UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________
SCHEDULE 14A
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Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant
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Filed by a Party other than the Registrant
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Preliminary Proxy Statement
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Soliciting Material Pursuant to §240.14a
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CREATIVE REALITIES, INC.
(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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CREATIVE REALITIES, INC.
13100 Magisterial Drive, Suite 100
Louisville, KY 40223
NOTICE OF ANNUAL MEETING OF
SHAREHOLDER
S
To Be Held on
J
une 10, 2019
TO THE SHAREHOLDERS OF CREATIVE REALITIES, INC.:
Please take notice that an annual meeting of shareholders of Creative Realities, Inc. will be held, pursuant to due call by the Board of Directors, on June
10, 2019, at 9:00 A.M. (Eastern Daylight Time) at 13050 Magisterial Drive, Suite 102, Louisville, Kentucky 40223, or at any adjournment or adjournments thereof, for the purpose of considering and taking appropriate action with respect to the following:
1. To elect five members of the Board of Directors of the Company to hold office until the next annual meeting or until their successors are duly elected and qualified.
2.
To vote on a non
-binding
advisory resolution to approve compensation of the Company’s executive officers as disclosed in the proxy statement accompanying this Notice.
3.
To vote on a non
-binding
advisory resolution on the frequency in which shareholders approve the compensation of the Company’s executive officers.
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. To ratify the appointment of EisnerAmper LLP as the Company’s independent registered public accounting firm for the fiscal year ending December
31, 2019.
Pursuant to due action of the Board of Directors, shareholders of record on April
25, 2019 will be entitled to vote at the meeting or any adjournments thereof.
The proxy statement for the annual meeting, which is included with this Notice, is also available to you on the Internet. We encourage you to review all of the important information contained in the proxy materials before voting. To view the proxy statement on the Internet, visit
www.creativerealities.com
.
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By order of the Board of Directors:
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/s/ Rick Mills
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Chief Executive Officer and Director
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Approximate date of mailing of proxy materials: April
30
, 2019
Important Notice Regarding the Availability of Proxy Materials for the annual meeting to be held on June 10, 2019: The proxy statement for the annual meeting is available at
www.edocumentview.com/CREX
.
PROXY STATEMENT
OF
CREATIVE REALITIES, INC.
For an Annual Meeting of Shareholders
to be held on June 10, 2019
This proxy statement is being furnished by Creative Realities, Inc., a Minnesota corporation, in connection with the solicitation by the Company of proxies for the purposes described in this proxy statement at an annual meeting of shareholders to be held on June
10, 2019, and at any and all adjournments or postponements thereof. This proxy statement and the accompanying proxy card are expected to be mailed to Company shareholders on or about April
30, 2019. Throughout this proxy statement, the terms “the Company,” “Creative Realities,” “we,” “our,” and “us” refer to Creative Realities, Inc.
The annual meeting will be held at the offices of the Company located at 13050 Magisterial Drive, Suite 102, Louisville, Kentucky 40223 on June
10, 2019, at 9 a.m. Eastern Daylight Time. The Board of Directors has fixed the close of business on April
25, 2019 as the record date for determining shareholders entitled to notice of and to vote at the annual meeting.
Purpose of the Annual Meeting
The Board of Directors has called an annual meeting in conformity with Minnesota Statutes, Section 302A.431, and the requirements of the Company’s amended and restated corporate bylaws. The purpose of the annual meeting is to consider and vote on whether to:
1. to elect 5 members of the Board of Directors of the Company to hold office until the next annual meeting or until their successors are duly elected and qualified; and
2. to vote on a non
-binding
advisory resolution to approve compensation of the Company’s executive officers as disclosed in the proxy statement accompanying this Notice.
3. to vote on a non
-binding
advisory resolution on the frequency in which shareholders approve the compensation of the Company’s executive officers;
4. to ratify the appointment of EisnerAmper LLP as the Company’s independent registered public accounting firm for the fiscal year ending December
31, 2019.
Voting
The presence, in person or by proxy, of the holders of a majority of the total number of outstanding shares of common stock entitled to vote constitutes a quorum for the transaction of business at the meeting. Votes cast by proxy or in person at the meeting will be tabulated by the election inspectors appointed for the meeting who will determine whether a quorum is present. Assuming that a quorum is present, the votes to approve the matters coming before the meeting are as follows.
