Tessco (TESS) 10-K/A2023 FY Annual report (amended)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K/A

(Amendment No. 1 to Form 10-K)

Commission file number 001-33938

TESSCO Technologies Incorporated

(Exact name of registrant as specified in its charter)

Registrant’s telephone number, including area code (410) 229-1000

Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Act:

None

Indicate by check mark if the registrant is a well-known seasoned issuer (as defined in Rule 405 of the Act). Yes ¨ No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes ¨ No x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ¨   Accelerated filer ¨   Non-accelerated filer x

Smaller reporting company x   Emerging growth company ¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. Yes x No ¨

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ¨

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

The aggregate market value of Common Stock, $0.01 par value, held by non-affiliates of the registrant based on the closing sales price of the Common Stock as quoted on Nasdaq as of September 25, 2022, was $36,909,325.

The number of shares of the registrant’s Common Stock, $0.01 par value, outstanding as of June 1, 2023, was 9,265,643.

DOCUMENTS INCORPORATED BY REFERENCE: None

EXPLANATORY NOTE

This Amendment No. 1 on Form 10-K (this “Amendment”) amends the Annual Report on Form 10-K of TESSCO Technologies Incorporated (the “Company,” “our,” “we,” or “us”) for the fiscal year ended March 26, 2023, originally filed with the United States Securities and Exchange Commission (the “SEC”) on May 26, 2023 (the “Original Filing”). This information was previously omitted from the Original Filing in reliance on General Instruction G(3) to Form 10-K, which permits the information in the above referenced items to be incorporated in the Form 10-K by reference from our definitive proxy statement if such statement is filed no later than 120 days after our fiscal year-end, or pursuant to an amendment to the Original Filing filed within such 120 day period. We are filing this Amendment for the purpose of including the information required by Part III because we do not now expect to file a definitive proxy statement including this information within 120 days of the end of our fiscal year ended Mach 26, 2023. The reference on the cover of the Original Filing to the incorporation by reference to the corresponding portions of the definitive Proxy Statement for the registrant’s 2023 Annual Meeting of Shareholders if filed within 120 days after the 2023 fiscal year end, or by reference to an amendment to Original Filing to be filed prior to or in lieu of such Proxy Statement, not later than the end of such 120-day period, is hereby deleted.

In accordance with Rule 12b-15 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), Part III, Items 10 through 14 of the Original Filing are hereby amended and restated in their entirety, and Part IV, Item 15 of the Original Filing is hereby amended and restated in its entirety. We have also included as exhibits the certifications required under Section 302 of The Sarbanes-Oxley Act of 2002. Because no financial statements are contained within this Amendment, we are not including certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. This Amendment does not amend or otherwise update any other information in the Original Filing to reflect any events which occurred at a date subsequent to the Original Filing. The Original Filing continues to speak as of the date of the Original Filing. Accordingly, this Amendment should be read in conjunction with the Original Filing and with our filings with the SEC subsequent to the Original Filing.

Table of Contents

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Executive Officers

Executive officers are appointed annually by the Board of Directors and, subject to the terms of any applicable employment agreement, serve at the discretion of the Board of Directors. Information regarding our current executive officers is as follows:

Our Directors

The names of our directors and their ages, positions, and biographies are set forth below. Our Board presently consists of seven directors with each director serving a term that continues until the annual meeting of shareholders in the year following his or her election or appointment and until his or her successor is elected and qualified.

Timothy Bryan, age 62 joined the Company as a director in December 2020 and has served as the Chairman of the Board since January 2022.  Since July 2011, Mr. Bryan has served as Chief Executive Officer of the National Rural Telecommunications Cooperative (NRTC), an organization focused on providing commercial technology solutions to the nation’s rural electric and telephone cooperatives and companies. Prior to NRTC, from 2005 to 2009, Mr. Bryan served as the Chief Executive Officer of ICO Global Communications, a next generation satellite and terrestrial wireless company. Before ICO, Mr. Bryan served as the Chief Financial Officer of Craig McCaw’s Eagle River Holdings, the President of United Pan Europe Communications (UPC) (now Liberty Global), the Vice President/Finance and Treasurer of Jones Financial Group and Jones Intercable, and the Vice President and Manager of the Communications Division at NationsBank Corporation.  In August 2012, Mr. Bryan was appointed to the Board of Directors of FirstNet by the United States Secretary of Commerce and chaired the Finance Committee of the Board. Mr. Bryan also served on the Board of Directors of Arris International (and served on its Audit Committee) until its sale to CommScope in 2019, and on the Board of Directors of Nextel Communications.

Mr. Bryan is well qualified to serve as a member of our Board based on his vast experience in executive positions, primarily focused on finance and executive leadership. The Board has also determined that Mr. Bryan qualifies as an Audit Committee financial expert.

Matthew W. Brewer, age 42, joined the Company as a director in May 2022. Mr. Brewer serves as an Equity Partner of Bartlit Beck LLP, a nationally recognized law firm which he joined in 2008. He has also served on the Board of Commissioners of the Chicago Housing Authority since 2013, and on the Board of Governors of the Metropolitan Planning Council, a nonprofit organization dedicated to shaping a more sustainable and prosperous greater Chicago region, since 2014. Mr. Brewer also served on the Board of Directors of Ann & Robert H. Lurie Children’s Hospital of Chicago, from 2015 to February 2020. He has served as the Founder, Executive Director and Chairman of the Board of Directors of Future Leaders of Chicago, a youth development organization, since 2015. Mr. Brewer received his B.A. in American Studies from Stanford University, his J.D. from Yale Law School and his M.B.A. from Harvard Business School.

Mr.  Brewer is well qualified to serve as a member of our Board based on his extensive leadership experience, coupled with his experience in the legal profession.

