. Chymiak disclaims beneficial ownership of the shares held by his wife.
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(4) |
Of the shares beneficially owned by Mr. Chymiak, 1,796,000 are held of record by his spouse, Susan C. Chymiak as trustee of the Susan Chymiak Revocable Trust. Mr. Chymiak has sole voting and investment power
over those shares held of record by him. Mr. Chymiak disclaims beneficial ownership of the shares held by his wife.
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(5) |
Based on a Schedule 13G/A, filed on February 13, 2019, of Mr. Satterfield’s reported ownership, 30,000 shares are held jointly with Mr. Satterfield’s spouse; 3,400 shares are held individually by Mr.
Satterfield’s spouse; 75,000 shares are held by Tomsat Investment & Trading Co., Inc., a corporation wholly-owned by Mr. Satterfield and of which he serves as President; and 380,000 shares are held by Caldwell Mill Opportunity Fund,
which fund is managed by an entity of which Mr. Satterfield owns a 50% interest and serves as Chief Investment Manager. Additionally, Mr. Satterfield has limited powers of attorney for voting and disposition purposes with respect to the
following shares: A.G. Family L.P. (375,000 shares); Jeanette Satterfield Kaiser (28,000 shares); Richard W. Kaiser, III (15,000 shares); and David Satterfield (18,000 shares). These individuals and entities have the right to receive or
the power to direct the receipt of the proceeds from the sale of their respective shares.
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(7) |
Includes 100,000 shares subject to stock options which are fully exercisable. Mr. Francis has a total of 130,000 stock options.
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(8) |
Includes 55,147 shares acquired on 10/08/18 that will vest 20% per year with the first installment vesting on the first anniversary of each grant.
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(9) |
Includes 33,334 shares subject to stock options which are fully exercisable. Mr. Kinison has a total of 100,000 stock options.
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(10) |
Mr. Brown has a total of 75,000 stock options, none of which are exercisable at this time. The Company has an obligation to award Mr. Brown 25,000 additional stock options once shares are available
in the 2015 Incentive Stock Plan.
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(11) |
Mr. Empey has a total of 75,000 stock options, none of which are exercisable at this time. The Company has an obligation to award Mr. Empey 25,000 additional stock options once shares are
available in the 2015 Incentive Stock Plan.
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(12) |
Includes 366,667 shares subject to stock options which are fully exercisable.
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Plan Category
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Number of securities to be issued upon exercise of outstanding options, warrants and rights
(a)
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Weighted-average exercise price of outstanding options, warrants and rights
(b)
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Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
(c)
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Equity compensation plans approved by security holders
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290,000
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$2.40
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542,301
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Equity compensation plans not approved by security holders
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0
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0
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0
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Total
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290,000
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$2.40
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542,301
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•
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Selects the firm that will serve as our independent registered public accounting firm;
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•
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Reviews scope and results of audits with our independent registered public accounting firm, compliance with any of our accounting policies and procedures and the adequacy of our system of internal controls;
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•
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Oversees quarterly reporting; and
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•
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Performs the other functions listed in the Charter of the Audit Committee, a current copy of which may be found on our website at www.addvantagetechnologies.com.
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•
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selected HoganTaylor as our independent registered public accounting firm for the audit of the fiscal 2018 financial statements and the review of the interim quarterly financial statements;
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•
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reviewed and discussed the audited financial statements for the fiscal year ended September 30, 2018 with management;
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•
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discussed with the independent registered public accounting firm the matters required to be discussed by Statement on Auditing Standards No. 61, as amended (AICPA, Professional Standards, Vol. 1. AU Section
380), adopted by the Public Company Accounting Oversight Board in Rule 3200T;
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•
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received the written disclosures and the letter from the independent registered public accounting firm required by the applicable requirements of the Public Company Accounting Oversight Board 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 the independent registered public accounting firm’s
independence; and
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•
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based on the reviews and discussions referred to above, recommended to the Board that the audited financial statements be included in our Annual Report on Form 10-K for fiscal year 2018 for filing with the
Securities and Exchange Commission (the “SEC”).
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Thomas J. Franz
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James C. McGill
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David W. Sparkman
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1)
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an understanding of generally accepted accounting principles and financial statements;
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2)
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the ability to assess the general application of such principles in connection with the accounting for estimates, accruals and reserves;
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3)
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experience preparing, auditing, analyzing or evaluating financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of
issues that can reasonably be expected to be raised by the registrant’s financial statements, or experience actively supervising one or more persons engaged in such activities;
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4)
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an understanding of internal control over financial reporting; and
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5)
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an understanding of audit committee functions.
