UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a)
of
the Securities Exchange Act of 1934 (Amendment No. )
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Filed by the Registrant x
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Filed by a Party other than the Registrant ¨
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Check the appropriate box:
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Preliminary Proxy Statement
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Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material under §240.14a-12
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Summer
Infant, Inc.
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(Name of Registrant as Specified
In Its Charter)
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(Name of Person(s) Filing Proxy
Statement, if other than the Registrant)
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Payment of Filing Fee (Check the appropriate
box):
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x
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No fee required.
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Fee computed on table below per
Exchange Act Rules 14a-6(i)(1) and 0-11.
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Title
of each class of securities to which transaction applies:
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Aggregate
number of securities to which transaction applies:
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(3)
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Per unit
price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
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Proposed
maximum aggregate value of transaction:
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fee paid:
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Fee paid previously with preliminary
materials.
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Check box if any part of the fee
is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously.
Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
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(1)
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Amount
Previously Paid:
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Form,
Schedule or Registration Statement No.:
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Party:
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SUMMER INFANT, INC.
1275 Park East Drive
Woonsocket, Rhode Island 02895
NOTICE OF 2020 ANNUAL MEETING OF STOCKHOLDERS
Notice is hereby given that the 2020 Annual
Meeting of Stockholders of Summer Infant, Inc. will be held at 9:00 a.m. (local time) on Wednesday, September 9, 2020, at the
offices of the Company, located at 1275 Park East Drive, Woonsocket, Rhode Island 02895, to consider and act upon the following
matters:
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1.
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To elect five director nominees to serve on the Board of Directors
for a one-year term expiring at the 2021 annual meeting of stockholders, and until their
respective successors are duly elected and qualified;
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2.
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To approve, on an advisory basis, the 2019 compensation of our
named executive officers;
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3.
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To approve, on an advisory basis, the frequency of holding future
advisory votes on our named executive officer compensation;
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4.
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To ratify the selection of RSM US LLP as independent registered
public accounting firm for the Company for the fiscal year ending January 2, 2021;
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5.
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To transact such other business as may properly come before
the meeting or any adjournments or postponements of thereof.
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Only stockholders of record at the close
of business on July 23, 2020 are entitled to notice of and to vote at the meeting.
All stockholders are cordially invited
to attend the meeting and vote in person. To assure your representation at the meeting, however, you are urged to vote by proxy
as soon as possible by mail by following the instructions on the proxy card or, if applicable, via the Internet. You may vote
in person at the meeting even if you have previously returned a proxy.
Special Note Regarding COVID-19:
Given the public health and safety concerns related to COVID-19, we ask that each stockholder evaluate the relative benefits to
them personally of in-person attendance at the Annual Meeting and take advantage of the ability to vote by proxy, as instructed
on the proxy card or voting instructions that have been provided to you. If you elect to attend the Annual Meeting in person,
we ask that you follow recommended guidance, mandates, and applicable executive orders from federal and state authorities, particularly
as they relate to social distancing and attendance at public gatherings. If you are not feeling well or think you may have been
exposed to COVID-19, we ask that you vote by proxy for the meeting. Please be advised that the Company will monitor any further
developments with COVID-19 and the impact on the Annual Meeting. If the Company determines that it is not advisable to hold the
Annual Meeting in person, the Company will, as promptly as possible, announce details on changes to the Annual Meeting, including
by issuing a press release and posting such information on our website.
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By Order of the Board of Directors,
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/s/ Mary Beth Schneider
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Mary Beth Schneider
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Secretary and SVP, General Counsel and Compliance
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Woonsocket, Rhode Island
July 29, 2020
IMPORTANT NOTICE REGARDING THE AVAILABILITY
OF PROXY MATERIALS FOR THE STOCKHOLDER MEETING TO BE HELD ON SEPTEMBER 9, 2020. The proxy materials relating
to the 2020 Annual Meeting of Stockholders, including this proxy statement, the Notice of Meeting, our Annual Report on Form
10-K for the fiscal year ended December 28, 2019, including financials, and proxy card, are available at no cost in the Investor
Relations section of our website at www.sumrbrands.com. You may also request copies of the proxy materials
from our Company as described in the enclosed proxy statement.
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SUMMER INFANT, INC.
1275 Park East Drive
Woonsocket, Rhode Island 02895
PROXY STATEMENT
2020 Annual
Meeting of Stockholders
This proxy statement is being furnished
to you in connection with the solicitation by the Board of Directors of Summer Infant, Inc., a Delaware corporation (“we”
or the “Company”), of proxies in the accompanying form to be used at the 2020 Annual Meeting of Stockholders to be
held at 9:00 a.m. (local time) on Wednesday, September 9, 2020, and at any adjournments or postponements thereof (the “Annual
Meeting”) at the offices of the Company, located at 1275 Park East Drive, Woonsocket, Rhode Island 02895. Our Board of Directors
has fixed July 23, 2020 as the record date for determining those stockholders entitled to receive notice of, and to vote at, the
Annual Meeting. Only stockholders of record at the close of business on July 23, 2020 will be entitled to vote at the Annual Meeting.
We intend to first mail or give this proxy statement and the accompanying proxy card to all stockholders entitled to vote on or
about July 29, 2020.
Questions and Answers
about the Voting at the Annual Meeting and Related Matters
What am I voting on?
At the Annual Meeting, you will be asked
to vote on the following four proposals. Our Board recommendation for each proposal is set forth below.
Proposal
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Board Recommendation
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1.
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To elect five director nominees to serve on the Board of
Directors for a one-year term expiring at the 2021 annual meeting of stockholders, and until their respective successors are duly
elected and qualified.
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FOR each Director Nominee
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2.
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To approve, on an advisory basis, of the 2019 compensation of our named executive officers.
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FOR
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3.
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To approve, on an advisory basis, the frequency of holding future advisory votes on our named executive officer compensation.
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FOR one year
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4.
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To ratify the selection
of RSM US LLP as the independent registered public accounting firm for the Company for the fiscal year ending January 2, 2021.
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FOR
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If other matters properly come before the
Annual Meeting, the proxy holders will have the authority to vote on those matters on your behalf at their discretion. As of the
date of this proxy statement, we are not aware of any matters that will come before the Annual Meeting other than those disclosed
in this proxy statement.
What is the vote required for a proposal
to pass?
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Proposal
No. 1 – Election of directors: Under our amended and restated bylaws (our “Bylaws”),
in an uncontested election of directors, as we have this year, a majority of votes cast
is required in order for a director to be elected, which means that a nominee must receive
a greater number of votes “FOR” his or her election than votes “AGAINST”
in order to be elected. Abstentions are not counted as votes “FOR” or “AGAINST”
a director nominee.
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Proposal
No. 2 – Approval, on advisory basis, of executive compensation: This proposal
asks for a non-binding, advisory vote of our stockholders on the 2019 compensation of
our named executive officers (“Say-on-Pay”). We value the opinions expressed
by our stockholders in this advisory vote, and our Compensation Committee, which is responsible
for overseeing and administering our executive compensation programs, will consider the
outcome of the vote when designing our compensation programs and making future compensation
decisions for our named executive officers. If a majority of votes are cast “FOR”
the Say-on-Pay proposal, we will consider the proposal to be approved. Abstentions are
not counted as votes “FOR” or “AGAINST” this proposal.
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Proposal
No. 3 – Approval, on advisory basis, of frequency of future advisory votes of executive
compensation: This proposal asks for a non-binding, advisory vote of our stockholders
on the frequency of future advisory votes on the compensation of our named executive
officers. If a majority of votes are cast “FOR” one of the three frequency
options (one year, two years, or three years), we will consider the proposal to be approved.
Abstentions are not counted as votes “FOR” or “AGAINST” this
proposal.
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Proposal
No. 4 – Ratification of the selection of independent registered public accounting
firm: A majority of the votes cast “FOR” is required for approval. Abstentions
are not counted as votes “FOR” or “AGAINST” this proposal.
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Who can vote?
Only stockholders of record at the close
of business on July 23, 2020 may vote at the Annual Meeting. As of the close of business on July 23, 2020, there were 2,111,427
shares of common stock issued and outstanding, all of which are entitled to vote at the Annual Meeting. Each share of common stock
entitles the holder of that share to one vote on each matter properly brought before the Annual Meeting.
What constitutes a quorum?
The representation in person or by proxy
of at least a majority of the shares of common stock entitled to vote at the Annual Meeting is necessary to establish a quorum
for the transaction of business at the Annual Meeting. Abstentions and “broker non-votes” will be counted for purposes
of determining whether a quorum is present for the transaction of business at the Annual Meeting. If we do not have a quorum,
we will be forced to reconvene the Annual Meeting at a later date.
What is the difference between a stockholder
of record and a beneficial owner?
If your shares are registered directly
in your name with our transfer agent, Continental Stock Transfer & Trust Company, you are considered the “stockholder
of record” with respect to those shares.
If your shares are held by a brokerage
firm, bank, trustee or other nominee, you are considered the “beneficial owner” of shares held in street name. This
proxy statement and our Annual Report on Form 10-K for the fiscal year ended December 28, 2019 (our “Annual Report”)
have been forwarded to you by your nominee who is considered the “stockholder of record” with respect to those shares.
As the beneficial owner, you have the right to direct your nominee how to vote your shares by using the voting instruction form
included in the mailing.
How do I vote my
shares?
Stockholder of Record
If your shares are registered directly
in your name, you may vote:
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By
Mail. Complete and mail the enclosed proxy card in the enclosed postage prepaid envelope.
Your proxy will be voted in accordance with your instructions. If you sign the proxy
card but do not specify how you want your shares voted, they will be voted as recommended
by our Board. Your proxy card must be mailed by the date shown on the proxy card to be
counted.
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Via
the Internet. You may vote via the Internet by going to https://www.cstproxy.com/summerinfant/2020
and following the on-screen instructions. Please have your proxy card available when
you access the webpage. Your vote must be received by 11:59 p.m., Eastern Daylight Time,
on September 8, 2020 to be counted.
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In
Person at the Annual Meeting. If you attend the Annual Meeting, you may deliver your
completed proxy card in person or you may vote by completing a ballot, which will be
available at the Annual Meeting.
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Beneficial Owner of Shares Held in Street
Name
If you hold shares in street name, the
organization holding your account is considered the stockholder of record for purposes of voting at the Annual Meeting. The stockholder
of record will provide you with instructions on how to vote your shares. Internet voting will be offered to stockholders owning
shares through most banks and brokers. Additionally, if you would like to vote in person at the Annual Meeting, contact the broker
or other nominee who holds your shares to obtain a legal proxy and bring it with you to the Annual Meeting. You will not be able
to vote at the Annual Meeting unless you have a legal proxy from your broker giving you the right to vote the shares at the Annual
Meeting.
What if I am a beneficial
owner and I do not give the nominee voting instructions?
Brokerage firms have the authority to vote
shares for which their customers do not provide voting instructions on certain “routine” matters. A broker non-vote
occurs when a nominee does not vote on a particular item because the nominee does not have discretionary voting authority for
that item and has not received instructions from the owner of the shares. Broker non-votes are included in the calculation of
the number of votes considered to be present at the Annual Meeting for purposes of determining the presence of a quorum, but are
not counted as shares present and entitled to be voted with respect to a matter on which the nominee has expressly not voted.
Other than Proposal No. 4 to approve the ratification of the appointment of RSM US LLP as our independent registered public accounting
firm, none of the proposals described in this proxy statement relate to “routine” matters. As a result, a broker
will not be able to vote your shares with respect to Proposals No. 1, No. 2, and No. 3 absent your voting instructions.
