o
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Preliminary Proxy Statement
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o
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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x
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Definitive Proxy Statement
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o
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Definitive Additional Materials
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o
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Soliciting Material under §240.14a-12
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Everi Holdings Inc.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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x
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No fee required
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o
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
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(1)
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Title of 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 Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it was determined):
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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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o
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Fee paid previously with preliminary materials
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o
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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 the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
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(1)
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Amount Previously Paid:
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(2)
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Form, Schedule or Registration Statement No.:
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(3)
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Filing Party:
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(4)
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Date Filed:
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NOTICE OF 2019 ANNUAL MEETING OF STOCKHOLDERS
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When
:
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9:00 a.m. Pacific Time, Tuesday, May 21, 2019
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Where
:
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Everi Holdings Inc. Corporate Headquarters
7250 S. Tenaya Way, Suite 100
Las Vegas, Nevada 89113
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1.
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To elect the three Class II director nominees named in this Proxy Statement;
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2.
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To vote on an advisory (non-binding) resolution to approve the compensation of our named executive officers as shown in this Proxy Statement;
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3.
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To ratify the appointment of BDO USA, LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2019; and
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4.
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To transact such other business as may properly be brought before the Annual Meeting or any adjournment or postponement thereof.
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By Order of the Board of Directors,
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/s/ Michael D. Rumbolz
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Michael D. Rumbolz
President and Chief Executive Officer
April 22, 2019
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PROXY STATEMENT SUMMARY
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Internet
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Phone
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Mail
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In Person
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Visit
www.proxyvote.com
. You will need the 16-digit number included in your proxy card, voting instruction form or notice.
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Call 1-800-690-6903 or the number on your voting instruction form. You will need the 16-digit number included in your proxy card, voting instruction form or notice.
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Send your completed and signed proxy card or voting instruction form to the address on your proxy card or voting instruction form.
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If you plan to attend the meeting in person, you will need to bring a government-issued picture ID and proof of ownership of Everi Holdings Inc. common stock as of the record date.
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Proposal
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Description
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Board Recommendation
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Page (for more detail)
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1
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Election of three Class II director nominees named in this Proxy Statement.
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FOR the Board’s nominees
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10
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2
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Approval, on an advisory basis, of the compensation of our named executive officers.
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FOR
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26
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3
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Ratification of the appointment of BDO USA, LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2019.
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FOR
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52
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Qualifications of Our Class II Director Nominees:
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Name
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Age
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Director Since
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Principal (or Most Recent) Occupation
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Current Committees
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Geoffrey P. Judge
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65
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2006
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Former Partner at iNovia Capital, a manager of early stage venture capital funds
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•
Audit Committee
•
Compensation Committee (Chair)
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Nominating and Corporate Governance (“Nom Gov”) Committee
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Michael D. Rumbolz
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65
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2010
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President and Chief Executive Officer of the Company
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None
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Ronald V. Congemi
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72
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2013
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Member of the Philadelphia Federal Reserve’s Payments Advisory Council
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•
Audit Committee
•
Compensation Committee
•
Nom Gov Committee
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Corporate Governance Highlights
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WHAT WE DO
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WHAT WE DON’T DO
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þ
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86% Independent Directors
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X
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No Related Party Transactions
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þ
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Entirely Independent Committees
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X
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No Poison Pill
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þ
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Independent Chairman
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X
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No Pledging of Our Securities
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þ
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Separate Chairman and Chief Executive Officer Roles
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X
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No Hedging of Our Securities
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þ
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“Plurality-Plus” Voting for Directors (mandatory resignation policy for nominees who fail to receive an affirmative majority of votes cast)
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þ
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Audit Committee Financial Experts
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þ
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Regular Executive Sessions of Independent Directors
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þ
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Limitations on Outside Board Service
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þ
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All Directors Attended at Least 75% of Board and Respective Committee Meetings
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þ
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Annual Board and Committee Self-Evaluations
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þ
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Stock Ownership Guidelines for Officers and Directors
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þ
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Executive Compensation Based on Pay-for-Performance Philosophy
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þ
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Annual Say on Pay Advisory Vote
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þ
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Cash and Equity Compensation Clawback Policy
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þ
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Double-Trigger for Change in Control Severance Payments
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þ
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Executive Succession Planning Process
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þ
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Code of Business Conduct, Standards and Ethics (and related training)
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PROXY STATEMENT
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Proposal
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Board’s Voting Recommendations
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1
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Election of three Class II directors to serve until the Company’s 2022 annual meeting of stockholders.
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FOR the Board’s nominees
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2
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Approval, on an advisory basis, of the compensation of our named executive officers as shown in this Proxy Statement.
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FOR
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3
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Ratification of the appointment of BDO USA, LLP as the Company’s independent registered public accounting firm (“independent auditors”) for the fiscal year ending December 31, 2019.
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FOR
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Voting Item
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Board Recommendation
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Voting Standard
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Treatment of Abstentions & Broker Non-Votes
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Election of Directors
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For
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Plurality
(1)
of Votes Represented at the Meeting and Entitled to Vote Thereon
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No effect on the outcome of the election
(2)
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Say on Pay
(3)
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For
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Majority
(4)
of Votes Represented at the Meeting and Entitled to Vote Thereon
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Broker Non-Votes:
No effect on the outcome of this proposal
Abstentions: Same effect as a vote “Against” this proposal |
Auditor Ratification
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For
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Majority
(4)
of Votes Represented at the Meeting and Entitled to Vote Thereon
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Broker Non-Votes:
No effect on the outcome of this proposal
Abstentions: Same effect as a vote “Against” this proposal |
(1)
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Director nominees who receive the highest number of shares voted “For” his or her election are elected.
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(2)
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If a nominee in an uncontested election (such as this one) does not receive the vote of at least the majority of the votes cast, it may trigger the Company’s guideline regarding majority voting for directors. Votes to withhold authority are included in the total number of votes cast with respect to the director’s election. Full details of the guideline are set out in our Corporate Governance Guidelines, which are publicly available at the Corporate Governance section of the “Investors” page on our website at
ir.everi.com/investor-relations/corporate-governance/governance-documents
.
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(3)
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Although this vote is advisory and non-binding on our Board, the Board and the Compensation Committee will consider the voting results, along with other relevant factors, in connection with their ongoing evaluation of our compensation program.
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(4)
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Number of shares voted “For” exceeds 50% of the number of votes cast.
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•
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electronically by using the Internet;
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•
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over the telephone by calling a toll-free number; or
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•
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by mailing the enclosed proxy card.
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•
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submitting another proxy card bearing a later date;
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•
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sending a written notice revoking your proxy to the
Corporate Secretary of the Company at 7250 South Tenaya Way, Suite 100, Las Vegas, Nevada 89113, or via e-mail to
secretary@everi.com
;
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•
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submitting new voting instructions via telephone or the Internet (if initially able to vote in that manner); or
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•
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attending the Annual Meeting and voting in person.
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•
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Director Nomination: all information relating to such proposed nominee that is required to be disclosed in solicitations of proxies for election of directors in an election contest, or is otherwise required, in each case pursuant to Regulation 14A under the Exchange Act and Rule 14a-4(d) thereunder (including such person’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected); and
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•
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Stockholder Proposals: a brief description of the business desired to be brought before the meeting, the reasons for conducting such business at the meeting and any material interest in such business of such stockholder and the beneficial owner, if any, on whose behalf the proposal is made.
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Key financial highlights for 2018:
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Diluted Earnings per Share of $0.17
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Games segment record unit sales of 4,513 units
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Growth in same store transactions and total dollars processed all four quarters in 2018, reaching 17 consecutive quarters
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Completion of a repricing of the $820 million Term Loan Facility in May 2018, resulting in approximately $4 million in interest savings over the first twelve months following the repricing
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Key business highlights for 2018:
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Games: British Columbia Lottery Corporation selected our TournEvent® system as its slot tournament system of choice for casinos in the province
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Games: Extended agreement with the New York Lottery to provide their Video Gaming Central System for an additional 2-year period
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FinTech: Extended cash access services contract with Penn National Gaming, the nation’s largest regional operator with 40 properties in 18 jurisdictions throughout the United States
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FinTech: Extended FinTech Central Credit agreement with Caesars Entertainment Corporation
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Class
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Directors
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Term Commencement
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Term Expiration
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I
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E. Miles Kilburn and Eileen F. Raney
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2018 Annual Meeting of
Stockholders
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2021 Annual Meeting of Stockholders
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II
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Geoffrey P. Judge, Michael D. Rumbolz and Ronald V. Congemi
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2016 Annual Meeting of
Stockholders
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2019 Annual Meeting of Stockholders
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III
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Linster W. Fox and Maureen T. Mullarkey
(1)
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2017 Annual Meeting of
Stockholders
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2020 Annual Meeting of Stockholders
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(1)
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Ms. Mullarkey’s term of office began on March 7, 2018, when she was appointed to the Board.
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Geoffrey P. Judge
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Age 65
Independent
Director since 2006
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Geoffrey P. Judge
was a Partner at iNovia Capital, a manager of early stage venture capital funds, from 2010 to 2016. He has been an active private equity investor since 2002. From 2003 to 2005, he was an investor in and the Chief Operating Officer of Preclick, a digital photography software firm. In 2002, he was the Chief Operating Officer of Media Solution Services, Inc., a provider of credit card billing insert media. From 1997 to 2002, Mr. Judge was a co-founder and Senior Vice President and General Manager of the media division of 24/7 Real Media. From 1995 to 1997, he was a Vice President of Marketing for iMarket, Inc., a software company. From 1985 to 1994, Mr. Judge was a Vice President and General Manager in the credit card division of American Express.
