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Lightpath Technologies Inc. – ‘DEF 14A’ for 9/21/22

On:  Monday, 9/26/22, at 4:20pm ET   ·   For:  9/21/22   ·   Accession #:  1654954-22-12961   ·   File #:  0-27548

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  As Of               Filer                 Filing    For·On·As Docs:Size             Issuer                      Filing Agent

 9/26/22  Lightpath Technologies Inc.       DEF 14A     9/21/22    1:972K                                   Blueprint/FA

Document/Exhibit                   Description                      Pages   Size 

 1: DEF 14A     Definitive Proxy Statement                          HTML    897K 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

(Rule 14a-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities

Exchange Act of 1934 (Amendment No. )

Filed by the Registrant ☒

Filed by a Party other than the Registrant ☐

Check the appropriate box:

(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)

Payment of Filing Fee (Check the appropriate box):

LightPath Technologies, Inc.

Annual Meeting of Stockholders

November 17, 2022

Notice and Proxy Statement

__________________________________________________________

NOTICE OF VIRTUAL ANNUAL MEETING OF STOCKHOLDERS

To Be Held On Thursday, November 17, 2022

It is our pleasure to invite you to this year’s Annual Meeting of the Stockholders of LightPath Technologies, Inc. (the “Annual Meeting”). Due to the continuing public health impact of the coronavirus (“COVID-19”) pandemic, and out of concern for the health and safety of our stockholders, directors, and members of management, the Annual Meeting will be held on Thursday, November 17, 2022 at 11:00 a.m. EST in a virtual meeting format only. There will be no physical location for stockholders to attend the Annual Meeting. Stockholders will be able to listen, vote, and submit questions, regardless of their physical location, via the internet at http://www.viewproxy.com/LightPath/2022/vm by using the virtual control number included in your notice regarding the availability of proxy materials, proxy card (printed in the box and marked by the arrow) and the instructions that accompanied your proxy materials. If you plan to participate in the virtual Annual Meeting, please see the Instructions for the Virtual Annual Meeting section in the attached Proxy Statement. The purpose of the Annual Meeting is to vote on the following:

You will also have the opportunity to hear what has happened in our business in the past year and to ask questions.

Only stockholders of record at the close of business on September 21, 2022 will be entitled to receive notice of and to vote at the Annual Meeting or any postponement or adjournment thereof. The enclosed Notice and Proxy Statement contain details concerning the foregoing items and any other business to be conducted at the Annual Meeting, as well as information on how to vote your shares. Other detailed information about us and our operations, including our audited financial statements, are included in our fiscal year 2022 Annual Report on Form 10-K (the “Annual Report”), a copy of which is enclosed. We urge you to read and consider these documents carefully.

Your vote is very important. Whether or not you expect to participate in the Annual Meeting, we urge you to cast your vote and submit your proxy in advance of the Annual Meeting. Unless you plan to vote at the Annual Meeting, your vote must be received by 11:59 pm EST, on November 16, 2022. You can vote by internet, telephone, or mail as follows:

If you have any questions or require any assistance with voting your shares, please contact Albert Miranda at 1-800-472-3486 ext. 362, or amiranda@lightpath.com. Thank you for your continued support of LightPath Technologies, Inc.

2603 Challenger Tech Court, Suite 100 * Orlando, Florida USA 32826 * 407-382-4003

PROXY STATEMENT

FOR ANNUAL MEETING OF STOCKHOLDERS

LIGHTPATH TECHNOLOGIES, INC.

PROXY STATEMENT

FOR ANNUAL MEETING OF STOCKHOLDERS

To be held at 11:00 a.m. EST on November 17, 2022

This Proxy Statement, and the enclosed proxy card, is solicited by the Board of Directors (the “Board”) of LightPath Technologies, Inc., a Delaware corporation, for use at the Annual Meeting of Stockholders (the “Annual Meeting”) to be held Thursday, November 17, 2022 at 11:00 a.m. EST, or at any adjournments or postponements thereof, for the purposes set forth in the accompanying Notice of Annual Meeting of Stockholders. The Annual Meeting will be a completely virtual meeting of stockholders conducted via live audio webcast to enable our stockholders to participate from anywhere. You will be able to virtually attend the Annual Meeting by registering at http://viewproxy.com/LightPath/2022/vm by 11:59 p.m. EST on November 15, 2022.