Steven T. Campbell, age 72, joined the Company as a director in July 2021. Mr. Campbell served at United States Cellular Corporation (“US Cellular”), a wireless telecommunications service provider, from 2005 through 2020. From 2019 to 2020, Mr. Campbell was Executive Vice President and Chief Administrative Officer. Prior to 2019, he was Executive Vice President, Chief Financial Officer and Treasurer since 2007. In these positions, Mr. Campbell led US Cellular’s finance, strategy, supply chain, legal and regulatory affairs, real estate, and intercarrier business activities. Mr. Campbell also served as a member of US Cellular’s Board of Directors from 2014 to 2020. Prior to joining US Cellular in 2005, Mr. Campbell held leadership positions in finance and operations at 3Com Corporation, U.S. Robotics Corporation, Amoco Corporation and Price Waterhouse & Co. (now PricewaterhouseCoopers). Mr. Campbell previously served as a member of the Board of Directors of United States Cellular Corporation, the Board of Trustees of Quincy University, and the President’s Board of UCAN, a non-profit social services organization.

Mr. Campbell is well qualified to serve as a member of the Board based on his extensive executive management experience in finance and operations and his previous board experience.

Stephanie Dismore, age 50, was elected to the Tessco Board in 2020. Since 2019, she has served as Senior Vice President and Managing Director, North America at HP Inc., where she is responsible for leading all aspects of HP’s market strategy and managing the multibillion-dollar P&L for the company’s largest geographic region. In this capacity, she also oversees direct and indirect sales engagements across HP’s portfolio of products and services, for commercial, consumer and public sector customer segments in North America. Throughout her 23-year tenure at HP, Ms. Dismore has held a variety of leadership positions in sales, marketing, and channel roles. Her deep understanding of how to navigate complex shifts in market dynamics, while achieving business objectives and creating capacity for sustainable growth, have earned her credibility and respect among her colleagues, partners and customers as a thought leader and key decision-maker. A committed advocate for advancing diversity, equity, and inclusion initiatives in the workplace, Ms. Dismore helped found HP’s Global Diversity Advisory Board, and today she serves as an Executive Sponsor for HP’s Racial Equality and Social Justice Task Force, as well as HP’s Global Sustainable Impact Steering Committee. Ms. Dismore currently serves as Chair of the Board of Directors for Boys & Girls Clubs of the Austin Area and is a Board member for the Consumer Technology Association.  She also serves on advisory boards for CDW and City of Hope.

Ms. Dismore is well qualified to serve as a member of our Board, due to her extensive experience in executive positions at HP and her knowledge and skills relating to marketing, sales and P&L management, as well as her board experience for a number of organizations.

Vernon Irvin, age 62, joined the Company as a director in July 2021. Since November 2022, Mr. Irvin has served as the Chief Revenue Officer of G-P/Globalization Partners, a provider of a SAAS-based Global Employment Platform^TM. In this role, Mr. Irvin is responsible for driving G-Ps customer-centric go-to-market strategy. Prior to November 2022, Mr. Irvin served as Executive Vice President and Chief Revenue Officer at Everbridge, Inc., a publicly traded SAAS communication business since September 2019. From May 2019 to September 2019, Mr. Irvin served as Head of Global Enterprise Business Development for Syniverse, the $800M Blockchain, Private Mobile Solutions company. From March 2013 to May 2019, Mr. Irvin served as an Executive Vice President at CenturyLink. Mr. Irvin also currently serves on the National Black MBA Association advisory council. Mr. Irvin previously served on the board of Brand Asset Digital, LLC (Private).

Mr. Irvin is well qualified to serve as a member of the Board based on his vast experience in sales and technical solutions.

Kathleen McLean, age 63, joined the Company as a director in December 2020. Since July 2016, Ms. McLean has been a consultant and advisor to senior executives in global corporations. From June 2013 to June 2016, Ms. McLean served as Senior Vice President, Chief Information Officer, and Chief Customer Officer for ADT Inc., a leading provider of electronic security, interactive home and business automation, and monitoring services for residences and small businesses in the U.S. and Canada. Prior to joining ADT, Ms. McLean served as Chief Revenue Officer and Chief Information Officer at FairPoint Communications, Inc., and in senior leadership positions in technology, sales, and service at Verizon Communications, Inc. Ms. McLean is a member and previous Governance Fellow of the National Association of Corporate Directors. . She has served on the Board of Trustees of Philips Education Partners and the Board of Directors of the Guardian ad Litem Association, as well as an advisory board member for several tech start-ups.

Ms. McLean is well qualified to serve as a member of our Board based on her vast experience in executive positions, primarily focused on information technology and customer success.

Sandip Mukerjee, age 60, has served as President and Chief Executive Officer of the Company, and as a member of the Board since August 2019. From 2016 until joining Tessco as its President and Chief Executive Officer, Mr. Mukerjee served as the President of the Global Professional and Consulting Services business for Nokia Software. From 2006-2016, he worked at Alcatel Lucent, starting as the SVP of marketing and business development and culminating in his role as President and General Manager of IP Platforms for the Americas. Mr. Mukerjee began his career at AT&T/Lucent Bell Labs where he held a variety of technical, product management and global strategy positions.

Mr. Mukerjee is well qualified to serve as a member of our Board based on his nearly 30 years of global experience in the wireless and telecom industry in a variety of executive roles including business and strategy development, marketing and general management.

Board Leadership Structure

Tessco believes that there are a wide array of leadership structures that could apply to many different business models and, therefore, that every company should be afforded the opportunity to determine the ideal structure for its board leadership. Leadership structures may change over time to best suit the Company’s current needs. Tessco’s Chairman of the Board and Chief Executive Officer roles are divided, and it is expected to remain that way for the foreseeable future.

In January 2022, the Board of Directors unanimously elected Mr. Bryan to serve as Chairman of the Board.