•
For Proposal
1, the election of directors, who are elected by a plurality, the nominees receiving the most “For” votes (from the holders of shares present in person or represented by proxy and entitled to vote on the election of directors) will be elected. Only votes “For” or “Withheld” will affect the outcome.
•
For Proposals 2 and
3, because these votes are advisory, they will not be binding upon the Company or the Board of Directors. However, we value our shareholders’ opinions, and we will consider the outcome of these votes when determining future executive compensation arrangements and the frequency of future votes on executive compensation arrangements.
•
To be approved, Proposal 4 (ratification of approval of EisnerAmper LLP as the Company’s independent registered public accounting firm) must receive a “For” vote from the majority of all shares present and entitled to vote either in person or by proxy. If you “Abstain” from voting, it will have the same effect as an “Against” vote.
1
Under applicable Nasdaq rules relating to the discretionary voting of proxies by brokers, brokers are not permitted to vote shares with respect to certain matters, including the election of directors and executive compensation matters, without instructions from the beneficial owner. However, brokers are permitted to vote shares held in brokerage accounts with respect to the approval of the independent registered public accounting firm, even if they do not receive instructions from the beneficial owner. Therefore, street name holders of shares held in broker accounts are advised that, if they do not timely provide instructions to their broker, their shares will not be voted in connection with Proposals
1, 2 and 3 and will be considered to be broker non
-votes
as described above. Such shares will not be considered as present and entitled to vote with respect to those matters.
Questions and Answers
Why am I receiving this proxy statement?
This proxy statement contains information relating to the solicitation of proxies for use at our annual meeting to be held at 9 a.m., Eastern Daylight Time, on June
10, 2019, at our offices located at 13050 Magisterial Drive, Suite 102, Louisville, Kentucky 40223, for the purpose stated in the Notice of Annual Meeting of Shareholders. We, the Company, are making this solicitation.
Who is entitled to vote at the annual meeting?
Only holders of record of our common stock at the close of business on April
25, 2019, the record date for the annual meeting, are entitled to receive notice of and to vote at the annual meeting or any adjournment or postponement of the annual meeting.
What are the voting rights of shareholders?
Each share of common stock outstanding on the record date entitles its holder to cast one vote on the matter to be voted upon. Each share of our voting preferred stock outstanding on the record date entitles its holder to cast that number of votes equal to the number of shares of common stock into which the preferred stock is convertible as of the record date.
Who can attend the annual meeting?
Only holders of our common stock at the close of business on April
25, 2019, the record date for the annual meeting, or their duly appointed proxies, are authorized to attend the annual meeting. Cameras, recording devices, and other electronic devices will not be permitted at the annual meeting. If you hold your shares in “street name” (that is, through a bank, broker or other nominee), you will need to bring either a copy of the brokerage statement reflecting your stock ownership as of the record date or a legal proxy from your bank or broker.
What will constitute a quorum at the annual meeting?
The presence at the annual meeting, in person or by proxy, of a majority of the voting power of the shares of common stock outstanding at the close of business on April
25, 2019, will constitute a quorum permitting our shareholders to conduct business at the annual meeting. We will include abstentions in the number of shares of common stock present at the annual meeting for purposes of determining a quorum. As of the record date, there were 9,686,716
shares of common stock outstanding.
How do I vote my shares of common stock that are held by my bank, broker or other nominee?
If you hold any or all of your shares of common stock through a bank, broker or other nominee, you should follow the voting instructions provided to you by the bank, broker or nominee. Specific voting procedures relating to your shares of common stock held through a bank, broker or other nominee will depend on their particular voting arrangements and procedures.
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How do I vote?
If you are a holder of record of our common stock, then you or your duly authorized agent may vote by completing and returning the accompanying proxy card, or you may attend the annual meeting and vote in person. For Proposals 2 and
4, you may vote “For” or “Against” or abstain from voting. For Proposal
1, you may either vote “For” all the nominees to the Board of Directors or you may “Withhold” your votes for any nominee you specify. For Proposal
3, you may vote that the shareholders shall approve the compensation of the Company’s executive officers every year, every two years or every three years, or abstain from voting.
May I change my vote after I return my proxy card?
Yes. You may revoke a previously granted proxy at any time before it is exercised by submitting to our Chief Financial Officer, Mr.
