UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
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14a-6(e)(2))
☒
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Statement
☐
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Additional Materials
☐
Soliciting Material
Pursuant to §240.14a-12
ZOOM TELEPHONICS, INC.
(Name
of Registrant as Specified In Its Charter)
(Name
of Person(s) Filing Proxy Statement, if other than the
Registrant)
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.
ZOOM TELEPHONICS, INC.
225
Franklin Street
Boston,
MA 02110
June 4,
2020
Dear
Stockholder:
You are
cordially invited to attend the Annual Meeting of Stockholders of
Zoom Telephonics, Inc. to be held on Thursday, July 17, 2020 by
live webcast at www.virtualshareholdermeeting.com/ZMTP2020.
The meeting will be held in virtual format only and will begin at
10:00 a.m. After the short formal part of the meeting, there will
be a business presentation and a question-and-answer
period.
We are
using the Internet as our primary means of furnishing the proxy
materials to our stockholders. This process expedites the delivery
of proxy materials and reduces our expenses.
In
accordance with rules adopted by the U.S. Securities and Exchange
Commission, we are mailing to our stockholders a Notice of Internet
Availability of Proxy Materials on or about June 4, 2020, which
contains instructions on how stockholders can access the proxy
materials over the Internet and vote electronically or by phone.
The Notice of Internet Availability of Proxy Materials also
contains instructions describing how stockholders can request a
paper copy of our proxy materials, including the Proxy Statement,
the 2019 Annual Report and a form of proxy card.
Whether
or not you plan to attend the Annual Meeting, we urge you to vote
your shares by using one of the voting options available to you as
described in the Notice of Internet Availability of Proxy Materials
and in our Proxy Statement. If you wish to revoke your proxy at the
meeting, you can withdraw your proxy and vote your shares
electronically during the meeting.
The
Board of Directors has fixed the close of business on May 22, 2020
as the record date for determination of stockholders entitled to
notice of, and to vote at, the Annual Meeting and any adjournments
or postponements thereof.
I look
forward to seeing those of you who will be able to attend our
meeting in its virtual format.
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Jeremy
Hitchcock
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Executive
Chairman of the Board of Directors
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ZOOM TELEPHONICS, INC.
225
Franklin Street
Boston,
MA 02110
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
NOTICE
IS HEREBY GIVEN that the Annual Meeting of Stockholders (the
"Annual Meeting") of Zoom Telephonics, Inc. (the
“Company”) will be held on Friday, July 17, 2020 at
10:00 a.m. Eastern Time by virtual means at www.virtualshareholdermeeting.com/ZMTP2020.
The meeting will be held for the following purposes:
1.
To elect nine
directors to serve for the ensuing year until their respective
successors are duly elected and qualified;
2.
To ratify the
appointment of Marcum LLP as the Company’s independent
registered public accounting firm for its fiscal year ending
December 31, 2020;
3.
To approve by a
non-binding advisory vote the compensation of the Company’s
named executive officers (the “say-on-pay” vote);
and
4.
To hold an advisory vote on the frequency of holding future
say-on-pay votes.
The
Board of Directors has fixed the close of business on May 22, 2020
as the record date for determining the stockholders entitled to
receive notice of and to vote at the Annual Meeting and any
continuation or adjournment thereof.
All
stockholders are cordially invited to attend the Annual Meeting in
its virtual format. Whether or not you plan to attend the Annual
Meeting, you are urged to vote by proxy in accordance with the
instructions included in the Notice of Internet Availability of
Proxy Materials. Any stockholder attending the Annual Meeting may
vote electronically during the meeting even if he or she has voted
by proxy.
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BY
ORDER OF THE BOARD OF DIRECTORS
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Jacquelyn
Barry Hamilton
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Chief
Financial Officer
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Boston,
Massachusetts
June 4,
2020
Important Notice Regarding the Availability of Proxy Materials for
the Stockholder Meeting to be Held on
Friday, July 17, 2020: The Proxy Statement for the Annual Meeting
and the Annual Report to
Stockholders for the year ended December 31, 2019 are
available at www.proxyvote.com.
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IMPORTANT: YOU
ARE URGED TO SUBMIT YOUR PROXY BY INTERNET OR TELEPHONE BY
FOLLOWING THE INSTRUCTIONS FOUND ON THE NOTICE OF INTERNET
AVAILABILITY OF PROXY MATERIALS. EVEN IF YOU HAVE SUBMITTED YOUR
PROXY, YOUR PROXY MAY BE REVOKED AT ANY TIME PRIOR TO EXERCISE BY
FILING WITH THE COMPANY A WRITTEN REVOCATION, BY EXECUTING A PROXY
AT A LATER DATE, OR BY ATTENDING AND VOTING AT THE
MEETING.
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THANK
YOU FOR ACTING PROMPTLY.
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ZOOM TELEPHONICS, INC.
PROXY STATEMENT FOR THE 2020 ANNUAL MEETING OF
STOCKHOLDERS
TO BE HELD ON JULY 17, 2020
INFORMATION CONCERNING SOLICITATION AND VOTING
General
The
enclosed proxy is solicited on behalf of the Board of Directors of
Zoom Telephonics, Inc., for use at the Annual Meeting of
Stockholders to be held on Friday, July 17, 2020 at 10:00 a.m.
Eastern Time (the "Annual Meeting"), or at any continuation or
adjournment thereof, for the purposes set forth herein and in the
accompanying Notice of Annual Meeting of Stockholders. The Annual
Meeting will be held by virtual means at www.virtualshareholdermeeting.com/ZMTP2020.
We intend to mail a Notice of Internet Availability of Proxy
Materials (sometimes referred to as the “Notice”) and
to make this proxy statement and Zoom's Annual Report for the year
ending December 31, 2019, available to our stockholders of record
entitled to vote at the Annual Meeting on or about June 4, 2020. In
this proxy statement we refer to Zoom Telephonics, Inc. as
“Zoom,” “we,” or
“us.”
Record Date, Stock Ownership and Voting
Only
stockholders of record at the close of business on May 22, 2020,
are entitled to receive notice of and to vote at the Annual
Meeting. At the close of business on May 22, 2020 there were
outstanding and entitled to vote 21,434,328 shares of common stock,
par value $.01 per share ("Common Stock"). Each stockholder is
entitled to one vote for each share of Common Stock.
One-third of the
shares of Common Stock outstanding and entitled to vote is required
to be present or represented by proxy at the Annual Meeting in
order to constitute the quorum necessary to take action at the
Annual Meeting. Votes cast by proxy or in person at the Annual
Meeting will be tabulated by the inspector of elections appointed
for the Annual Meeting. The inspector of elections will treat
abstentions as shares of Common Stock that are present and entitled
to vote for purposes of determining a quorum. Shares of Common
Stock held of record by brokers who do not return a signed and
dated proxy or do not comply with the voting instructions will not
be considered present at the Annual Meeting, will not be counted
towards a quorum and will not be voted on any proposal. Shares of
Common Stock held of record by brokers who complete a proxy in
accordance with the instructions included in the Notice of Internet
Availability and Proxy Material or comply with the voting
instructions but who fail to vote on one or more proposals
(“broker non-votes”) will be considered present at the
Annual Meeting and will count toward the quorum but will be deemed
not to have voted on such proposal.
The
nine nominees for the Board of Directors who receive the greatest
number of votes cast by stockholders present in person or
represented by proxy and entitled to vote thereon will be elected
directors of Zoom Telephonics, Inc.
An
affirmative vote of a majority of the votes properly cast at the
Annual Meeting will be necessary to ratify the appointment of
Marcum LLP as the Company’s independent registered public
accounting firm for the fiscal year ending December 31, 2020.
Abstentions and broker non-votes will have no effect on the outcome
of voting on this matter.
An
affirmative vote of a majority of the votes properly cast at the
Annual Meeting will be necessary to approve by a non-binding
advisory vote the compensation of the Company’s named
executive officers. Abstentions and broker non-votes will have no
effect on the outcome of voting on this matter.
An
affirmative vote of a majority of the votes properly cast at the
Annual Meeting will be necessary to approve by a non-binding
advisory vote the frequency of holding
future say-on-pay votes. Abstentions and broker non-votes
will have no effect on the outcome of voting on this
matter.
We do
not intend to submit any other proposals to the stockholders at the
Annual Meeting. The Board of Directors was not aware, a reasonable
time before mailing of this proxy statement to stockholders, of any
other business that may properly be presented for action at the
Annual Meeting. If any other business should properly come before
the Annual Meeting, shares represented by all proxies received by
us will be voted with respect thereto in accordance with the best
judgment of the persons named as attorneys in the
proxies.
If you
are a stockholder of record, you may vote in person at the Annual
Meeting. We will give you a ballot when you arrive.