Meetings and Committees of the Board

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The Board has three standing committees: an Audit Committee, a Compensation Committee and a Nominating and Governance Committee. The current membership and the function of each of the committees is described below. The Board met fifteen times during fiscal year 2023, and during that period no current director attended fewer than 70% of the total number of meetings of the Board and Committees on which that director served. The Company does not have a policy on director attendance at annual meetings, but all of our directors are invited and encouraged to attend annual meetings. In addition, during fiscal year 2023, the Board established a Special Committee, comprised of Messrs. Bryan. Campbell and Mukerjee, to assist the Board and management in the pursuit and consideration of strategic alternatives.

Board Standing Committee Membership

Audit Committee

The Audit Committee is primarily concerned with the effectiveness of the auditing efforts by the Company’s independent registered public accounting firm. The Audit Committee’s duties include approving the selection of the Company’s independent registered public accounting firm, reviewing both the scope of audits conducted by them and the results of those audits, and reviewing the organization and scope of the Company’s internal system of accounting and financial controls. The Audit Committee met five times during fiscal year 2023. The Audit Committee also reviews its charter on an annual basis and recommends to the Board updates to such charter when it deems it appropriate. A copy of the Audit Committee charter is available for review on our website (www.tessco.com), under the heading “Investors”. The Board has determined that the Audit Committee is comprised solely of directors who are “independent” within the meaning of applicable SEC rules and Nasdaq Rules 5605(a)(2) and 5605(c)(2), and that Mr. Bryan qualifies as an Audit Committee “financial expert” as defined by such rules. Mr. Bryan currently serves as Chairman of the Audit Committee.

Compensation Committee

The Compensation Committee provides assistance to the members of the Board in fulfilling their responsibilities to our shareholders with regard to matters relating to compensation practices of the Company, including salary and other forms of compensation. The Compensation Committee’s primary duties and responsibilities are to formulate and recommend compensation policies of the Company that will enable the Company to attract and retain high-quality leadership in ways that are consistent with the Company’s established compensation philosophy. The Compensation Committee administers the Company’s incentive compensation plans, including our 2019 Stock and Incentive Plan. The Compensation Committee met ten times during fiscal year 2023. The Compensation Committee also reviews its charter on an annual basis and recommends to the Board updates to such charter when it deems it appropriate. A copy of the Compensation Committee charter is available for review on our website (www.tessco.com), under the heading “Investors”. Ms. McLean currently serves as Chairwoman of the Compensation Committee. The Compensation Committee has the authority to select, retain or obtain the advice of any compensation consultant, legal counsel or other advisor as it deems necessary to assist with its duties and responsibilities. During fiscal year 2023, the Compensation Committee employed the services of a compensation consultant to ensure alignment between the Company’s compensation structure for its Named Executive Officers and its mix of cash and equity compensation.

Nominating and Governance Committee

The Company has a Nominating and Governance Committee, the functions of which include, among other things, making recommendations to the Board regarding matters and practices concerning the Board, its committees and individual directors; evaluating the current composition and governance structure of the Board and determining its future requirements; making recommendations concerning nominees for election to the Board; and appointing directors to Board committees and selecting Chairpersons of the Board committees. The Nominating and Governance Committee met five times during fiscal year 2023. The Nominating and Governance Committee also reviews its charter on an annual basis and recommends to the Board updates to such charter when it deems it appropriate. A copy of the Nominating and Governance Committee charter is available for review on our website (www.tessco.com), under the heading “Investors”. Ms. Dismore currently serves as Chairman of the Nominating and Governance Committee.

The Nominating and Governance Committee has determined, in its view, that the minimum qualifications for serving as a director of the Company are that a nominee demonstrate an ability to make a meaningful contribution to the Board’s oversight of the business and affairs of the Company, and have an impeccable record of and reputation for honesty and ethical conduct in both his or her professional and personal activities. The Committee also examines a candidate’s specific experiences and skills, time availability, potential conflicts of interest and independence from management and the Company. The Board and the Committee have adopted a formal policy with respect to diversity, a copy of which is available for review on our Website (www.tessco.com), under the heading “Investors” and believes that it is essential that the Board is comprised of members that have diverse backgrounds, skill sets, education and professional experience. The Nominating and Governance Committee believes that it has been able to attract and appoint directors of diverse backgrounds in the past using criteria such as that described above, and is committed to continuing to actively seek highly qualified women and minority candidates. The Board and Committee also follow the overall Company philosophy regarding maintaining an environment free from discrimination based upon race, color, religion, national origin, sex, age, disability, sexual orientation, marital status or any unlawful factor. The Board has determined that a director shall not be re-nominated by the Board to serve as a director beyond the end of an elected term during which the director achieves his or her 76^th birthday, provided that the Board may re-nominate a director to serve for one additional term commencing after the end of an elected term during which the director achieves his or her 76^th birthday if the Board determines that the director’s particular circumstances, contributions or expertise so warrant. The Board believes that it is important for the Board and the executive officers to be committed to the long-term retention and creation of value for shareholders. Accordingly, each independent member of the Board should own at least 10,000 shares of the Company’s common stock by the third anniversary of such director’s initial election.

Director candidates are identified through various means, including recommendations of current directors and executive officers, by the retaining third-party consultants to assist in this process, and by considering director candidates recommended by shareholders. In considering candidates submitted by shareholders, the Committee will consider the needs of the Board and the qualifications of the candidate. The Committee may also consider other factors it determines to be relevant, such as the number of shares held by the recommending shareholder and the length of time that such shares have been held. For the Committee to consider a candidate, a shareholder should submit the recommendation in writing and include the name of the shareholder and evidence of the person’s ownership of Company stock, including the number of shares owned and the length of time of ownership, and the name of the candidate, the candidate’s resume or a listing of his or her qualifications to be a director of the Company and the person’s consent to be named as a director if selected and nominated. The shareholder recommendation and information should be sent to our Corporate Secretary at 11126 McCormick Road, Hunt Valley, Maryland 21031 and, in order for the candidate to be eligible for nomination for election at the next annual meeting, must in all respects comply with the procedural requirements set forth in our bylaws. Once a potential candidate has been identified, the Committee may collect and review information regarding the candidate to assess whether the person should be considered further. If the Committee determines that the candidate warrants further consideration, personal contact with the candidate may be made and further review of the candidate’s accomplishments, qualifications and willingness to serve may be undertaken and compared to other candidates. The Committee’s evaluation process does not vary based on whether or not a candidate is recommended by a shareholder, although, as stated above, the Board may take into consideration other factors, such as the number of shares held by the recommending shareholder and the length of time that such shares have been held. Mr. Brewer was nominated to serve on our Board pursuant to an agreement with Lakeview Trading & Investment LLC, one of our larger stockholders.