References in this Proxy Statement to “LightPath,” “we,” “us,” “our,” or the “Company” refers to LightPath Technologies, Inc.

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE MEETING OF STOCKHOLDERS TO BE HELD ON NOVEMBER 17, 2022.

This Proxy Statement, the enclosed proxy card, and the Annual Report for the fiscal year ended on June 30, 2022 are all available on our website at www.lightpath.com. With respect to the Annual Meeting and all of our future stockholder meetings, please contact Albert Miranda at 1-800-472-3486 ext. 362, or amiranda@lightpath.com, to request a copy of the proxy statement, annual report, or proxy card, or to obtain information regarding such meeting. A list of stockholders entitled to vote at the Annual Meeting will be available for inspection at our principal executive offices for at least ten days prior to the Annual Meeting and at the Annual Meeting. A stockholder may examine the list for any legally valid purpose related to the Annual Meeting.

The information provided in the “question and answer” format below is for your convenience only and is merely a summary of the information contained in this Proxy Statement. You should read this entire Proxy Statement carefully. Information contained on or that can be accessed through our website is not intended to be incorporated by reference into this Proxy Statement.

QUESTIONS AND ANSWERS

What is a proxy?

A proxy is your legal designation of another person to vote the stock you own and are entitled to vote. The person you designate is your “proxy,” and, by submitting a proxy card, you give the proxy the authority to vote your shares. The proxy card that is solicited by the Board of Directors designates Louis Leeburg, Chair of the Board, as proxy for the Annual Meeting.

Why am I receiving these materials?

You are receiving this Proxy Statement and the enclosed proxy card because our Board is soliciting your proxy to vote at the Annual Meeting for the purposes set forth herein. This Proxy Statement provides you with information on the matters to be voted on at the Annual Meeting as well as instructions on how to vote.

We intend to mail this Proxy Statement and accompanying proxy card on or about October 6, 2022 to all stockholders of record entitled to vote at the Annual Meeting.

Who can vote at the Annual Meeting?

You can vote if, as of the close of business on September 21, 2022 (the “Record Date”), you were a stockholder of record of the Company’s Class A common stock, par value $0.01 per share (the “Class A common stock”), our only class of common stock issued and outstanding. On the Record Date, there were 27,071,929 shares of Class A common stock issued and outstanding.

Stockholder of Record: Shares Registered in Your Name

If, on the Record Date, your shares were registered directly in your name with our transfer agent, Computershare Trust Company, N.A., then you are a stockholder of record. As a stockholder of record, you may vote virtually at the Annual Meeting or vote by proxy. Whether or not you plan to participate in the virtual Annual Meeting, we urge you to vote by written proxy, telephone, or the Internet prior to the Annual Meeting to ensure your vote is counted. Even if you vote by proxy, you may still vote at the virtual Annual Meeting. In order to virtually attend the Annual Meeting, you must register at http://viewproxy.com/LightPath/2022/vm by 11:59 p.m. EST on November 15, 2022, using the virtual control number included on your proxy card.

Beneficial Owner: Shares Registered in the Name of a Broker or Bank

If on the Record Date, your shares were held in an account at a brokerage firm, bank, dealer, or other similar organization, then you are the beneficial owner of shares held in “street name” and these proxy materials are being forwarded to you by that organization. The organization holding your account is considered the stockholder of record for purposes of voting at the Annual Meeting. As a beneficial owner, you have the right to direct your broker or other agent on how to vote the shares in your account. If you do not direct your broker how to vote your shares, the broker will be entitled to vote the shares with respect to “discretionary” items but will not be permitted to vote the shares with respect to “non-discretionary” items (resulting in a “broker non-vote”). The ratification of the appointment of our independent registered public accounting firm under Proposal 4 is a “discretionary” matter. The election of directors under Proposal 1, the amendment to the Plan under Proposal 2, and the advisory say-on-pay vote under Proposal 3 are “non-discretionary” items.