If you
do not wish to vote in person or you will not be attending the
Annual Meeting, you may vote by proxy. You may vote by proxy over
the Internet, over the telephone or by mail. The procedures for
voting by proxy are as follows:
●
To vote by proxy
over the Internet go to the web address listed on the Notice of
Internet Availability of Proxy Materials; or
●
To vote by proxy
over the telephone, dial the toll-free phone number listed on the
Notice of Internet Availability of Proxy Materials under the
heading “Telephone” and following the recorded
instructions; or
●
To vote by written
proxy you must request a printed copy of these proxy materials by
mail at no cost to you as indicated on the Notice of Internet
Availability of Proxy Materials. Complete, sign and date your proxy
card and return it promptly in the envelope.
Revocability of Proxies
Any
person giving a proxy in the form accompanying this proxy statement
has the power to revoke it at any time before the final vote. A
person’s proxy vote may be revoked by filing a written notice
of revocation and sending such notice to Zoom at 225 Franklin
Street, Boston, Massachusetts 02110, by duly executing a proxy
bearing a later date, or by attending the Annual Meeting and voting
electronically.
Solicitation
All
costs of this solicitation of proxies will be borne by Zoom. Zoom
may reimburse banks, brokerage firms and other persons representing
beneficial owners of shares for their reasonable expenses incurred
in forwarding solicitation materials to such beneficial owners.
Solicitation of proxies by mail may be supplemented by telephone,
fax, electronic mail, or personal solicitations by directors,
officers, or employees of Zoom. No additional compensation will be
paid for any such services. Zoom may engage a professional proxy
solicitation firm to assist in the proxy solicitation and, if so,
will pay such solicitation firm customary fees plus
expenses.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
A Board
of nine directors is to be elected at the Annual Meeting. The Board
of Directors, upon the recommendation of the Nominating Committee,
has nominated the persons listed below for election as directors of
Zoom, all of whom have been nominated for re-election:
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David
Allen
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Joseph
Donovan
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Philip
Frank
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Jeremy
Hitchcock
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Joshua
Horowitz
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Peter R.
Kramer
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Frank B.
Manning
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Jonathan
Seelig
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Peter
Sykes
Unless
otherwise instructed, the proxy holders will vote the proxies
received by them for the nominees named above. All nominees are
currently directors of Zoom. In the event that any nominee is
unable or unwilling to serve as a director at the time of the
Annual Meeting, the proxies will be voted for the nominee, if any,
who shall be designated by the present Board of Directors to fill
the vacancy. It is not expected that any nominee will be unable or
unwilling to serve as a director. The proposed nominees are not
being nominated pursuant to any arrangement or understanding with
any person. Each director elected will hold office until the next
Annual Meeting or until his successor is duly elected or appointed
and qualified, unless his office is earlier vacated in accordance
with the Certificate of Incorporation of Zoom or he becomes
disqualified to act as a director. The nine nominees who receive
the greatest number of votes cast by stockholders present, in
person or by proxy, and entitled to vote at the Annual Meeting,
will be elected directors of Zoom.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” THE
ELECTION OF THE NINE NOMINEES SET FORTH ABOVE.
BOARD OF DIRECTORS AND MANAGEMENT
Information Regarding the Board of Directors
The
Board of Directors consists of nine members. In connection with the
private placement of Common Stock pursuant to a Stock Purchase
Agreement, dated May 26, 2020, which closed on May 27, 2020, the
Board of Directors was expanded from seven to nine members, and
Messrs. David Allen and Joshua Horowitz were appointed to fill the
resulting vacancies. In the event that Mr. Horowitz resigns or is
removed from the Board of Directors, Palm Global Small Cap Master
Fund LP (“Palm Fund”) will have the right to designate
a replacement director pursuant to the terms of the Stock Purchase
Agreement. At each meeting of stockholders, directors are elected
for a one-year term. The following table and biographical
descriptions set forth information regarding the current members of
the Board of Directors.
(1)
Members of the Audit Committee as
of May 22, 2020. Chair, Philip Frank.
(2)
Members of the Compensation
Committee as of May 22, 2020. Chair, David
Allen.
(3)
Members of the Nominating
Committee as of May 22, 2020. Chair, Joshua
Horowitz.
(4)
Executive Chairman of the Board of
Directors, Jeremy Hitchcock.
David Allen has been a director of Zoom
since May 2020. Mr. Allen was the Vice President, Operations &
Strategy of Oracle Corporation from 2017 to October 2019. From 2013
to 2017, he served as Senior Vice President at Dyn, Inc.
(“Dyn”) where he oversaw Dyn’s legal team, and
was responsible for all aspects of the company’s legal
matters. Prior thereto, Mr. Allen practiced law at Nixon Peabody
LLP. In private practice, he represented strategic and financial
buyers and sellers of publicly and privately held businesses and
served as outside general counsel to technology companies. His
extensive experience in technology, business, and legal matters
enable him to serve on our Board of Directors.
Joseph J. Donovan has been a director
of Zoom since 2005. Currently retired, Mr. Donovan served as the
Director of Education Programs of Suffolk University's Sawyer
School of Management on the Dean College campus, where he was
responsible for the administration of undergraduate and graduate
course offerings at Dean College from March 2004 through September
2009. Mr. Donovan also served as an adjunct faculty member at
Suffolk University's Sawyer School of Management. He taught Money
and Capital Markets, Managerial Economics, and Managerial Finance
in the Graduate School of Business Administration at Suffolk
University. Mr. Donovan served as the Director of Emerging
Technology Development for the Commonwealth of Massachusetts'
Office of Emerging Technology from January 1993 through
October 2004. Mr. Donovan also served as a director of
the Massachusetts Technology Development Corporation, the
Massachusetts Emerging Technology Development Fund, and the
Massachusetts Community Development Corporation. He received a
Bachelor of Arts in Economics and History from St. Anselm College
in Manchester, N.H. and a Master's Degree in Economics and Business
from the University of Nebraska. Mr. Donovan adds a
perspective to our Board of Directors which he gained through his
experience both as an educator and a leader in the Massachusetts
high technology community.
Philip Frank
is a technology executive with over 25
years of experience. He has been a director of Zoom since September 22,
2015. He has served as President, Chief Executive Officer and
director of VUI, Inc. since September 2018. Prior to that, he
was the President, Chief Executive Officer and a director of
AirSense Wireless from August of 2016 until its sale to Charter
Communications, Inc. in January 2018, and was Zoom's Chief
Financial Officer from September 2015 to July 2016. From
February 2005 to December 2014 he worked for the Nokia Corporation
including Nokia Siemens Networks, based in London, England.
At Nokia, Mr. Frank was most recently the Global Head of Corporate
Development and Mergers and Acquisitions. Earlier in his
career Mr. Frank was an executive with AT&T Wireless Services
as well as having worked with global advisory firms Diamond-Cluster
International, Inc. and Accenture PLC. He received a
Master’s Degree in Business Administration from the
University of Michigan Ross School of Business. Mr.
Frank’s extensive experience as a senior financial and
development executive with the world’s largest
telecommunications service provider and with the world’s
largest infrastructure vendor provides Zoom with topical industry
expertise and a valuable perspective regarding financial
management, strategy, development and sales.
Jeremy Hitchcock is a technology
entrepreneur and executive who joined Zoom’s Board of
Directors in May 2019. On January 16, 2020, the Board appointed Mr.
Hitchcock as Chairman of the Board, to be effective as of February
1, 2020. On April 14, 2020, the Board appointed Mr. Hitchcock as
Executive Chairman of the Board. Mr. Hitchcock serves as President
and Chief Executive Officer of Minim, Inc. (“Minim”),
an Internet of Things (“IoT”) networking and security
company. Mr. Hitchcock is a Principle at Orbit Group LLC, a New
Hampshire based venture capital firm. Previously, Mr. Hitchcock
founded Dyn when he was a student at Worcester Polytechnic
Institute in 2001. Dyn is an Internet infrastructure company
connecting people, content, and commerce. The company grew to 500
employees and raised $100 million of growth capital, and was
acquired by Oracle Corporation in 2017. Mr. Hitchcock’s
extensive experience in networking, security, and business enable
him to serve on our Board of Directors.
Joshua Horowitz has been a director of
Zoom since May 2020. Mr. Horowitz is a professional investor with
over 17 years of investing experience. Since January 2012, Mr.
Horowitz has served as a portfolio manager and Managing Director at
various Palm entities, first with Palm Ventures LLC and currently
with Palm Management (US) LLC where he manages the Palm Global
Small Cap Master Fund. He was formerly Director of Research at
Berggruen Holdings, a multi-billion dollar family office and a
research analyst at Crossway Partners LP, a value strategy
investment partnership. Mr. Horowitz has served as a director of
three separate Nasdaq traded companies over the past six years. Mr.