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Skills and Qualifications:
Mr. Judge is valuable to our Board due to his extensive knowledge of the Company’s business and his experience in the financial services and payments industries.
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Michael D. Rumbolz
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Age 65
Director since 2010
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Michael D. Rumbolz
has served as our President and Chief Executive Officer since May 2016, having previously served as our Interim President and Chief Executive Officer since February 2016 and previously as an independent member of our Board since 2010 until his February 2016 appointment to the Interim President and Chief Executive Officer position. From 2008 to 2010, Mr. Rumbolz served as a consultant to the Company advising on various strategic, product development, and customer relations matters following the Company’s acquisition of Cash Systems, Inc., a provider of cash access services to the gaming industry, in 2008. Mr. Rumbolz served as Chairman and Chief Executive Officer of Cash Systems, Inc. from January 2005 until August 2008. Mr. Rumbolz is the former Vice Chairman of the Board of Casino Data Systems, was the President and Chief Executive Officer of Anchor Gaming, was the Director of Development for Circus Circus Enterprises (later Mandalay Bay Group) and was the President of Casino Windsor at the time of its opening in Windsor, Ontario. Mr. Rumbolz also has provided various consulting services and held various public and private sector employment positions in the gaming industry, including serving as Member and Chairman of the Nevada Gaming Control Board from January 1985 to December 1988. In addition, Mr. Rumbolz is the former Chief Deputy Attorney General of the State of Nevada. Mr. Rumbolz currently serves as Chairman of the Board of Directors of Employers Holdings, Inc. (NYSE: EIG), a holding company whose subsidiaries are engaged in the commercial property and casualty industry. In addition, Mr. Rumbolz currently serves as a member of the Board of Directors of VICI Properties Inc. (NYSE: VICI) and Seminole Hard Rock Entertainment, LLC.
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Skills and Qualifications:
Mr. Rumbolz’s vast experience in and knowledge of the highly regulated gaming industry, both as an operator and as a regulator, as well as his experience in the cash access business and skills gained from previous and current public and private board service are valuable to our Company and our Board.
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Ronald V. Congemi
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Age 72
Independent
Director since 2013
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Ronald V. Congemi
is an active member of the Philadelphia Federal Reserve’s Payments Advisory Council and served as a member of the Board of Directors of Clearent LLC, a merchant processing company, from 2007 to 2015, and as a consultant to the Acxsys Corporation of Canada, the operating arm of the Interac debit network of Canada from 2009 to 2011. He was also a paid advisor to the Gerson Lehrman Group, a global advisory firm. Mr. Congemi previously served as the Chief Executive Officer of First Data’s Debit Services Group from 2004 until his retirement in 2009. Mr. Congemi also served as Senior Vice President of Concord EFS, Inc., a payment and network services company (which was acquired by First Data Corporation in February 2004), and Concord’s Network Services Group from 2001 to 2004. Mr. Congemi founded Star Systems, Inc., an ATM and Personal Identification Number, or PIN, debit network in the United States, and served as its President and Chief Executive Officer from 1984 to 2001.
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Skills and Qualifications:
Mr. Congemi is valuable to our Board due to his extensive management experience in the payments industry.
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E. Miles Kilburn
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Age 56
Independent
Director since 2005
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E. Miles Kilburn
currently serves as Chairman of the Board. Mr. Kilburn is the co-founder and a partner of Mosaik Partners, LLC, a venture capital firm focused on financial and commerce enabling technology he founded in 2012. He has been a private investor focused on the electronic payments sector since June 2004. Prior to that, Mr. Kilburn was Executive Vice President and Chief Strategy Officer of Concord EFS, Inc., a payment and network services company (which was acquired by First Data Corporation in February 2004), from 2003 to 2004, and Senior Vice President of Business Strategy and Corporate Development from 2001 to 2003. He served as Chief Executive Officer of Primary Payment Systems, Inc. (now Early Warning Services, LLC), a subsidiary of Concord EFS, Inc., from 2002 to 2003, and Chief Financial Officer from 1997 to 1999. From 1995 to 2001, Mr. Kilburn served in various roles at Star Systems, Inc., ultimately as Group Executive Vice President and Chief Financial Officer.
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Skills and Qualifications:
Mr. Kilburn has valuable knowledge and skills in management due to his experience in investment and financial technology and payments industries, as well as his status as an “audit committee financial expert.”
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Maureen T. Mullarkey
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Age 59
Independent
Director since 2018
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Maureen T. Mullarkey
retired in 2007 as Executive Vice President and Chief Financial Officer of International Game Technology (currently known as International Game Technology PLC), a leading supplier of gaming equipment and technology, a position Ms. Mullarkey held from 1998 to 2007. She served in a variety of financial and executive management positions in her 18 years with the company. Ms. Mullarkey has served since 2014 as a director of PNM Resources, Inc. (NYSE: PNM), a holding company with two regulated utilities providing electricity and electric services in the State of New Mexico and Texas. Ms. Mullarkey previously served as a director of NV Energy, Inc. from 2008 to 2013 when the company was sold to Mid-American Energy Holdings Company, a subsidiary of Berkshire Hathaway, Inc. Ms. Mullarkey served as Entrepreneur in Residence with The Nevada Institute of Renewable Energy Commercialization from 2009 to 2011. Ms. Mullarkey has a B.S. from the University of Texas and an M.B.A. from the University of Nevada-Las Vegas.
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Skills and Qualifications
: Ms. Mullarkey provides valuable knowledge and skills to our Board due to her experience in the gaming industry, as well as her financial skills and status as an “audit committee financial expert.”
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WHAT WE DO
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WHAT WE DON’T DO
|
||
þ
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86% Independent Directors.
Six of our seven directors have been determined by us to be “independent” as defined by the SEC and NYSE listing standards, which the Board has adopted as our standards.
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X
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No Related Party Transactions.
For fiscal year 2018, we did not have any related party transactions.
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þ
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“Plurality-Plus” Voting for Directors.
Director nominees are elected by the highest number of shares cast “For” a director (mandatory resignation policy for nominees who fail to receive an affirmative majority of votes cast).
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X
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No Poison Pill.
We do not have a “poison pill” or stockholder rights plan.
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þ
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Independent Chairman.
Our Chairman of the Board is an independent director, which we believe ensures a greater role for the non-employee directors in setting agendas and establishing priorities and procedures for the work of the Board, as well as enables the independent directors to raise issues and concerns for Board consideration without immediately involving management.
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X
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No Pledging of Our Securities.
Our officers and directors are prohibited from pledging our stock to secure loans of any type.
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þ
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Separate Chairman and Chief Executive Officer Roles.
Our Board believes the separation of these roles promotes the balance between the Board’s independent authority to oversee our business and determine long-term strategy and the Chief Executive Officer’s implementation and execution with his management team of our strategic direction and oversight of the day-to-day operations and performance of the Company.
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X
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No Hedging of Our Securities.
Our officers and directors are prohibited from engaging in any hedging or other speculative trading in our stock.
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þ
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Entirely Independent Committees.
All of the members of our Audit, Compensation, and Nom Gov Committees are independent.
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þ
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Audit Committee Financial Experts.
Four of the six members of our Audit Committee qualify as an “audit committee financial expert” as defined by the SEC. The remaining two members qualify as “financially literate.”
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þ
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Regular Executive Sessions of Independent Directors.
Our independent directors regularly meet in executive session without management’s participation.
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þ
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Limitations on Outside Board Service.
Our directors may not serve on more than three public company boards without the approval of our Nom Gov Committee.
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þ
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All Directors Attended at Least 75% of Board and Respective Committee Meetings.
Each director attended at least 75% of the aggregate of the total number of meetings of the Board and the total number of meetings held by all Committees of the Board on which he or she serves held during 2018.
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þ
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Annual Board and Committee Self-Evaluations.
Our Board and Committee members conduct self-evaluations at least annually to determine whether the Board and its Committees are functioning effectively.
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þ
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Executive Succession Planning Process.
Our Board oversees Chief Executive Officer and senior management succession planning, which is reviewed at least annually.
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þ
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Code of Business Conduct, Standards and Ethics (and related training).
We have adopted a Code of Business Conduct, Standards and Ethics for our non-employee directors and all employees and provide training on compliance.
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ü
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Serves as the liaison between the Chief Executive Officer and the independent and non-employee directors;
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ü
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In conjunction with the Compensation Committee, reviews and approves corporate goals and objectives relevant to the Chief Executive Officer’s compensation, evaluates the Chief Executive Officer’s compensation based upon such evaluation, and communicates with the Chief Executive Officer regarding the foregoing.
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ü
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assesses risks relating to the Company’s financial statements and cybersecurity matters, including information technology risks (inclusive of but not limited to data privacy and security issues); and
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ü
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oversees both the Company’s external and internal audit functions and oversees the Company’s compliance with applicable laws and regulations.