Shareholder Communications with Directors

The Board recommends that shareholders initiate any communications with the Board in writing. Written communications may be directed to our Corporate Secretary. Shareholders can send communications by e-mail to corporatesecretary@tessco.com, or by mail to Corporate Secretary, TESSCO Technologies Incorporated, 11126 McCormick Road, Hunt Valley, Maryland 21031. This centralized process will assist the Board in reviewing and responding to shareholder communications in an appropriate manner. The name of any specific intended Board recipient should be noted in the communication. The Board has instructed the Corporate Secretary to forward such correspondence only to the intended recipients; however, the Board has also instructed the Corporate Secretary, prior to forwarding any correspondence, to review such correspondence and, in his discretion, not to forward certain items if they are deemed of a commercial or frivolous nature or otherwise inappropriate for the Board’s consideration. In such cases, some of that correspondence may be forwarded elsewhere in the Company for review and possible response.

Board’s Role in Risk Oversight

The Board oversees the business of the Company, including CEO and senior management performance and risk management, in an effort to assure that the long-term interests of the shareholders are being served. Each committee of the Board is also responsible for reviewing Company risk exposure in the area of the committee’s responsibility and providing input to management on such risks.

Our management and Board have a process to identify, analyze, manage and report all significant risks to the Company. Our CEO and other senior managers regularly report to the Board on significant risks facing the Company, including financial, operational, competitive, legal, regulatory, cyber and strategic risks. Each of the Board committees review with management significant risks related to the committee’s area of responsibility and reports to the Board on such risks. The independent Board members also discuss material risks when they meet in executive session without management.

Code of Business Conduct and Ethics

We have adopted a code of business conduct and ethics that applies to our team members, including all of our officers and directors, and particularly our Chief Executive Officer, Chief Financial Officer, principal accounting officer and other persons performing similar functions. This code is available on our website (www.tessco.com) under the heading “Investors”. We will promptly disclose on our website any amendments to, and waivers from, our code of business conduct and ethics, if and when required.

Employee, Officer and Director Hedging

The Company’s Corporate Governance Guidelines prohibit our directors and executive officers from entering into hedging or monetization transactions or similar arrangements with respect to Company securities and from pledging any Company securities as collateral. A copy of the Company’s Corporate Governance Guidelines is available for review on our website (www.tessco.com) under the heading “Investors”.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), requires our directors, executive officers, and persons who own more than 10% of our common stock to file reports of their ownership and changes in ownership of our common stock with the SEC. Our employees prepare these reports for our directors and executive officers on the basis of information obtained from them and from the Company’s records. Based on information available to us during fiscal year 2023, we believe that all applicable Section 16(a) filing requirements were met.

Item 11. EXECUTIVE COMPENSATION

REPORT OF THE COMPENSATION COMMITTEE

The Compensation Committee, which is composed solely of independent directors, assists the Board in fulfilling its responsibilities with regard to compensation matters, and is responsible under its charter for determining the compensation of Tessco’s executive officers. The Compensation Committee has reviewed and discussed the “Compensation Discussion and Analysis” (CD&A) appearing below with management, including our Chief Executive Officer, Sandip Mukerjee. Based on this review and discussion, the Compensation Committee recommended to the Board of Directors that the “Compensation Discussion and Analysis” section be included in Tessco’s 2023 Annual Report on Form 10-K.

Compensation Committee

Kathleen McLean, Chairperson

Steven T. Campbell

Vernon Irvin

As of June 7, 2023

COMPENSATION DISCUSSION AND ANALYSIS

The Compensation Committee (the “Committee”) of our Board of Directors (the “Board”), which is comprised entirely of independent directors, oversees our executive compensation program and determines all compensation for our executive officers. From time to time, the Committee requests recommendations from our Chief Executive Officer (“CEO”) regarding the amounts, types and structure of our executive compensation. This report focuses on the compensation program for our CEO, Chief Financial Officer (“CFO”), three other most highly compensated executive officers, whom we refer to collectively as our “named executive officers”, or “NEOs”. During fiscal year 2023, the Company only employed two executive officers beyond our CEO and CFO, and accordingly, only four NEOs are including in the CD&A analysis. Our NEOs for purposes of this Compensation Discussion and Analysis are:

Mr. Lowe and Ms. Ridgely were promoted to Senior Vice Presidents in March 2022. Mr. Lowe is the Company’s Chief Technology Officer and oversees the Information Business System group, the Ventev product group and our Tessco Observer SAAS offering. Ms. Ridgley leads our vendor management, supply chain, customer success and marketing teams.

Executive Summary

Tessco operates in the extremely competitive and rapidly changing wireless communication product and service industry. The Committee believes that compensation programs for our NEOs should and do align the financial interests of the NEOs with those of our shareholders. The programs are designed to attract, motivate and retain talented executives for our long-term success.