Horowitz served as a Director of The Lincoln General Insurance
Company from October 2001 to November 2014, 1347 Capital Corp
(Nasdaq: TFSC) from July 2014 to July 2016, and 1347 Property
Insurance Holdings, Inc. (Nasdaq: PIH) from April 2015 to April
2018. He was most recently the Interim Chairman of the Board of
Directors at Birner Dental Management Services, Inc. (OTC: BDMS)
from June 2018 until the Company’s sale to Mid Atlantic
Dental Partners in January 2019. Birner was the only publicly
traded dental service organization (“DSO”) in the
country with 67 offices and over 500 employees. He is currently a
Director of Limbach, Inc. (Nasdaq: LMB), a $500m mechanical systems
solutions concern. He is also a Board Observer at Biomerica, Inc.
(Nasdaq: BMRA) and a Director of Insurance Income Strategies, Ltd.
Mr. Horowitz holds a Bachelor of Science degree in Management magna
cum laude from Binghamton University and also studied at the Bath
School of Management in the United Kingdom. We believe that Mr.
Horowitz’s qualifications to serve on our Board include
valuable insights obtained through his management and operational
experience as well as his extensive experience in the financial
industry, including investing, corporate governance, capital
allocation, finance and financial analysis of public
companies.
Peter R. Kramer is a co-founder of Zoom
and has been a director of Zoom since May 1977.
Mr. Kramer also served as our Executive Vice President from
May 1977 until November 2009, when he retired from this
position. He earned his B.A. degree in 1973 from the State
University of New York at Stony Brook and his Master’s in
Fine Art degree from C.W. Post College in 1975. From 1999 to 2005,
Mr. Kramer was a director of Intermute, Inc., a company that
Zoom co-founded and sold to Trend Micro Inc., a subsidiary of Trend
Micro Japan. Mr. Kramer’s experience as our co-founder
and as Executive Vice President with Zoom for over thirty years
enables him to bring a well-informed perspective to our Board of
Directors.
Frank B. Manning co-founded the Company
and served as Chief Executive Officer from May 1977 until his
retirement on February 1, 2020. He has continued to serve on the
Company’s Board of Directors since 1977. He earned his BS, MS
and PhD degrees in Electrical Engineering from the Massachusetts
Institute of Technology, where he was a National Science Foundation
Fellow. From 1998 through late 2006, Mr. Manning was also a
director of the Massachusetts Technology Development Corporation, a
public purpose venture capital firm that invests in seed and
early-stage technology companies in Massachusetts. From 1999 to
2005, Mr. Manning was a director of Intermute, Inc., a company
that Zoom co-founded and that was sold to Trend Micro Inc., a
subsidiary of Trend Micro Japan. Mr. Manning was a director of
Unity Business Networks, a hosted VoIP service provider, from
Zoom's investment in July 2007 until Unity’s acquisition
in October 2009. From its inception until November 2010,
Mr. Manning was also a director of Zoom Technologies.
Mr. Manning’s extensive experience as our co-founder,
Chief Executive Officer, and Chairman for many years, as well as
his experience and professional skills in electronics and business,
enable him to skillfully serve on Zoom’s Board of
Directors.
Peter Sykes has been a director of Zoom
since October 24, 2016. Mr. Sykes is a British entrepreneur
and investor. Mr. Sykes had a successful corporate career with Dell
Inc., from 1992 to 2002 initially setting up the Dell subsidiaries
in Switzerland and Austria and later developing the Dell Global
Enterprise Program across Europe. Subsequently, Mr. Sykes
spearheaded Dell's development of Thailand, Korea and India.
Since 2002, Mr. Sykes has managed his personal investment
portfolio. Mr. Sykes has a wealth of experience developing
electronics hardware sales channels enabling him to capably serve
on our Board of Directors.
Jonathan Seelig joined as a director of
Zoom in May 2019. Mr. Seelig is co-founder and Chief Executive
Officer of Tectonic Network Inc., a startup cloud infrastructure
company. In 1998, while a student at the Massachusetts Institute of
Technology, he co-founded Akamai Technologies, Inc. (NASDAQ: AKAM),
the world’s first and largest Content Delivery Network. He
was formerly Managing Director at Globespan Capital Partners and
Chairman of the board at Zipcar. From 2016 to 2017, Mr. Seelig was
Chairman of the Board of Pq By Ron Arad, a consumer eyeglass
company. Since 2017 he has been a Board Member of Zagster Inc., an
innovative transportation company. Mr. Seelig has been a board
member of over a dozen companies and an investor in many more. His
extensive experience in networking, cloud infrastructure, business,
and finance enable him to serve on our Board of
Directors.
Board of Directors' Meetings, Structure and Committees
The
Board of Directors held nine regular and special meetings during
the year ending December 31, 2019. Each director attended at
least 75% of the meetings of the Board of Directors and each
Committee on which he served. All of Zoom's directors are
encouraged to attend Zoom's Annual Meeting of stockholders. There
were three directors in attendance at the 2019 Annual
Meeting.
Standing
committees of the Board include an Audit Committee, a Compensation
Committee and a Nominating Committee. As of December 31, 2019,
the members of the Audit Committee were Messrs. Donovan,
Frank, and Sykes with Mr. Frank presiding as Chairman; the members
of the Compensation Committee were Messrs. Donovan, Frank, and
Kramer with Mr. Kramer presiding as Chairman; and the members of
the Nominating Committee were Messrs. Donovan, Hitchcock, and
Kramer with Mr. Donovan presiding as Chairman. Effective as of
April 14, 2020, Mr. Hitchcock was appointed the Executive Chairman
of the Board of Directors and resigned as a member of the
Nominating Committee. As of May 27, 2020, Messrs. Allen and
Horowitz joined the Board of Directors. Effective as of June 1,
2020, Mr. Allen was appointed to the Compensation Committee and
elected as its Chairman, and Mr. Horowitz and Mr. Seelig were
appointed to the Nominating Committee, with Mr. Horowitz elected as
its Chairman.
Board
Independence. The Board of
Directors has reviewed the qualifications of Messrs. Allen,
Donovan, Frank, Horowitz, Kramer, Seelig and Sykes and has
determined that each individual is "independent" as such term is
defined under the current listing standards of the Nasdaq Stock
Market. In addition, each member of the Audit Committee is
independent as required under Section 10A(m)(3) of the
Securities Exchange Act of 1934, as amended (the “Exchange
Act”).
Structure of the Board of
Directors. Mr. Hitchcock serves as the Executive
Chairman of the Board of Directors. The Board of Directors has not
designated a lead independent director.
The Board of Directors’
Role in Risk Oversight. The Board of Directors oversees our risk
management process. This oversight is primarily accomplished
through the Board of Directors’ committees and
management’s reporting processes, including receiving regular
reports from members of senior management on areas of material risk
to the company, including operational, financial and strategic
risks. The Audit Committee focuses on risks related to accounting,
internal controls, and financial and tax reporting and related
party transactions. The Audit Committee also assesses economic and
business risks and monitors compliance with ethical standards. The
Compensation Committee is tasked with identifying and overseeing
risks associated with our executive compensation policies and
practices.
Our Executive Officers
The
names and biographical information of our executive officers are
set forth below:
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Name
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Age
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Position with the Company
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Jeremy Hitchcock
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38
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Executive Chairman of the Board of Directors
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Jacquelyn Barry Hamilton
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58
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Chief Financial Officer
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John Lauten
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54
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Senior Vice President of Operations
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Phil Stanhope
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56
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Chief Technology Officer and Vice President of
Engineering
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Jeremy Hitchcock is a technology
entrepreneur and executive who joined Zoom’s Board of
Directors in May 2019. On January 16, 2020, the Board appointed Mr.
Hitchcock as Chairman of the Board, to be effective as of February
1, 2020. On April 14, 2020, the Board appointed Mr. Hitchcock as
Executive Chairman of the Board. Mr. Hitchcock serves as the
President and Chief Executive Officer of Minim, an IoT networking
and security company. Mr. Hitchcock is a Principle at Orbit Group
LLC, a New Hampshire based venture capital firm. Previously, Mr.
Hitchcock founded Dyn, Inc. when he was a student at Worcester
Polytechnic Institute in 2001. Dyn is an Internet infrastructure
company connecting people, content, and commerce. The company grew
to 500 employees and raised $100 million of growth capital, and was
acquired by Oracle Corporation in 2017. Mr. Hitchcock’s
extensive experience in networking, security, and business enable
him to serve on our Board of Directors.
Jacquelyn Barry
Hamilton was appointed
Chief Financial Officer of Zoom in February 2020 following her
initial role with the Company as consultant and Acting Chief
Financial Officer. Prior to joining Zoom, she served as Chief
Financial Officer of Modo Labs, Inc., a mobile application
development company, from February 2019 through December 2019. Ms.