What does it mean
if I receive more than one proxy card?
If you receive more than one proxy card,
it means that you hold shares of our common stock in more than one account. To ensure that all your shares are voted, sign and
return each proxy card. Alternatively, if you vote via the Internet, you will need to vote once for each proxy card you receive.
Can I change my vote or revoke my proxy?
You may change your vote or revoke your
proxy at any time prior to the vote at the Annual Meeting by the following means:
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You can send
a written notice revoking your earlier-dated proxy, addressed to our Secretary at our
principal office at 1275 Park East Drive, Woonsocket, Rhode Island 02895.
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If you signed
and returned a proxy card by mail and want to change your vote, you can complete, sign,
date and deliver a new proxy card, dated a later date than the first proxy card.
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If you submitted
your proxy via the Internet, you may change your vote or revoke your proxy with a later
Internet proxy.
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You can attend
the Annual Meeting and vote in person (provided you have a legal proxy from your broker
if your shares are held in street name, as indicated below). Your attendance at the Annual
Meeting will not, however, by itself revoke your proxy. Even if you plan to attend
the Annual Meeting, we recommend that you also submit your proxy or voting instructions
or vote via the Internet so that your vote will be counted if you later decide not to
attend the Annual Meeting.
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If you hold your
shares in “street name” and have instructed your broker, bank or other nominee
to vote your shares for you, you must follow directions received from your broker, bank
or other nominee to change those instructions.
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Who will pay the costs of soliciting proxies and how are
proxies solicited?
Proxies in the form enclosed are solicited
by our Board. Solicitation of proxies will be made initially by mail. Proxies may also be solicited personally, by telephone,
e-mail or by facsimile transmission by our directors, officers and other employees. We may also engage a paid proxy solicitor
to assist in the solicitation. Copies of solicitation materials will be furnished to brokerage houses, nominees, fiduciaries and
custodians to forward to beneficial owners of our common stock held in their names. We will bear all costs and expenses incurred
in connection with this solicitation, including the cost of printing and mailing these proxy materials and the expenses, charges
and fees of brokers, custodians, nominees and other fiduciaries who, at the request of our management, mail material to, or otherwise
communicate with, the beneficial owners of our common stock held of record by those brokers, custodians, nominees or other fiduciaries.
Annual Report and Other Matters
Our Annual Report, which was made available
to stockholders with or preceding this proxy statement, contains financial and other information about our Company, but is not
incorporated into this proxy statement and is not to be considered a part of these proxy soliciting materials or subject to Regulations
14A or 14C or to the liabilities of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
Through our website, www.sumrbrands.com,
we make available free of charge all of our filings with the Securities and Exchange Commission (“SEC”), including
our proxy statements, our Annual Reports on Form 10-K, our Quarterly Reports on Form 10-Q, and our Current Reports on Form 8-K,
as well as Forms 3, Forms 4, and Forms 5 of our directors, officers, and principal stockholders, together with amendments to these
reports filed or furnished pursuant to Sections 13(a), 15(d), or 16 of the Exchange Act. We will also provide upon written request,
without charge to each stockholder of record as of the record date, a copy of our Annual Report as filed with the SEC. Any exhibits
listed in the Annual Report also will be furnished, upon request, at the actual expense we incur in furnishing such exhibits.
Any such requests should be directed to our Secretary at our executive offices at 1275 Park East Drive, Woonsocket, Rhode Island
02895, telephone: (401) 671-6550.
Attending the Annual Meeting
Only stockholders and
our invited guests are permitted to attend the Annual Meeting. To gain admittance, you must bring a form of personal identification
to the meeting, where your name will be verified against our stockholder list. If a nominee holds your shares and you plan to
attend the Annual Meeting, you should bring a brokerage statement showing your ownership of the shares as of the record date or
a letter from the nominee confirming such ownership, and a form of personal identification. If you wish to vote your shares that
are held by a nominee at the meeting, you must obtain a legal proxy from your nominee and bring it to the meeting.
Special Note Regarding
COVID-19: Given the public health and safety concerns related to COVID-19, we ask that each stockholder evaluate the relative
benefits to them personally of in-person attendance at the Annual Meeting and take advantage of the ability to vote by proxy,
as instructed on the proxy card or voting instructions that have been provided to you. If you elect to attend the Annual Meeting
in person, we ask that you follow recommended guidance, mandates, and applicable executive orders from federal and state authorities,
particularly as they relate to social distancing and attendance at public gatherings. If you are not feeling well or think you
may have been exposed to COVID-19, we ask that you vote by proxy for the meeting. Please be advised that the Company will monitor
any further developments with COVID-19 and the impact on the Annual Meeting. If the Company determines that it is not advisable
to hold the Annual Meeting in person, the Company will, as promptly as possible, announce details on changes to the Annual Meeting,
including by issuing a press release and posting such information on our website.
Householding of Materials
Some banks, brokers, and other nominee
record holders may be participating in the practice of “householding” proxy statements and annual reports. This means
that only one copy of these proxy materials may have been sent to multiple stockholders in each household. We will promptly deliver
a separate copy of these proxy materials to any stockholder upon written or verbal request to us at our principal office at 1275
Park East Drive, Woonsocket, Rhode Island 02895, telephone: (401) 671-6550. Any stockholder who wants to receive separate copies
of proxy materials in the future, or any stockholder who is receiving multiple copies and would like to receive only one copy
per household, should contact that stockholder’s bank, broker, or other nominee record holder, or that stockholder may contact
us at the address and phone number set forth above.
Stockholder Proposals for 2021 Annual Meeting
Stockholder proposals for inclusion
in our proxy statement: If a stockholder wishes to present a proposal to be included in our proxy statement and form of proxy
for our 2021 annual meeting of stockholders, the proponent and the proposal must comply with the proxy proposal submission rules
of the SEC and namely, Rule 14a-8 promulgated under the Exchange Act. One of the requirements is that the proposal must be received
by our Secretary at our corporate offices in Woonsocket, Rhode Island, no later than the close of business on March 31, 2021.
Such proposal must also comply with the applicable requirements as to form and substance established by the SEC if those proposals
are to be included in the proxy statement and form of proxy. If the date of next year’s annual meeting is changed by more
than 30 days from the anniversary date of the Annual Meeting, then the deadline is a reasonable time before we begin to print
and mail proxy materials.
Other stockholder proposals: Our
Bylaws establish an advance notice procedure with regard to other stockholder proposals, including nominations for the election
of directors and business proposals to be brought before an annual meeting of stockholders by any stockholder, other than matters
included in our proxy materials in accordance with Rule 14a-8 under the Exchange Act. For any nominations or any other business
to be properly brought before an annual meeting of stockholders, the stockholder must give timely notice. Such notice will be
considered timely if we receive notice of such proposed director nomination or the proposal of other business at our corporate
offices in Woonsocket, Rhode Island, not earlier than the close of business on the 90th day and not later than the close of business
on the 60th day prior to the date of the 2021 annual meeting of stockholders; provided, however, that if less than 70 days’
notice or prior public disclosure of the date of the annual meeting is given or made to stockholders, then notice by the stockholder,
to be timely, must be received no later than the close of business on the 10th day following the day on which such notice of the
date of the annual meeting was mailed or such public disclosure was made, whichever first occurs.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
Our Board currently has six directors.
In May 2020, pursuant to the Bylaws, the Board, based on the recommendation of its Nominating/Governance Committee, reduced the
size of the Board from seven to six members. In July 2020, Martin Fogelman, a current director, notified the Board that he would
retire at the end of his current term. Therefore, following the Annual Meeting, the Board will have five directors and one vacancy.
Based on the recommendation of its Nominating/Governance Committee, the Board nominated the following persons for election at
the Annual Meeting, all of whom are currently directors, each for a one-year term that expires at the 2021 annual meeting and
until their successors are duly elected and qualified: (i) Evelyn D’An, (ii) Robin Marino, (iii) Alan Mustacchi, (iv) Andrew
Train and (v) Stephen Zelkowicz.
Each nominee has consented to be named
in this proxy statement and to serve if elected. If, prior to the meeting, any nominee should become unavailable to serve, the
shares of our common stock represented by a properly executed and returned proxy will be voted for such other person as shall
be designated by our Board, unless the Board determines to reduce the number of directors in accordance with our Bylaws.
Below are biographies for each of our current
directors and director nominees and certain information regarding the individual and the experiences, qualifications, attributes,
skills and qualifications that caused our Board to determine that such individual should be serving as a director of our Company.
Director Nominees
Evelyn D’An, 58, a
director since November 2016, is President of D’An Financial Services, a strategic consulting firm she established in 2004.
She also worked in various positions of increasing responsibility at Brightstar Corporation from 2010-2014, prior to which she
provided the company with consulting/advisory services. Her last position at Brightstar was CFO of the joint venture Brightstar
ERV, managing all financial aspects of the organization, which handles the recycling of mobile devices. Ms. D’An was employed
by Ernst & Young from 1986 until 2004 and became the first Hispanic female partner in the Southeast region. Since March 2018,
Ms. D’An has served as a director of Enochian Biosciences, Inc., a publicly traded, pre-clinical stage biotechnology company.
She graduated with a Masters of Accounting from Florida International University and a Bachelor of Science from the State University
of Albany. Ms. D’An brings to our Board significant financial and accounting expertise.
Robin Marino, 66, a director
since August 2015, is currently an independent brand consultant. From June 2011 to November 2014, Ms. Marino served as Group President,
Accessories and Home, of LFUSA/Global Brands Group (GBG), a branded apparel, footwear, fashion accessories and related lifestyle
product company, where she oversaw five divisions. Prior to joining GBG, Ms. Marino was President and CEO of Merchandising at
Martha Stewart Living Omnimedia, which she originally joined in 2005. Ms. Marino was also President and COO of Kate Spade from
1999 to 2005. Prior to that, she served in a variety of management positions for fashion and retail companies such as Burberry
Limited, Wathne LTD and Federated Department Stores, Inc. Ms. Marino served as a director of Hampshire Group, Limited from February
2016 until September 2016. Ms. Marino holds a B.B.A. from Stetson University. Ms. Marino brings to our Board over 35 years of
strategic business leadership, encompassing corporate vision, global brand strategy, licensing, product architecture and international
sales development.
Alan Mustacchi, 59,
director since May 2015, served most recently as Executive Vice President, Capital Markets of GreenSky, Inc., a technology-focused
consumer finance platform, from November 2014 until April 2020. Prior to joining GreenSky, Mr. Mustacchi was Managing Director
and Head of Consumer Products & Specialty Retail Investment Banking of Dresner Partners, a middle market investment bank specializing
in merger & acquisition advisory, institutional private placements of debt and equity, financial restructuring and corporate
turnaround, valuation and strategic consulting, from 2013 until 2014. From 2005 until 2013, Mr. Mustacchi was at Navigant Capital
Advisors, LLC, where he was Managing Director, Investment Banking. He was also Managing Director, Merchant Banking Group, at BNP
Paribas, where he spent 11 years, and Vice President of The Bank of New York in its commercial finance group. Early in his career,
Mr. Mustacchi spent six years as a Certified Public Accountant. He holds a B.S. in Accounting and Economics from New York University’s
College of Business and Public Administration and a M.B.A. in Finance and International Business from New York University’s
Graduate School of Business Administration. Mr. Mustacchi brings to our Board significant capital markets experience and financial
acumen.