Our current executive compensation programs established by the Committee are heavily weighted to incentive compensation that is “at risk”. The broad objectives of the programs are to:

Fiscal 2023 was our second full year following the divestiture during fiscal 2021 of our Retail business. Our exit from the Retail business was a significant milestone in our long-term strategy, and we are now fully focused on our more profitable Carrier and Commercial business. In fiscal 2023, with that divestiture and the significant impact of Covid-19 behind us, and with an improving global supply chain, we achieved meaningful improvements in revenues, margins and operating income. Revenues from continuing operations totaled $452 million, an 8% increase over the prior year, and gross profits from continuing operations totaled $91 million, a 17% increase. Our selling, general and administrative expenses were up 14% compared to fiscal year 2022. Fiscal year 2023 SG&A costs were impacted by $3.1 million related to one significant accounts receivable write-off and costs associated with the Company’s consideration of strategic alternatives during that period. Operating loss was reduced by approximately $1.4 million in fiscal 2023, totaling $2.1 million, compared to last year’s loss of $3.5 million. We also achieved positive adjusted EBITDA of $2.8 million, compared to a $0.3 million in fiscal 2022. Results achieved in fiscal year 2023 met certain minimum targets established by the Compensation Committee near the beginning of the year (primarily Adjusted EBITDA), and the variable payments made to our NEOs in fiscal year 2023 are reflective of these results.

Our executive compensation program generally includes several elements that, taken together, we believe allow us to achieve the best alignment of Company growth, long-term shareowner value and team member retention. These elements are:

We strongly believe that our executives are properly motivated by appropriate base salaries and our pay for performance and other incentive programs. The Committee continues to believe that time-vested stock grants are aligned with long-term shareholder interests. The Committee has concluded that stock option and/or restricted stock unit (RSU) grants to NEOs and others can also provide an effective retention and/or recruiting tool and additional incentive for driving long-term stock price growth.

The Committee continually reevaluates its approach to executive compensation, and when circumstances are determined to justify it, the Committee makes adjustments. During fiscal year 2023, the Compensation Committee employed the services of a compensation consultant to ensure alignment between the Company’s compensation structure for its NEOs and its mix of cash and equity compensation. This included a benchmarking analysis but did not result in changes to compensation paid in fiscal year 2023.

Reward Metrics

A significant percentage of NEO compensation potential is at risk and performance based. This performance-based compensation requires the achievement of specific performance targets intended to drive shareholder value over the long-term in order for the compensation to be paid, and is designed to reward achievement of targeted financial results and individual performance. These performance metrics are based on financial measures regularly used by our management internally to understand, manage and evaluate our business and make operating decisions. The following is a list of our typical reward metrics, although some may or may not be used every year or be applicable to each NEO.

How Compensation is Determined

Opportunity for Shareholder Feedback. The Committee considered feedback from our shareholders regarding our executive compensation program. The advisory (non-binding) vote on our overall executive compensation policies and procedures first instituted in 2012 and continued in 2015, 2018 and annually thereafter, provides shareholders with an opportunity to communicate their views on our executive compensation program on a regular basis. At our 2018 Annual Meeting of Shareholders, our shareholders voted on an advisory (non-binding) basis to hold “say-on-pay” votes each year.

At our 2022 Annual Meeting of Shareholders, our shareholders voted to approve, on an advisory (non-binding) basis, the compensation paid to the Company’s NEOs for fiscal year 2022. We have considered this “2022 say-on-pay vote” and we believe that support from our shareholders for the 2022 say-on-pay vote proposal indicates that our shareholders are supportive of our overall approach to executive compensation.

Base Salary. Base salary is the fixed component of the NEO’s annual cash compensation and is set with the goal of attracting talented executives and adequately compensating and rewarding them for services rendered during the fiscal year. The Committee periodically reviews base salaries for our NEOs on its own initiative and at the recommendation of the CEO. In reviewing base salaries, the Committee considers each NEO’s level of responsibility, the size and complexity of their business unit, changes in duties and responsibilities, the business and overall and business unit financial results, the relationship among base salaries paid to others within TESSCO, and knowledge of base salaries paid by peers to comparable executives.

Mr. Mukerjee’s base salary has been set by contract and cannot be reduced. No other NEO has a base salary set by contract.

Base salaries of each NEO for fiscal year 2023 are discussed below under the heading “Fiscal Year 2023 Executive Compensation”, and the actual salaries paid to each NEO for fiscal year 2023 are set forth in the “Summary Compensation Table” under the heading, “Salary”.

Performance-Based Annual Cash Bonus Program. Cash bonus earning opportunities for each individual are expressed as a percentage of the actual base salary paid to the NEO during the fiscal year and are determined by the Committee. The percentages are determined by the Committee based upon the NEO’s job level and responsibilities and may vary for different officers or business units.

Early in each fiscal year, the Committee typically establishes specific performance objectives for the payment of cash bonuses for that year. The performance objectives for each year are aligned with Tessco’s growth and diversification strategies and have included: earnings per share, Adjusted EBITDA, operating income, landed gross profit, operating margin, non-concentrated net profit contribution, unit/segment results, customer growth, return on capital employed, productivity measurements (i.e., net income as a percentage of revenues), IT initiatives, strategic imperatives, and returns (i.e., return on assets). When establishing performance goals for a given period, the Committee reviews and discusses Tessco’s business and financial plans for that year and key underlying assumptions, expectations under then-existing and anticipated market conditions, and the opportunity to generate shareholder value. Based on these and other factors, the Committee establishes the performance targets for purposes of cash bonuses.

Generally, following the close of each fiscal year (or other measurement period when applicable), the Committee determines whether the performance objectives for the period have been achieved and evaluates and then rates the individual performance of each of the NEOs for purposes of cash bonuses. The Committee evaluates each NEO’s leadership skills and contribution by considering a variety of factors, including collaboration within the organization and the individual’s ability to drive bottom-line results.

Also see the “Summary Compensation Table” included herein, under the heading “Non-Equity Incentive Plan Compensation”.