You are also invited to virtually participate in the Annual Meeting. However, since you are not the stockholder of record, you must provide a legal proxy from your bank or broker during registration and you will be assigned a virtual control number in order to vote your shares during the Annual Meeting. If you are unable to obtain a legal proxy to vote your shares, you will still be able to attend the Annual Meeting (but will not be able to vote your shares during the meeting) so long as you demonstrate proof of stock ownership. Instructions on how to connect and participate via the Internet, including how to demonstrate proof of stock ownership, are posted at http://www.viewproxy.com/LightPath/2022.

How many votes do I have?

On each matter to be voted upon, you have one vote for each share of Class A common stock you owned as of the Record Date.

What am I voting on?

The following matters are scheduled for the Annual Meeting: (i) the election of two Class I Directors to our Board; (ii) the approval of an amendment to the Plan to increase the shares available for future grants under the Plan by 2,100,000 shares; (iii) an advisory say-on-pay vote; and (iv) the ratification of the selection of MSL as our independent registered public accounting firm. A vote may also be held on any other business as may properly come before the Annual Meeting or any postponement or adjournment thereof, although there is no other business anticipated to come before the Annual Meeting.

What are my voting choices for each of the items to be voted on at the Annual Meeting?

Instructions for the Virtual Annual Meeting

Participating in the Virtual Annual Meeting

Due to the continuing public health impact of the coronavirus (“COVID-19”) pandemic, the Annual Meeting will be virtual. There will be no physical meeting location. A virtual meeting format offers the same participation opportunities as those opportunities available to stockholders at in-person meetings. Stockholders will be able to listen, vote, and submit questions. To participate in the Annual Meeting, you must register at http://www.viewproxy.com/LightPath/2022/vm by 11:59 p.m. EST on November 15, 2022 using your desktop or mobile device and entering the virtual control number on your proxy card. If you hold your shares beneficially through a bank or broker, you must provide a legal proxy from your bank or broker during registration and you will be assigned a virtual control number in order to vote your shares during the Annual Meeting. If you are unable to obtain a legal proxy to vote your shares, you will still be able to attend the Annual Meeting (but will not be able to vote your shares during the meeting) so long as you demonstrate proof of stock ownership. Instructions on how to connect and participate via the Internet, including how to demonstrate proof of stock ownership, are posted at http://www.viewproxy.com/LightPath/2022.

On the day of the Annual Meeting, if you have properly registered, you may enter the Annual Meeting by logging in using the event password you received via email in your registration confirmation at http://www.viewproxy.com/LightPath/2022/vm.

The Annual Meeting will begin promptly at 11:00 a.m. EST on November 17, 2022. We encourage you to access the virtual meeting website prior to the start time. Online check-in will begin 30 minutes prior to the start of the Annual Meeting. You should allow ample time to ensure your ability to access the meeting.

We will hold our question and answer session with management immediately following the conclusion of the Annual Meeting. You may submit a question in advance of the Annual Meeting during the registration process by visiting http://viewproxy.com/LightPath/2022. You may also submit a question at any time during the Annual Meeting by typing the questions into the questions box on the screen once the virtual meeting starts. The Chair of the Annual Meeting has broad authority to conduct the meeting in an orderly manner.

What if I have technical difficulties or trouble accessing the virtual Annual Meeting website during the check-in time or during the Annual Meeting?

Technicians will be available to assist you if you experience technical difficulties accessing the virtual meeting website. If you encounter any difficulties accessing the virtual meeting during the check-in or meeting time, send an email to VirtualMeeting@viewproxy.com or call (866) 612-8937 for assistance.