Barry Hamilton served as Chief Financial Officer of Netcracker
Technology Corp., a subsidiary of NEC Corporation that delivers a
software platform together with professional integration services
and managed services to telecommunications and cable companies
globally, from June 2015 through September 2018 and as Chief
Financial Officer of Intronis Technologies, a company that provides
cloud-based data protection and recovery, from March 2012 through
June 2015. Ms. Barry Hamilton also served as Vice President Finance
& Operations of Monster Worldwide, Inc., a global public
company providing a SaaS platform to match jobseekers with
employers, from 2008 through 2012, and as Chief Financial Officer
of the Global Technology Division of Monster Worldwide, Inc. from
2004 through 2008. Ms. Barry Hamilton served as Senior Vice
President of the Integrated Services Group of Level 3
Communications, LLC from March 2002 through May 2003. Ms. Barry
Hamilton served as Senior Vice President and Chief Financial
Officer at Corporate Software Inc., a global reseller of software
and related technologies from September 1998 through March 2002 and
held positions of financial responsibility developing its finance,
analytics and strategy functions between September 1990 through
September 1998. Ms. Barry Hamilton earned a BA in Finance from
Simmons College and an MS in Finance from the Carroll School of
Management at Boston College.
John Lauten was appointed Senior Vice President of
Operations of the Company in November 2019. Mr. Lauten is a high
technology, senior level operations executive with extensive
experience working for consumer electronics and communications
companies offering products and/or services worldwide. His areas of
expertise include supply chain management, operations, and
strategy. Mr. Lauten held senior level positions with various
high-tech companies including Nortel Networks Inc.,
Scientific-Atlanta LLC, Cisco Systems, Inc., Fox Factory, and
Skully Technologies. At Scientific-Atlanta/Cisco he was Global Head
of Customer Operations and Supply Chain Management. Under his
leadership, Mr. Lauten optimized the supply chain and customer
support organizations to create operational efficiencies and a
better customer experience. Most recently, Mr. Lauten managed the
turnaround of a wearable technology company called Skully
Technologies as Chief Operating Officer. Mr. Lauten earned a BBA in
Business Administration from Texas Christian University and an MBA
from the University of Texas at Austin, The Red McCombs School of
Business.
Phil
Stanhope was appointed
Chief Technology Officer and Vice President of Engineering in May
2019. Mr. Stanhope was the Vice President
of Technology Strategy for Oracle Cloud Infrastructure (OCI). In
this role he led the acquisition of a cloud security company and
the subsequent launch of OCI’s first hosted security service.
Mr. Stanhope was a member of the office of the Chief Technology
Officer since 2014 and was the Chief Technology Officer of Dyn in
2016 when it was acquired by Oracle Corporation. Mr.
Stanhope’s expertise includes engineering, infrastructure,
architecture, security, analytics, operations, and emerging
technologies. Mr. Stanhope is a known thought leader in the
industry, having served on numerous advisory boards and technology
adoption programs for over 30 years and has been a speaker at
numerous internet and security conferences. Mr. Stanhope earned a
BS degree in Computer & Information Science from the University
of Massachusetts.
AUDIT COMMITTEE REPORT
The
Audit Committee has reviewed and discussed with management Zoom's
audited financial statements for the year ended December 31, 2019.
The Audit Committee has also discussed with Marcum LLP, Zoom's
independent registered public accounting firm for the year ended
December 31, 2019, the matters required to be discussed by the
Auditing Standards No. 16 (Communications with Audit Committees),
issued by the Public Company Accounting Oversight Board. The Audit
Committee has received the written disclosures and the letter from
the independent auditors required by applicable requirements of the
Public Company Accounting Oversight Board regarding the independent
auditors’ communications with the Audit Committee concerning
independence, and has discussed with Marcum LLP that firm’s
independence. The Audit Committee has reviewed the independent
auditors’ fees for audit and non-audit services for the
fiscal year ended December 31, 2019.
Based
on its review and discussions of the foregoing, the Audit Committee
recommended to the Board of Directors that Zoom's audited financial
statements for 2019 be included in Zoom's Annual Report on
Form 10-K for the year ended December 31, 2019.
|
|
Audit Committee:
|
|
|
Philip
Frank, Chairman
|
|
|
Joseph
J. Donovan
|
|
|
Peter
Sykes
|
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Item
404(d) of Regulation S-K requires us to disclose in our proxy
statement any transaction in which the amount involved exceeds the
lesser of (i) $120,000, or (ii) one percent of the average of
Zoom’s total assets at year-end for the last two completed
fiscal years, in which Zoom is a participant and in which any
related person has or will have a direct or indirect material
interest. A related person is any executive officer, director,
nominee for director, or holder of 5% or more of our common stock,
or an immediate family member of any of those persons.
On May
3, 2019, the Company entered into a Stock Purchase Agreement (the
“2019 Stock Purchase Agreement”) with certain
accredited investors, including Messrs. Kramer, Manning, Stanhope
and Sykes, Zulu Holdings LLC (“Zulu”) of which Mr.
Hitchcock is the Co-Manager of Orbit Group LLC, the Manager of
Zulu, Palm Fund, and our former President and Chief Executive
Officer, Joseph L. Wytanis, in a private placement (the “2019
Private Placement”) pursuant to which the Company sold an
aggregate of 4,545,455 shares of our Common Stock at a purchase
price of $1.10 per share. Mr. Kramer purchased 90,910 shares for
$100,001; Mr. Manning purchased 313,634 shares for $344,997; Mr.
Stanhope purchased 50,000 shares for $55,000; Mr. Sykes purchased
36,364 shares for $40,000 and Mr. Wytanis purchased 90,910 shares
for $100,001. Zulu purchased 3,727,273 shares for $4.1 million and
Palm Fund purchased 136,364 shares for $150,000. Zulu served as the
lead investor in the 2019 Private Placement. The gross proceeds to
the Company at the closing of the 2019 Private Placement were
approximately $5.0 million. In connection with the 2019 Private
Placement, Messrs. Hitchcock and Seelig were appointed as members
of the Board of Directors of the Company. In the event that Mr.
Hitchcock or Mr. Seelig resigns or is removed from the Board, Zulu
will have the right to designate a replacement director for each of
them pursuant to the terms of the 2019 Stock Purchase Agreement.
The board designation rights will terminate upon Zulu ceasing to
own at least 8% of the Company’s Common Stock on a fully
diluted basis. For a period of 30 months following the date of the
2019 Stock Purchase Agreement, Zulu shall have the right to
participate in any subsequent financing in an amount necessary to
maintain Zulu’s pro rata ownership of the Company (calculated
on a fully-diluted basis) on the same terms, conditions and price
provided for in any such subsequent financing.
On July
25, 2019, the Company entered into a Master Partnership Agreement
with Minim, together with a related Statement of Work, License,
Collaborative Agreement, Software/Service Availability Agreement
and Software/Service Support Level Agreement (collectively, the
“Partnership Agreement”). Mr. Hitchcock is the
President and Chief Executive Officer of Minim. Under the
Partnership Agreement, the Company will integrate Minim software
and services into certain hardware products distributed by the
Company, and Minim will be entitled to certain fees and a portion
of revenue received from the end users of such services and
software. The Company and Minim entered into an additional
Statement of Work on December 31, 2019 providing for further
integration of Minim services, with a monthly minimum payment of
$5,000 payable by the Company to Minim starting in January 2020 for
a period of 36 months and a requirement for Minim to purchase at
least $90,000 of the Company’s hardware by December 2022. As
of May 22, 2020, the Company has made payments totaling $25,000 to
Minim under the Partnership Agreement.
On May
11, 2020, Joseph Wytanis notified the Company of his decision to
step down from the positions of President and Chief Executive
Officer of the Company. On May 15, 2020, the Company entered into a
letter agreement (the “Separation Agreement”) with Mr.
Wytanis, which terminated and superseded his employment agreement
with the Company. Pursuant to the terms of the Separation
Agreement, in consideration for, among other things, his compliance
with certain restrictive covenants and all agreements between him
and the Company, a general release of all claims against the
Company, and subject to his non-revocation of the Separation
Agreement, Mr. Wytanis will receive severance compensation equal to
his current base salary, at the rate of $210,000 per year, less all
applicable federal, state or local tax withholdings, payable in
installments for the six months following the effective date of his
separation from the Company. Mr. Wytanis’ stock options that
would have vested during the six-month period following the date of
separation were immediately vested and exercisable for up to 30
days following the date of separation. In addition, Mr. Wytanis
will receive continuation of certain health insurance benefits. The
Company also reimbursed Mr. Wytanis for certain relocation and
business expenses.