Performance Stock Award Program and other Equity Incentives. The Committee believes that providing equity-based rewards to senior leaders and key contributors who are responsible for developing and successfully executing Tessco’s growth strategies is in the best interests of all shareholders. The Company had granted Performance Stock Units (“PSUs”) to its NEOs and other key contributors in each fiscal year, beginning in fiscal year 2005 and through fiscal year 2020. No PSUs were granted to NEOs in fiscal year 2023. Tessco’s Performance Stock Award Program is designed to reward the achievement of business objectives that benefit shareholders, and to help retain a successful and tenured management team. While the Committee believes equity-based compensation based on both performance and time-based metrics, like PSUs, may generally be more aligned with long-term shareholder interests than stock options, it believes that stock option and restricted stock unit grants to NEOs can also serve as an effective retention and recruiting tool, and as additional incentive for driving long-term stock price growth. Therefore, the Committee uses both and may emphasize any of these types of awards from time to time.

The Compensation Committee has also utilized restricted stock awards, restricted stock units (RSUs) and stock options as additional compensation for certain key executives when the Compensation Committee determines that the circumstances so warrant. The Compensation Committee awarded RSUs instead of PSUs as part of 2023 NEO compensation. Mr. Mukerjee was granted a stock option for 250,000 shares of our common stock shortly after commencement of his employment as CEO in August 2019. The use of stock options as a means of equity incentive compensation for NEOs and other senior executives has increased over the past several years, as compared to the previous decade or more. Mr. Mukerjee received 10,000 stock options in fiscal year 2023 in accordance with his employment agreement. Otherwise, no stock options were issued in fiscal year 2023, as the Company issued RSUs to NEOs. In fiscal year 2023, Mr. Mukerjee received RSUs for 15,000 shares, and Messrs. Spitulnik and Lowe and Ms. Ridgely received RSUs for 11,250 shares. These RSUs vest ratably over a four-year period subject to certain accelerations and forfeitures.

Retirement and Other Benefits. The key retirement and other benefits provided to our NEOs, where applicable, are described below.

Executive Perquisites. The Committee believes that it has taken a conservative approach to perquisites. Each of the NEOs was the beneficiary of minor perquisites in fiscal year 2023, which totaled less than $10,000 for each. The Committee has considered these perquisites and has determined them to be reasonable and appropriate.

Fiscal Year 2023 Executive Compensation

This section provides an explanation and analysis of the decision-making behind the compensation provided to NEOs for fiscal year 2023.

During fiscal year 2023, Mr. Lowe was tasked with leading the Company’s Information Business Systems, including the ERP transformation project. In lieu of an immediate salary increase, Mr. Lowe was provided a monthly stipend that totaled $17,300 for fiscal year 2023. This stipend ceased at the end of fiscal 2023.

For fiscal year 2023, cash bonuses were determined on the basis of Adjusted EBITDA, achievement of the launch of the Company’s new ERP under prescribed dates and individual performance evaluations. Based on actual results in fiscal year 2023, performance-based annual bonuses for fiscal year 2023 were $178,200 for Mr. Mukerjee, $63,180 for Mr. Spitulnik, $67,414 for Mr. Lowe and $44,769 for Ms. Ridgely.

Risk Considerations

Our Compensation and Audit Committees periodically consider the risks associated with the structure of the Company’s executive compensation plans. These committees regularly review the various compensation programs, identify plan design features that could potentially encourage imprudent risk taking for short-term gain, and assess the presence or absence of controls that mitigate potential risks. These committees believe that the Company’s overall control environment is effective and that our executive compensation programs have a number of risk mitigation factors, including:

Based on this review, the Compensation and Audit Committees, with the concurrence of the full Board, believe that the risks associated with the Company’s compensation policies and practices are not reasonably likely to result in a material adverse effect on the Company.

Stock Plans

The Company’s 2019 Stock and Incentive Plan, or the “2019 Plan”, was adopted by our Board in June 2019 and by our shareholders at the 2019 Annual Meeting of Shareholders. The 2019 Plan succeeded our Third Amended and Restated 1994 Stock and Incentive Plan, or “the 1994 Plan”. No additional grants may be made under the 1994 Plan, although its terms remain applicable to awards previously made and remaining outstanding under the 1994 Plan. The Compensation Committee and the Board believe that the ability to offer equity compensation incentives to eligible participants, and particularly to our current and prospective senior management, is an important element of our compensation programs. The 2019 Plan provides for the grant or award to regular full-time employees (including officers) and non-employee directors of stock options, stock appreciation rights, restricted stock, restricted stock units and other performance awards, which may be denominated in shares of common stock or other securities of the Company.

The maximum number of shares of common stock with respect to which awards may be granted under the 2019 Plan is 1,787,187, subject to further adjustment from time to time to reflect future stock splits and other similar events. As of March 26, 2023, there were 507,523 shares of common stock available for future awards under the 2019 Plan. The shares of common stock underlying any awards granted under the 2019 Plan, or awards previously granted under the 1994 Plan, that either expire or are terminated or cancelled for any reason, without the issuance of the shares or payment in accordance with the terms of the corresponding award agreement, are returned to the pool of shares available for future awards under the 2019 Plan.

In addition, the Company maintains the Team Member Stock Purchase Plan. This plan permits eligible employees to purchase up to an aggregate of 450,000 shares of the Company’s common stock at 85% of the lower of the market price on the first day of a six-month period and the market price on the last day of that same six-month period. During fiscal year 2023, an aggregate of 36,639 shares were sold to employees under this plan. The number of shares of common stock available under this plan as of March 26, 2023 was 40,972.

EXECUTIVE COMPENSATION TABLES

Summary Compensation Table

The following table summarizes the compensation awarded to, earned by, or paid to the Company’s NEOs during fiscal years 2023, 2022, and 2021, as applicable.

Grants of Plan-Based Awards in Fiscal Year 2023

The following table provides information about cash and equity awards granted to or earned by the NEOs for fiscal year 2023. All of the equity grants have been made under the 2019 Plan. Grants of non-equity incentive plan awards are made under the Company’s Cash Bonus Plan.