Andrew Train, 38, has been
a director since August 2017. Since May 2014, Mr. Train has been President of OBERLAND, a purpose driven branding agency based
in New York City which he co-founded. Prior to founding OBERLAND, Mr. Train was the Advertising Business Director at J. Walter
Thompson New York, a branding, marketing and advertising agency, from May 2009 until May 2014. Earlier in his career, he worked
on well-known global brands such as HSBC, Verizon, UPS, Puma, and Lufthansa in North America and China while at J. Walter Thompson
and other advertising agencies. Mr. Train has been recognized by several national and global organizations for cause marketing
and driving social change through traditional, digital, social and mobile campaigns. Mr. Train holds a B.A. in Economics from
the University of Richmond. Mr. Train brings to our Board nearly 15 years of advertising, marketing and branding experience working
with corporate, non-profit, and public sector organizations.
Stephen J. Zelkowicz, 47,
has been a director since August 2014. Since 1999, he has served as an equity research analyst at Wynnefield Capital, Inc., an
investment firm specializing in small, publicly-traded companies. Mr. Zelkowicz holds a B.A. from the University of Pennsylvania.
Mr. Zelkowicz brings to our Board his knowledge of our Company and industry and his experience in the capital markets.
Other Current Directors
Martin Fogelman, 76, a director
since March 2007, is an independent consultant and private investor in the juvenile products industry. He was instrumental in
the conception and development of the Babies R Us retail chain and served as senior vice president of both Toys R Us and Babies
R Us, where he was employed from 1986 to May 2003. From May 2003 until March 2007, Mr. Fogelman was President of Baby Trend, Inc.,
a manufacturer of infant products. He also served as an advisory board member of Babyganics Products, pbc, a baby healthcare products
Company. Mr. Fogelman will retire from the Board at the end his current term.
Recommendation
Our Board recommends that stockholders
vote “FOR” the election of Mmes. D’An and Marino and Messrs. Mustacchi, Train and Zelkowicz to the Board.
CORPORATE GOVERNANCE
Board Leadership Structure
As a general policy, as an aid to the Board’s
oversight of management, the Board believes that the Chairperson of the Board should be independent, and that if the Chief Executive
Officer serves on the Board, the positions of Chairperson of the Board and Chief Executive Officer should be held by separate
persons and that the Chairperson of the Board should be independent. The Board may, however, determine at any time that, in light
of new or special circumstances, it is in the best interests of our Company for the roles of the Chairperson of the Board and
Chief Executive Officer to be combined. If the individual elected to serve as Chairperson of the Board is our Chief Executive
Officer, or if the Chairperson of the Board is not independent as determined by the Board, then the independent directors will
elect a Lead Independent Director. The Lead Independent Director’s responsibilities include presiding over meetings of the
independent directors held in executive session, consulting with the executive Chairperson and the Chief Executive Officer on
Board and committee meeting agendas and acting as a liaison between management, the executive Chairperson and the independent
directors.
Board’s Role in Oversight of
Risk
Our Board is responsible for risk oversight.
The Board regularly reviews information regarding our Company’s credit, liquidity and operations, as well as the risks associated
with each. The Audit and Finance Committee discusses with our independent auditor the major financial risk exposures and the steps
management has taken to monitor and mitigate such exposures.
Board of Directors Meetings, Committees of the Board and
Director Independence
Attendance of Directors
In 2019, our Board met
eight times, and all directors attended at least 75% of the Board meetings and meetings of the committees of the Board on which
each director served. Our directors are encouraged, but not required, to attend annual meetings. All members of the Board then
in office attended our 2019 Annual Meeting of Stockholders, and all of our current director are expected to attend the 2020 Annual
Meeting.
Committees of the Boards of Directors
Our Board has designated
the following standing committees: an Audit and Finance Committee, a Compensation Committee and a Nominating/Governance Committee.
From time to time as needed, our Board may designate ad hoc or special committees to address specifically delegated matters and
in 2019, the Board formed an ad hoc Marketing Committee.
The current membership
of our standing Board committees is as follows:
Name
|
|
Audit and Finance
|
|
Nominating/
Governance
|
|
Compensation
|
|
Evelyn D’An
|
|
|
|
|
|
|
|
Marty Fogelman
|
|
|
|
|
|
|
|
Robin Marino
|
|
|
|
|
|
|
|
Alan Mustacchi
|
|
|
|
|
|
|
|
Andrew Train
|
|
|
|
|
|
|
|
Stephen Zelkowicz
|
|
|
|
|
|
|
|
Audit and Finance Committee
The Audit and Finance Committee met four
times in 2019. As described in the committee’s charter, a copy of which is available under the Investor Relations section
of our website at www.sumrbrands.com, the primary function of the committee is to oversee (1) our accounting and financial
reporting process and (2) the independent audit of our Company’s financial statements, by appointing, retaining, setting
compensation of, and supervising our independent auditors, reviewing the results and scope of the audit and other accounting-related
services, and reviewing our accounting practices and systems of internal accounting and disclosure controls.
The committee, established in accordance
with section 3(a)(58)(A) of the Exchange Act, currently consists of three members: Alan Mustacchi (Chairperson), Evelyn D’An
and Robin Marino. Each member of the committee is an “independent” director under applicable SEC and Nasdaq Stock
Market rules. The members of the committee have extensive business and financial experience, and are required to have a good understanding
of financial statements, including our balance sheet, income statement, cash flow statement and our quarterly reports on Form
10-Q and our annual report on Form 10-K and related financial statements and disclosures. Our Board has determined that each of
Mr. Mustacchi and Ms. D’An qualifies as an “audit committee financial expert” within the meaning of SEC rules.
The committee meets with our external auditors
and principal financial personnel to review quarterly financial results and the results of the annual audit (in both regular and
executive sessions). The committee reviews and approves annual external auditor engagement plans, scopes and fees, and verifies
the rotation of the lead or coordinating audit partner having primary responsibility for the audit and the audit partner responsible
for reviewing the audit. The committee approves all fees and terms related to the annual independent audit as well as all permissible
non-audit engagements of the external auditors. The committee pre-approves all audit and permissible non-audit services to be
performed by the external auditors.
Compensation Committee
The Compensation Committee met five times
in 2019. The committee currently consists of three members: Evelyn D’An (Chairperson), Alan Mustacchi and Stephen J. Zelkowicz.
Each member of the committee is an “independent” director under the rules of the Nasdaq Stock Market.
As described in the committee’s charter,
which is available under the Investor Relations section of our website at www.sumrbrands.com, the committee has the overall
responsibility, on behalf of our Board, for approving and evaluating all compensation plans, programs and policies as they affect
our Chief Executive Officer and our other executive officers, and for matters involving the compensation of our directors. The
committee will meet as often as necessary to carry out its responsibilities, and may invite to its meetings any director, management,
or such other persons as it deems necessary to carry out such responsibilities. The committee will review and approve, at least
annually, the annual base salaries and annual incentive opportunities of our Chief Executive Officer and our other executive officers.
The committee also acts as administrator of our compensation programs as they affect all of our employees.
Use of Outside Advisors. All compensation
decisions are made with consideration of the committee’s guiding principles to provide competitive compensation for the
purpose of attracting and retaining talented executives and employees and of motivating our employees to achieve improved Company
performance, which ultimately benefits our stockholders. The committee has the sole authority to retain and terminate any advisors,
including independent counsel, compensation consultants and other advisors to assist as needed, and has sole authority to approve
the advisors’ fees, which will be paid by the Company, and the other terms and conditions of their engagement. The committee
considers input and recommendations from management, including our Chief Executive Officer (who is not present during any committee
deliberations with respect to his compensation), and outside compensation consultants in connection with its review of our Company’s
compensation programs and its annual review of the performance of the other executive officers. The committee has engaged the
services of an independent compensation consultant, Pearl Meyer. As further described below under Executive Compensation “-
Role of Compensation Committee and Management” and “- Role of Compensation Consultant,” Pearl Meyer has assisted
the committee with executive compensation matters.
The committee takes into consideration
the recommendations of its compensation consultant and our Chief Executive Officer, but retains absolute discretion as to whether
to adopt such recommendations in whole or in part, as it deems appropriate. For additional information on the processes followed
by the committee and the objectives, methodologies and components of compensation considered by the committee in connection with
executive compensation and overall compensation for employees, see the “Executive Compensation” section of this proxy
statement.
Nominating/Governance Committee
The Nominating/Governance Committee met
three times in 2019. As described in the committee’s charter, which is available under the Investor Relations section of
our website at www.sumrbrands.com, the committee is responsible for (1) overseeing and reviewing the size, functioning,
composition and needs of the Board and its committees, including recruitment of qualified board members and recommending nominees
to the Board for election as directors, (2) developing and recommending corporate governance guidelines and monitoring those guidelines
and (3) overseeing the CEO and management succession planning process.
The committee currently consists of three
members: Stephen Zelkowicz (Chairperson), Marty Fogelman and Robin Marino. Each member of the committee is an “independent”
director under the rules of the Nasdaq Stock Market.
Process for Identifying and Evaluating
Potential Director Nominees. The committee will consider persons identified by its members, management, stockholders, investment
bankers and others for nomination to the Board. The committee follows the process described in this proxy statement and its charter
when determining nominees to our Board.
The committee will identify, evaluate and
recommend candidates to become members of our Board with the goal of creating a Board that, as a whole, consists of individuals
with various and relevant career experience, industry knowledge and experience, financial expertise (including whether a candidate
satisfies the criteria for being an “audit committee financial expert,” as defined by the SEC), and community ties.
The committee will also consider minimum individual qualifications of candidates, including strength of character, mature judgment,
familiarity with our Company’s business and industry, independence of thought, an ability to work collegially and whether
the candidate is “independent” within the meaning of SEC and Nasdaq Stock Market rules. While our Board has not adopted
a mandatory retirement age or term limits for its members, in re-nominating incumbent members to the Board, the committee takes
into account the tenure of the member and the appropriateness of the director’s continued service. Candidates, whether identified
by the committee or proposed by stockholders, will be reviewed in the context of the current composition of our Board, our operating
requirements and the long-term interests of our stockholders. Although the committee does not have a formal diversity policy concerning
membership of the Board, the committee does consider diversity in its broadest sense when evaluating candidates, including persons
diverse in gender, ethnicity, experience, and background.
Process for Stockholder Nominations.
Nominations to our Board may be submitted to the committee by our stockholders in accordance with the process described in our
Bylaws. Stockholders who wish to recommend a candidate for election to our Board should send their letters to us at 1275 Park
East Drive, Woonsocket, Rhode Island 02895, Attention: Secretary. These letters will be promptly forwarded to the members of the
Nominating/Governance Committee.
All stockholder recommendations for director
candidates must be submitted to us not less than 60 calendar days or more than 90 calendar days prior to the annual meeting at
which the nominee is requested to be proposed, provided, however, that if less than 70 days’ notice or prior disclosure
of the date of the annual meeting is given or made to stockholders, then notice by the stockholder, to be timely, must be received
no later than the close of business on the 10th day following the day on which such notice of the date of the annual meeting was
mailed or such public disclosure was made, whichever first occurs. Stockholders must follow certain procedures to recommend or
propose candidates for election as directors described in our Bylaws and summarized below.