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•
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Evaluates performance and sets compensation and benefits of Chief Executive Officer;
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•
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Approves compensation and benefits programs of our other named executive officer(s);
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•
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Approves compensation and benefits of our non-employee Board of Directors; and
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•
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Performs the other functions listed in the Charter of the Compensation Committee, a current copy of which may be found on our website at www.addvantagetechnologies.com.
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•
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Provides oversight of the governance of the Board of Directors;
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•
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Makes recommendations to the Board as a whole concerning board size and composition;
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•
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Identifies individuals qualified to become Board members;
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•
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Selects or recommends that the Board select the director nominees to stand for election at the annual meeting of shareholders;
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•
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Recommends to the Board nominees for the positions of Chairman of the Board, chairmen of the various committees of the Board, and members of the various committees of the Board; and
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•
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Performs other functions listed in the Charter of the Corporate Governance and Nominating Committee, a current copy of which may be found on our website at www.addvantagetechnologies.com.
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Negotiate and approve or disapprove a transaction with David E. Chymiak or his affiliate for the sale of the Cable TV segment of the Company; and
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•
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Consider strategic options for the Company.
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Name
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Fees Earned or
Paid in Cash
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Restricted Stock Awards
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Total
Compensation
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Thomas J. Franz (1) (2) (3) (4)
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$11,300
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$15,000 (5)
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$26,300
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Joseph E. Hart (6)
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$4,500 (6)
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$15,000 (5)
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$19,500
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James C. McGill (1) (2) (3) (4) (7)
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$18,400 (7)
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$15,000 (5)
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$33,400
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David W. Sparkman (1) (3) (4)
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$11,375
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$15,000 (5)
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$26,375
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(1)
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Member of the Audit Committee.
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(2)
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Member of the Corporate Governance and Nominating Committee.
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(3)
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Member of the Compensation Committee.
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(4)
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Member of the Strategic Direction Committee.
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(5)
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The amounts shown represent the total fair value of the stock award of 11,450 shares on the date of grant for fiscal 2018. The fair value of the stock awards are amortized over the 12-month
holding period to compensation expense in the Consolidated Financial Statements contained in the Company’s Annual Report on Form 10-K. The fair value of the stock award was based on the closing market price of the stock on the date of
grant.
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(6)
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Joseph Hart’s director compensation represents his compensation until he was appointed President and Chief Executive Officer in July 2018.
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(7)
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James C. McGill and the Company entered into a Letter Agreement on October 8, 2018, which provides that Mr. McGill will receive annual compensation in the form of $75,000 cash and $75,000 in
shares of restricted stock for serving as Chairman of the Board.
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Name and Principal Position
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Year
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Salary
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Bonus
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Restricted
Stock
Awards
(1)
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Option Awards
(2)
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Non-Equity
Incentive Plan
Compensation
(3)
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All Other
Compensation
(4)
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Total
Compensation
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|||||||||||||||||||||||||
Joseph E. Hart
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President and Chief Executive Officer (5) (6)
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2018
2017
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$57,692
$–
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$–
$–
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$15,000
$15,000
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$−
$–
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$–
$–
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$962
$–
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$73,654
$15,000
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David L. Humphrey
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President and Chief Executive Officer (5) (7)
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2018
2017
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$429,763
$250,000
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$–
$–
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$15,000
$15,000
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$–
$–
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$–
$–
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$13,310
$14,834
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$458,073
$279,834
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David E. Chymiak
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Vice President, Chief Technology Officer
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2018
2017
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$294,580
$294,580
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$–
$–
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$15,000
$$15,000
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$−
$–
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$–
$11,513
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$16,861
$16,850
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$326,441
$337,943
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|||||||||||||||||||||
Scott A. Francis
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Vice President, Chief Financial Officer and Secretary
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2018
2017
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$175,000
$175,000
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$–
$–
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$15,000
$$15,000
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$−
$–
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$−
$–
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$12,350
$15,876
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$202,350
$205,876
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Donald E. Kinison
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Vice President of Sales (8)
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2018
2017
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$180,000
$75,462
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$70,000
$11,667
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$‒
$‒
|
$–
$33,150
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$–
$–
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$13,375
$3,006
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$263,375
$123,285
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(1)
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The amounts shown are director and Company officer compensation and represent the total fair value of the stock award of 11,450 shares and 8,287 shares on the date of the grant to
directors for fiscal 2018 and 2017, respectively. The fair value of the stock awards is amortized over the 12-month holding period to compensation expense in the Consolidated Financial Statements contained in the Company’s Annual
Report on Form 10-K for the years ended September 30, 2018 and 2017 for stock awards. The fair value of the stock awards was based on the closing market prices of the stock on the dates of the grants.