Outstanding Equity Awards at 2023 Fiscal Year End

Option Exercises and Stock Vested for Fiscal Year 2023

The following table summarizes the vesting of stock awards for each of the NEOs during fiscal year 2023. No options were exercised by any of the NEOs during fiscal year 2023.

OTHER EXECUTIVE COMPENSATION MATTERS

Employment Agreements/Payments upon Termination or Change in Control

The information contained in this section details the estimated incremental value transfer that a NEO would receive in various scenarios relating to a termination of employment or a change in control. All payments that would be made to any NEO assume that the triggering event occurred as of March 26, 2023, the last day of our fiscal year 2023, unless otherwise noted. The value of stock transactions discussed below have been calculated using a price of $4.48, the closing price of our stock as reported by Nasdaq on March 24, 2023, the last trading day prior to the end of our 2023 fiscal year. The actual amounts that would be paid to any NEO can only be determined at the time and based upon the circumstances of an actual termination of employment and would vary from those listed below. This section does not address compensation that is unaffected by these various scenarios. Certain of the terms used below, such as “good reason”, “disability”, “cause” and others, may be defined under the terms of the applicable employment agreements or other contracts between the Company and the applicable officer.

Mr. Mukerjee

The termination or separation of the employment of Mr. Mukerjee is governed in part by an Employment Agreement, dated as of August 20, 2019. The discussion appearing below details the benefits and timing of payouts associated with each termination of employment noted in the agreement, and under the applicable RSU awards, stock options and other arrangements, as of the last day of our fiscal year 2023. In addition, Mr. Mukerjee is entitled to base salary and other compensation earned then to date but not yet paid. Mr. Mukerjee’s employment was amended effective March 27, 2023. Since that amendment was not effective until the first day of fiscal year 2024, that amendment was not considered in the calculations below. The discussion below is qualified in its entirety by the terms of the Employment Agreement and the applicable award agreements.

Termination by the Company without cause or resignation by Mr. Mukerjee for good reason not in connection with or following a Change in Control.

Termination due to Mr. Mukerjee’s death or disability.

Upon a Change in Control

Except with regard to the outstanding options, PSU and RSU awards, in order for Mr. Mukerjee to receive the benefits discussed above related to a termination by the Company without cause or a resignation by Mr. Mukerjee for good reason and to a termination due to a change in control or a resignation for good reason following a change in control, Mr. Mukerjee is required to sign and deliver a release. Mr. Mukerjee would also be restricted from competing against the Company and from soliciting certain Company employees for approximately one year.

Messrs. Spitulnik and Lowe and Ms. Ridgely

The termination or separation of the employment of Mr. Spitulnik is governed in part by a Severance and Restrictive Covenant Agreement, dated May 27, 2014. Mr. Lowe and Ms. Ridgely are not party to such an agreement. The discussion appearing below details the benefits and timing of payouts associated with each termination of employment noted in the agreement with Mr. Spitulnik’s, and under the applicable RSU awards, stock options and other arrangements. In addition, each NEO is entitled to base salary and other compensation earned then to date but not yet paid. The discussion below is qualified in its entirety by the terms of the applicable Severance and Restrictive Covenant Agreement, in the case of Mr. Spitulnik.

Termination by the Company without cause or resignation of the NEO for good reason.

Termination due to the NEO’s death or disability.

Upon a Change in Control.

Resignation without good reason, termination by the Company for cause or retirement.

Except with regard to the outstanding options and RSU awards, in order for the NEO to receive the benefits discussed above related to a termination by the Company without cause or a resignation by the NEO for good reason and to a termination due to a change in control or a resignation for good reason following a change in control, the NEO is required to sign and deliver a release to the Company releasing the Company from all claims. The NEO would also be restricted from competing against the Company and from soliciting certain Company employees for approximately one year.

Compensation Committee Interlocks and Insider Participation

There are no “interlocks” (as defined by the rules of the Securities and Exchange Commission (the “SEC”) with respect to any member of the Compensation Committee of the Board of Directors, which is currently comprised of Mr. Campbell, Mr. Irvin and Ms. McLean (Chair), and the Compensation Committee consists entirely of independent, non-employee directors who have never been employees of the Company. None of the members of the Compensation Committee had any relationship requiring disclosure by the Company under Item 404 of Regulation S-K. No executive officer of the Company during fiscal year 2023 served as a member of the compensation committee (or other board committee performing equivalent functions or, in the absence of any such committee, the entire board of directors) of another entity, or as a director of another entity, where one of the other entity’s executive officers served on the Compensation Committee of the Company or as a director of the Company.

Nonqualified Deferred Compensation for Fiscal Year 2023

We do not offer a nonqualified deferred compensation plan to our NEOs.

DIRECTOR COMPENSATION FOR FISCAL YEAR 2023

The current compensation program for independent directors is designed to achieve the following goals: fairly pay directors for work required for a company of our size; align directors’ interests with the long-term interests of shareholders; and structure compensation in a simple and transparent format, which is easy for shareholders to understand.

In consideration for services on the Board, each non-employee director of the Company is paid $41,000 per fiscal year and the Chairman of the Company is paid $51,000 per fiscal year. In addition, each non-employee director of the Company is paid $2,500 for each meeting of the Board and $1,000 for each meeting of a Committee of the Board that he or she attends. The director compensation table below does not include reimbursements for reasonable out-of-pocket expenses incurred in connection with attendance at Board or Committee meetings. Directors are also eligible to receive equity-based awards under our equity compensation plans. Since fiscal year 2012, independent directors have received annual awards of Restricted Stock Units (RSUs) at the beginning of each fiscal year (3,000 for each non-employee director for fiscal year 2023). These awards provide for the issuance of shares of the Company’s common stock in accordance with a vesting schedule, which typically provides for vesting of 25% of the shares annually over of each of the following four years, provided that holder remains associated with the Company (or meets other criteria as prescribed in the RSU award agreement) on each such date.