The notice must contain certain information
about the stockholder making the recommendation or proposal of a candidate for election to the Board, as described in our Bylaws,
including (1) the name and address of the stockholder and its affiliates making the recommendation, (2) the number of shares of
our common stock directly or indirectly beneficially owned by the stockholder, including any rights to acquire shares of our common
stock and (3) the information relating to such stockholder that would be required to be disclosed in a proxy statement in connection
with the solicitation of proxies for election of directors in a contested election under Section 14 of the Exchange Act. The recommendation
must contain the following information about the candidate being proposed for election to the Board as described in our Bylaws,
including (i) the name and address of the candidate, (ii) the number of shares of our common stock directly or indirectly beneficially
owned by the candidate, including any rights to acquire shares of our common stock, (iii) the information that would be required
to be disclosed in a proxy statement in connection with the solicitation of proxies for election of directors in a contested election
under Section 14 of the Exchange Act and (iv) a description of all direct and indirect compensation and other material monetary
agreements, arrangements and understandings during the past three years, and any other material relationships, between or among
such stockholder, on the one hand, and each such proposed nominee, on the other hand, including, without limitation, all information
that would be required to be disclosed pursuant to Item 404 of Regulation S-K if the stockholder making the nomination were the
“registrant” for purpose of such rule and the nominee were a director or executive officer of such registrant. The
candidate must also submit a written representation and agreement to us that he or she is not party to any agreement with another
person (other than our Company) that, if elected, would obligate the candidate to act or vote on a certain issue or that provides
for compensation or other reimbursement for service on the Board, and that if elected, the candidate would be in compliance with
all of our applicable Company guidelines and policies.
Ad Hoc Committees
In 2018, the Board formed a Marketing Committee
as a new, ad hoc committee to assist the Board in overseeing the Company’s overall strategic direction, risks, investments
and progress in the areas of marketing, branding and e-commerce. The committee met regularly during 2019. In early 2020, in part
due to the COVID 19 pandemic, the Board determined to dissolve the committee.
Independence of Directors
In determining the independence of directors,
our Board analyzes each director’s relationship with our Company and our subsidiaries to determine whether our directors
are independent under the applicable rules of the Nasdaq Stock Market and the SEC. Our Board has determined that each of its current
directors is “independent” within the meaning of the independence rules of the Nasdaq Stock Market and the SEC.
Other Governance Matters
Majority Voting
Our Bylaws provide for a majority voting
standard in uncontested elections of directors, such that a nominee for director shall be elected to the board if the votes cast
for such nominee’s election exceed the votes cast against such nominee’s election, with a plurality vote standard
retained for contested director elections, that is, when the number of director nominees exceeds the number of directors to be
elected.
In connection with this majority voting
standard, the Board adopted a director resignation policy that is set forth in our Corporate Governance Guidelines. The director
resignation policy provides that director nominees must tender irrevocable resignations that will be effective only upon (1) the
failure to receive the required vote in an uncontested election at the next stockholder meeting at which they face re-election
and (2) acceptance of such resignation by the Board. If an incumbent director fails to receive the required vote for re-election,
the Nominating/Governance Committee will make a recommendation to the Board on whether to accept or reject the resignation, or
whether other action should be taken. The Board will act on the resignation, taking into account the Nominating/Governance Committee’s
recommendation, within 90 days from the date of the certification of the director election results. Thereafter, the Board will
promptly publicly disclose its decision and rationale for the decision.
Executive Sessions
Our independent directors meet in executive
session from time to time, and met at least four times in 2019.
Code of Ethics
We have adopted a Code of Ethics that applies
to all our directors, officers and employees, which can be found under the Investor Relations section of our website at www.sumrbrands.com.
Amendments to our Code of Ethics and any grant of a waiver from a provision of our Code of Ethics requiring disclosure under applicable
SEC or Nasdaq Stock Market rules will be disclosed on our website.
Corporate Governance Guidelines
Our Board has adopted Corporate Governance
Guidelines, which can be found under the Investor Relations section of our website at www.sumrbrands.com. These guidelines
include, without limitation, guidelines relating to director qualifications and responsibilities, director resignations, board
committees, director access to officers and employees, director and officer compensation, management succession and stockholder
communication with the Board.
Insider Trading Policy
Under our Code of Ethics, directors, officers,
and employees who have access to confidential information relating to our Company are not permitted to use or share that information
for stock trading purposes or for any other purpose except the conduct of the Company’s business. To use non-public information
for personal financial benefit or to “tip” others who might make an investment decision on the basis of this information
is not only unethical and against Company policy but is also illegal. We also maintain an insider trading policy, applicable to
all directors, officers and employees and other designated service providers. The policy provides that these persons may not (1)
buy, sell or engage in other transactions in our securities while aware of material non-public information about our Company;
(2) buy or sell securities of other companies while aware of material non-public information about those companies that they become
aware of as a result of business dealings with our Company, or (3) disclose material non-public information to any unauthorized
persons outside of our Company. In addition, officers and directors are prohibited from purchasing or selling options on our common
stock or engaging in short sales of our common stock. Officers and directors are discouraged from engaging in hedging or monetizing
transactions (such as prepaid variable forwards, collars, equity swaps or similar derivative securities that are linked to our
common stock), and must obtain prior approval to engage in such transactions. The policy also requires officers, directors and
certain other identified employees to obtain pre-clearance for any trading, and subjects these persons to a defined trading blackout
period.
Stock Ownership Guidelines
Our Board has adopted ownership guidelines
to align the interests of its directors and our Chief Executive Officer with the interests of our stockholders. These guidelines
encourage our directors and our Chief Executive Officer to maintain a significant ownership stake over their tenure. It is expected
that each director and the Chief Executive Officer shall attain the applicable share ownership level within five years of his
or her initial election or appointment, or for non-employee directors that were members of the Board at the time the policy was
adopted, within five years of adoption of the policy.
In calculating compliance with the guidelines,
each director and our Chief Executive Officer shall be credited for each share of common stock beneficially owned by him or her,
including shares held in benefit plans, each share of vested and non-vested restricted stock, and each restricted stock unit.
The Compensation Committee will review from time to time the ownership guidelines and recommend any changes for approval by our
Board as appropriate. Because the Company currently has an Interim Chief Executive Officer, to whom the stock ownership guidelines
are not applicable to our Chief Executive Officer at this time. As of the date of this proxy statement, our directors have made
progress towards meeting the ownership guidelines.
Communications with Directors
Stockholders may send communications to
our Board, the Chairperson, any individual director or group of directors, or any Board committee by using the contact information
provided on our website. Stockholders also may send communications by letter addressed to our Secretary, Attn: Board of Directors,
Summer Infant, Inc., 1275 Park East Drive, Woonsocket, Rhode Island 02895. Communications may also be received and reviewed by
our Chairperson or members of senior management. Stockholder concerns about our accounting, internal controls, auditing matters
or business practices will be reported to the Audit and Finance Committee. All other concerns will be reported to the appropriate
committee(s) of our Board.
Director Compensation
For fiscal 2019, the following director
compensation program was in place for our non-employee directors:
|
·
|
for the first
two quarters, an annual retainer fee of $90,000 for the Chairperson and $45,000 for other
non-employee directors, which was reduced to $70,000 and $35,000, respectively, beginning
in the third quarter of 2019;
|
|
·
|
for any meetings
beyond four regularly scheduled board meetings per year, a fee of $1,000 for each board
meeting attended in person;
|
|
·
|
the chairpersons
of the Audit, Compensation, Nominating/Governance and Marketing Committees received an
additional annual fee of $15,000, $10,000, $8,000 and $8,000, respectively;
|
|
·
|
each director
serving as a member of the Audit, Compensation and Nominating/Governance Committees (other
than the chairperson of each such committee) received an annual fee of $5,000; and
|
|
·
|
on the date
of our 2019 annual meeting of stockholders, each director other than our Chairperson
received an annual equity award, in the form of 7,500 (834 shares on a post-split adjusted
basis) and the Chairperson received an annual equity award, in the form of shares of
our common stock, of 15,000 shares (1,667 shares on a post-split adjusted basis).
|
We also generally reimburse non-employee
directors for travel expenses incurred in connection with their duties as directors. In addition, our Board of Directors may from
time to time also provide for cash compensation, as recommended by the Compensation Committee, payable to members of special or
ad hoc committees of the Board of Directors.
Other than as disclosed in this proxy statement,
we do not pay any directors who are also executive officers any additional compensation for service as directors.
Director Compensation in 2019
The following table shows non-employee
director compensation in 2019. Mark Messner, our former Chief Executive Officer, served on the Board during 2019 and did not receive
any additional compensation for his service as a director. For information on compensation received by Mr. Messner for his services
as Chief Executive Officer, please see “Executive Compensation - Summary Compensation Table” below.
Name
|
|
Fees Earned
or
Paid in Cash ($)(1)
|
|
|
Stock Awards
($)(2)
|
|
|
All Other
Compensation ($)
|
|
|
Total ($)
|
|
Evelyn D’An
|
|
|
55,000
|
|
|
|
5,175
|
|
|
|
--
|
|
|
|
60,175
|
|
Marty Fogelman
|
|
|
45,000
|
|
|
|
5,175
|
|
|
|
--
|
|
|
|
50,175
|
|
Robin Marino
|
|
|
90,000
|
|
|
|
10,350
|
|
|
|
--
|
|
|
|
100,350
|
|
Alan Mustacchi
|
|
|
60,000
|
|
|
|
5,175
|
|
|
|
--
|
|
|
|
65,175
|
|
Andrew Train
|
|
|
48,000
|
|
|
|
5,175
|
|
|
|
--
|
|
|
|
53,175
|
|
Stephen J. Zelkowicz
|
|
|
53,000
|
|
|
|
5,175
|
|
|
|
--
|
|
|
|
58,175
|
|
|
(1)
|
Represents fees earned or paid
in cash in 2019, including annual retainer fees and committee fees.
|
|
(2)
|
The amounts reflect the aggregate
grant date fair value computed in accordance with FASB ASC Topic 718. Assumptions used
in the calculation of these amounts are included in Note 7 to our audited consolidated
financial statements for the fiscal year ended December 28, 2019, included in our Original
Filing. As of December 28, 2019, Mr. Train had 278 unvested restricted shares (on a post-split
basis).
|
PROPOSAL NO. 2
ADVISORY VOTE ON NAMED EXECUTIVE OFFICER
COMPENSATION
The Dodd-Frank Wall Street Reform and Consumer
Protection Act of 2010 (known as the Dodd-Frank Act), provides that a public company’s proxy statement in connection with
the Company’s annual meeting of stockholders must allow stockholders to cast an advisory, non-binding vote regarding the
compensation of our named executive officers as disclosed in accordance with the SEC’s rules.
As discussed under “Executive Compensation”
below, our compensation programs are designed to attract, motivate and retain highly qualified executives and seek to foster a
performance-oriented culture, where individual performance is aligned with organizational objectives. For example, our annual
short-term incentive plan is designed to reward individuals for performance based primarily on our financial results and their
achievement of personal and corporate goals that contribute to our long-term goal of building stockholder value. Grants of equity-based
awards are intended to provide additional incentive to work to enhance long-term total return to stockholders and to align the
interests of our executives with those of our stockholders. For additional information on our executive compensation programs,
including specific information about compensation paid by us in 2019, please read the information set forth in the “Executive
Compensation” section below, including the tables and narrative descriptions.
At the Annual Meeting, we will ask our
stockholders to approve our named executive officer compensation for 2019 as described in this proxy statement. This proposal,
referred to as a “Say-on-Pay Proposal,” provides our stockholders with the opportunity to express their views on our
named executive officers’ compensation. Accordingly, we will present the following advisory Say-on-Pay Proposal at the meeting
for stockholder approval:
“RESOLVED, that, the compensation paid to our
Company’s named executive officers in 2019, as disclosed in this proxy statement for the Company’s 2020 Annual Meeting
of Stockholders pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the compensation
tables and related narrative disclosure, is hereby approved.”
This Say-on-Pay vote is advisory, and therefore
not binding on our Company, the Compensation Committee or our Board. However, the Compensation Committee intends to review the
results of the advisory vote and will be cognizant of the feedback received from the voting results as it completes its annual
review and engages in the compensation planning process.
