PROPOSAL 1: ELECTION OF DIRECTORS
As provided by our bylaws, our directors are elected annually. We currently have nine directors, eight of whom (Ms. Zabrocky and Messrs. Anderson, Fagerstal, Kneen, Raspino, Rigdon, Robotti and Traub) were elected at our 2021 Annual Meeting. Ms. Cougle was elected by the Board as the ninth director on January 4, 2022, upon the recommendation of our Nominating and Corporate Governance Committee.
On May 3, 2021, we entered into a Cooperation Agreement (the “Agreement”) with Robert E. Robotti and certain of his related parties (collectively, the “Robotti Group”). Pursuant to the Agreement, the company agreed to increase the size of the Board of Directors by one seat and nominated Mr. Robotti to our Board for election at our 2021 Annual Meeting of Stockholders. Upon his election at the 2021 Annual Meeting, our Board undertook all actions necessary to immediately appoint Mr. Robotti to the Compensation Committee of the Board (subject only to Mr. Robotti’s satisfaction of the requirements of the New York Stock Exchange and applicable law, which were determined by our Board and any applicable committee of the Board, prior to the 2021 Annual Meeting).
The Robotti Group’s rights and our obligations under the Agreement to nominate Mr. Robotti at the 2022 Annual Meeting and appoint Mr. Robotti to the Compensation Committee were conditioned on the Robotti Group’s Net Long Position (as defined in the Agreement) not falling at any time below 1,425,025 shares of our common stock, $0.001 par value per share (the “Common Stock”), representing 3.5% of the outstanding shares of Common Stock as of the effective date of the Agreement (the “Minimum Ownership Threshold”), subject to certain exceptions set forth in the Agreement. In addition, if at any time the Robotti Group’s Net Long Position falls below the Minimum Ownership Threshold, Mr. Robotti shall immediately tender his advance irrevocable resignation letter as a director to our Board.
During the term of the Agreement, the size of our Board shall not exceed nine directors without the unanimous written consent of all of the directors on our Board, other than in connection with any merger or acquisition approved by a majority of the directors then serving on our Board.
With respect to each annual or special meeting of our stockholders during the term of the Agreement, the Robotti Group agreed to vote the shares of Common Stock it holds in accordance with our Board’s recommendations on proposals regarding the election or removal of directors (each such proposal, a “Director Proposal”) and any other proposal to be submitted to the stockholders by either us or any of our stockholders, except that the Robotti Group may vote in its discretion on certain extraordinary transactions, and, other than with respect to any Director Proposal, in accordance with the recommendations of Institutional Shareholder Services Inc. or Glass, Lewis & Co., LLC if either of them recommend differently from our Board.
The Robotti Group has also agreed to certain customary standstill provisions prohibiting it from, among other things, (i) making certain announcements regarding or proposing certain extraordinary transactions relating to the company, (ii) soliciting proxies, (iii) selling securities of the company outside of the public markets which results in any third party owning more than 4.9% of the outstanding shares of the Common Stock (subject to certain exceptions set forth in the Agreement), (iv) taking actions to change or influence our Board, our management or the direction of certain of our matters other than in his capacity as a director, and (v) exercising certain stockholder rights.
We reimbursed the Robotti Group for its reasonable, documented out-of-pocket fees and expenses incurred in connection with the 2021 Annual Meeting and the negotiation and execution of the Agreement, in an amount of $200,000.
Since our Board has timely determined to nominate Mr. Robotti for election at the 2022 Annual Meeting, the term of the Agreement will be extended until the date that is the earlier of (i) 150 days prior to our 2023 Annual Meeting of Stockholders and (ii) 150 days prior to the first anniversary of our 2022 Annual Meeting.
Pursuant to the Agreement and upon the recommendation of our Nominating and Corporate Governance Committee, our Board has re-nominated all eight current board members (each of Ms. Zabrocky and Messrs. Anderson, Fagerstal, Kneen, Raspino, Rigdon, Robotti and Traub) and nominated Ms. Cougle as the ninth director to serve a one-year term as each is identified below.
Each director elected at the 2022 Annual Meeting will serve a one-year term beginning at the Annual Meeting and ending when his or her successor, if any, is elected or appointed. Assuming stockholders elect all nine of the director nominees at the Annual Meeting, our Board will have nine directors immediately following the Annual Meeting.