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Name
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Audit
(4 meetings in 2018)
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Compensation
(6 meetings in 2018)
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Nom Gov Committee
(5 meetings in 2018)
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E. Miles Kilburn*
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X
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X
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X
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Geoffrey P. Judge
|
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X
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Chair
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X
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Ronald V. Congemi
|
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X
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X
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X
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Eileen F. Raney*
|
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X
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X
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Chair
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Linster W. Fox*
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Chair
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X
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X
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Maureen T. Mullarkey*
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X
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X
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X
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•
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the integrity of our financial statements in accordance with generally accepted accounting principles (“GAAP”) and applicable rules and regulations of the SEC and the NYSE, including the Company’s annual and quarterly audited financial statements;
|
•
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the performance and adequacy of the Company’s internal audit function and internal auditor;
|
•
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policies with respect to risk assessment and risk management, including information technology risks (inclusive of but not limited to data privacy and security issues) and material financial risk, and the steps management has taken to monitor and control such exposures (further detail about the role of the Audit Committee in risk assessment and risk management is included in the section entitled “Board and Corporate Governance Matters - Board Role in Risk Oversight” above);
|
•
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the performance and independence of the Company’s independent auditor;
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•
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our compliance with certain legal and regulatory requirements, including reports from the Company’s independent auditor in connection with the preparation of the Company’s financial statements; and
|
•
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related-party transactions.
|
•
|
Aon did not provide any services to the Company or its management, other than services to our Compensation Committee, and its services were limited to executive and director compensation consulting. Specifically, it did not provide, directly, or indirectly through affiliates, any non-executive compensation services, including, but not limited to, pension consulting or human resource outsourcing;
|
•
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Fees from the Company were less than 1% of Aon’s total revenue;
|
•
|
Aon maintains a Conflicts Policy with specific policies and procedures designed to ensure independence;
|
•
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None of the Aon consultants who worked on Company matters had any business or personal relationship with the Compensation Committee members;
|
•
|
None of the Aon consultants who worked on Company matters, or Aon, as a whole, had any business or personal relationship with executive officers of the Company; and
|
•
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None of the Aon consultants who worked on Company matters directly own Company stock.
|
•
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Board Independence
- Independence of candidates for director nominees, including the appearance of any conflict in serving as a director
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Tenure
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Independence
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Diversity
|
43% < 5 Years
29% 5 - 10 Years
28% > 10 Years
|
86% Independent
14% Non-Independent
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71% Male
29% Female
|
•
|
The values of cash retainers were increased to better align to competitive market practice;
|
•
|
The form of equity portion of compensation was changed from stock options to restricted stock units, which vest 33% per year for three years and settle upon the earlier of the director’s separation from service, the occurrence of a Change in Control, or the ten-year anniversary of the date of grant; and
|
•
|
The number of restricted stock units was determined based on stated cash value consistent with competitive market practice and converted to restricted stock units of equivalent value as of the date of grant.
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Annual Cash Retainer
|
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Restricted Stock Units
(1)
|
All non-employee Board Members
|
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$75,000
|
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17,687
(2)
|
Chairman of the Board
|
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$100,000
($75,000 retainer plus $25,000 Chair fee) |
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27,891
(3)
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Audit Committee Member
|
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$12,500
|
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None
|
Audit Committee Chair
|
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$25,000
|
|
None
|
Compensation Committee Member
|
|
$10,000
|
|
None
|
Compensation Committee Chair
|
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$20,000
|
|
None
|
Nom Gov Committee Member
|
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$9,375
|
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None
|
Nom Gov Committee Chair
|
|
$15,000
|
|
None
|
(1)
|
Vest in equal installments on each of the first three anniversary dates of the grant date and settle on the earliest of the following events: (i) March 7, 2028; (ii) death; (iii) the occurrence of a Change in Control (as defined in the Amended and Restated 2014 Plan), subject to qualifying conditions; or (iv) the date that is six months following the separation from service, subject to qualifying conditions.
|
(2)
|
Represents equity units initially calculated based on a value of $130,000. The actual value at the date of grant is disclosed in the following table.
|
(3)
|
Represents equity units initially calculated based on a value of $205,000. The actual value at the date of grant is disclosed in the following table.
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Name
|
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Fees earned
or paid in cash
|
|
Stock
awards
(1)
|
|
Total
|
||||||
E. Miles Kilburn
(2)
|
|
$
|
131,875
|
|
|
$
|
217,550
|
|
|
$
|
349,425
|
|
Geoffrey P. Judge
(2)
|
|
116,875
|
|
|
137,959
|
|
|
254,834
|
|
|||
Ronald V. Congemi
(2)
|
|
106,875
|
|
|
137,959
|
|
|
244,834
|
|
|||
Eileen F. Raney
(2)
|
|
112,500
|
|
|
137,959
|
|
|
250,459
|
|
|||
Linster W. Fox
(2)
|
|
119,375
|
|
|
137,959
|
|
|
257,334
|
|
|||
Maureen T. Mullarkey
(2)
|
|
87,339
|
|
|
137,959
|
|
|
225,298
|
|
(1)
|
Represents the fair value of the directors’ restricted stock unit awards in fiscal year 2018, as calculated in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718, Stock Compensation. The time-based restricted stock units awards granted in 2018 to independent members of our Board vest in equal installments on each of the first three anniversary dates of the grant date and settle on the earliest of the following events: (i) March 7, 2028; (ii) death; (iii) the occurrence of a Change in Control (as defined in the Amended and Restated 2014 Plan), subject to qualifying conditions; or (iv) the date that is six months following the separation from service, subject to qualifying conditions. For a discussion on the assumptions made in the valuation of the directors’ restricted stock unit awards, see the notes to the consolidated financial statements contained in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018.
|
(2)
|
At December 31, 2018, our independent directors had the following aggregate numbers of unvested restricted stock unit awards and shares underlying unvested option awards:
|
Name
|
|
Unvested stock awards
|
|
Shares underlying unvested option awards
|
||
E. Miles Kilburn
|
|
27,891
|
|
|
156,248
|
|
Geoffrey P. Judge
|
|
17,687
|
|
|
94,998
|
|
Ronald V. Congemi
|
|
17,687
|
|
|
94,998
|
|
Eileen F. Raney
|
|
17,687
|
|
|
95,000
|
|
Linster W. Fox
|
|
17,687
|
|
|
95,000
|
|
Maureen T. Mullarkey
|
|
17,687
|
|
|
—
|
|
Name
|
|
Age
|
|
Position
|
Michael D. Rumbolz
|
|
65
|
|
President and Chief Executive Officer
|
Randy L. Taylor
|
|
56
|
|
Executive Vice President and Chief Financial Officer
|
Edward A. Peters
|
|
56
|
|
Executive Vice President, Sales and Marketing
|
Dean A. Ehrlich
|
|
50
|
|
Executive Vice President, Games Business Leader
|
Harper H. Ko
|
|
45
|
|
Executive Vice President, Chief Legal Officer, General Counsel and Corporate Secretary
|
THE BOARD UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” THE RESOLUTION APPROVING THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS AS DISCLOSED IN THIS PROXY STATEMENT.
|
Name
|
Current Title
|
Michael D. Rumbolz
|
President and Chief Executive Officer
|
Randy L. Taylor
|
Executive Vice President and Chief Financial Officer
|
Edward A. Peters
|
Executive Vice President, Sales and Marketing
|
Dean A. Ehrlich
|
Executive Vice President, Games Business Leader
|
Harper H. Ko
|
Executive Vice President, Chief Legal Officer, General Counsel and Corporate Secretary
|
Executive Summary
|
Section I
|
Compensation Philosophy and Objectives
|
Section II
|
Compensation Decision Making Process
|
Section III
|
Compensation Competitive Analysis
|
Section IV
|
Elements of Compensation
|
Section V
|
Additional Compensation Practices and Policies
|
Section VI
|
•
|
Total revenues adjusted for the net versus gross retrospective impact of ASC 606 increased by approximately $58.8 million, or 14%, to approximately $469.5 million;
|
◦
|
Games segment revenues increased by approximately $36.8 million, or 17%, and FinTech segment revenues increased by approximately $22.0 million, or 12%;
|
•
|
Reported Net Income of approximately $12.4 million as a result of net income in each quarter;
|
◦
|
First year of profitability since the acquisition of the Games business in late 2014;
|
◦
|
Profitability driven by increased year-over-year revenues in both the Games and in FinTech segments;
|
•
|
Achieved Diluted Earnings per Share of $0.17 in 2018;
|
•
|
Record unit sales of 4,513 units in our Games segment;
|
•
|
Installed base of gaming machines of 13,999 units in our Games segment.
|
•
|
Performance-Based Compensation
: Executive compensation includes substantial variable compensation components, including short-term incentive compensation in the form of annual non-equity incentive cash bonuses that are contingent upon achievement of certain financial targets as well as long-term incentive compensation in the form of both (i) performance-based equity grants that are contingent upon achievement of pre-determined revenue and Adjusted Earnings Before Interest Taxes Depreciation and Amortization (“AEBITDA”) targets by December 31, 2020, and (ii) time-based equity grants for which full value can only be realized upon continued employment with the Company through the entirety of the four-year vesting period.
|
•
|
Short-Term Incentive Opportunities
: To better align our NEOs (less the Chief Executive Officer) with the outcomes of our annual performance, target short-term incentive opportunities were increased to 75% of base salary for 2018.
|
•
|
Short-Term Incentive Payouts
: Our AEBITDA was $230.4 million, slightly above our target performance level. As such, executives received annual non-equity incentives for this financial goal. Average achieved target payout for named executive employees was approximately 80% of individual annual short-term incentive target. (See Appendix A to this Proxy Statement for a reconciliation of financial measures prepared in accordance with GAAP to non-GAAP financial measures disclosed in this CD&A. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, financial results prepared in accordance with GAAP).
|
•
|
Equity Grants in 2018
: Consistent with past years, the Compensation Committee concluded that executive equity grants are a beneficial vehicle for retaining and motivating the executive team to pursue the creation of long-term sustainable stockholder value. In 2018, the Compensation Committee modified the way it delivers long-term awards by replacing the stock option design used in 2017 with a mix of performance- and time-based restricted share units. The performance-based restricted share units link executive pay outcomes to three-year corporate revenue growth and AEBITDA growth goals and time-based restricted share units vest over a four-year period.
|
•
|
Certain Base Salary Increases
: In light of strong corporate performance in 2017, the Compensation Committee determined that the Chief Executive Officer and the Chief Financial Officer should receive merit increases to their respective base salaries in 2018.
|
WHAT WE DO
|
|
WHAT WE DON’T DO
|
||
þ
|
Executive Compensation Based on Pay-for-Performance Philosophy
. We align the interests of our executives and stockholders through the use of performance-based annual cash incentive compensation and service and performance-based long-term equity incentive compensation.
|
|
X
|
No Pledging of Our Securities.