Vote Required
We will consider the proposal to be approved
if a majority of votes are cast “FOR” the proposal. Abstentions are not counted as votes “FOR” or “AGAINST”
this proposal.
Recommendation
Our Board recommends that stockholders
vote “FOR” the approval, on an advisory basis, of the 2019 compensation of our named executive officers as
described in this proxy statement.
PROPOSAL NO. 3
ADVISORY VOTE TO APPROVE THE FREQUENCY
OF HOLDING FUTURE ADVISORY VOTES ON NAMED EXECUTIVE OFFICER COMPENSATION
The Dodd-Frank Act added Section 14A to
the Exchange Act requires that we provide our stockholders with the opportunity to cast an advisory, non-binding vote regarding
their preference as to how frequently to vote on future advisory votes on the compensation of our named executive officers as
disclosed in accordance with the SEC’s rules. Stockholders may indicate whether they would prefer that we conduct future
advisory votes on named executive officer compensation once every one, two, or three years. Stockholders also may abstain from
casting a vote on this proposal.
Previously, our Board of Directors recommended,
and the stockholders voted for, an annual vote on the compensation of our named executive officers, and we have submitted an advisory
vote to our stockholders each year. Our Board of Directors recommends that we continue with an annual advisory vote on named executive
officer compensation.
Our Board of Directors has reviewed this
frequency and has determined that an advisory vote on named executive officer compensation that occurs each year continues to
be the most appropriate alternative for the Company and; therefore, our Board recommends that you vote for the “one year”
option with respect to the advisory vote on named executive officer compensation. Our Board of Directors believes that an annual
advisory vote on named executive officer compensation is the optimal interval for conducting and responding to a “Say-on-Pay”
vote. Our Board of Directors also believes this frequency is in alignment with our executive compensation practices, as we review
the core elements of our executive compensation program annually. By providing an advisory vote on named executive officer compensation
on an annual basis, our stockholders will be able to provide us with direct input on our compensation philosophy, policies and
practices as disclosed in the Proxy Statement every year.
Vote Required
The frequency choice receiving the majority
of the votes cast will be considered as approval of that frequency choice. If none of the three choices receives a majority of
the votes cast, the choice that receives the most number of votes will be considered to be the result. Unless otherwise instructed,
proxy holders will vote the proxies received by them in accordance with the Board’s recommendation that a Say-on-Pay proposal
be submitted to stockholders every year. If you abstain from voting or you are a beneficial holder and do not provide specific
voting instructions to your broker, the organization that holds your shares will not be authorized to vote on this proposal and
will have not be counted toward the tabulation of the votes on this proposal. Accordingly, we encourage you to vote promptly,
even if you plan to attend the meeting.
Recommendation
Our Board of Directors recommends that
you vote “FOR” for the “one-year” option as the preferred frequency for future advisory votes on
named executive officer compensation.
PROPOSAL NO. 4
RATIFICATION OF APPOINTMENT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Our Audit and Finance Committee
has appointed RSM US LLP (“RSM”) as the independent registered public accounting firm to audit the consolidated financial
statements of our Company for the fiscal year ending January 2, 2021 and recommends that stockholders vote in favor of the ratification
of such appointment. In the event of a negative vote on such ratification, the Audit and Finance Committee will reconsider its
selection. We anticipate that representatives of RSM will be present at the Annual Meeting, will have the opportunity to make
a statement if they desire, and will be available to respond to appropriate questions.
Fees
The following table shows the aggregate
fees paid or accrued for audit and other services provided for fiscal years 2019 and 2018:
|
|
2019
|
|
|
2018
|
|
Audit Fees
|
|
$
|
338,246
|
|
|
$
|
339,120
|
|
Audit-Related Fees
|
|
|
-
|
|
|
|
12,000
|
|
Tax Fees
|
|
|
-
|
|
|
|
-
|
|
All Other Fees
|
|
|
-
|
|
|
|
-
|
|
Total Fees
|
|
$
|
338,246
|
|
|
$
|
351,120
|
|
Audit Fees in 2018 and 2019 were
for professional services rendered for the audit of our annual consolidated financial statements and related procedures and review
of consolidated financial statements included in our Quarterly Reports on Form 10-Q and services that are normally provided by
RSM in connection with statutory and regulatory filings or engagements. Audit-Related Fees in 2018 were for services rendered
with respect to the Company’s adoption of and transition to the new lease accounting standard (ASC 842, Leases).
Audit Committee Policy on Pre-Approval of Audit and Permissible
Non-Audit Services of Independent Auditors
The Audit and Finance Committee pre-approves
all audit and permissible non-audit services provided by the independent registered public accounting firm. These services may
include audit services, audit-related services, tax services and other services. Pre-approval is generally provided for up to
one year, and any pre-approval is detailed as to the particular service or category of services and is generally subject to a
specific budget. The independent registered public accounting firm and management are required to periodically report to the Audit
and Finance Committee regarding the extent of services provided by the independent registered public accounting firm in accordance
with the pre-approval, and the fees for the services performed to date. The Audit and Finance Committee may also pre-approve particular
services on a case-by-case basis.
Vote Required
A majority of shares cast “FOR”
the proposal are required for approval. Abstentions are not counted as votes “FOR” or “AGAINST” this proposal.
Recommendation
Our Board recommends that stockholders
vote “FOR” the ratification of RSM US LLP as independent registered public accounting firm for the Company
for the fiscal year ending January 2, 2021.
AUDIT COMMITTEE REPORT
This Audit Committee Report shall not be deemed to be “soliciting
material” or to be filed with the Securities and Exchange Commission or subject to Regulation 14A or 14C under the Exchange
Act, or to the liabilities of Section 18 of the Exchange Act. Notwithstanding anything to the contrary set forth in any of our
previous filings under the Securities Act of 1933 or the Exchange Act that might incorporate future filings, including this proxy
statement, in whole or in part, this report shall not be incorporated by reference into any such filings.
The Audit and Finance Committee (the “Audit
Committee”) reviews our financial reporting process on behalf of our Board. Management has the primary responsibility for
the financial statements and the reporting process. Our independent auditors are responsible for expressing an opinion on the
conformity of our audited financial statements to accounting principles generally accepted in the United States of America.
In this context, the Audit Committee has
reviewed and discussed our audited financial statements with management and the independent auditors. The Audit Committee has
discussed with the independent auditors the matters required to be discussed with the Audit Committee by the applicable requirements
of the Public Company Accounting Oversight Board (the “PCAOB”) and the SEC. In addition, the Audit Committee has received
the written disclosures and the letter from the independent auditors required by the applicable requirements of the PCAOB regarding
the independent auditor’s communications with the Audit Committee concerning independence, and has discussed with the independent
auditor the independent auditor’s independence. In addition, the Audit Committee has considered whether the independent
auditor’s provision of non-audit services to us is compatible with the auditor’s independence.
In reliance on the reviews and discussions
referred to above, the Audit Committee recommended to the Board that our audited financial statements be included in our Annual
Report on Form 10-K for the year ended December 28, 2019, for filing with the SEC.
The foregoing report has been furnished
by the Audit Committee.
Alan Mustacchi, Chairperson
Evelyn D’An
Robin Marino
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth information
regarding the beneficial ownership of our common stock as of July 23, 2020 by:
|
·
|
each person
known by us to be the beneficial owner of more than 5% of our outstanding shares of common
stock;
|
|
·
|
each of our
directors and named executive officers listed in the Summary Compensation Table under
the section entitled “Executive Compensation”; and
|
|
·
|
all of our current
executive officers and directors as a group.
|
Name and Address of Beneficial Owner (1)
|
|
Amount and
Nature of
Beneficial
Ownership (2)
|
|
|
Percent of
Common Stock (3)
|
|
5% Stockholders
|
|
|
|
|
|
|
|
|
Wynnefield Capital Management LLC and related parties (4)
|
|
|
758,788
|
|
|
|
35.9
|
%
|
Jason Macari (5)
|
|
|
385,432
|
|
|
|
18.3
|
%
|
Plaisance Capital LLC (6)
|
|
|
111,497
|
|
|
|
5.3
|
%
|
|
|
|
|
|
|
|
|
|
Directors and Named
Executive Officers
|
|
|
|
|
|
|
|
|
Evelyn D’An
|
|
|
5,782
|
|
|
|
*
|
|
Marty Fogelman (7)
|
|
|
16,826
|
|
|
|
*
|
|
Paul Francese (8)
|
|
|
3,894
|
|
|
|
*
|
|
Robin Marino
|
|
|
28,216
|
|
|
|
1.4
|
%
|
Mark Messner (9)
|
|
|
18,405
|
|
|
|
*
|
|
Alan Mustacchi
|
|
|
12,464
|
|
|
|
*
|
|
Stuart Noyes
|
|
|
--
|
|
|
|
--
|
|
Edmund J. Schwartz
|
|
|
--
|
|
|
|
--
|
|
Andrew Train (10)
|
|
|
6,478
|
|
|
|
*
|
|
Stephen J. Zelkowicz
|
|
|
10,359
|
|
|
|
*
|
|
All current directors and
executive officers as a group (8 persons)
|
|
|
80,125
(10)
|
|
|
|
3.8
|
%
|
* Less
than 1%
|
(1)
|
Unless otherwise noted, the business address of each named
person is 1275 Park East Drive, Woonsocket, Rhode Island 02895.
|
|
(2)
|
Unless otherwise noted, each person named in the table has
sole voting and investment power with regard to all shares beneficially owned, subject
to applicable community property laws.
|
|
(3)
|
The percentages shown are calculated based on 2,111,427 shares
of common stock issued and outstanding on July 23, 2020. In calculating the percentage
of ownership, all shares of common stock that the identified person or group had the
right to acquire within 60 days of July 23, 2020 are deemed to be outstanding for the
purpose of computing the percentage of the shares of common stock owned by that person
or group, but are not deemed to be outstanding for the purpose of computing the percentage
of the shares of common stock owned by any other person or group.
|
|
(4)
|
The information is as reported on Amendment No. 11 to Schedule
13D filed with the SEC on March 12, 2019. The address for Wynnefield Capital Management,
LLC and related entities is 450 Seventh Avenue, Suite 509, New York, NY 10123. Of the
shares indicated, 228,644 shares are beneficially owned by Wynnefield Partners Small
Cap Value, L.P. (“Partners”), 346,343 shares are beneficially owned by Wynnefield
Partners Small Cap Value, L.P. I (“Partners I”), 159,527 shares are beneficially
owned by Wynnefield Small Cap Value Offshore Fund, Ltd. (“Fund”), and 24,274
shares are beneficially owned by Wynnefield Capital, Inc. Profit Sharing & Money
Purchase Plan (“Plan”).
|
Wynnefield Capital Management, LLC (“WCM”)
is the sole general partner of Partners and Partners I and, accordingly, may be deemed to be the indirect beneficial owner (as
that term is defined under Rule 13d-3 under the Exchange Act) of the shares that Partners and Partners I beneficially own. WCM,
as the sole general partner of Partners and Partners I, has the sole power to direct the voting and disposition of the shares
that Partners and Partners I beneficially own. Nelson Obus and Joshua Landes are the co-managing members of WCM and, accordingly,
each of Messrs. Obus and Landes may be deemed to be the indirect beneficial owner (as that term is defined under Rule 13d-3 under
the Exchange Act) of the shares that WCM may be deemed to beneficially own. Each of Messrs. Obus and Landes, as co-managing members
of WCM, share the power to direct the voting and disposition of the shares that WCM may be deemed to beneficially own.