How do I vote?

Stockholder of Record: Shares Registered in Your Name

If you are a stockholder of record, you may vote using the following methods:

Whether or not you plan to participate in the virtual Annual Meeting, we urge you to vote by proxy to ensure your vote is counted. You may still participate in the virtual Annual Meeting and vote electronically if you have already voted by proxy.

Beneficial Owner: Shares Registered in the Name of Broker or Bank

If you are a beneficial owner of shares registered in the name of your broker, bank, or other agent, you can vote as follows:

What if I am a stockholder of record and return a proxy card but do not make specific choices?

You should specify your choice for each matter on the proxy card. If you return a signed and dated proxy card without marking any voting selections, your shares will be voted as follows:

If any other matter is properly presented at the meeting, your proxy (the individual named on your proxy card) will vote your shares using his or her best judgment.

What if I am a beneficial owner and do not give voting instructions to my broker?

If you fail to complete a proxy card or provide your broker with voting instructions at least ten days before the meeting, your broker will be unable to vote on the non-discretionary matters. Your broker may use his or her discretion to cast a vote on any other routine or discretionary matter.

Who is paying for this proxy solicitation?

We will pay for the entire cost of soliciting proxies. In addition to these mailed proxy materials, our directors, officers, and employees may also solicit proxies by mail, in person, by telephone, or by other means of communication. Directors, officers, and employees will not be paid any additional compensation for soliciting proxies. We will also reimburse brokerage firms, banks, and other agents for the cost of forwarding proxy materials to beneficial owners.

What does it mean if I receive more than one proxy card?

If you receive more than one proxy card, your shares are registered in more than one name or are registered in different accounts. Please complete, sign, and return each proxy card to ensure that all of your shares are voted.

What is “householding”?

The Securities and Exchange Commission (the “SEC”) has adopted rules that permit companies and intermediaries such as brokers to satisfy the delivery requirements for proxy statements with respect to two or more security holders sharing the same address by delivering a single proxy statement addressed to those security holders. This process, which is commonly referred to as “householding,” potentially means convenience for security holders and cost savings for companies.

A number of brokers with account holders who are LightPath stockholders will be “householding” our proxy materials. A single proxy statement will be delivered to multiple stockholders sharing an address unless contrary instructions have been received from the affected stockholders. Once you have received notice from your broker or us that they will be “householding” communications to your address, “householding” will continue until you are notified otherwise or until you revoke your consent. If, at any time, you no longer wish to participate in “householding” and would prefer to receive a separate proxy statement, please notify your broker and also notify us by sending your written request to Investor Relations, LightPath Technologies, Inc., 2603 Challenger Tech Court, Suite 100, Orlando, Florida USA 32826 or by calling Investor Relations at 407-382-4003, ext. 362. Stockholders who currently receive multiple copies of the proxy statement at their address and would like to request “householding” of their communications should also contact their broker and notify us in writing or by telephone.

Can I revoke or change my vote after submitting my proxy?

Yes. You can revoke your proxy at any time before the final vote at the Annual Meeting. You may revoke your proxy by:

Who will count votes?

Votes will be counted by the inspector of elections appointed for the Annual Meeting. The inspector of elections will also determine the number of shares outstanding, the voting power of each, the number of shares represented at the Annual Meeting, the existence of a quorum, and whether or not the proxies and ballots are valid and effective.

What is the quorum requirement?

A majority of the issued and outstanding shares of Class A common stock entitled to vote must be present at the Annual Meeting (in person or represented by proxy) in order for us to hold the Annual Meeting and conduct business. This is called a quorum. On the Record Date, there were 27,071,929 outstanding shares of Class A common stock (including all restricted stock awards at such date) entitled to vote. Thus, 13,535,965 shares must be present at the Annual Meeting (in person or represented by proxy) to have a quorum.