Our officers and directors are prohibited from pledging our stock to secure loans of any type.
|
þ
|
Double-Trigger Severance Payments.
A Change in Control by itself is not sufficient to trigger severance payments, it must also be accompanied by a qualifying termination.
|
|
X
|
No Hedging of Our Securities.
Our officers and directors are prohibited from engaging in any hedging or other speculative trading in our stock.
|
þ
|
Cash and Equity Clawback Policy.
We have a clawback policy regarding the recoupment of incentive compensation if an executive officer willfully committed an illegal act, fraud, intentional misconduct or gross recklessness that caused a mandatory restatement of our financials.
|
|
X
|
No Defined Benefit or Supplemental Retirement Plans.
We do not provide pension arrangements, retirement plans or nonqualified deferred compensation plans or arrangements to our executives, other than benefits generally available to our employees.
|
þ
|
Stock Ownership Guidelines for Officers and Directors.
Our officers and directors are required to accumulate stock holdings over a reasonable period of time that is a multiple of their respective base salaries or Board retainers, as applicable.
|
|
X
|
No Excise Tax Gross-Ups.
Our NEOs are not entitled to any such gross-up.
|
þ
|
Independent Committee Members.
Our Compensation Committee is comprised of entirely independent members.
|
|
X
|
No Excessive Perquisites.
We do not provide perquisites or other personal benefits to executive officers that are not available to all employees.
|
þ
|
Independent Compensation Consultant.
We engage an independent compensation consultant to review and provide recommendations regarding our executive compensation program.
|
|
|
|
þ
|
Peer Group Analysis.
We review total direct compensation (base salary, annual cash incentive and long-term incentive payments) and the mix of compensation components for the NEOs relative to the peer group as one of the factors in determining if compensation is adequate to attract and retain executive officers.
|
|
|
|
þ
|
Annual Say on Pay Advisory Vote.
|
|
|
|
Type
|
Element
|
Performance Period
|
Objective
|
Performance Measured and Rewarded
|
Fixed
|
Base Salary
|
Annual
|
Recognizes an individual’s role and responsibilities and serves as an important retention vehicle
|
• Reviewed annually and set based on
market competitiveness, individual
performance and internal equity
considerations
|
|
|
|
Short-Term Incentive Plan
|
|
Performance -based
|
Annual Cash Bonus
|
Annual
|
Rewards achievement of annual financial objectives and individual performance goals
|
• Corporate AEBITDA (37.5%)
• Segment AEBITDA (37.5%)
• Individual Performance Goals (25%)
|
|
|
|
Long-Term Incentive Plan
|
|
Performance -based
|
Performance-Based Restricted Stock Units
|
Long-Term
|
Supports the achievement of long-term financial objectives and share price
|
• Revenue growth (50%)
• AEBITDA growth (50%)
• Three year performance period
|
|
Time-Based Restricted Stock Units
|
Long-Term
|
Aligns the interests of management and stockholders and supports share price growth
|
• Vests ratably over four years
|
Comparator Company
|
|
Ticker
|
|
Type
|
Boyd Gaming Corporation
|
|
BYD
|
|
Gaming
|
Scientific Games Corp.
|
|
SGMS
|
|
Gaming
|
Churchill Downs Inc.
|
|
CHDN
|
|
Gaming
|
JAKKS Pacific, Inc.
|
|
JAKK
|
|
Gaming
|
Zynga, Inc.
|
|
ZNGA
|
|
Gaming
|
Glu Mobile, Inc.
|
|
GLUU
|
|
Gaming
|
Pinnacle Entertainment
(1)
|
|
PNK
|
|
Gaming
|
Red Rock Resorts, Inc.
|
|
RRR
|
|
Gaming
|
Eldorado Resorts, Inc.
|
|
ERI
|
|
Gaming
|
Tropicana Entertainment Inc.
(1)
|
|
TPCA
|
|
Gaming
|
Golden Entertainment Inc.
|
|
GDEN
|
|
Gaming
|
VeriFone Systems, Inc.
(1)
|
|
PAY
|
|
Payments
|
Euronet Worldwide, Inc.
|
|
EEFT
|
|
Payments
|
Moneygram International Inc.
|
|
MGI
|
|
Payments
|
Blackhawk Network Holdings, Inc.
(1)
|
|
HAWK
|
|
Payments
|
Cardtronics, Inc.
|
|
CATM
|
|
Payments
|
WEX Inc.
|
|
WEX
|
|
Payments
|
Green Dot Corporation
|
|
GDOT
|
|
Payments
|
ACI Worldwide, Inc.
|
|
ACIW
|
|
Payments
|
Evertec, Inc.
|
|
EVTC
|
|
Payments
|
20 Peers
|
|
|
|
|
(1)
|
Peer company was acquired since the completion of the last benchmarking analysis.
|
•
|
Position and responsibility;
|
•
|
Job performance, and expected contribution to the Company’s future performance;
|
•
|
Market factors, including the market compensation profile for similar jobs and the need to attract and retain qualified candidates for high-demand positions;
|
•
|
Internal value of the executive’s role based on the relative importance of the job as compared to the Company’s other executive officers, as measured by the scope of responsibility and performance expectations; and
|
•
|
Retention risk and the Company’s need to retain high performing and high potential executives.
|
NEO
|
|
2017 Base Salary
|
|
2018 Base Salary
|
||||
Michael D. Rumbolz
(1)
|
|
$
|
600,000
|
|
|
$
|
700,000
|
|
Randy L. Taylor
(1)
|
|
400,000
|
|
|
475,000
|
|
||
Edward A. Peters
|
|
400,000
|
|
|
400,000
|
|
||
Dean A. Ehrlich
|
|
400,000
|
|
|
400,000
|
|
||
Harper H. Ko
|
|
—
|
|
|
350,000
|
|
(1)
|
In connection with the Company’s performance review process, the Compensation Committee increased the base salary for Mr. Rumbolz and Mr. Taylor to $700,000 and $475,000, respectively, effective November 6, 2017.
|
Name
|
|
Target
|
|
Maximum
|
||
|
|
(
As a % of base salary)
|
||||
Michael D. Rumbolz
|
|
100
|
%
|
|
150
|
%
|
Randy L. Taylor
|
|
75
|
%
|
|
150
|
%
|
Edward A. Peters
|
|
75
|
%
|
|
150
|
%
|
Dean A. Ehrlich
|
|
75
|
%
|
|
150
|
%
|
Harper H. Ko
|
|
75
|
%
|
|
150
|
%
|
Metric
|
Corporate AEBITDA
|
Games Segment AEBITDA
|
FinTech Segment AEBITDA
|
Personal Goals
|
Michael D. Rumbolz
|
37.5%
|
18.75%
|
18.75%
|
25.0%
|
Randy L. Taylor
|
37.5%
|
18.75%
|
18.75%
|
25.0%
|
Edward A. Peters
|
37.5%
|
18.75%
|
18.75%
|
25.0%
|
Dean A. Ehrlich
|
37.5%
|
37.5%
|
—
|
25.0%
|
Harper H. Ko
|
37.5%
|
18.75%
|
18.75%
|
25.0%
|
|
Performance Ranges
|
|
Payout Ranges
|
Component
|
Target
|
|
Target
(1)
|
Corporate AEBITDA
|
$228M - $230M
|
|
100%
|
Games AEBITDA
|
$128M - $129M
|
|
100%
|
FinTech AEBITDA
|
$100M - $101M
|
|
100%
|
Corporate Strategy
|
• Continue to lead in product innovation and technology for the gaming industry.
• Maintain and expand the Company’s operating footprint through strategic acquisitions, alliances or technology development to achieve growth targets.
• Continue to improve internal processes to align with provision of best in class products and services to our customers.
|
Leadership
|
• Implement corporate leadership training programs to educate and contribute to career development of senior and executive leaders.
|
Enhance Customer and Community Relationships
|
• Enhance the Company’s customer communications efforts with efficient and effective resources to ensure targeted and accurate information dissemination.