On May
26, 2020, the Company entered into a Stock Purchase Agreement (the
“2020 Stock Purchase Agreement”) with certain
accredited investors, including Messrs. Allen, Manning and
Stanhope, Zulu and Palm Fund, in a private placement (the
“2020 Private Placement”) pursuant to which the Company
sold an aggregate of 2,237,103 shares of Common Stock, at a
purchase price of $1.52 per share. Mr. Allen purchased 6,578 shares
for $10,000; Mr. Manning purchased 200,000 shares for $304,000 and
Mr. Stanhope purchased 10,000 shares for $15,200. Zulu and Palm
Fund each purchased 822,368 shares for $1.25 million. Palm Fund
served as the lead investor in the 2020 Private Placement. The
gross proceeds to the Company at the closing of the 2020 Private
Placement were approximately $3.4 million. In connection with the
2020 Private Placement, Messrs. Allen and Horowitz were appointed
as members of the Board. Pursuant to the 2020 Purchase Agreement,
Palm Fund has the right to appoint replacements for Mr. Horowitz in
the event of his resignation and to request that its designees be
appointed to each committee of the Board of Directors to the extent
approved by an affirmative vote of a majority of the Board of
Directors of the Company and as otherwise permitted by applicable
SEC and stock market requirements. The Board and committee
designation right will terminate upon Palm Fund ceasing to own at
least 5% of the Company’s Common Stock (as calculated for
purposes of Section 13(d) of the Exchange Act. Pursuant to the 2020
Purchase Agreement, Palm entered into a standstill covenant for a
period ending not later than the earliest to occur of five years
after the date of completion of the 2020 Private Placement and two
years after Mr. Horowitz or the Palm designee who succeeds him no
longer serves on the Board of Directors of the
Company.
Other
than the foregoing transactions, Zoom has not been a participant in
any transaction that is reportable under Item 404(d) of
Regulation S-K since January 1, 2019.
Policies and Procedures Regarding Review, Approval or Ratification
of Related Person Transactions
In
accordance with our Audit Committee charter, which is in writing,
our Audit Committee is responsible for reviewing and approving the
terms of any related party transactions. The Audit Committee
charter sets forth the standards, policies and procedures that we
follow for the review, approval or ratification of any related
person transaction that we are required to report pursuant to Item
404(d) of Regulation S-K promulgated by the Securities and Exchange
Commission. Any related person transactions would need to be
approved by our Audit Committee prior to us entering into such a
transaction.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The
following table sets forth certain information regarding beneficial
ownership of Zoom's Common Stock as of May 22, 2020 by (i) each
person who is known by Zoom to own beneficially more than
five percent of Zoom's outstanding Common Stock, (ii) each of
Zoom's directors and named executive officers, as listed below in
the Summary Compensation Table under the heading "Executive
Compensation", and (iii) all of Zoom's current directors and
executive officers as a group.
On May
22, 2020, there were 21,434,328 issued and outstanding shares of
Zoom Common Stock. Unless otherwise noted, each person identified
below possesses sole voting and investment power with respect to
the shares listed. The information contained in this table is based
upon information received from or on behalf of the named
individuals or from publicly available information and filings by
or on behalf of those persons with the SEC.
|
Name and Address
of Beneficial Owner (1)(2)
|
Beneficial
Ownership
|
% of Common
Stock Outstanding
|
|
5% or Greater Stockholders:
|
|
|
|
Manchester
Management Company LLC(3)
3 West Hill
Place
Boston, MA
02114
|
4,285,717
|
20.0%
|
|
Zulu Holdings
LLC(4)
848 Elm Street, 2nd
Floor
Manchester, NH
03101
|
3,727,273
|
17.4%
|
|
|
|
|
|
Directors and Named Executive Officers:
|
|
|
|
Joseph J. Donovan,
Director(5)
|
151,000
|
*
|
|
Philip Frank,
Director(6)
|
82,500
|
*
|
|
Jeremy Hitchcock,
Executive Chairman(7)
|
3,779,953
|
17.6%
|
|
Peter R. Kramer,
Director(8)
|
495,839
|
2.3%
|
|
Frank B. Manning,
Director
|
2,020,773
|
9.4%
|
|
Jonathan Seelig,
Director(9)
|
45,000
|
*
|
|
Peter Sykes,
Director(10)
|
206,314
|
1.0%
|
|
Jacquelyn Barry
Hamilton, Chief Financial Officer
|
-
|
-
|
|
John Lauten, Senior
Vice President of Operations(11)
|
20,000
|
*
|
|
Phil Stanhope,
Chief Technology Officer and Vice President of
Engineering(12)
|
105,000
|
*
|
|
All directors and
Executive Officers as a group (10 persons) (13)
|
6,906,379
|
31.6%
|
*Less
than one percent of shares outstanding.
(1)
This table does not
reflect the recent private placement transaction that closed on May
27, 2020, in which each of Zulu Holdings LLC, Palm Global Small Cap
Master Fund LP, Mr. Frank Manning and Mr. David Allen participated
and purchased shares of Common Stock and as a result of which
Messrs. David Allen and Joshua Horowitz joined the Board of
Directors.
(2)
Unless otherwise
noted: (i) each person identified possesses sole voting and
investment power over the shares listed; and (ii) the address of
each person identified is c/o Zoom Telephonics, Inc., 225 Franklin
Street, Boston, Massachusetts 02110.
(3)
Information is
based on a Schedule 13D filed by Manchester Management Co LLC on
September 27, 2015. It includes the following stockholders
Manchester Explorer, L.P. in the amount of 2,857,143 shares, JEB
Partners, L.P. in the amount of 1,142,857 shares, James E. Besser
in the amount of 142,857 shares and Morgan C. Frank in the amount
of 142,857 shares totaling 1,295,376. In all cases the address
listed in the above table applies to all stockholders other than
Morgan C. Frank whose address is: 1398 Aerie Drive, Park City, UT
84060.
(4)
Information is
based on a Schedule 13D/A filed as of April 17, 2020, by Jeremy
Hitchcock, Elizabeth Cash Hitchcock, Orbit Group LLC
(“Orbit”), Hitchcock Capital Partners, LLC
(“HCP”) and Zulu Holdings LLC (“Zulu”). The
3,727,273 shares are held of record by Zulu. HCP may be deemed the
beneficial owner of the shares as a beneficial owner of the Common
Stock held by Zulu through its ownership of Zulu. As the manager of
Zulu, Orbit may be deemed the beneficial owner of the Common Stock
held by Zulu. As the co-managers of Orbit and HCP, each of Jeremy
P. Hitchcock and Elizabeth Cash Hitchcock may be deemed the
beneficial owner of the Common Stock held by Zulu.
(5)
Includes 75,000
shares the Mr. Donovan has the right to acquire upon exercise
of outstanding stock options exercisable within sixty (60) days
after May 22, 2020.
(6)
Includes 82,500
shares that Mr. Frank has the right to acquire upon exercise
of outstanding stock options exercisable within sixty (60) days May
22, 2020.
(7)
Includes 3,727,273
shares that are held of record by Zulu, and 45,000 shares that Mr.
Hitchcock has the right to acquire upon exercise of outstanding
stock options exercisable within sixty (60) days after May 22,
2020.
(8)
Includes 75,000
shares that Mr. Kramer has the right to acquire upon exercise
of outstanding stock options exercisable within sixty (60) days
after May 22, 2020.
(9)
Includes 45,000
shares that Mr. Seelig, who became a director in May 2019, has the
right to acquire upon exercise of outstanding stock options
exercisable within sixty (60) days after May 22, 2020.
(10)
Includes 52,500
shares that Mr. Sykes has the right to acquire upon exercise
of outstanding stock options exercisable within sixty (60) days
after May 22, 2020.
(11)
Includes 20,000
shares that Mr. Lauten has the right to acquire upon exercise
of outstanding stock options exercisable within sixty (60) days
after May 22, 2020.
(12)
Includes 45,000
shares that Mr. Stanhope has the right to acquire upon
exercise of outstanding stock options exercisable within sixty (60)
days after May 22, 2020.
(13)
Includes an
aggregate of 462,500 shares that the current directors and Named
Executive Officers listed above have the right to acquire
uponexercise of outstanding stock options exercisable within sixty
(60) days after May 22, 2020.
EXECUTIVE COMPENSATION
Summary Compensation Table
The
following Summary Compensation Table sets forth the total
compensation paid or accrued for the fiscal years ended
December 31, 2019 and December 31, 2018 for our principal
executive officer and our other two most highly compensated
executive officers. We refer to these officers as our named
executive officers.
|
Name and
Principal Position
|
Year
|
Salary
($)
|
Bonus
(1)
($)
|
Option
Awards
(2)
($)
|
All
Other Compensation (3)
($)
|
Total
($)
|
|
Frank B.
Manning,
|
2019
|
$134,244
|
--
|
$67,463
|
$350
|
$202,057
|
|
retired Chairman of
the Board, Chief Executive Officer and President
|
2018
|
$129,272
|
--
|
$45,500
|
$536
|
$175,308
|
|
Deena Randall
(4),
|
2019
|
$137,492
|
$10,000
|
--
|
$350
|
$147,842
|
|
former Vice
President of Operations
|
2018
|
$128,336
|
--
|
$40,950
|
$536
|
$169,822
|
|
Joseph L. Wytanis
(5),
|
2019
|
$207,708
|
$60,000
|
--
|
$107,538
|
$375,246
|
|
former President
and Chief Executive Officer
|
2018
|
$26,923
|
$30,000
|
$76,273
|
--
|
$133,196
|
(1)
The amounts in this
column represent bonus payments granted in the applicable fiscal
year.