Will Logan, at 13100 Magisterial Drive, Suite 100, Louisville, Kentucky 40223, a notice of revocation or a duly executed proxy (bearing a later date) on or prior to the close of business on June
9, 2019. You may also revoke a previously granted proxy by attending the annual meeting and voting in person.
How are votes counted?
If the accompanying proxy card is properly signed and returned to us, and not revoked, it will be voted AS DIRECTED BY YOU. If you return a proxy card but do not indicate how your shares are to be voted, your proxy card will be voted FOR both proposals at the annual meeting.
How does the Board of Directors recommend that shareholders vote on the proposed amendment?
Our Board of Directors recommends a vote “FOR” each of the proposals.
Who pays the costs of soliciting proxies?
We will pay the costs of soliciting proxies. Presently, we do not anticipate that we will solicit proxies by any means other than mail. We expect that banks, brokers, fiduciaries, custodians and nominees will forward proxy soliciting materials to their principals and that we will reimburse such persons’ out
-of-pocket
expenses.
How can I determine the results of the voting at the annual meeting?
Preliminary voting results will be announced at the annual meeting, if available. Preliminary results, if necessary, and final results will be reported on a Form 8
-K
filed with the SEC within four days of the date of the annual meeting.
What does it mean if I receive more than one proxy card?
If you receive more than one proxy card, then your shares are registered in more than one name or are registered in different accounts. Please complete, sign and return each proxy card to ensure that all of your shares are voted.
Are proxy materials available on the Internet?
To view this proxy statement on the Internet, please follow the instructions for Internet voting on the accompanying proxy card or visit
www.edocumentview.com/CREX
.
Are there dissenters’ or appraisal rights?
No. None of the proposals to be considered and voted upon at the annual meeting entitle our holders of common stock to any dissenters’ or appraisal rights.
Whom should I contact if I have any questions?
If you have any questions about the annual meeting, the proxy materials or your ownership of our common stock, please contact Will Logan, our Chief Financial Officer, at (502) 791
-8800
.
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When are
shareholder
proposals due for the 2020 annual meeting?
If a shareholder wishes to present a proposal for consideration for inclusion in the proxy materials for the 2019 annual meeting of shareholders, the proposal must be sent by certified mail, return receipt requested, and must be received by the Company at its principal address at 13100 Magisterial Drive, Suite 100, Louisville, Kentucky 40223, to the attention of Will Logan, Chief Financial Officer, no later than April
30, 2019. All proposals must conform to the rules and regulations of the SEC. Under SEC rules, if a shareholder notifies us of his or her intent to present a proposal for consideration at the 2020 annual meeting of shareholders after February
10, 2020, we, acting through the persons named as proxies in the proxy materials for such meeting, may exercise discretionary authority with respect to such proposal without including information regarding such proposal in our proxy materials.
Our amended and restated bylaws provide that for a shareholder to nominate a candidate for election as a director at an annual meeting of shareholders, the shareholder must generally notify us in writing at our principal address not later than 90 days in advance of such meeting. A copy of our amended and restated bylaws may be obtained from Will Logan, Chief Financial Officer, by written request to our principal address.
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PROPOSAL 1:
ELECTION OF DIRECTORS
Nominees
Five persons have been nominated for election as directors at the annual meeting, all of whom currently serve as directors. Our directors are elected annually, by a plurality of the votes cast, to serve until the next annual meeting of shareholders and until their respective successors are elected and duly qualified. There are no familial relationships between any director or officer.
Vote Required
The five nominees receiving the highest number of affirmative votes of the shares entitled to vote at the annual meeting shall be elected to the Board of Directors. Set forth below is certain information concerning the nominees for the Board of Directors.
The Board of Directors recommends that shareholders vote “FOR” the nominees listed below.
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Name
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Age
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Positions
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Alec Machiels
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46
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Director (Chairman)
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David Bell
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74
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Director
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Donald A. Harris
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66
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Director
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Richard Mills
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63
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Chief Executive Officer and Director
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Joseph Manko
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53
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Director
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The biographies of the above
-identified
individuals are set forth below:
Alec Machiels
is a Partner at Pegasus Capital Advisors, L.P., a private equity fund manager, and joined our Board of Directors in August 2014 in connection with our acquisition of Creative Realities, LLC. Mr.