• Implement additional employee benefits and procedures to measure employee satisfaction to invest in employee retention and better align employees with the Company’s strategic goals.
|
•
|
AEBITDA - $230.4 million (100% of target)
|
•
|
Games AEBITDA - $126.8 million (less than target)
|
•
|
FinTech AEBITDA - $103.6 million (100% of target)
|
Name
|
Base Salary
|
Target Short-Term Incentive Opportunity as a % of Base Salary
|
Target Short-Term Incentive Opportunity ($)
|
Total Short-Term Incentive Payment
|
Achieved Short-Term Incentive Opportunity as a % of Base Salary
|
||||||||
Michael D. Rumbolz
|
$
|
700,000
|
|
100
|
%
|
$
|
700,000
|
|
$
|
535,000
|
|
76.4
|
%
|
Randy L. Taylor
|
475,000
|
|
75
|
%
|
356,250
|
|
285,000
|
|
80.0
|
%
|
|||
Edward A. Peters
|
400,000
|
|
75
|
%
|
300,000
|
|
265,000
|
|
88.3
|
%
|
|||
Dean A. Ehrlich
|
400,000
|
|
75
|
%
|
300,000
|
|
220,000
|
|
73.3
|
%
|
|||
Harper H. Ko
|
350,000
|
|
75
|
%
|
262,500
|
|
220,000
|
|
83.8
|
%
|
|
Target Split
|
|||||||||||||||||
|
Corporate
|
Split FinTech
|
Split Games
|
Games Only
|
Personal
|
Total
Target
|
||||||||||||
Name
|
37.5%
|
18.75%
|
18.75%
|
37.5%
|
25.0%
|
100%
|
||||||||||||
Michael D. Rumbolz
|
$
|
262,500
|
|
$
|
131,250
|
|
$
|
131,250
|
|
$
|
—
|
|
$
|
175,000
|
|
$
|
700,000
|
|
Randy L. Taylor
|
133,594
|
|
66,797
|
|
66,797
|
|
—
|
|
89,063
|
|
356,250
|
|
||||||
Edward A. Peters
|
112,500
|
|
56,250
|
|
56,250
|
|
—
|
|
75,000
|
|
300,000
|
|
||||||
Dean A. Ehrlich
|
112,500
|
|
—
|
|
—
|
|
112,500
|
|
75,000
|
|
300,000
|
|
||||||
Harper H. Ko
|
98,438
|
|
49,219
|
|
49,219
|
|
—
|
|
65,625
|
|
262,500
|
|
|
Actual Split
|
|||||||||||||||||
|
Corporate
|
Split FinTech
|
Split Games
|
Games Only
|
Personal
|
Total
Achieved
|
||||||||||||
Name
|
37.5%
|
18.75%
|
18.75%
|
37.5%
|
25.0%
|
100%
|
||||||||||||
Michael D. Rumbolz
|
$
|
262,500
|
|
$
|
131,250
|
|
$
|
39,375
|
|
$
|
—
|
|
$
|
101,875
|
|
$
|
535,000
|
|
Randy L. Taylor
|
133,594
|
|
66,797
|
|
20,039
|
|
—
|
|
64,570
|
|
285,000
|
|
||||||
Edward A. Peters
|
112,500
|
|
56,250
|
|
16,875
|
|
—
|
|
79,375
|
|
265,000
|
|
||||||
Dean A. Ehrlich
|
112,500
|
|
—
|
|
—
|
|
33,750
|
|
73,750
|
|
220,000
|
|
||||||
Harper H. Ko
|
98,438
|
|
49,219
|
|
14,766
|
|
—
|
|
57,579
|
|
220,000
|
|
Current NEO
|
|
Required Salary Multiple
|
President and Chief Executive Officer
|
|
6x base salary
|
All other NEOs
|
|
3x base salary
|
Other officers
|
|
1x to 2x base salary
|
Non-employee directors
|
|
5x annual cash retainer
|
•
|
Shares owned outright/shares beneficially owned (including by a family member and/or in a trust);
|
•
|
Vested restricted stock;
|
•
|
Shares owned through the Company’s 401(k) plan (if applicable); and
|
•
|
Shares underlying vested, but unexercised, stock options (based on the excess of the market price of the stock over the exercise price and after deducting any tax withholding obligations).
|
•
|
Hedging their interest in Company shares by selling short or trading or purchasing “put” or “call” options on our Common Stock or engaging in similar transactions; and
|
•
|
Pledging any shares of our Common Stock without prior clearance from our Corporate Compliance Officer as outlined in our Insider Trading Policy.
|
Name and principal position
|
|
Year
|
|
Salary
|
|
Bonus
|
|
Stock
awards
(1)(2)
|
|
Option
awards
(1)
|
|
Non-equity
incentive plan
compensation
(3)
|
|
All other
compensation
(4)
|
|
Total
|
||||||||||||||
Michael D. Rumbolz
|
|
2018
|
|
$
|
700,000
|
|
|
$
|
—
|
|
|
$
|
2,988,000
|
|
|
$
|
—
|
|
|
$
|
535,000
|
|
|
$
|
17,718
|
|
|
$
|
4,240,718
|
|
President and Chief,
|
|
2017
|
|
614,795
|
|
|
—
|
|
|
266,400
|
|
|
712,316
|
|
|
603,497
|
|
|
9,787
|
|
|
2,206,795
|
|
|||||||
Executive Officer
|
|
2016
|
|
507,692
|
|
|
—
|
|
|
—
|
|
|
601,162
|
|
|
132,377
|
|
|
17,348
|
|
|
1,258,579
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Randy L. Taylor
|
|
2018
|
|
475,000
|
|
|
—
|
|
|
1,195,200
|
|
|
—
|
|
|
285,000
|
|
|
16,748
|
|
|
1,971,948
|
|
|||||||
Executive Vice President,
|
|
2017
|
|
411,096
|
|
|
—
|
|
|
—
|
|
|
405,842
|
|
|
254,365
|
|
|
9,793
|
|
|
1,081,096
|
|
|||||||
Chief Financial Officer
|
|
2016
|
|
400,000
|
|
|
—
|
|
|
—
|
|
|
215,959
|
|
|
65,000
|
|
|
9,779
|
|
|
690,738
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Dean A. Ehrlich
(5)
|
|
2018
|
|
400,000
|
|
|
—
|
|
|
560,250
|
|
|
—
|
|
|
220,000
|
|
|
15,910
|
|
|
1,196,161
|
|
|||||||
Executive Vice President,
|
|
2017
|
|
400,000
|
|
|
—
|
|
|
—
|
|
|
405,842
|
|
|
197,300
|
|
|
7,366
|
|
|
1,010,508
|
|
|||||||
Games Business Leader
|
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Edward A. Peters
|
|
2018
|
|
400,000
|
|
|
—
|
|
|
448,200
|
|
|
—
|
|
|
265,000
|
|
|
16,751
|
|
|
1,129,951
|
|
|||||||
Executive Vice President,
|
|
2017
|
|
400,000
|
|
|
—
|
|
|
—
|
|
|
405,842
|
|
|
198,650
|
|
|
65,714
|
|
|
1,070,206
|
|
|||||||
Sales Marketing
|
|
2016
|
|
400,000
|
|
|
—
|
|
|
—
|
|
|
215,959
|
|
|
55,000
|
|
|
16,198
|
|
|
687,157
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Harper H. Ko
(6)
|
|
2018
|
|
350,000
|
|
|
—
|
|
|
373,500
|
|
|
—
|
|
|
220,000
|
|
|
10,416
|
|
|
953,917
|
|
|||||||
Executive Vice President,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Chief Legal Officer,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
General Counsel
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
and Corporate Secretary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Represents the fair value of the stock and option awards granted to the NEOs, as calculated in accordance with FASB ASC Topic 718, Stock Compensation. For a discussion of the assumptions made in determining the valuation of these equity awards, see our notes to the financial statements in the Company’s Annual Report on Form 10-K for the years ended December 31, 2018, 2017 and 2016.
|
(2)
|
The restricted stock units granted in 2018 were comprised of both time- and performance-based awards: (a) with 40% of those restricted stock units granted in 2018 being time-based awards that will vest ratably over a period of four years; and (b) with 60% of those restricted stock units granted in 2018 being performance-based awards and vesting will be evaluated by our Compensation Committee of our Board after a performance period, beginning on the date of grant through December 31, 2020, as a result of certain revenue and AEBITDA growth rate metrics being met, with achievement of each measure to be determined independently of one another. If the performance criteria of the metrics have been achieved and are then approved by our Compensation Committee, the eligible awards will become vested on the third anniversary of the grant dates.
|
(3)
|
Represents the amount of non-equity incentive compensation earned under the Company’s annual short-term incentive plan for the fiscal year. Amounts earned for a particular calendar year are typically paid to the NEOs in the first quarter of the following fiscal year.
|
(4)
|
Includes contributions made by the Company under its 401(k) plan and cost of short-term and long-term disability coverage. We make contributions on behalf of certain executive officers consistent with Company contributions to all eligible non-executive employees.
|
(5)
|
Mr. Ehrlich has served as our Executive Vice President, Games Business Leader since January 2017, having previously served as an Executive Consultant to the Company since August 2016.
|
(6)
|
Ms. Ko has served as our Executive Vice President, Chief Legal Officer, General Counsel, and Corporate Secretary since December 2017.