Your shares will be counted towards the quorum only if you submit a valid proxy or vote electronically at the Annual Meeting. Abstentions and broker non-votes will be counted towards the quorum requirement. If there is no quorum, a majority of the shares entitled to vote and present at the Annual Meeting (virtually or represented by proxy) may adjourn the meeting to another date.

How can I find out the results of the voting at the Annual Meeting?

We will announce preliminary voting results at the Annual Meeting. We will report the final voting results in a Current Report on Form 8-K filed with the SEC within four business days following such results becoming final.

When are stockholder proposals for the fiscal year 2024 Annual Meeting due?

Stockholders interested in presenting a proposal to be considered for inclusion in next year’s proxy statement and form of proxy may do so by following the procedures prescribed in Rule 14a-8 under the Securities Exchange Act of 1934, as amended (the “Securities Exchange Act”), and our Bylaws. To be considered for inclusion, stockholder proposals must be submitted in writing to the Corporate Secretary, LightPath Technologies, Inc., 2603 Challenger Tech Court, Suite 100, Orlando, Florida USA 32826 before June 8, 2023, which is 120 calendar days prior to the anniversary of the mailing date of this Proxy Statement, and must be in compliance with all applicable laws and regulations.

If a stockholder wishes to present a proposal at the fiscal year 2024 Annual Meeting, but the proposal is not intended to be included in the Company’s proxy statement relating to the meeting, or nominate a director for election at the fiscal year 2024 Annual Meeting, the stockholder must give advance notice to the Company prior to the deadline for such meeting determined in accordance with our Bylaws (the “Bylaw Deadline”). Under our Bylaws, in order for a proposal to be timely, it must be received by us no earlier than 120 days prior to the anniversary of the fiscal year 2023 Annual Meeting, or July 20, 2023, and no later than 90 days prior to the anniversary date of the fiscal year 2023 Annual Meeting, or August 19, 2023. If a stockholder gives notice of such a proposal after the Bylaw Deadline, the stockholder will not be permitted to present the proposal to the stockholders for a vote at the meeting or nominate a director for election at the meeting. Finally, the deadline for providing notice to the Company under Rule 14a-19, the SEC's universal proxy rule, of a stockholder's intent to solicit proxies in support of nominees submitted under the Company's advance notice bylaws for our fiscal year 2024 Annual Meeting is August 19, 2023.

If a stockholder fails to meet these deadlines or fails to satisfy the requirements of SEC Rule 14a-4, the persons named as proxies will be allowed to use their discretionary voting authority to vote on any such proposal or nomination as they determine appropriate if and when the matter is raised at the fiscal year 2024 Annual Meeting.

How do I get a copy of the exhibits filed with our Annual Report?

A copy of our Annual Report for the fiscal year ended June 30, 2022, and consolidated financial statements, were provided to you with this Proxy Statement. We will provide copies of the exhibits filed with our Annual Report upon written request if you are a stockholder as of the Record Date. Requests for such copies should be directed to Investor Relations at 2603 Challenger Tech Court, Suite 100, Orlando, Florida USA 32826. In addition, copies of all of our electronically filed exhibits may be reviewed and printed from the SEC website at http://www.sec.gov.

PROPOSAL 1 – ELECTION OF DIRECTORS

What Am I Voting On?

Stockholders are being asked to elect two Class I Directors: Dr. Joseph Menaker and Ms. Darcie Peck, to serve for a term ending at the third successive annual meeting of stockholders following this Annual Meeting, or until their successors have been duly elected and qualified. Dr. Menaker and Ms. Peck are current members of the Board.

If any of the nominees becomes unable or unwilling to serve as a director before the Annual Meeting, an event which is not presently anticipated, the individual named as proxy on the proxy card may exercise discretionary authority to vote for substitute nominees proposed by the Board, or, if no substitute is selected by the Board prior to or at the Annual Meeting, for a motion to reduce the present membership of the Board to the number of nominees available.

Voting Recommendation

FOR the election of each Class I Director nominee.