Machiels is a member of the Executive, Investment and Sustainability Committees, as well as the co
-chair
of the Energy and Wellness Committees at Pegasus Capital Advisors, L.P. He has over 19 years of private equity investing and investment banking experience. Previously, Mr.
Machiels was a Financial Analyst in the Financial Services Group at Goldman Sachs International in London and in the Private Equity Group at Goldman Sachs and Co. in New York. Investments in which he has been highly involved in include Molycorp Minerals, Traxys, Pure Biofuels, Olympus, Slipstream Communications, Coffeyville Resources and Merisant Company. Mr.
Machiels previously served on the board of Pure Biofuels from 2012
-2018
and currently serves on the boards of Olympus, Slipstream Communications, NSI, and Valogix. He was also a member of the Board of Trustees of the American Federation of Arts and Chair of its Endowment Committee 2011
-2013
. Mr.
Machiels also co
-founded
Potentia Pharmaceuticals and Apellis Pharmaceuticals (NASD:APLS) – two biotechnology companies in the complement immunotherapy space — as well as Revon Systems, a healthcare IT company. Mr.
Machiels is a graduate of Harvard Business School, KU Leuven Law School in Belgium and Konstanz University in Germany.
David Bell
joined our Board of Directors in August 2014 in connection with our acquisition of Creative Realities, LLC. Mr.
Bell brings over 40 years of advertising and marketing industry experience to the board, including serving as CEO of three of the largest companies in the industry–Bozell Worldwide, True North Communications and The Interpublic Group of Companies, Inc. Since 2007, Mr.
Bell has led Slipstream Communications, LLC which is an international company providing strategic branding, digital marketing, and public relations services and served as a Senior Advisor to Google Inc. from 2006 to 2009. Mr.
Bell previously served as an Operating Advisor at Pegasus Capital Advisors. He is currently a Senior Advisor to AOL and has also served on the boards of multiple publicly traded companies, including Lighting Science Group Corporation and Point Blank Solutions, Inc., and Primedia, Inc., and served as President and CEO of The Interpublic Group of Companies Inc. from 2003 to 2005. Mr.
Bell served as an independent director on the Board of Directors of Time, Inc. from June 2014 to January 2018.
Donald A. Harris
was appointed to our Board of Directors in August 2014 in connection with our acquisition of Broadcast International, Inc. He has been President of 1162 Management, and the General Partner of 5 Star Partnership, a private equity firm, since June 2006. Mr.
Harris has been President and Chief Executive Officer of UbiquiTel Inc., a telecommunications company organized by Mr.
Harris and other investors, since its inception in September 1999 and also its Chairman since May 2000. Mr.
Harris served as the President of Comcast Cellular Communications Inc. from March 1992 to March 1997. Mr.
Harris received a Bachelor of Science degree from
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the United States Military Academy and an MBA from Columbia University. Mr.
Harris’s experience in the telecommunications industry and his association with private equity funding is valuable to the Company.
Richard Mills
is currently our Chief Executive Officer and a member of our Board of Directors. Mr.
Mills possesses over 32 years of industry experience. He was previously Chief Executive Officer of ConeXus World Global, a leading digital media services company, which he founded in 2010, and which was acquired by Creative Realities as reported herein. Prior to founding ConeXus, Mr.
Mills was President and Director at Beacon Enterprise Solutions Group, Inc., a public telecom and technology infrastructure services provider. Previous to that, he joined publicly traded Pomeroy Computer Resources, Inc. in 1993 and served as Chief Operating Officer and a member of the Board of Directors from 1995 until 1999. Mr.
Mills helped grow sales at Pomeroy during his time there from $100
million to $700
million. Mr.
Mills was also a founder of Strategic Communications LLC.
Joseph Manko
is an experienced Board member and Senior Principal in Horton Capital Management LLC, the investment manager for the Horton Capital Partners Fund, LP (“Horton Fund”), and significant shareholder in the Company. Mr.
Manko was appointed to our Board in 2018. Mr.
Manko has over 20 years of investment experience in the asset management, investment banking, private equity and corporate securities markets, including senior roles at Deutsche Bank in London and Merrill Lynch in Hong Kong. Prior to founding the Horton Fund, Mr.
Manko was a Partner and Chief Executive Officer of Switzerland
-based
BZ Fund Management Limited. Mr.