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(2)
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The amounts shown represent expenses recognized in the Consolidated Financial Statements contained in the Company’s Annual Report on Form 10-K for the years ended September 30, 2018 and
2017 for stock option awards. Mr. Humphrey forfeited 200,000 of stock option awards in fiscal 2018 when he resigned (see note 5). There were no forfeitures of stock option in fiscal 2017. All assumptions utilized to calculate the
expense amounts shown above are set forth in Note 9 of the Notes to Consolidated Financial Statements for the year ended September 30, 2018.
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(3)
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Fiscal 2018 and fiscal 2017 amounts were earned under the Senior Management Incentive Compensation Plan for fiscal 2018 and fiscal 2017 performance, respectively (see further discussion
below), and the amounts were paid in the first quarter of fiscal 2019 and fiscal 2018, respectively.
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(4)
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Represents amounts paid by the Company on behalf of an officer for matching contributions to the Company’s qualified 401(k) plan plus an auto allowance received during the year.
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(5)
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On July 2, 2018, the Board of Directors appointed Mr. Hart as the Company’s new President and Chief Executive Officer. On July 2, 2018, Mr. Humphrey resigned as the Company’s President
and Chief Executive Officer as well as from the Company’s Board of Directors.
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(6)
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The salary of Mr. Hart for fiscal year 2018 is from his date of hire on July 2, 2018. The restricted stock award reflected both in fiscal year 2018 and 2017 represents restricted stock
granted to Mr. Hart as a member of the Company’s Board of Directors.
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(7)
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The salary of Mr. Humphrey for fiscal year 2018 is through his resignation date of July 2, 2018 and reflects his severance payment of $180,243.
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(8)
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On May 2, 2017, the Company hired Mr. Kinison as the Vice President of Sales. Therefore, the salary for fiscal year 2017 is from his date of hire of May 2, 2017.
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Named Executive Officer
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Number of Securities Underlying Options which are Exercisable
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Number of Securities Underlying Options which are Unexercisable
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Option Exercise Price
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Option Expiration Date
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|||||||||
Joseph E. Hart
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200,000
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–
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$
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1.36
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9/13/2028
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||||||||
David E. Chymiak
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50,000
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–
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$
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3.21
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4/3/2024
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||||||||
Scott A. Francis
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50,000
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–
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$
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2.45
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4/2/2022
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||||||||
50,000
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–
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$
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3.21
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4/3/2024
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|||||||||
Donald E. Kinison |
33,334
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16,666
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$
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1.79
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5/2/2027
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2018
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2017
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|||||||
Audit Fees(1)
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$
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126,500
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$
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134,250
|
||||
Audit-Related Fees(2)
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1,000
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2,210
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||||||
Tax Fees(3)
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33,045
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28,445
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||||||
All Other Fees
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925
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‒
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||||||
Total
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$
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161,470
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$
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164,905
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1)
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Audit Fees represent fees for professional services provided in connection with the audit of our annual financial statements and review of our quarterly financial statements and audit services
provided in connection with the issuance of comfort letters, consents, and assistance with review of documents filed with the SEC.
|
2)
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Audit-Related Fees represent reimbursements of travel and other costs associated with audit services.
|
3)
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Tax Fees represent fees for annual tax return preparation and research of tax related matters.
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1.
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Audit services include audit work performed on the financial statements, internal control over financial reporting, as well as work that generally
only the independent registered public accounting firm can reasonably be expected to provide, including comfort letters, statutory audits, and discussions surrounding the proper application of financial accounting and/or reporting
standards.
|
2.
|
Audit-Related services are for assurance and related services that are traditionally performed by the independent registered public accounting firm,
including due diligence related to mergers and acquisitions and special procedures required to meet certain regulatory requirements.
|
3.
|
Tax services include all services, except those services specifically related to the audit of the financial statements, performed by the independent
registered public accounting firm’s tax personnel, including tax analysis; assisting with coordination of execution of tax related activities, primarily in the area of corporate development; supporting other tax related regulatory
requirements; and tax compliance and reporting.
|
4.
|
Other Fees are those associated with services not captured in the other categories. We generally do not request such services from the independent registered public
accounting firm other than the annual audit of our Defined Contribution Plan.
|
1. |
Election of directors.
|
◻
|
FOR all nominees listed below (except as indicated to the contrary below and subject to the discretion of the proxy as provided herein).
|
David E. Chymiak
|
Thomas J. Franz
|
Joseph E. Hart
|
James C. McGill
|
John M. Shelnutt
|
David W. Sparkman
|
◻
|
WITHHOLD AUTHORITY to vote for all the nominees above.
|
2. |
Proposal to ratify the appointment of HoganTaylor as our independent registered public accounting firm for fiscal 2019.
|