|
|
|
|
|
Estimated future payouts under non-equity incentive plan compensation
(1)
|
|
Estimated future payouts under equity incentive plan compensation
(2)
|
|
All Other Stock Awards: Number of Shares of Stock Units (#)
(3)
|
|
Grant date fair value of RSUs awarded
($)
(4)
|
||||||||||||||||||||
Name
|
|
Grant
Date
|
|
Threshold ($)
|
|
Target
($)
|
|
Maximum ($)
|
|
Threshold (#)
|
|
Target
(#)
|
|
Maximum (#)
|
|
|
||||||||||||||
Michael D. Rumbolz
|
|
|
|
$
|
—
|
|
|
$
|
700,000
|
|
|
$
|
1,050,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
$
|
—
|
|
|
|
5/22/2018
|
|
—
|
|
|
—
|
|
|
—
|
|
|
120,000
|
|
|
240,000
|
|
|
480,000
|
|
|
160,000
|
|
|
2,988,000
|
|
||||
Randy L. Taylor
|
|
|
|
—
|
|
|
356,250
|
|
|
712,500
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
|
|
5/22/2018
|
|
—
|
|
|
—
|
|
|
—
|
|
|
48,000
|
|
|
96,000
|
|
|
192,000
|
|
|
64,000
|
|
|
1,195,200
|
|
||||
Dean A. Ehrlich
|
|
|
|
—
|
|
|
300,000
|
|
|
600,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
|
|
5/22/2018
|
|
—
|
|
|
—
|
|
|
—
|
|
|
22,500
|
|
|
45,000
|
|
|
90,000
|
|
|
30,000
|
|
|
560,250
|
|
||||
Edward A. Peters
|
|
|
|
—
|
|
|
300,000
|
|
|
600,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
|
|
5/22/2018
|
|
—
|
|
|
—
|
|
|
—
|
|
|
18,000
|
|
|
36,000
|
|
|
72,000
|
|
|
24,000
|
|
|
448,200
|
|
||||
Harper H. Ko
|
|
|
|
—
|
|
|
262,500
|
|
|
525,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
|
|
5/22/2018
|
|
—
|
|
|
—
|
|
|
—
|
|
|
15,000
|
|
|
30,000
|
|
|
60,000
|
|
|
20,000
|
|
|
373,500
|
|
(1)
|
Represents amounts potentially payable to the NEOs under the Company’s annual cash incentive plan. A more detailed discussion of how the target is determined and calculated is found in the CD&A above.
|
(2)
|
The number of performance-based RSUs that are ultimately earned will range from 0% to 200% of the target number shown above. The number earned will be based upon the attainment of Revenue Growth goals and AEBITDA Growth goals measured over the three-year period ending on December 31, 2020. The Revenue Growth goals and AEBITDA Growth goals will apply to 50% of the target number of performance-based RSUs in the table above. The parameters set forth in the grant notice for these performance-based restricted stock unit awards are as follows:
|
|
|
Performance Ranges
|
|
Performance-based RSUs Earned
(as a percent of target)
|
||||||
|
Weighting
|
Below Threshold
|
Threshold
|
Target
|
Maximum
|
|
Below Threshold
|
Threshold
|
Target
|
Maximum
|
Revenue Growth
|
50%
|
< 6.3%
|
6.3%
|
7.9%
|
9.5%
|
|
0%
|
50%
|
100%
|
200%
|
AEBITDA Growth
|
50%
|
< 7.7%
|
7.7%
|
9.6%
|
11.5%
|
|
0%
|
50%
|
100%
|
200%
|
(3)
|
Time-based RSUs vest at a rate of 25% per year over the four years from the date of grant.
|
(4)
|
Represents the total fair value of the NEOs’ restricted stock unit awards granted to the NEOs, as calculated in accordance with FASB ASC Topic 718 Stock Compensation. For a discussion of the assumptions made in the valuation, please see the notes to the financial statements in the Company’s Annual Report on Form 10-K for the years ended December 31, 2018, 2017 and 2016.
|
|
|
Option awards
|
Stock awards
|
||||||||||||||||||||||||
|
|
|
|
Equity Incentive Plan Awards:
|
|
|
|
|
|
|
|
||||||||||||||||
Name
|
Date Granted
|
Number of
securities
underlying
unexercised
exercisable options
|
Number of
securities
underlying
unexercised
unexercisable options
|
|
Number of
securities
underlying
unexercised
unearned
options
|
|
Option
exercise
price
|
Option
expiration
date
|
Number of
shares or units of unvested unearned stock |
|
Number of
shares or units of unearned unvested stock |
|
Market
value of
shares or
units of stock
that have not
vested
|
||||||||||||||
Michael D. Rumbolz
|
8/30/2010
|
100,000
|
|
—
|
|
|
—
|
|
|
$
|
3.72
|
|
8/30/2020
|
|
—
|
|
|
—
|
|
|
$
|
—
|
|
||||
|
3/1/2011
|
40,000
|
|
—
|
|
|
—
|
|
|
3.41
|
|
3/1/2021
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
|
3/2/2012
|
40,000
|
|
—
|
|
|
—
|
|
|
5.58
|
|
3/2/2022
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
|
3/6/2013
|
19,424
|
|
—
|
|
|
—
|
|
|
7.09
|
|
3/6/2023
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
|
5/2/2014
|
50,000
|
|
—
|
|
|
—
|
|
|
6.59
|
|
5/2/2024
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
|
4/22/2015
|
37,500
|
|
12,500
|
|
(1
|
)
|
—
|
|
|
7.74
|
|
4/22/2025
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
|
2/13/2016
|
465,116
|
|
—
|
|
|
—
|
|
|
2.78
|
|
2/13/2026
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
|
3/8/2017
|
62,326
|
|
—
|
|
|
186,976
|
|
(2
|
)
|
3.29
|
|
3/8/2027
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
|
3/8/2017
|
30,698
|
|
92,093
|
|
(1
|
)
|
—
|
|
|
3.29
|
|
3/8/2027
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
|
5/5/2017
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
—
|
|
8,330
|
|
(3
|
)
|
—
|
|
|
42,900
|
|
|||||
|
5/22/2018
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
—
|
|
160,000
|
|
(1
|
)
|
—
|
|
|
824,000
|
|
|||||
|
5/22/2018
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
—
|
|
|
|
|
240,000
|
|
(4
|
)
|
1,236,000
|
|
|||||
Randy L. Taylor
|
12/7/2011
|
15,000
|
|
—
|
|
|
—
|
|
|
4.57
|
|
12/7/2021
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
|
3/2/2012
|
16,875
|
|
—
|
|
|
—
|
|
|
5.58
|
|
3/2/2022
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
|
3/6/2013
|
11,859
|
|
—
|
|
|
—
|
|
|
7.09
|
|
3/6/2023
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
|
5/2/2014
|
100,000
|
|
—
|
|
|
—
|
|
(7
|
)
|
6.59
|
|
5/2/2024
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
|
4/22/2015
|
—
|
|
—
|
|
|
400,000
|
|
(5
|
)
|
7.74
|
|
4/22/2022
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
|
5/13/2016
|
88,776
|
|
—
|
|
|
88,774
|
|
(6
|
)
|
1.46
|
|
5/13/2026
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
|
5/13/2016
|
43,726
|
|
43,724
|
|
(1
|
)
|
—
|
|
|
1.46
|
|
5/13/2026
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
|
3/8/2017
|
35,510
|
|
—
|
|
|
106,530
|
|
(2
|
)
|
3.29
|
|
3/8/2027
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
|
3/8/2017
|
17,490
|
|
52,470
|
|
(1
|
)
|
—
|
|
|
3.29
|
|
3/8/2027
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
|
5/22/2018
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
—
|
|
64,000
|
|
(1
|
)
|
—
|
|
|
329,600
|
|
|||||
|
5/22/2018
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
96,000
|
|
(4
|
)
|
494,400
|
|
|||
Dean A. Ehrlich
|
12/8/2016
|
21,450
|
|
21,450
|
|
(1
|
)
|
—
|
|
|
2.40
|
|
12/8/2026
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
|
12/8/2016
|
43,550
|
|
—
|
|
|
43,550
|
|
(5
|
)
|
2.40
|
|
12/8/2026
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
|
3/8/2017
|
17,490
|
|
52,470
|
|
(1
|
)
|
—
|
|
|
3.29
|
|
3/8/2027
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
|
3/8/2017
|
35,510
|
|
—
|
|
|
106,530
|
|
(2
|
)
|
3.29
|
|
3/8/2027
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
|
5/22/2018
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
—
|
|
30,000
|
|
(1
|
)
|
—
|
|
|
154,500
|
|
|||||
|
5/22/2018
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
45,000
|
|
(4
|
)
|
231,750
|
|
|||
Edward A. Peters
|
12/4/2014
|
300,000
|
|
—
|
|
|
—
|
|
|
7.61
|
|
12/4/2024
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
|
4/22/2015
|
—
|
|
—
|
|
|
200,000
|
|
(5
|
)
|
7.74
|
|
4/22/2022
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
|
5/13/2016
|
21,863
|
|
43,724
|
|
(1
|
)
|
—
|
|
|
1.46
|
|
5/13/2026
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
|
5/13/2016
|
44,388
|
|
—
|
|
|
88,774
|
|
(6
|
)
|
1.46
|
|
5/13/2026
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
|
3/8/2017
|
17,490
|
|
52,470
|
|
(1
|
)
|
—
|
|
|
3.29
|
|
3/8/2027
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
|
3/8/2017
|
35,510
|
|
—
|
|
|
106,530
|
|
(2
|
)
|
3.29
|
|
3/8/2027
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
|
5/22/2018
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
—
|
|
24,000
|
|
(1
|
)
|
—
|
|
|
123,600
|
|
|||||
|
5/22/2018
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
|
36,000
|
|
(4
|
)
|
185,400
|
|
|||||
Harper H. Ko
|
12/29/2017
|
20,625
|
|
61,875
|
|
(1
|
)
|
—
|
|
|
7.54
|
|
12/29/2027
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
|
12/29/2017
|
—
|
|
—
|
|
|
27,500
|
|
(6
|
)
|
7.54
|
|
12/29/2027
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
|
5/22/2018
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
—
|
|
20,000
|
|
(1
|
)
|
—
|
|
|
103,000
|
|
|||||
|
5/22/2018
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
|
30,000
|
|
(4
|
)
|
154,500
|
|
(1)
|
These equity awards vest ratably over the first four anniversaries of the grant date.