(2)
The amounts
included in the “Option Awards” column reflect the
aggregate grant date fair value of option awards in accordance with
FASB ASC Topic 718, pursuant to the 2009 Stock Option Plan and 2019
Stock Option Plan. Assumptions used in the calculations of these
amounts are included in Note 7 to our Financial Statements included
in our Annual Report on Form 10-K for the year ended
December 31, 2019. These options are incentive stock options
issued under the 2009 Stock Option Plan or 2019 Stock Option Plan
and represent the right to purchase shares of Common Stock at a
fixed price per share (the grant date fair market value of the
shares of Common Stock underlying the options).
(3)
The amounts
included in the “All Other Compensation” column for
2019 consists of: (a) Zoom’s contribution to a 401(k) plan of
$350 for each named executive officer, and (b) taxable housing
allowance to Mr. Wytanis of $107,188; and for 2018 consists of: (a)
life insurance premiums paid by Zoom to the named executive
officer: Mr. Manning $186 and Ms. Randall $186; and (b)
Zoom’s contribution to a 401(k) plan of $350 for each named
executive officer.
(4)
Ms. Randall retired
from the Company effective as of October 1, 2019.
(5)
Mr. Wytanis
resigned from the Company effective as of May 8, 2020.
Outstanding
Equity Interests
The
following table sets forth information concerning outstanding stock
options as of December 31, 2019 for each named executive
officer.
Outstanding
Equity Awards at 2019 Fiscal Year-End
|
|
|
Number of
Securities
Underlying
Unexercised Options
|
Option
|
Option
|
|
|
Name
|
Grant Date
|
Exercisable
Options
|
Unexercisable
Options
|
Exercise
Price
|
Expiration
Date
|
|
Frank B.
Manning(1)
|
04/30/2015
|
75,000
|
--
|
$0.25
|
04/30/2020
|
|
hh
|
08/09/2018
|
25,000
|
25,000
|
$2.09
|
08/09/2021
|
|
hh
|
09/03/2019
|
--
|
200,000
|
$0.81
|
09/03/2022
|
|
Deena
Randall
|
08/09/2018
|
22,500
|
22,500
|
$2.09
|
08/09/2021
|
|
Joseph
Wytanis(2)
|
10/29/2018
|
50,000
|
50,000
|
$1.66
|
08/09/2021
|
(1)
Upon his
retirement, effective February 1, 2020, all of the options held by
Mr. Manning became fully vested.
(2)
Upon his
resignation, effective May 8, 2020, all of the options held by Mr.
Wytanis became fully vested.
Employment, Termination and Change of Control
Agreements
Zoom
entered into severance and change of control agreements with each
of the named executive officers. The purpose of these arrangements
is to encourage the named executive officers to continue as
employees and/or assist in the event of a change-in-control of
Zoom. Zoom has entered into agreements with each of the named
executive officers formalizing the compensation arrangement
described below.
Under
the terms of each agreement, if a named executive officer is
terminated by Zoom for any reason other than for cause, such named
executive officer will receive severance pay in an amount equal to
the greater of three months’ base salary or a number of weeks
of base salary equal to the number of full years employed by Zoom
divided by two and all outstanding stock options issued on or after
September 22, 2009 held by the named executive officer will
become immediately vested and will be exercisable for a period of
up to 30 days after termination.
Under
the terms of each agreement, each named executive officer will
receive severance pay equal to six months’ base salary if (i)
the named executive officer’s employment is terminated
without cause within six months after a change-in-control, (ii) the
named executive officer’s job responsibilities, reporting
status or compensation are materially diminished and the named
executive officer leaves the employment of the acquiring company
within six months after the change-in-control, or (iii) Zoom is
liquidated. In addition, in the event of a change-in-control or
liquidation of Zoom, outstanding stock options granted to the named
executive officer on or after September 22, 2009 will become
immediately vested.
Potential Termination and Change-in Control Payments
As of
December 31, 2019, in the event a named executive officer is
terminated by Zoom for any reason other than cause or a
change-in-control or liquidation of Zoom, the named executive
officer would receive the following cash payments: Mr. Manning
$50,963 and Mr. Wytanis $50,000. These amounts represent the
greater of three months’ salary or the number of weeks of
base salary equal to the number of years employed by Zoom divided
by two. In the event of termination as a result of a
change-in-control or liquidation, the named executive officers
would receive the following cash payments: Mr. Manning $64,636
and Mr. Wytanis $100,000. These amounts represent six months’
base salary. In the event of either termination of employment, all
options held by the named executive officers that were issued on or
after September 22, 2009 would become immediately vested. As
described below and in the “Certain Relationships and Related
Transactions” section, Mr. Wytanis employment
agreement was terminated and superseded in connection with the
Separation Agreement.
Ms.
Randall, who retired effective October 1, 2019, was not then
eligible for any such payment. Mr. Wytanis retired from the
Company, effective as of May 8, 2020, and entered into the
Separation Agreement, which terminated and superseded his prior
employment agreement. Pursuant to the terms of the Separation
Agreement, in consideration for, among other things, his compliance
with certain restrictive covenants and all agreements between him
and the Company, a general release of all claims against the
Company, and subject to his non-revocation of the Separation
Agreement, Mr. Wytanis will receive severance compensation equal to
his current base salary, at the rate of $210,000 per year, less all
applicable federal, state or local tax withholdings, payable in
installments for the six months following the effective date of his
separation from the Company. Mr. Wytanis’ stock options that
would have vested during the six-month period following the date of
separation will be immediately vested and exercisable for up to 30
days following the date of separation. In addition, Mr. Wytanis
will receive continuation of certain health insurance benefits. The
Company will also reimburse Mr. Wytanis for certain relocation and
business expenses.
Director Compensation
The
following table sets forth information concerning the compensation
of our directors who are not named executive officers and who
served as directors for the fiscal year ended December 31,
2019.
|
Name
|
Fees Earned or
Paid in Cash
|
Option Awards
(1)(2)(3)(4)(5)
|
All Other
Compensation
|
Total
|
|
Joseph J.
Donovan
|
$2,000
|
$9,801
|
−
|
$11,801
|
|
Derek
Elder
|
−
|
$5,841
|
−
|
$5,841
|
|
Philip
Frank
|
$2,000
|
$9,801
|
−
|
$11,801
|
|
Jeremy
Hitchcock
|
$1,250
|
$18,522
|
−
|
$19,772
|
|
Peter R.
Kramer
|
$2,000
|
$9,801
|
−
|
$11,801
|
|
Jonathan
Seelig
|
$1,250
|
$18,522
|
−
|
$19,772
|
|
Peter
Sykes
|
$2,000
|
$9,801
|
−
|
$11,801
|
(1)
The amounts
included in the “Option Awards” column reflect the
aggregate grant date fair value of option awards in accordance with
FASB ASC Topic 718, pursuant to the 2009 Directors Stock Option
Plan and 2019 Directors Stock Option Plan. Assumptions used in the
calculations of these amounts are included in Note 7 to our
Financial Statements included in our Annual Report on
Form 10-K for the year ended December 31, 2019. These
options are non-qualified stock options issued under the 2009
Directors Stock Option Plan or 2019 Directors Stock Option Plan and
represent the right to purchase shares of Common Stock at a fixed
price per share (the grant date fair market value of the shares of
Common Stock underlying the options).
(2)
As of
December 31, 2019, each non-employee director holds the
following aggregate number of shares under outstanding stock
options:
|
Name
|
Number of Shares
Underlying Outstanding Stock Options
|
|
Joseph J.
Donovan
|
75,000
|
|
Derek
Elder(4)
|
--
|
|
Philip
Frank
|
75,000
|
|
Jeremy
Hitchcock
|
37,500
|
|
Peter
Kramer
|
75,000
|
|
Jonathan
Seelig
|
37,500
|
|
Peter
Sykes
|
45,000
|
(3)
As of December 31,
2019, the number of shares underlying stock options granted to each
non-employee director in 2019 and the grant date fair market value
of such stock options is:
|
Name
|
Grant
Date
|
Number of Shares
underlying Stock Options Grants in 2019
|
Grant Date Fair
Value of Stock Option Grants in 2019
|
|
Joseph J.