Board and Committee Composition

Currently, we have eight directors with each director serving until his or her successor is elected and qualified. Our Board is divided into three classes, denoted as Class I, Class II, and Class III, serving staggered three-year terms with one class elected at the annual meeting of stockholders. The Class III Directors’ term expires at the annual meeting of stockholders proposed to be held in fiscal year 2024. The Class II Directors’ term expires at the annual meeting of stockholders proposed to be held in fiscal year 2025. The Class I Directors’ term expires at this Annual Meeting.

The table below lists each current director, each such director’s committee memberships as of June 30, 2022, the Chair of each Board committee, and each such director’s class.

Biographical and Related Information – Director Nominees, Continuing Directors, and Executive Officers

The following is an overview of the biographical information for each of our director nominees, continuing directors, and executive officers, including their age, the year they became directors or officers, their principal occupations or employment for at least the past five years, and certain of their other directorships.

Nominees for Class I Directors

Class II Directors

Class III Directors

Executive Officers Who Do Not Serve as Directors

Required Vote of Stockholders

The nominees who receive a plurality of the votes of the shares present in person or by proxy and entitled to vote at the Annual Meeting, will be elected. Abstentions, withheld votes, and broker non-votes are not considered votes cast and will have no effect on the election of nominees.

CORPORATE GOVERNANCE

Meetings of the Board and its Committees

The Board has an Audit Committee (the “Audit Committee”), a Compensation Committee (the “Compensation Committee”), a Nominating and Corporate Governance Committee (the “Nominating Committee”), and a Finance Committee (the “Finance Committee”). The following discussions are based on the Board membership and committee composition as of the end of fiscal year 2022.

The entire Board met ten times, including telephonic meetings, during fiscal year 2022. Each director attended at least 75% of the total number of meetings of the Board and committees on which such director served that were held during fiscal year 2022. All of the then-elected directors attended the fiscal year 2022 Annual Meeting of Stockholders on November 11, 2021.

It is our policy that all of our directors are required to make a concerted and conscientious effort to attend our annual stockholders’ meeting in each year during which that director serves as a member of the Board.

Audit Committee. The Audit Committee, which as of June 30, 2022, consisted of Craig Dunham (Chair), Darcie Peck and Dr. Joseph Menaker, met five times during fiscal year 2022. The meetings included discussions with management and with our independent registered public accounting firm to discuss our interim and annual financial statements and our annual report, and the effectiveness of our financial and accounting functions and organization. 

The Audit Committee acts pursuant to a written charter adopted by the Board, a copy of which is available on our website at www.lightpath.com under the “Investors” tab. The Audit Committee’s responsibilities include, among others, engaging and terminating our independent registered public accounting firm, oversight of the independent registered public accounting firm, and determining the compensation for their engagement(s). The Board has determined that the Audit Committee is comprised entirely of independent members as defined under applicable listing standards set out by the SEC and The Nasdaq Capital Market (the “NCM”). The Board has also determined that all three members of the Audit Committee are “audit committee financial experts” as defined by SEC rules and qualify as independent in accordance with the NCM rules. Their respective business experience that qualifies each director to be determined as “audit committee financial expert” is described above.

Compensation Committee. The Compensation Committee, which as of June 30, 2022, consisted of Louis Leeburg (Chair), Darcie Peck, M. Scott Faris and S. Eric Creviston, met twice during fiscal year 2022. The Compensation Committee acts pursuant to a written charter adopted by the Board, a copy of which is available on our website at www.lightpath.com under the “Investors” tab.