Manko began his career as a corporate finance attorney at Skadden, Arps, Slate, Meagher & Flom and earned both his B.A. and Juris Doctorate from the University of Pennsylvania.
Under our corporate bylaws, all of our directors serve for indefinite terms expiring upon the next annual meeting of our shareholders.
When considering whether directors and nominees have the experience, qualifications, attributes and skills to enable the Board of Directors to satisfy its oversight responsibilities effectively in light of our business and structure, the Board of Directors focuses primarily on the industry and transactional experience, and other background, in addition to any unique skills or attributes associated with a director. With regard to Mr.
Machiels, the Board of Directors considered his background and experience with the private investing market and his long
-standing
oversight of the Creative Realities business during such time as it was wholly owned by Pegasus Capital. With regard to Mr.
Bell, the Board considered his deep experience within the advertising and marketing industries and his prior management of large enterprises. With regard to Mr.
Mills, the Board of Directors considered his extensive background and experience in the industry. With regard to Mr.
Manko, the Board of Directors considered his legal and corporate finance background and prior experience on boards of directors. Finally, with regard to Mr.
Harris, the Board of Directors considered his extensive experience in the telecommunications industry and association with private equity investors.
The Board of Directors has determined that there are presently three “independent” directors as such term is defined in Section 5605(a)(2) of the Nasdaq listing rules, each of whom also meets the criteria for independence set forth in Rule 10A
-3
(b)(1) under the Securities Exchange Act of 1934. The directors whom the board has determined to be independent are Messrs. Bell, Harris and Manko.
The Board of Directors has determined that at least one member of the board, Mr.
Bell, is an “audit committee financial expert” as that term is defined in Regulation S
-K
promulgated under the Securities Exchange Act of 1934. Mr.
Bell’s relevant experience in this regard is detailed above, which includes past employment experience in finance and through various Director roles at public companies, including experience on the Audit Committee for other publicly traded companies. Mr.
Bell is deemed to be independent of the Company. The Board of Directors has determined that each director is able to read and understand fundamental financial statements.
The Board of Directors recommends that shareholders vote “FOR” each nominee named above.
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INFORMATION REGARDING THE BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
Board Committees
Our Board of Directors has created a standing Compensation Committee and Audit Committee. Messrs. Bell, Harris and Manko serve on each of those committees. In the case of the Compensation Committee, Mr.
Manko serves as chair, and in the case of the Audit Committee, Mr.
Bell serves as chair. The Board of Directors has determined that at least one member of the Board’s Audit Committee, Mr.
Bell, is an “audit committee financial expert” as that term is defined in Regulation S
-K
promulgated under the Securities Exchange Act of 1934. Mr.
Bell’s relevant experience in this regard is detailed above. Mr.
Bell, Mr.
Harris and Mr.
Manko qualify as “independent” member of the board as described above. The Board of Directors has determined that each director serving on the Audit Committee is able to read and understand fundamental financial statements.
The Board of Directors has not created a separate committee for nomination or corporate governance. Instead, the entire Board of Directors shares the responsibility of identifying potential director
-nominees
to serve on the Board of Directors. Nevertheless, nominees to serve as directors on our Board of Directors are selected by those directors on our board who are independent.
Communications with Board Members
Our Board of Directors has provided the following process for shareholders and interested parties to send communications to our board and/or individual directors. All communications should be addressed to Creative Realities, Inc., 13100 Magisterial Drive, Ste. 100, Louisville, KY 40223, Attention: Corporate Secretary. Communications to individual directors may also be made to such director at our company’s address. All communications sent to any individual director will be received directly by such individuals and will not be screened or reviewed by any company personnel. Any communications sent to the board in the care of the Corporate Secretary will be reviewed by the Corporate Secretary to ensure that such communications relate to the business of the Company before being reviewed by the board.
Code of Ethics
We have adopted a Code of Business Conduct and Ethics that applies to all of our employees, officers (including our principal executive officer, principal financial officer, principal accounting officer or controller, and persons performing similar functions) and directors. Our Code of Business Conduct and Ethics satisfies the requirements of Item 406(b) of Regulation S
-K
. Our Code of Business Conduct and Ethics is available, free of charge, upon written request to our Corporate Secretary at 13100 Magisterial Drive, Ste. 100, Louisville, KY 40223.
7