|
(2)
|
These equity awards vest at a rate of 25% per year on each of the first four anniversaries of the grant date, provided that as of the vesting date for each vesting tranche, the closing price of the Company’s shares on the NYSE is at least a specified price hurdle of $4.11, defined as a 25% premium to the closing stock price on the grant date. If the price hurdle is not met as of the vesting date for a vesting tranche, then such tranche shall vest and become vested shares on the last day of a period of 30 consecutive trading days during which the closing price is at least the price hurdle. If these target prices are not met during the life of the grant, the unvested shares underlying the options will terminate, except upon the termination of service without cause or by the participant without good reason within ten days prior to, or within eighteen months after a change in control of the Company as defined in the Amended 2014 Plan, in which case, the unvested shares underlying such options shall become fully vested on the effective date of such change in control.
|
(3)
|
These equity awards vest over two years from the date of grant, with an equal number of shares vesting each monthly period.
|
(4)
|
These equity awards have vesting conditions that will be evaluated by our Compensation Committee of our Board after a performance period, beginning on the date of grant through December 31, 2020, as a result of certain revenue and AEBITDA growth rate metrics being met, with achievement of each measure to be determined independently of one another. If the performance criteria of the metrics have been achieved and are then approved by our Compensation Committee, the eligible awards will become vested on the third anniversary of the grant dates. The parameters set forth in the grant notice for these performance-based restricted stock unit awards are as follows:
|
|
|
Performance Ranges
|
|
Performance-based RSUs Earned
(as a percent of target)
|
||||||
|
Weighting
|
Below Threshold
|
Threshold
|
Target
|
Maximum
|
|
Below Threshold
|
Threshold
|
Target
|
Maximum
|
Revenue Growth
|
50%
|
< 6.3%
|
6.3%
|
7.9%
|
9.5%
|
|
0%
|
50%
|
100%
|
200%
|
AEBITDA Growth
|
50%
|
< 7.7%
|
7.7%
|
9.6%
|
11.5%
|
|
0%
|
50%
|
100%
|
200%
|
(5)
|
These equity awards vest if our average stock price in any period of 30 consecutive trading days meets certain target prices of $18 and $21 per share during a four-year period that commenced on the date of grant for these options. These equity awards will expire on the seventh anniversary of the date of grant, except upon the termination of service without cause within ten days prior to, or within eighteen months after a change in control of the Company as defined in the Amended 2014 Plan, in which case, the unvested shares underlying such options shall become fully vested on the effective date of such change in control.
|
(6)
|
These equity awards vest at a rate of 25% per year on each of the first four anniversaries of the grant date, provided that as of the vesting date for each vesting tranche, the closing price of the Company’s shares on the NYSE is at least a specified price hurdle of $2.19, defined as a 50% premium to the closing stock price on the grant date. If the price hurdle is not met as of the vesting date for a vesting tranche, then such tranche shall vest and become vested shares on the last day of a period of 30 consecutive trading days during which the closing price is at least the price hurdle. If these target prices are not met during the life of the grant, the unvested shares underlying the options will terminate, except upon the termination of service without cause or by the participant without good reason within ten days prior to, or within eighteen months after a change in control of the Company as defined in the Amended 2014 Plan, in which case, the unvested shares underlying such options shall become fully vested on the effective date of such change in control.
|
(7)
|
The market-based option awards of 120,000 were canceled in 2018 due to not meeting the vesting requirements related to the option award granted in 2014.
|
|
|
Option Awards
|
|
Stock Awards
|
||||||||||
|
|
Number of shares
acquired on
|
|
Value realized
|
|
Number of shares
acquired on
|
|
Value realized
|
||||||
Name
|
|
exercise
|
|
on exercise
(1)
|
|
vesting
|
|
on vesting
(2)
|
||||||
Michael D. Rumbolz
|
|
85,000
|
|
|
$
|
190,850
|
|
|
20,001
|
|
|
$
|
148,608
|
|
Randy L. Taylor
|
|
—
|
|
|
—
|
|
|
11,000
|
|
|
76,010
|
|
||
Edward A. Peters
|
|
66,251
|
|
|
503,348
|
|
|
—
|
|
|
—
|
|
||
Dean A. Ehrlich
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||
Harper H. Ko
|
|
—
|
|
|
—
|
|
|
10,000
|
|
|
49,400
|
|
•
|
the median of the annual total compensation (inclusive of base salary, bonus and other items, as described below) of all our employees, other than Mr. Rumbolz, was
$68,204
; and
|
•
|
the annual total compensation of Mr. Rumbolz, as reported in the Summary Compensation Table included elsewhere in this Proxy Statement, was
$4,240,718
.
|
•
|
Based on this information, for 2018, the ratio of the annual total compensation of Mr. Rumbolz, our President and Chief Executive Officer, to the median of the annual total compensation of all employees was 62.2 to 1.
|
1.
|
We determined that, as of December 31, 2018, we had approximately 1,250 employees, with approximately 93% and 7% of the individuals located domestically in the United States (the “U.S.”) and internationally in various foreign jurisdictions, respectively.
|
2.
|
The relevant payroll and other compensation data for our employee population are maintained in a single system located at our principal headquarters in the U.S. and were utilized to identify the “median employee” from our employee population. To identify the “median employee” from our employee population, we compared the amount of base salary of our employees as reflected in our payroll records and included as part of the total compensation reported to the Internal Revenue Service on Form W-2 for 2018. We identified our median employee using this compensation measure, which was consistently applied to all our employees included in the calculation.
|
3.
|
Once we identified our median employee, we combined all of the elements of such employee’s compensation for 2018 in accordance with the requirements of Item 402(c)(2)(x) of Regulation S-K, resulting in the annual total compensation presented in the pay ratio calculation. The difference between such employee’s base salary and the employee’s annual total compensation represents company matching contributions on behalf of the employee to our 401(k) employee savings plan and cost of short-term and long-term disability coverage. Since we do not maintain a defined benefit or other actuarial plan for our employees, and do not otherwise provide a plan for payments or other benefits at, following, or in connection with retirement, the “median employee’s” annual total compensation did not include amounts attributable to those types of arrangements.
|
Name and principal position
|
|
Year
|
|
Salary
|
|
Bonus
|
|
Stock
awards
(1)
|
|
Option
awards
(1)
|
|
Non-equity
incentive plan
compensation
(2)
|
|
All other
compensation
(3)
|
|
Total
|
||||||||||||||
Michael D. Rumbolz - President and Chief Executive Officer
|
|
2019
|
|
$
|
700,000
|
|
|
$
|
—
|
|
|
$
|
2,988,000
|
|
|
$
|
—
|
|
|
$
|
535,000
|
|
|
$
|
17,718
|
|
|
$
|
4,240,718
|
|
Median Employee
(4)
|
|
2019
|
|
66,209
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,995
|
|
|
68,204
|
|
|||||||
Pay Ratio
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
62.2x
|
(1)
|
Represents the fair value of the equity awards, as calculated in accordance with FASB ASC Topic 718, Stock Compensation. For a discussion of the assumptions made in determining the valuation of the restricted stock awards, see our notes to the financial statements in the Company’s Annual Report on Form 10-K for the years ended December 31, 2018, 2017 and 2016.
|
(2)
|
Represents the amount of non-equity incentive compensation earned under the Company’s annual short-term incentive plan for the fiscal year. Amounts earned for a particular calendar year are typically paid to the NEOs in the first quarter of the following fiscal year.
|
(3)
|
Includes contributions made by the Company under its 401(k) plan as well as short-term and long-term disability payments made by the Company.
|
(4)
|
Represents the total annual compensation of the middle-most employee, excluding the President and Chief Executive Officer.
|
|
|
Termination without Cause or For Good Reason
|
|
Change in Control Event
|
|
Termination without Cause or For Good Reason following a Change in Control Event
|
||||||||||||||||||||||||||||||
Name
|
|
Cash Payment
(1)
|
|
Benefits
(2)
|
|
Acceleration of Stock and Options
(3)
|
|
Total
|
|
Acceleration of Stock and Options
(3)
|
|
Cash Payment
(1)
|
|
Benefits
(2)
|
|
Acceleration of Stock and Options
(3)
|
|
Total
|
||||||||||||||||||
Michael D. Rumbolz
|
|
$
|
1,400,000
|
|
|
$
|
26,666
|
|
|
$
|
—
|
|
|
$
|
1,426,666
|
|
|
$
|
—
|
|
|
$
|
1,400,000
|
|
|
$
|
26,666
|
|
|
$
|
2,621,968
|
|
|
$
|
4,048,634
|
|
Randy L. Taylor
|
|
831,250
|
|
|
33,885
|
|
|
—
|
|
|
865,135
|
|
|
—
|
|
|
831,250
|
|
|
33,885
|
|
|
1,608,658
|
|
|
2,473,792
|
|
|||||||||
Edward A. Peters
|
|
700,000
|
|
|
32,103
|
|
|
—
|
|
|
732,103
|
|
|
—
|
|
|
700,000
|
|
|
32,103
|
|
|
1,093,658
|
|
|
1,825,761
|
|
|||||||||
Dean A. Ehrlich
|
|
700,000
|
|
|
30,019
|
|
|
—
|
|
|
730,019
|
|
|
—
|
|
|
700,000
|
|
|
30,019
|
|
|
860,740
|
|
|
1,590,759
|
|
|||||||||
Harper H. Ko
|
|
612,500
|
|
|
42,515
|
|
|
—
|
|
|
655,015
|
|
|
—
|
|
|
612,500
|
|
|
42,515
|
|
|
257,500
|
|
|
912,515
|
|
(1)
|
Based on the NEO’s salary and target bonus in effect at the date of termination.
|
(2)
|
Estimated value of continued coverage under group health insurance plans through the end of the applicable severance period.
|
(3)
|
The value attributable to the hypothetical acceleration of the vesting of any restricted stock awards held by a NEO is determined by multiplying the number of unvested shares of restricted stock accelerated by $5.15 (the closing price of our Common Stock on December 28, 2018). The value attributable to the hypothetical acceleration of the vesting of any stock option awards held by a NEO is determined by multiplying (i) the difference, if greater than zero, between the exercise price of the applicable stock option award and the closing price of our Common Stock on December 28, 2018 of $5.15 by (ii) the number of unvested shares underlying the applicable stock option. The equity awards held by the NEO that are subject to possible acceleration are described as unexercisable or not vested in the table entitled “Outstanding Equity Awards at December 31, 2018.”
|
|
|
Shares Beneficially Owned
|
||||
Name
|
|
Number
|
|
Percentage
(1)
|
||
Principal stockholders
|
|
|
|
|
||
Indaba Capital Management, L.P.