Wynnefield Capital, Inc. (“WCI”) is
the sole investment manager of the Fund and, accordingly, may be deemed to be the indirect beneficial owner (as that term is defined
under Rule 13d-3 under the Exchange Act) of the shares that the Fund beneficially owns. WCI, as the sole investment manager of
the Fund, has the sole power to direct the voting and disposition of the shares that the Fund beneficially owns. Messrs. Obus
and Landes are executive officers of WCI and, accordingly, each may be deemed to be the indirect beneficial owner (as that term
is defined under Rule 13d-3 under the Exchange Act) of the shares that WCI may be deemed to beneficially own. Messrs. Obus and
Landes, as executive officers of WCI, share the power to direct the voting and disposition of the shares that WCI may be deemed
to beneficially own.
The Plan is an employee profit sharing plan. Messrs.
Obus and Landes are the co-trustees of the Plan and accordingly, Messrs. Obus and Landes may be deemed to be the indirect beneficial
owner (as that term is defined under Rule 13d-3 under the Exchange Act) of the shares that the Plan may be deemed to beneficially
own. Each of Messrs. Obus and Landes, as the trustees of the Plan, shares with the other the power to direct the voting and disposition
of the shares beneficially owned by the Plan.
The information set forth in this footnote with
respect to WCM, WCI and Messrs. Obus and Landes, shall not be considered an admission that any of such persons, for the purpose
of Section 16(b) of the Exchange Act, are the beneficial owners of any shares in which such persons do not have a pecuniary interest.
Each of WCM, WCI and Messrs. Obus and Landes disclaims any beneficial ownership of these shares.
|
(5)
|
The information is as reported on Amendment No. 2 to Schedule
13D filed with the SEC on September 16, 2016 and a Form 4 filed on November 20, 2019.
The address of Mr. Macari is 3100 Diamond Hill Road, Cumberland, RI 02864.
|
|
(6)
|
The information is as reported on Schedule 13G filed with
the SEC on June 12, 2020 by Plaisance Capital I LLC, Plaisance Fund LP, Plaisance Capital
GP LLC and Daniel Kozlowski. The Reporting Persons address is 250 Fillmore Street, Suite
525, Denver, Colorado 80206. The Reporting Persons specifically disclaim beneficial ownership
of the shares except to the extent of its pecuniary interest therein.
|
|
(7)
|
Includes 6,255 shares held by Mr. Fogelman’s spouse.
|
|
(8)
|
Includes 1,390 shares that may be acquired upon exercise
of outstanding vested options.
|
|
(9)
|
Mr. Messner stepped down as the Company’s CEO effective
December 13, 2019.
|
|
(10)
|
Includes
278 restricted shares that will vest within 60 days of July 23, 2020.
|
Delinquent
Section 16(a) Reports
Section 16(a) of the Exchange Act requires
our directors and executive officers, and persons who beneficially own more than 10% of a registered class of our equity securities,
to file reports with the SEC relating to their ownership and changes in ownership of our common stock and other equity securities.
Based solely on our review of our records, SEC filings and on written representations from our executive officers and directors,
we believe that each person who, at any time during the fiscal year, was a director, officer or beneficial owner of more than
10% of our common stock, complied with all Section 16(a) requirements during the fiscal year, except for Jason Macari, who filed
two late Form 4 filings reporting five purchase transactions.
Executive
Officers
Information concerning our current executive
officers is set forth below. All executive officers hold their positions for an indefinite term and serve at the pleasure of our
Board.
Current Executive Officers
Stuart Noyes, 56, was appointed
our Interim Chief Executive Officer in December 2019. Mr. Noyes is managing partner of Winter Harbor, LLC, a consulting firm specializing
in turnaround and restructuring services, which he co-founded in January 2012. He has more than 25 years of experience in executive
and general management, operations, procurement, creditor negotiations, and finance, providing strategic and tactical turnaround
solutions to a variety of clients. From February 2016 through April 2016, Mr. Noyes served as Chief Restructuring Officer of The
Mid-States Supply Company, which filed a voluntary petition for bankruptcy in February 2016. From September 2016 through November
2016, Mr. Noyes served as Chief Restructuring Officer for TPP Acquisition (d/b/a The Picture People), which filed a voluntary
petition for bankruptcy in September 2016. From November 2012 until December 2015, Mr. Noyes served as Chief Restructuring Officer,
and then Assignee for Creditors, of AFL Quality, Inc. and its related entities, AFL Quality NY LLC and DGF, Inc., which were subject
to an involuntary petition for liquidation in February 2013 that was later dismissed in April 2013. From Mr. Noyes is a member
of the Turnaround Management Association and holds a Master of Business Administration from the University of Utah and Bachelor
of Business Administration from the University of Maine.
Edmund J. Schwartz, 70, was
appointed our Chief Financial Officer effective June 15, 2020. Mr. Schwartz is a finance professional with extensive experience
with acquisitions, organizational restructuring, implementing cost reducing process improvement initiatives and developing cash
management discipline in a variety of industries, including consumer products, manufacturing, distribution and retail. Since December
2017, Mr. Schwartz has worked with Winter Harbor, LLC, as a consultant to various companies on financial matters. From August
2015 until September 2016, he served as interim chief financial officer of LRI Holdings. Inc. Mr. Schwartz previously served as
a consultant to the Company, and acted as the Company’s Interim Chief Financial Officer from March 2012 through September
2012.
EXECUTIVE COMPENSATION
Overview
We are an infant and juvenile products
company originally founded in 1985 and have publicly traded on the Nasdaq Stock Market since 2007 under the symbol “SUMR.”
We are a recognized authority in the juvenile industry, providing parents and caregivers a full range of innovative, high-quality,
and high-value products to care for babies and toddlers.
Our industry is highly competitive and
has many participants, and our ability to compete effectively in our industry is dependent in part on our ability to attract,
motivate and retain key management personnel and qualified employees. Historically, we have followed a pay-for-performance compensation
philosophy, with the intent to, over time, bring salaries and total executive compensation in line with approximately the median
(50th percentile) of the companies represented in our peer group. However, we have not been able to compensate our executives
near this level in past years due to our Company’s financial performance, stock price and the limited pool of shares available
for issuance under our equity plan.
The below discussion outlines the Company’s
approach to executive compensation leading up to 2019. However, in 2019, given the uncertainty of the impact on the Company’s
results of trade tariffs on imported Chinese goods, including tariffs imposed in 2018, proposed new tariffs and increases in existing
tariffs, the Compensation Committee, with the approval of the Board, determined not to adopt an annual bonus incentive program
for fiscal 2019. The Company’s actual fiscal 2019 sales ended relatively flat, declining by 0.3%. In late 2019, we experienced
a change in senior management, with Mark Messner, our former Chief Executive Officer stepping down. In light of the Company’s
financial situation at the end of 2019, the Board appointed Stuart Noyes as the Company’s Interim Chief Executive Officer
pursuant to an engagement with Winter Harbor, LLC, a consulting firm specializing in turnaround and restructuring services. In
May 2020, we announced the retirement of Paul Francese, our Chief Financial Officer, who was succeed by Edmund J. Schwartz, our
current Chief Financial Officer, as of June 15, 2020.
Our Board has appointed a Compensation
Committee consisting of independent directors as required by applicable SEC and Nasdaq Stock Market rules. The Compensation Committee
is authorized to determine and approve, or make recommendations to our Board with respect to, the compensation of our chief executive
officer, chief financial officer and our other executive officers, and to grant or recommend the grant of stock-based compensation
to our executive officers and employees. The Compensation Committee also reviews our compensation policies and practices for all
employees.
Historically, our philosophy is to compensate
our executives at levels that enable us to attract, motivate and retain highly qualified executives. In the past, the components
of executive compensation have been base salary, annual incentive bonuses and equity award grants. The Compensation Committee
aims to provide salaries that are competitive with those paid by comparable companies for similar work, based on each executive’s
experience and performance. In prior years, our compensation program has included an annual bonus program designed to reward individuals
for performance based primarily on the Company’s achievement of financial goals as well as the individual’s achievement
of personal and strategic goals that contribute to building stockholder value. In addition, annual grants of stock-based awards
are intended to provide additional incentive to executives to work to enhance long-term total return to stockholders and to align
the interests of our executives with those of our stockholders. Total compensation levels reflect the executive’s position,
responsibilities, tenure, individual experience and achievement of goals. Compensation levels may vary from year to year and among
our various executive officers with fixed and variable pay components. The Compensation Committee and the Board may also, from
time to time, desire to recognize individual contributions to the Company and to encourage continued outstanding performance by
granting discretionary bonuses, in the form of cash or equity awards.
We provide only certain executive fringe
benefits. Generally our executives receive health and welfare benefits, such as group medical, dental, life and long-term disability
coverage, under plans generally available to all other employees. We believe that our executives should be able to provide for
their retirement needs from the total annual compensation they earn based on our performance. Accordingly, other than an employer
matching contribution under our 401(k) plan, which is the same that we provide all of our employees, we do not offer our executives
any nonqualified pension plans, supplemental executive retirement plans, deferred compensation plans or other forms of compensation
for retirement. We may provide for fringe benefits, such as auto allowances, commuting benefits, housing or relocation benefits
in individually negotiated executive employment agreements.
Role of the Compensation Committee
and Management
The Compensation Committee currently determines
or recommends to the Board the compensation of our chief executive officer, chief financial officer and our other executive officers.
Annually, our Compensation Committee, together with our Board, evaluates the performance of and determines the compensation of
our chief executive officer in light of the goals and objectives of our compensation program for that year. Our Compensation Committee
annually assesses the performance of our other executive officers and considers recommendations from our chief executive officer
when determining the compensation of our other executive officers. As discussed below, the Compensation Committee may also consider
input from other independent directors, our compensation consultant and benchmarking studies and surveys, but retains absolute
discretion as to whether to adopt any recommendations as it deems appropriate.
At the request of our Compensation Committee,
our chief executive officer, chief financial officer and other executive officers may attend our Compensation Committee meetings,
including meetings at which our compensation consultant is present. This enables our Compensation Committee to review with senior
management the strategic and individual goals. Our Compensation Committee ultimately makes all determinations regarding financial
and individual goals and targets. Our chief executive officer does not attend any portion of meetings at which his compensation
is discussed.
The Compensation Committee also, in consultation
with its independent compensation consultant, considers changes to our compensation programs as appropriate in response to input
from stockholders through our annual Say on Pay vote and evolving factors such as the business environment and competition for
talent. As part of its 2019 compensation setting process, the Compensation Committee reviewed the results of the Say on Pay vote
regarding executive compensation paid in 2018, in which approximately 99% of the votes cast were voted in favor of our executive
compensation program.
The Compensation Committee has authority
to retain (at our Company’s expense) outside counsel, compensation consultants and other advisors to assist as needed. The
Compensation Committee considers input and recommendations from our outside compensation consultants in connection with its review
of our Company’s compensation programs and its annual review of the performance of the other executive officers. In 2019,
the Compensation Committee engaged the services of an independent compensation consultant, Pearl Meyer. The Compensation Committee
retains Pearl Meyer directly, although in carrying out assignments Pearl Meyer also interacts with management when necessary and
appropriate to obtain compensation and performance data. As required under SEC rules, the Compensation Committee reviews the services
of its compensation consultant to evaluate whether any conflicts of interest are raised, taking into consideration certain factors,
including whether the consultant provides any other services to our Company, the amount of fees our Company pays to the consultant,
whether there are any business or personal relationships with an executive officer of our Company or with any committee member,
and whether the consultant owns any stock of our Company. On an annual basis, the Compensation Committee will continue to monitor
the independence of its compensation consultants. The Compensation Committee determined, based on its evaluation, that the work
of Pearl Meyer has not created any conflict of interest. In 2019, Pearl Meyer assisted the Compensation Committee with the following:
(i) attended Compensation Committee meetings as requested; (ii) provided advice and analysis of the design of the Company’s
short-term and long-term incentive programs; and (iii) reviewed and provided comments on named executive officers’ compensation
and the disclosure regarding executive compensation in the proxy statement for the 2019 annual meeting of stockholders.