Beginning with and since fiscal year 2021, to improve the Company’s cash position and to further align the interests of the Board with shareholders, the $41,000 annual consideration for services (or pro-rata portion thereof) has been paid by the grant of shares of restricted stock, in lieu of cash, with otherwise equivalent grant date fair market value. Each non-employee Director except for Messrs. Bryan and Brewer received 6,949 shares of restricted stock on June 6, 2022, that vests in whole or in part, subject to certain conditions, on June 6, 2023. Mr. Bryan received 8,644 shares which includes his fees as Chairman of the Board. Mr. Brewer received a prorated amount of 5,791 shares to account for his joining the Board after the fiscal year had begun.  In addition, beginning with and since fiscal 2022, the Company issued RSUs to the directors in lieu of the estimated amount of cash payments that would otherwise be paid as fees in respect of board and committee meetings during the applicable fiscal year. These amounts varied among the directors due to the estimated number of meetings of each committee and the committee composition. Accordingly, for fiscal year 2023, Mr. Bryan received 5,085 RSUs, Messrs. Campbell, Irvin and Mses. Dismore and McLean received 5,932 RSUs and Mr. Brewer received 3,814 RSUs. These grants are scheduled to vest upon the first anniversary of the grant date. The estimated number of meetings used initially in determining the number of RSUs issued was exceeded by the actual number of meetings held and attended by each board member, resulting in an additional payment due, which was paid in a cash to each board member.

The following table summarizes the compensation awarded to, earned by, or paid to the Company’s non-employee directors during fiscal year 2023:

Director Compensation Table

Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT [AND RELATED STOCKHOLDER MATTERS]

Equity Compensation Plan Information

The following table sets forth information as of March 26, 2023, the last day of the Company’s fiscal year 2023, with respect to the 1994 Plan, the 2019 Plan and the Team Member Stock Purchase Plan.

Security Ownership of Management and Certain Beneficial Owners

The following table sets forth information regarding the beneficial ownership of common stock of the Company as of June 1, 2023 by (i) all shareholders known by the Company to beneficially own more than five percent of our common stock, (ii) each of our current directors and director nominees, (iii)  all individuals serving as our Chief Executive Officer (CEO) and Chief Financial Officer (CFO) during fiscal year 2023, and our other three most highly compensated executive officers as of the end of our most recent completed fiscal year (and those executive officers who would have then been among the most highly compensated executive officers had they been serving as such at fiscal year-end), (collectively, the “named executive officers” or “NEOs”), and (iv) all current directors and executive officers as a group. Percentage of beneficial ownership is based on 9,265,643 shares of common stock outstanding on June 1, 2023. The amounts and percentage of shares beneficially owned are reported on the basis of SEC regulations governing the determination of beneficial ownership of securities. Under SEC rules, a person is deemed to be a “beneficial owner” of a security if that person has or shares “voting power,” which includes the power to vote or to direct the voting of such security, or “investment power,” which includes the power to dispose of or to direct the disposition of such security. A person is also deemed to be a beneficial owner of any securities of which that person has a right to acquire beneficial ownership within 60 days. Under these rules, more than one person may be deemed a beneficial owner of the same securities and a person may be deemed a beneficial owner of securities as to which he has no economic interest. For fiscal 2023, the Company only had two executive officers beyond the CEO and CFO.

*  Less than 1% of the outstanding common stock.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Certain Relationships and Related Transactions

Our Audit Committee is charged with monitoring and reviewing issues involving potential conflicts of interest, and reviewing and approving all related party transactions. While the Company currently does not have a written policy regarding the review, approval or ratification of related party transactions, the Board and the Audit Committee look to the rules of Nasdaq and of the SEC to determine what transactions may be considered to be of concern and apply these rules as the standard to determine whether a transaction or relationship would be permitted. Detailed questions are posed annually to the executive officers of the Company and to all members of the Board which require disclosure of any relationship or transaction that may be a related party transaction. These questionnaire responses are reviewed by management and disclosures are analyzed and reported to the entire Board. Potential issues are investigated. Related person transactions, if any, would be reviewed for the determination made by the Board annually that certain members of the Board are independent. We are not aware of any relationships or related person transactions that require disclosure under the rules and regulations promulgated by the SEC.

We did not pay any material underwriting discounts or commissions to a related person serving as a principal underwriter.

Director Independence

The Board has determined that, other than Mr. Mukerjee, each of the current directors is independent within the meaning of the Company’s director independence standards, which reflect both the Nasdaq and SEC director independence standards, as currently in effect. The three standing committees of the Board are comprised solely of independent directors.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

The following table shows the fees paid or accrued by the Company for the audit and other services provided by Ernst & Young LLP for fiscal years 2023 and 2022:

Pursuant to the Company’s Audit Committee Charter, all audit services and permitted non-audit services to be performed for the Company by its independent registered public accounting firm are pre-approved by the Audit Committee. The Committee has delegated authority to one or more members to pre-approve audit and permitted non-audit services (including pre-approval of fees), provided that the approvals granted by such persons are reviewed with the full Audit Committee at its next scheduled meeting. All fees incurred in fiscal years 2023 and 2022 and reflected in the table above were pre-approved.

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

Consolidated Balance Sheets as of March 26, 2023 and March 27, 2022

Consolidated Statements of Income (Loss) for the fiscal years ended March 26, 2023, March 27, 2022, and March 28, 2021

Consolidated Statements of Changes in Shareholders’ Equity for the fiscal years ended March 26, 2023, March 27, 2022, and March 28, 2021

Consolidated Statements of Cash Flows for the fiscal years ended March 26, 2023, March 27, 2022, and March 28, 2021

Notes to Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm (PCAOB ID 42)

Schedule II Valuation and Qualifying Accounts

Schedules not listed above have been omitted because the information required to be set forth therein is not applicable.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Signatures

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.