Donovan
|
01/10/2019
|
7,500
|
$5,841
|
|
|
07/10/2019
|
7,500
|
$3,960
|
|
Derek
Elder(4)
|
01/10/2019
|
7,500
|
$5,841
|
|
Philip
Frank
|
01/10/2019
|
7,500
|
$5,841
|
|
|
07/10/2019
|
7,500
|
$3,960
|
|
Jeremy
Hitchcock(5)
|
05/30/2019
|
30,000
|
$14,562
|
|
|
07/10/2019
|
7,500
|
$3,960
|
|
Peter
Kramer
|
01/10/2019
|
7,500
|
$5,841
|
|
|
07/10/2019
|
7,500
|
$3,960
|
|
Jonathan
Seelig(5)
|
05/30/2019
|
30,000
|
$14,562
|
|
|
07/10/2019
|
7,500
|
$3,960
|
|
Peter
Sykes
|
01/10/2019
|
7,500
|
$5,841
|
|
|
07/10/2019
|
7,500
|
$3,960
|
(4)
On January 25,
2019, Derek Elder resigned from the Board of
Directors.
(5)
The Company closed
on a $5 million private placement and issued an aggregate of
4,545,455 shares on May 3, 2019 and Mr. Hitchcock and Mr. Seelig
joined the Board; upon joining the Board, Mr. Hitchcock and Mr.
Seelig each received a grant of 30,000 stock options. See the description of the private placement in
the “Certain Relationships and
Related Transactions”
section in this proxy statement.
Each
non-employee director of Zoom receives a fee of $500 per quarter
plus a fee of $500 for each meeting at which the director is
personally present. Travel and lodging expenses are also
reimbursed.
Each
non-employee director of Zoom may be granted stock options under
Zoom's 2009 Directors Stock Option Plan, as amended (the "Directors
Plan") or the 2019 Director Stock Option Plan. The 2009 Directors
Plan expired and was replaced with the 2019 Director Stock Option
Plan approved at the Company Annual Meeting in July, 2019. The
exercise price for the options granted under either Directors Plan
is the fair market value of the Common Stock on the date the option
is granted.
Option Exercises
Joseph
Donovan and Peter Kramer each exercised options to purchase a total
of 15,000 shares of Common Stock during the fiscal year ended
December 31, 2019.
PROPOSAL NO. 2
RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
Upon
recommendation of the Audit Committee, the Board of Directors has
appointed Marcum LLP as Zoom’s principal accountants and
independent registered public accounting firm, to audit the
financial statements of Zoom for the year ending December 31,
2020. A representative of Marcum LLP will be available at the
meeting and will have the opportunity to make a statement if such
representative desires to do so and will be available to respond to
appropriate questions. Marcum LLP served as Zoom’s
independent registered public accounting firm for the year ended
December 31, 2019.
Although
stockholder ratification of the appointment is not required by law,
the Company desires to solicit such ratification. If the
appointment of Marcum LLP is not approved by a majority of the
shares represented at the Annual Meeting, the Company will consider
the appointment of other independent registered public accounting
firms.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” THE APPROVAL OF THE
RATIFICATION OF THE APPOINTMENT OF MARCUM LLP AS THE
COMPANY’S INDEPENDENT AUDITORS FOR THE FISCAL YEAR ENDING
DECEMBER 31, 2020.
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Audit Committee Policy on Pre-Approval of Services of Independent
Registered Public Accounting Firm
The
Audit Committee's policy is to pre-approve all audit and
permissible non-audit services provided by the independent
registered public accounting firm. These services may include audit
services, audit-related services, tax services and other services.
Pre-approval is generally provided for up to one year. The Audit
Committee may also pre-approve particular services on a
case-by-case basis. During our fiscal year ended December 31,
2019, no services were provided to us by Marcum LLP other than in
accordance with the pre-approval procedures described
herein.
Principal Accountant Fees and Services
The firm of Marcum LLP served as our independent
registered public accounting firm for fiscal years
2019 and 2018. The table below shows the
aggregate fees that the Company paid or accrued for the audit and
other services provided by Marcum LLP for the fiscal years ended
December 31, 2019 and December 31, 2018:
|
FEE CATEGORY
|
2019
|
2018
|
|
Audit fees (1)
|
$187,200
|
$169,060
|
|
Audit-related fees (2)
|
10,000
|
––
|
|
Total
fees
|
$197,200
|
$169,060
|
———————
(1)
Audit Fees.
Consists of fees billed for
professional services rendered for the audit of Zoom’s
consolidated financial statements and review of the
interim consolidated financial statements included in
quarterly reports and services that are normally provided in
connection with statutory filings and
engagements.
(2)
Audit-Related Fees.
Consists of fees billed for assurance
and related services that are reasonably related to the performance
of the audit or review of Zoom’s consolidated financial
statements and are not reported under "Audit Fees." For 2019, fees
are related to a private placement.
All
services rendered by Marcum LLP for fiscal years 2018 and 2019 were
permissible under applicable laws and regulations, and were
pre-approved by the Audit Committee.
PROPOSAL NO. 3
ADVISORY VOTE ON EXECUTIVE COMPENSATION
(“SAY-ON-PAY”)
Pursuant to Section
14A of the Exchange Act, we provide our stockholders with the
opportunity to vote to approve, on a nonbinding, advisory basis,
the compensation of our named executive officers as disclosed in
this proxy statement in accordance with the compensation disclosure
rules of the Securities and Exchange Commission.
Our
executive compensation programs are designed to attract, motivate,
and retain our named executive officers, who are critical to our
success, and to reward our named executive officers for the
achievement of short-term and long-term strategic and operational
goals and the achievement of increased total stockholder return. We
seek to closely align the interests of our named executive officers
with the interests of our stockholders, and our Compensation
Committee regularly reviews named executive officer compensation to
ensure such compensation is consistent with our goals.
Required Vote
This
vote is advisory, which means that the vote on executive
compensation is not binding on the company, our Board of Directors,
or the Compensation Committee of the Board of Directors. The vote
on this resolution is not intended to address any specific element
of compensation, but rather relates to the overall compensation of
our named executive officers, as described in this proxy statement
in accordance with the compensation disclosure rules of the
Securities and Exchange Commission. To the extent there is a
significant vote against our named executive officer compensation
as disclosed in this proxy statement, the Compensation Committee
will evaluate whether any actions are necessary to address our
stockholders’ concerns.
Accordingly,
we ask our stockholders to vote on the following resolution at the
Annual Meeting:
“RESOLVED,
that the Company’s stockholders approve, on an advisory
basis, the compensation of the named executive officers, as
disclosed in the Company’s Proxy Statement for the 2020
Annual Meeting of Stockholders pursuant to the compensation
disclosure rules of the Securities and Exchange Commission,
including the Summary Compensation Table, and the other related
tables and disclosure.”
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE APPROVAL OF THE
COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS, AS DISCLOSED IN THIS
PROXY STATEMENT.
PROPOSAL NO. 4
ADVISORY VOTE ON THE FREQUENCY OF FUTURE SAY-ON-PAY
VOTES
Pursuant
to Section 14A of the Exchange Act, we provide our stockholders
with the opportunity to vote, on a non-binding, advisory basis, for
their preference as to how frequently to hold future say-on-pay
votes. Stockholders may indicate whether they would prefer that we
conduct future say-on-pay votes once every one, two, or three
years. Stockholders also may abstain from casting a vote on this
proposal.
The
Board of Directors has determined that an annual advisory vote on
executive compensation will permit our stockholders to provide
direct input on the Company’s executive compensation
philosophy, policies, and practices as disclosed in the
Company’s proxy statement, which is consistent with our
efforts to engage in an ongoing dialogue with our stockholders on
executive compensation and corporate governance
matters.
Required Vote
This
vote is advisory, which means that the vote on the frequency of
future say-on-pay votes is not binding on the company, our Board of
Directors, or the Compensation Committee of the Board of Directors.
The Company recognizes that the stockholders may have different
views as to the best approach for the Company, and, therefore, we
look forward to hearing from our stockholders as to their
preferences on the frequency of an advisory vote on executive
compensation. The Board of Directors and the Compensation Committee
will take into account the outcome of the vote; however, when
considering the frequency of future say-on-pay votes, the Board of
Directors may decide that it is in the best interests of our
stockholders and the Company to hold future say-on-pay votes more
or less frequently than the frequency receiving the most votes cast
by our stockholders.
The
proxy card provides stockholders with the opportunity to choose
among four options (holding the vote every one, two, or three
years, or abstain from voting) and, therefore, stockholders will
not be voting to approve or disapprove the recommendation of the
Board of Directors.
THE BOARD OF DIRECTORS RECOMMENDS A
VOTE “FOR” THE OPTION OF AN ANNUAL VOTE AS THE
PREFERRED FREQUENCY FOR FUTURE SAY-ON-PAY
VOTES.
CODE OF ETHICS
Zoom
has adopted a Code of Ethics for Senior Financial Officers that
applies to Zoom's principal executive officer and its principal
financial officer, principal accounting officer and controller, and
other persons performing similar functions. Zoom's Code of Ethics
for Senior Financial Officers is publicly available on its website
at www.zoomtel.com.