Compensation Benchmarking
In determining compensation levels, the
Compensation Committee believes that it is important when making compensation-related decisions to be informed as to the practices
of publicly-held companies of similar size, revenue and market focus. As a result, the Compensation Committee relies on its independent
compensation consultant to help define the appropriate competitive market using a combination of peer group companies and industry-specific
compensation surveys. The Company’s peer group currently consists of the companies noted below.
Acme United Corporation
|
JAKKS Pacific, Inc.
|
Black Diamond, Inc.
|
Lifetime Brands, Inc.
|
Crown Crafts, Inc.
|
Nautilus Inc.
|
CSS Industries Inc.
|
Rocky Brands, Inc.
|
Delta Apparel, Inc.
|
Turtle Beach Corporation
|
Escalade Inc.
|
ZAGG Inc.
|
Named Executive Officer Compensation in 2019
Our named executive officers for 2019 were
Stuart Noyes, Interim Chief Executive Officer, Paul Francese, Senior Vice President and Chief Financial Officer, and Mark Messner,
former President and Chief Executive Officer. Mr. Noyes joined our Company in December 2019, replacing Mr. Messner.
Interim CEO
Winter Harbor Engagement. Mr. Noyes
does not receive any compensation directly from the Company, but was engaged pursuant to the terms of an engagement letter between
the Company and Winter Harbor, LLC dated December 9, 2019 (the “Letter Agreement”), to act as the Company’s
Interim CEO, effective December 16, 2019. Mr. Noyes reports to the Board, and, together with other Winter Harbor advisors, provides
restructuring and advisory services to the Company. Compensation for the services provided under the Agreement for the first ten
weeks of the engagement were determined based on agreed-upon hourly rates, subject to a cap of $35,000 per week (other than holiday
weeks, which were capped at $15,000 each week) and thereafter upon actual hours worked or such other mutually agreed upon fee
structure, plus any out-of-pocket expenses. In February 2020, the Compensation Committee approved, and the Company entered into,
an amendment to the Letter Agreement that provides for compensation at a weekly rate of $40,000, effective beginning the week
of February 24, 2020 through the termination of the engagement letter. The Letter Agreement, as amended, also includes a bonus
(within a range of $50,000 to $550,000) payable to Winter Harbor if the Company engages in a transaction that constitutes a “change
in control” (as defined in the Company’s existing Change in Control Plan) and the Company’s stockholders receive
a specified amount of per share consideration, the amount of such bonus to vary depending on such per share consideration. The
Company has also agreed to indemnify Winter Harbor, Mr. Noyes and other Winter Harbor personnel in connection with the engagement,
subject to customary terms and conditions. Either party may terminate the Letter Agreement upon 30 days’ prior written notice.
Prior to entering into the Letter Agreement,
in November 2019 in connection with the Company’s amendment to its credit facilities, the Company engaged Winter Harbor
to provide financial advisory services (the “Advisor Agreement”) and paid a retainer of $25,000. Compensation under
the Advisor Agreement is determined based on agreed-upon hourly rates for actual hours worked, plus any out-of-pocket expenses
and a 1% administrative fee on the total amount of each invoice to cover administrative costs. As of December 28, 2019, the Company
had paid or accrued approximately $35,774 related to services provided under the Advisory Agreement, including expenses and administrative
fees. Fees for services under the Advisor Agreement engagement are separate from, and in addition to, fees paid under the Letter
Agreement. Fees paid to Winter Harbor under the Letter Agreement are included in the Summary Compensation Table set forth in the
Executive Compensation section below.
Other Named
Executive Officers
Base Salaries. There were no base
salary increases for Messrs. Messner or Francese in 2019.
Annual Incentive Bonus. As discussed
above, no annual incentive bonus program was approved for fiscal 2019.
Long-Term Equity Incentive Awards.
For 2019, our annual equity-based incentive compensation awards for executive officers and senior management employees were in
the form of restricted stock awards and stock options in amounts generally below the market 25th percentile for similar companies
due to our stock price and share pool size. Messrs. Messner and Francese each received an annual equity award comparable to prior
years. The vesting schedule for these awards is 25% per year, with vesting beginning on the first anniversary of the grant date.
In connection with his separation from the Company as described below, a portion of Mr. Messner’s 2019 annual equity award
was accelerated.
SUMMARY COMPENSATION TABLE
The following table sets forth, for fiscal
years 2018 and 2019, information regarding compensation of our named executive officers:
Name and Principal Position
|
|
Year
|
|
|
Salary
($)
|
|
|
Bonus
($)
|
|
|
Stock Awards
($) (1)
|
|
|
Option Awards
($) (1)
|
|
|
All Other
Compensation ($)
|
|
|
Total
($)
|
|
Stuart Noyes
|
|
|
2019
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
76,194
|
(2)
|
|
|
76,194
|
|
Interim Chief Executive Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Paul Francese (3)
|
|
|
2019
|
|
|
|
330,000
|
|
|
|
--
|
|
|
|
6,900
|
|
|
|
7,800
|
|
|
|
11,175
|
(3)
|
|
|
355,875
|
|
Former Senior Vice President and Chief Financial Officer
|
|
|
2018
|
|
|
|
17,769
|
|
|
|
--
|
|
|
|
18,800
|
|
|
|
15,900
|
|
|
|
3,899
|
|
|
|
56,368
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark Messner (4)
|
|
|
2019
|
|
|
|
403,846
|
|
|
|
--
|
|
|
|
13,800
|
|
|
|
15,600
|
|
|
|
293,086
|
(4)
|
|
|
726,332
|
|
Former President and Chief Executive Officer
|
|
|
2018
|
|
|
|
420,000
|
|
|
|
--
|
|
|
|
16,400
|
|
|
|
18,000
|
|
|
|
96,667
|
|
|
|
551,067
|
|
|
(1)
|
The amounts for 2019 reflect the aggregate grant date fair
value computed in accordance with FASB ASC Topic 718. Assumptions used in the calculation
of these amounts are included in Note 7 to our audited consolidated financial statements
for the fiscal year ended December 28, 2019, included in our Original Filing.
|
|
|
|
|
(2)
|
Represents fees paid to Winter Harbor, LLC pursuant to the
Letter Agreement described above under “Winter Harbor Engagement” during
the year ending December 28, 2019. Consists of (i) $30,620 hourly fees paid for
services of Mr. Noyes, (ii) $18,331 hour fees paid for services of other Winter Harbor
employees, (iii) a $25,000 retainer paid upon entering into the Letter Agreement and
(iv) $2,243 of expenses.
|
|
|
|
|
(3)
|
Mr. Francese retired from his position as Chief Financial Officer
in June 2020. Includes (i) $175 of relocation expenses and (ii) $11,000 of employer contributions
to our Company’s 401(k) plan.
|
|
(4)
|
Mr. Messner stepped down as the Company’s CEO effective
December 13, 2019. The amount in the All Other Compensation column for 2019 includes
(i) $30,505 of living expenses, (ii) $44,191 of travel expenses to and from Mr. Messner’s
residence to our Company’s executive offices, (iii) an auto allowance of $8,250,
(iv) $11,000 of employer contributions to our Company’s 401(k) plan, (v) $22,353
of accrued paid time-off that was paid to Mr. Messner upon his separation from the Company,
(vi) $15,158 of value for equity awards accelerated upon his separation from the Company,
(vii) $150,000 cash severance payment, (viii) $6,175 lease liability assumed under Mr.
Messner’s separation agreement and (ix) $5,454 post-termination payment for COBRA.
|
OUTSTANDING EQUITY AWARDS AT FISCAL
YEAR-END
The following table
provides information about outstanding equity awards held by the named executive officers at the end of 2019. Mr. Noyes has received
no equity awards from the Company. Share amounts in the table below have been adjusted to reflect the 9-for-1 reverse stock split
that occurred in March 2020.
|
|
Option Awards
|
|
|
|
Stock
Awards
|
|
Name
|
|
Award Grant Date
(1)
|
|
|
Number
of Securities Underlying Unexercised
Options (#)
Exercisable
|
|
|
|
Number
of Securities Underlying Unexercised
Options (#)
Unexercisable
|
|
|
|
Option
Exercise
Price Per Share
($)
|
|
|
|
Option
Expiration
Date
|
|
|
|
Number
of Shares or Units of Stock That Have Not Vested (#)
|
|
|
|
Market
Value of Shares or Units of Stock That Have Not Vested ($)
|
|
Paul Francese
|
|
11/27/2018
|
|
|
833
|
|
|
|
2,500
|
|
|
|
8.46
|
|
|
|
11/27/2028
|
|
|
|
|
|
|
|
|
|
|
|
11/27/2018
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
1,667
|
|
|
|
3,450
|
|
|
|
05/10/2019
|
|
|
--
|
|
|
|
2,223
|
|
|
|
6.21
|
|
|
|
05/10/2029
|
|
|
|
|
|
|
|
|
|
|
|
05/10/2019
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
1,111
|
|
|
|
2,300
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark Messner (2)
|
|
07/13/2016
|
|
|
9,723
|
|
|
|
--
|
|
|
|
15.30
|
|
|
|
06/30/2020
|
|
|
|
|
|
|
|
|
|
|
|
02/22/2017
|
|
|
4,862
|
|
|
|
--
|
|
|
|
17.73
|
|
|
|
06/30/2020
|
|
|
|
|
|
|
|
|
|
|
|
03/19/2018
|
|
|
3,429
|
|
|
|
--
|
|
|
|
10.71
|
|
|
|
06/30/2020
|
|
|
|
|
|
|
|
|
|
|
|
05/02/2018
|
|
|
1,667
|
|
|
|
--
|
|
|
|
7.38
|
|
|
|
06/30/2020
|
|
|
|
|
|
|
|
|
|
|
|
05/102019
|
|
|
556
|
|
|
|
--
|
|
|
|
6.21
|
|
|
|
06/30/2020
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Unless otherwise noted, (i) option grants vest as follows:
25% of the total number of shares subject to the options vest and become exercisable
on each of the first, second, third and fourth anniversaries of the date of grant and
(ii) restricted stock grants have a vesting schedule as follows: 25% of the total number
of shares underlying the award vest on each of the first, second, third and fourth anniversaries
of the date of grant.
|
|
(2)
|
Mr. Messner stepped down as the Company’s CEO effective
December 13, 2019. Under his separation agreement with the Company, (i) the vesting of
a portion of outstanding, unvested option awards was accelerated and the period in which
to exercise vested options was extended to June 30, 2020, and unvested option awards
were terminated, and (ii) the vesting of a portion of outstanding, unvested stock awards
was accelerated and remaining unvested stock awards were terminated.
|
Equity Compensation Plan Information
The following table
summarizes information, as of December 28, 2019, regarding our equity compensation plans.