(2)
|
|
7,009,118
|
|
|
9.9
|
%
|
Eagle Asset Management, Inc.
(3)
|
|
5,929,002
|
|
|
8.4
|
%
|
BlackRock, Inc.
(4)
|
|
4,785,799
|
|
|
6.8
|
%
|
Private Capital Management, LLC
(5)
|
|
3,854,840
|
|
|
5.5
|
%
|
Directors and named executive officers
(6)
|
|
|
|
|
||
Michael D. Rumbolz
(7)
|
|
1,094,293
|
|
|
1.5
|
%
|
E. Miles Kilburn
(8)
|
|
700,531
|
|
|
*
|
|
Edward A. Peters
(9)
|
|
550,500
|
|
|
*
|
|
Randy L. Taylor
(10)
|
|
517,946
|
|
|
*
|
|
Geoffrey P. Judge
(11)
|
|
420,347
|
|
|
*
|
|
Ronald V. Congemi
(12)
|
|
302,251
|
|
|
*
|
|
Dean A. Ehrlich
(13)
|
|
178,500
|
|
|
*
|
|
Eileen F. Raney
(14)
|
|
164,000
|
|
|
*
|
|
Linster W. Fox
(15)
|
|
105,000
|
|
|
*
|
|
Harper H. Ko
(16)
|
|
33,190
|
|
|
*
|
|
Maureen T. Mullarkey
(17)
|
|
—
|
|
|
*
|
|
Directors and current named executive officers as a group (11 persons)
|
|
4,066,558
|
|
|
5.5
|
%
|
*
|
Represents beneficial ownership of less than 1%.
|
(1)
|
The percentage of beneficial ownership as to any person as of a particular date is calculated by dividing the number of shares beneficially owned by such person, which includes the number of shares as to which such person has the right to acquire voting or investment power within 60 days after such date, by the sum of the number of shares outstanding as of such date plus the number of shares as to which such person has the right to acquire voting or investment power within 60 days after such date. Consequently, the numerator and denominator for calculating beneficial ownership percentages may be different for each beneficial owner.
|
(2)
|
As reported on Schedule 13G filed on February 14, 2019 for shares held by Indaba Capital Management, L.P. (“Indaba”) jointly on behalf of Indaba, IC GP, LLC (“IC”), and Derek C. Schrier. According to Schedule 13G, Indaba, IC and Mr. Schrier all have shared voting and dispositive power over all 7,009,118 shares. The address for Indaba is One Letterman Drive, Building D, Suite DM700, San Francisco, California 94129.
|
(3)
|
As reported on Schedule 13G/A filed on January 11, 2019 for shares held by Eagle Asset Management, Inc. (“Eagle”) on its own behalf. According to Schedule 13G/A, Eagle has sole voting and dispositive power over all 5,929,002 shares. The address for Eagle is 880 Carillon Parkway, St. Petersburg, FL 33716.
|
(4)
|
As reported on Schedule 13G/A filed on February 4, 2019 for shares held by BlackRock, Inc. (“BlackRock”) on its own behalf. According to the Schedule 13G/A, BlackRock has sole voting power over 4,651,944 shares and sole dispositive power over all 4,785,799 shares. The address for BlackRock
is 55 East 52
nd
Street, New York, NY 10055.
|
(5)
|
As reported on Schedule 13G/A filed on February 8, 2019 for shares held by Private Capital Management, LLC (“Private Capital”) on its own behalf. According to the Schedule 13G/A, Private Capital has sole voting and dispositive power over 980,546 shares and shared voting and dispositive power over 2,874,294 shares. The address for Private Capital is 8889 Pelican Bay Boulevard, Suite 500, Naples, Florida 34108.
|
(6)
|
Includes shares owned and shares issuable upon exercise of stock options that are currently exercisable or exercisable within 60 days.
|
(7)
|
Consists of 143,705 shares owned by Mr. Rumbolz and 950,588 shares issuable upon the exercise of stock options that are currently exercisable or exercisable within 60 days for Mr. Rumbolz.
|
(8)
|
Consists of 207,645 shares owned by Mr. Kilburn and 492,886 shares issuable upon the exercise of stock options that are currently exercisable or exercisable within 60 days for Mr. Kilburn.
|
(9)
|
Consists of 12,000 shares owned by Mr. Peters and 538,500 shares issuable upon the exercise of stock options that are currently exercisable or exercisable within 60 days for Mr. Peters.
|
(10)
|
Consists of 69,461 shares owned by Mr. Taylor and 448,485 shares issuable upon the exercise of stock options that are currently exercisable or exercisable within 60 days for Mr. Taylor.
|
(11)
|
Consists of 104,672 shares owned by Mr. Judge and 315,675 shares issuable upon the exercise of stock options that are currently exercisable or exercisable within 60 days for Mr. Judge.
|
(12)
|
Consists of 16,000 shares owned by Mr. Congemi and 286,251 shares issuable upon the exercise of stock options that are currently exercisable or exercisable within 60 days for Mr. Congemi.
|
(13)
|
Consists of 7,500 shares owned by Mr. Ehrlich and 171,000 shares issuable upon the exercise of stock options that are currently exercisable or exercisable within 60 days for Mr. Ehrlich.
|
(14)
|
Consists of 59,000 shares owned by Ms. Raney and 105,000 shares issuable upon the exercise of stock options that are currently exercisable or exercisable within 60 days for Ms. Raney.
|
(15)
|
Consists of 105,000 shares issuable upon the exercise of stock options that are currently exercisable or exercisable within 60 days for Mr. Fox.
|
(16)
|
Consists of 12,565 shares owned by Ms. Ko and 20,625 shares issuable upon the exercise of stock options that are currently exercisable or exercisable within 60 days for Ms. Ko.
|
(17)
|
As of the date of this filing, Ms. Mullarkey is not a beneficial owner of any securities nor does she have a right to acquire beneficial ownership within 60 days.
|
THE BOARD UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” THE RATIFICATION OF THE APPOINTMENT OF BDO USA, LLP AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING DECEMBER 31, 2019.
|
|
|
Year Ended
December 31,
|
||||||
|
|
2018
|
|
2017
|
||||
Audit fees
(1)
|
|
$
|
1,193
|
|
|
$
|
1,303
|
|
Audit-related fees
(2)
|
|
48
|
|
|
55
|
|
||
Tax fees
(3)
|
|
7
|
|
|
—
|
|
||
Total
|
|
$
|
1,248
|
|
|
$
|
1,358
|
|
(1)
|
Audit fees include amounts for the following professional services:
|
•
|
attestation services, technical consultations and advisory services in connection with Section 404 of the Sarbanes‑Oxley Act of 2002;
|
(2)
|
Audit-related fees include amounts for the following professional services:
|
•
|
evaluations of service organization controls under the Statement on Standards for Attestation Engagements (SSAE) No. 18; and
|
(3)
|
Tax Fees include amounts for planning (domestic and international), advisory and compliance services.
|
|
Members of the Audit Committee:
|
|
|
|
Linster W. Fox (Chair)
E. Miles Kilburn
Geoffrey P. Judge
Ronald V. Congemi
Eileen F. Raney
Maureen T. Mullarkey
|
|
By Order of the Board of Directors,
|
|
|
|
/s/ Michael D. Rumbolz
|
|
|
|
Michael D. Rumbolz
|
|
President and Chief Executive Officer
|
Las Vegas, Nevada
|
|
April 22, 2019
|
|
|
Year Ended
December 31, 2018
Reconciliation of Net
Income to EBITDA and AEBITDA
|
||
|
(in thousands)
|
||
Net income
|
$
|
12,356
|
|
Income tax benefit
|
(9,710
|
)
|
|
Loss on extinguishment of debt
|
166
|
|
|
Interest expense, net of interest income
|
83,001
|
|
|
Operating income
|
$
|
85,813
|
|
Plus: depreciation and amortization
|
126,470
|
|
|
EBITDA
|
$
|
212,283
|
|
Non-cash stock compensation expense
|
7,251
|
|
|
Accretion of contract rights
|
8,421
|
|
|
Non-recurring professional fees
|
408
|
|
|
Adjustment of certain purchase accounting liabilities
|
(550
|
)
|
|
Write-off of inventory and fixed assets
|
2,575
|
|
|
AEBITDA
|
$
|
230,388
|
|