If Zoom makes any amendments to this Code of Ethics or grants any
waiver, including any implicit waiver, from a provision of this
Code of Ethics to Zoom's principal executive officer, principal
financial officer, principal accounting officer, controller or
other persons performing similar functions, Zoom will disclose the
nature of such amendment or waiver, the name of the person to whom
the waiver was granted and the date of waiver in a current report
on Form 8-K.
DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS AND RECOMMENDATIONS
FOR DIRECTOR
Stockholder
proposals for inclusion in Zoom's proxy materials for Zoom's 2021
Annual Meeting of Stockholders must be received by Zoom no later
than February 4, 2021. These proposals must also meet the other
requirements of the rules of the Securities and Exchange Commission
relating to stockholder proposals.
Stockholders may
make recommendations to the Nominating Committee of candidates for
its consideration as nominees for director at Zoom's 2021 Annual
Meeting of Stockholders by submitting the name, qualifications,
experience and background of such person, together with a statement
signed by the nominee in which he or she consents to act as such,
to the Nominating Committee, c/o Zoom Telephonics, Inc., 225
Franklin Street, Boston, Massachusetts 02110. Notice of such
recommendations should be submitted in writing as early as
possible, but in any event not later than 120 days prior to the
anniversary date of the immediately preceding annual meeting or
special meeting in lieu thereof and must contain the specified
information and conform to certain requirements set forth in Zoom's
Bylaws. In addition, any persons recommended should at a minimum
meet the criteria and qualifications referred to in the Nominating
Committee's charter, a copy of which is publicly available on
Zoom's website at www.zoomtel.com.
The letter of recommendation from one or more stockholders should
state whether or not the person(s) making the recommendation have
beneficially owned 5% or more of Zoom's Common Stock for at least
one year. The Nominating Committee may refuse to acknowledge the
nomination of any person not made in compliance with the procedures
set forth herein, in the Nominating Committee's charter or in
Zoom's Bylaws.
Stockholders may
make a business proposal, other than the nomination of for the
election of directors by a stockholder, by providing notice that
sets forth: (i) as to each matter the stockholder proposes to bring
before Zoom's 2021 Annual Meeting of Stockholders: a brief
description of the business desired to be brought before such
meeting, the text of the proposal, and the reasons for conducting
such business at such meeting; and (ii) as to the stockholder
giving the notice and the beneficial owner, if any, on whose behalf
the proposal is being made: the name and address of such
stockholder, as they appear on the Company’s books, and of
such beneficial owner, the class and series and number of shares of
stock of the Company that are, directly or indirectly, owned,
beneficially or of record, by such stockholder and such beneficial
owner, and a description of any material interest of such
stockholder or such beneficial owner and the respective affiliates
and associates of, or others acting in concert with, such
stockholder or such beneficial owner in such business. Notice of
such business proposal should be submitted in writing as early as
possible, but in any event not later than 120 days prior to the
anniversary date of the immediately preceding annual meeting or
special meeting in lieu thereof and must contain the specified
information and conform to certain requirements set forth in Zoom's
Bylaws.
STOCKHOLDER COMMUNICATIONS
Any
stockholder wishing to communicate with any of Zoom's directors
regarding Zoom may write to the director c/o Investor Relations,
Zoom Telephonics, Inc., 225 Franklin Street, Boston, Massachusetts
02110. Investor Relations will forward these communications
directly to the director(s).
OTHER MATTERS
The
Board of Directors knows of no other business to be presented for
consideration at the Annual Meeting other than described in this
proxy statement. However, if any other business should come before
the Annual Meeting, it is the intention of the persons named in the
proxy to vote, or otherwise act, in accordance with their best
judgment on such matters.
INCORPORATION BY REFERENCE
To the
extent that this proxy statement has been or will be specifically
incorporated by reference into any filing by Zoom under the
Securities Act of 1933, as amended, or the Exchange Act, the
section of the Proxy Statement entitled "Audit Committee Report"
shall not be deemed to be so incorporated, unless specifically
otherwise provided in any such filing.
COPIES OF ANNUAL REPORT ON FORM 10-K FOR 2018
Copies
of Zoom's Annual Report on Form 10-K for the year ending
December 31, 2019, as filed with the Securities and Exchange
Commission, are provided herewith and available to stockholders
without charge upon written request addressed to Zoom Telephonics,
Inc., 225 Franklin Street, Boston, Massachusetts 02110, Attention:
Investor Relations.
IT
IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. STOCKHOLDERS ARE
URGED TO UTILIZE THE AVAILABLE VOTING OPTIONS AS DESCRIBED IN THE
NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIALS AND IN THIS
PROXY STATEMENT.
|
|
By
order of the Board of Directors,
|
|
|
|
|
|
Jeremy
Hitchcock
Executive
Chairman of the Board of Directors
Zoom
Telephonics, Inc.
|
|
|
|
Boston,
Massachusetts
June 4,
2020
Appendix A
ZOOM TELEPHONICS, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
July 17, 2020
The
undersigned stockholder of Zoom Telephonics, Inc., a Delaware
corporation (the “Company”), acknowledges receipt of
the Notice of Annual Meeting of Stockholders and Proxy Statement,
dated June 4, 2020, and hereby appoints Jeremy Hitchcock and
Jacquelyn Barry Hamilton, and each of them acting singly, with full
power of substitution and resubstitution, attorneys and proxies to
represent the undersigned at the Annual Meeting of Stockholders of
the Company to be held on Thursday, July 17, 2020 by live webcast
at www.virtualshareholdermeeting.com/ZMTP2020.
The meeting will be held in virtual format only and will begin at
10:00 a.m., and at any adjournment or adjournments thereof, with
all power which the undersigned would possess if personally
present, and to vote all shares of stock which the undersigned may
be entitled to vote at said meeting upon the matters set forth in
the Notice of Meeting in accordance with the following instructions
and with discretionary authority upon such other matters as may
come before the meeting. All previous proxies are hereby
revoked.
THIS
PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. IT WILL BE
VOTED AS DIRECTED BY THE UNDERSIGNED AND IF NO DIRECTION IS
INDICATED AS TO A PARTICULAR PROPOSAL, IT WILL BE VOTED FOR THE
ELECTION OF THE PERSONS NOMINATED BY THE BOARD OF DIRECTORS AS
DIRECTORS OR SUCH OTHER PROPOSAL, AS THE CASE MAY BE.
Notice of Internet Availability of Proxy Material: The Notice of
Meeting, proxy statement and proxy card are available at
www.proxyvote.com.
DETACH
PROXY CARD HERE
v
v
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR”
THE NOMINEES AS DIRECTORS AND “FOR”
ALL OTHER PROPOSALS EXCEPT WITH RESPECT TO PROPOSAL 4. THE BOARD OF
DIRECTORS RECOMMENDS A VOTE FOR “1 YEAR” ON PROPOSAL
4.
|
1. Election
of Directors:
|
FOR
|
AGAINST
|
ABSTAIN
|
|
DAVID ALLEN
|
[ ]
|
[ ]
|
[ ]
|
|
JOSEPH J. DONOVAN
|
[ ]
|
[ ]
|
[ ]
|
|
PHILIP FRANK
|
[ ]
|
[ ]
|
[ ]
|
|
JEREMY HITCHCOCK
|
[ ]
|
[ ]
|
[ ]
|
|
JOSHUA HOROWITZ
|
[ ]
|
[ ]
|
[ ]
|
|
PETER R. KRAMER
|
[ ]
|
[ ]
|
[ ]
|
|
FRANK B. MANNING
|
[ ]
|
[ ]
|
[ ]
|
|
JONATHAN SEELIG
|
[ ]
|
[ ]
|
[ ]
|
|
PETER SYKES
|
[ ]
|
[ ]
|
[ ]
|
2.
To
ratify the appointment of Marcum LLP as Zoom Telephonics,
Inc.’s independent registeredpublic accounting firm for its
fiscal year ending December 31, 2020.
[ ] FOR
[ ] AGAINST
[ ] ABSTAIN
3.
Advisory
vote to approve the compensation of the Company’s named
executive officers (the “say-on-pay”
vote).
[ ] FOR
[ ] AGAINST
[ ] ABSTAIN
4.
Advisory
vote on the
frequency of holding future say-on-pay votes.
[ ] 1 YEAR
[ ] 2 YEARS
[ ] 3 YEARS
[ ] ABSTAIN
|
|
Mark here for
address change and
note at left
|
☐
|
|
|
Signatures should be the same as the name printed hereon.
Executors, administrators, trustees, guardians, attorneys, and
officers of corporations should add their titles when
signing.
Signature:
___________________________________Date:_____________
Signature:
___________________________________Date:_____________
|
|
Please Detach Here
You Must Detach This Portion of the Proxy Card
Before Returning it in the Enclosed Envelope
——————————————