Plan Category
|
|
Number of
Securities to Be
Issued Upon
Exercise
of Outstanding
Options,
Warrants and
Rights (a)
|
|
|
Weighted
Average
Exercise Price
of
Outstanding
Options,
Warrants, and
Rights (b)
|
|
|
Number of Securities
Remaining Available
for Future Issuance
under Equity
Compensation Plans
[excluding
securities reflected
in column (a)] (c)
|
|
Equity compensation plans
approved by stockholders
|
|
|
105,604
|
(1)
|
|
$
|
13.46
|
|
|
|
71,468
|
|
Equity compensation
plans not approved by stockholders
|
|
|
18,196
|
(2)
|
|
|
18.59
|
|
|
|
—
|
|
Total
|
|
|
123,800
|
|
|
$
|
14.21
|
|
|
|
71,468
|
|
|
(1)
|
Includes 21,716 shares issuable upon vesting of outstanding
restricted stock awards granted to employees which have not yet vested. Such shares are
not included in the calculation of the weighted average exercise price reflected in column
(b).
|
|
|
|
|
(2)
|
Represents awards granted as inducement grants to newly-hired
employees that were not subject to shareholder approval pursuant to applicable Nasdaq
Stock Market Rules. Includes 694 shares issuable upon vesting of outstanding restricted
stock awards granted to employees which have not yet vested. Such shares are not included
in the calculation of the weighted average exercise price reflected in column (b).
|
Employment Arrangements with Current Named Executive
Officers
Stuart Noyes.
Our Interim Chief Executive Officer, Mr. Noyes, does not receive any compensation directly from the Company. See “Winter
Harbor Engagement” and the Summary Compensation Table above regarding compensation paid to Winter Harbor, LLC for Mr. Noyes’
services.
Edmund J. Schwartz. Mr. Schwartz
was appointed as our Chief Financial Officer effective June 15, 2020. Mr. Schwartz is compensated pursuant to the terms of a consulting
agreement with the Company pursuant to which he received compensation of $5,000 for the month of May, and thereafter receives
$20,000 per month, plus living and commuting expenses that will be reimbursed by the Company. Mr. Schwartz may terminate the consulting
agreement upon 30 days’ prior written notice to the Company, and the Company may terminate the consulting agreement upon
14 days’ prior written notice to Mr. Schwartz.
Agreements with Former Executive
Officers
Separation Agreement and General Release
with Former Chief Executive Officer. In November 2019, the Company, Summer Infant (USA), Inc. and Mr. Messner entered into
a Separation Agreement and General Release (the “Separation Agreement”) regarding the terms of his departure from
the Company. Pursuant to the Separation Agreement, in consideration for a general release and covenants from Mr. Messner, Mr.
Messner received (i) cash severance totaling $150,000.00, (ii) accelerated vesting of a total of 31,250 shares (3,473 shares on
a post-split adjusted basis) under outstanding restricted share awards, (iii) accelerated vesting of a total of 31,250 stock options
(3,473 options on a post-split adjusted basis) under outstanding stock option awards, (iv) an extension of the option exercise
period for all vested and unexercised stock option awards until June 30, 2020, and (v) reimbursement for COBRA coverage expense
up to November 30, 2020. In addition, the Company assumed remaining obligations under Mr. Messner’s apartment lease in Rhode
Island and will provide, at its expense, outplacement services to Mr. Messner for a period of up to 12 months following his separation.
Offer Letter with Paul Francese.
Pursuant to the terms of his offer letter with the Company, Mr. Francese received an initial annual base salary of $330,000, and
was eligible to participate in the Company’s short-term incentive bonus program beginning in fiscal year 2019, with a target
equal to 40% of his base salary. He was also eligible to participate in our long-term incentive plan and any other bonus plans,
as determined by the Compensation Committee, and was eligible to receive all medical, dental and other benefits to the same extent
as provided to other senior management employees. Further, the Company agreed to reimburse Mr. Francese for certain living expenses
incurred during his first month of employment in an amount not to exceed $8,000. If Mr. Francese’s employment was terminated
by us without cause, or Mr. Francese terminated his employment for good reason, then he was entitled to receive a cash severance
payment equal to six months of his then current base salary, payable in accordance with the Company’s customary payroll
practices and subject to the Company’s receipt of a general release and termination agreement from Mr. Francese. Mr. Francese
retired from the Company in 2020.
Change in Control Plan
In February 2018, the Board of Directors
approved a Change in Control Plan, which was subsequently amended in May 2020 to extend the expiration date of the plan to February
7, 2021. Under the “double trigger” provisions of the Change in Control Plan, a participant will be entitled to certain
payments if (1) there is a change in control and (2) within the 12-month period following the change in control, the participant’s
employment is terminated without cause by the Company or for good reason by the participant. If these events occur, a participant
will be entitled to receive payments based on their tier under the Plan for a period of time following the termination. Neither
our Interim Chief Executive Officer, Mr. Noyes, nor current Chief Financial Officer, Mr. Schwartz, participate in the Change in
Control Plan. Our former Chief Financial Officer, Mr. Francese, was a Tier 2 participant in the Change in Control Plan. Participants
in the plan receive benefits depending on their Tier as follows: (i) a cash payment equal to his annual base salary times the
applicable tier multiplier (2.0x for CEO; 1.0x for CFO), payable over a period of time following termination (24 months for CEO;
12 months for CFO); (ii) a cash payment equal to the pro-rated portion of the participant’s annual cash bonus actually achieved
for the fiscal year in which the termination occurs, payable when such payment would otherwise be paid after the end of the relevant
performance period; and (iii) a cash payment equal to one times the monthly premiums for the participant’s group medical,
dental and vision coverage for a period of time (24 months for CEO; 12 months for CFO), payable monthly provided that such payments
will end if the participant becomes eligible to participate in similar plans with a subsequent employer.
In addition, any unvested equity awards
held by participants that were granted prior to the change in control will accelerate and vest in full as of the participant’s
termination date, and any unvested performance-based equity awards will be deemed vested and earned assuming achievement at the
target performance level. As a condition to receiving payments under the Plan, participants must execute a severance agreement
and release, which includes non-competition and similar covenants that remain in effect for a period of time, depending on the
Tier of participation.
Retirement Plans
We have a Section 401(k) plan and provide
an employer matching contribution, which is the same that we provide all of our employees. We do not offer our executives any
nonqualified pension plans, supplemental executive retirement plans, deferred compensation plans or other forms of compensation
for retirement.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In March 2009, our wholly owned subsidiary,
Summer Infant (USA), Inc. (“Summer USA”), entered into a definitive agreement with Faith Realty II, LLC, a company
whose members are Jason P. Macari, our former Chief Executive Officer and a former director. Under this agreement, Faith Realty
purchased our corporate headquarters located at 1275 Park East Drive, Woonsocket, Rhode Island for $4,052,500 and subsequently
leased the headquarters back to Summer USA. The lease was last amended in May 2020 and, among other things, extended the term
of the lease until June 30, 2025, reduced annual base rent payments commencing on July 1, 2020 to $303,180 (with incremental annual
increases thereafter pursuant to the amended lease), and provided Summer USA with two options to extend the term of the lease,
each for an additional five-year term. In fiscal 2019, payments under this lease totaled $468,000.
For a description of the Company’s
agreement with Winter Harbor, of which Mr. Noyes is managing partner, see “Executive Compensation - Winter Harbor Engagement”
above.
OTHER MATTERS
We know of no other matters that may come
before the Annual Meeting. If any other matters should properly come before the Annual Meeting, it is the intention of the persons
named in the accompanying proxy to vote in accordance with their judgment on those matters. This discretionary authority is conferred
by the proxy.
▲
FOLD HERE • DO NOT SEPARATE • INSERT IN ENVELOPE PROVIDED ▲
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS
SUMMER INFANT, INC.
Proxy for 2020 Annual Meeting of Stockholders
September 9, 2020
The undersigned hereby
appoints Mary Beth Schneider as proxy of the undersigned, with full power to appoint her substitute, to act for and to vote all
shares of Summer Infant, Inc. common stock owned by the undersigned, upon the matters set forth in the Notice of Meeting and related
Proxy Statement at the Annual Meeting of Stockholders of Summer Infant, Inc., to be held at 9:00 a.m., local time, on Wednesday,
September 9, 2020, at the offices of the Company located at 1275 Park East Drive, Woonsocket, Rhode Island 02895 and at any adjournments
or postponements of the meeting. The proxy is further authorized to vote, in her discretion, upon other such business as may come
before the Annual Meeting, or any adjournments or postponements of the meeting.
YOUR SHARES WILL BE
VOTED “FOR” THE ELECTION OF THE NOMINEES FOR DIRECTOR, “FOR” THE ONE YEAR OPTION FOR ITEM 3, AND “FOR”
ITEMS 2 AND 4, UNLESS OTHERWISE INDICATED.
PLEASE SIGN, DATE
AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
PLEASE DO NOT RETURN
THE PROXY CARD IF YOU ARE VOTING ELECTRONICALLY.
(Continued, and to be marked, dated
and signed on the other side)
YOUR
VOTE IS IMPORTANT. PLEASE VOTE TODAY.
Vote by Internet– QUICK ♦
♦ ♦ EASY
IMMEDIATE – 24 Hours a Day, 7
Days a Week or by Mail
SUMMER
INFANT, INC.
|
|
Your Internet vote authorizes the
named proxies to vote your shares in the same manner as if you marked, signed and returned your proxy card. Votes submitted
electronically over the Internet must be received by 11:59 p.m., Eastern Time, on September 8, 2020.
|
|
|
|
|
|
|
|
|
INTERNET/MOBILE –
www.cstproxyvote.com
|
|
|
|
|
|
|
|
Use the Internet to vote your proxy. Have your
proxy card available when you access the above website. Follow the prompts to vote your shares.
|
|
|
|
|
|
|
|
|
|
PLEASE
DO NOT RETURN THE PROXY CARD IF YOU ARE VOTING ELECTRONICALLY.
|
|
|
|
|
|
|
|
MAIL – Mark, sign and date your
proxy card and return it in the postage-paid envelope provided.
|
▲
FOLD HERE • DO NOT SEPARATE • INSERT IN ENVELOPE PROVIDED ▲
Please
mark your votes like this x
THIS PROXY IS SOLICITED
ON BEHALF OF THE BOARD OF DIRECTORS
1.
|
Election of Directors. To elect five director nominees, each
to serve for a one-year term expiring at the 2021 annual meeting of stockholders, and until their
respective successors are duly elected and qualified:
|
(1) Evelyn D’An □ FOR □ AGAINST □
ABSTAIN
(2) Robin Marino □ FOR □ AGAINST □
ABSTAIN
(3) Alan Mustacchi □ FOR □ AGAINST □
ABSTAIN
(4) Andrew Train □ FOR □ AGAINST □
ABSTAIN
(5) Stephen J. Zelkowicz □ FOR □ AGAINST □
ABSTAIN
2.
|
Advisory vote to approve named executive officer compensation for 2019.
|
p
FOR
p
AGAINST
p
ABSTAIN
|
3.
|
Advisory vote to approve the frequency of holding future advisory
votes on named executive officer compensation.
|
□
ONE YEAR □ TWO YEARS □ THREE YEARS □ ABSTAIN
|
4.
|
Ratification of Auditors. To ratify
the selection of RSM US LLP as independent registered public accounting firm for the
Company for the fiscal year ending January 2, 2021.
|
p
FOR
p
AGAINST
p
ABSTAIN
In their discretion, the proxy holders
are authorized to vote upon such other matters as may properly come before the Annual Meeting or any adjournments or postponements
thereof.
Signature
|
|
Signature, if held jointly
|
|
Date
|
|
,
|
2020
|
NOTE: Please sign exactly
as your name or names appear on this Proxy. When shares are held jointly, each holder should sign. When signing as executor, administrator,
attorney, trustee or guardian, please give full title as such. If the signer is a corporation, please sign full corporate name
by duly authorized officer, giving full title as such. If signer is a partnership, please sign in partnership name by authorized
person.
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