The Compensation Committee is responsible for establishing, implementing, and continually monitoring our compensation policies and philosophy, including administering our 2018 Omnibus Incentive Plan (the “Incentive Plan”), pursuant to which incentive awards, including stock options, are granted to our directors, executive officers, and key employees. The Compensation Committee is responsible for determining executive compensation, including approving recommendations regarding equity awards to all of our executive officers. However, the Compensation Committee does rely on the annual reviews made by the Chief Executive Officer with respect to the performance of each of our other executive officers. The conclusions reached, and recommendations made based on these reviews, including with respect to salary adjustments and annual award amounts, are presented to the Compensation Committee. The Compensation Committee can exercise its discretion in modifying any recommended adjustments or awards to executive officers. In the case of the Chief Executive Officer, compensation is determined solely based on the review conducted by the Compensation Committee.

The Compensation Committee also annually reviews director compensation to ensure non-employee directors are adequately compensated for the time expended in fulfilling their duties to us, as well as the skill-level required by us of members of the Board. After the Compensation Committee completes their annual review, they make recommendations to the Board regarding director compensation.

The Compensation Committee regularly engages compensation consultants to assist with the Compensation Committee’s responsibilities related to our executive compensation program and the director compensation program. The Compensation Committee plans to engage a consultant every two years to review and make recommendations on the Company’s executive compensation plans.

At the beginning of fiscal year 2021, Compensation Strategies, Inc. (“Compensation Strategies”) was engaged to recommend (i) a structure for a long-term incentive program, (ii) metrics for the short-term incentive program, and (iii) provide guidance for placing parameters around calculating bonus payments when performance goals are exceeded and when bonuses are paid on a prorated basis. Compensation Strategies used a peer group it established in fiscal year 2020, which was based on peer companies within the optical business industry with revenues of a minimum of $50,000,000 and market capitalization of between $75,000,000 and $150,000,000 comprised of the following twenty-one companies: Photon Control, Inc., RADCOM Ltd., LRAD Corporation, Lantronix, Inc., Wireless Telecom Group, Inc., Frequency Electronics, Inc., GSI Technology, Inc., RF Industries, Ltd., CyberOptics Corporation, inTEST Corporation, Luna Innovations Incorporated, Perceptron, Inc., EMCORE Corporation, Mesa Laboratories, Inc., Ultralife Corporation, Intevac, Inc., IEC Electronics Corp., Gooch & Housego, PLC, nLIGHT, Inc., Applied Optoelectronics, Inc., and EXPO Inc.

In early fiscal year 2022, Compensation Strategies was engaged to provide input on the proposed amendment to the Incentive Plan. In June 2022, Compensation Strategies was engaged to provide benchmarking on Board size and compensation, as well as executive salaries.

The Compensation Committee evaluated the independence of Compensation Strategies at the time of engagement and determined that the consultants were independent pursuant to the factors set forth in Section 10C-1 of the Securities Exchange Act, as amended.

Finance Committee. The Finance Committee, which as of June 30, 2022, consisted of Sohail Khan (Chair), Louis Leeburg, Dr. Joseph Menaker, and S. Eric Creviston met once during fiscal year 2022. The Finance Committee acts pursuant to a written charter adopted by the Board, a copy of which is available on our website at www.lightpath.com under the “Investors” tab. The Finance Committee oversees our financial management, including overseeing our strategic and transactional planning and activities, global financing, capital structure objectives and plans, insurance programs, tax structure, and investment program and policies.

Nominating and Corporate Governance Committee. The Nominating Committee, which as of June 30, 2022, consisted of Louis Leeburg (Chair), Sohail Khan, Craig Dunham, and M. Scott Faris, did not meet during fiscal year 2022. The Nominating Committee acts pursuant to a written charter adopted by the Board, a copy of which is available on our website at www.lightpath.com under the “Investors” tab. The Nominating Committee carries out the responsibilities delegated by the Board relating to our director nominations process and procedures, and developing, maintaining, and monitoring compliance with the Company’s corporate governance policies, guidelines, and activities. During fiscal year 2021, the Nominating Committee established retirement guidelines for our executive officers and directors.

Nominations Process and Criteria

The Nominating Committee determines the qualifications, qualities, skills, and other expertise required to be a director and to develop, and recommend to the Board for its approval, criteria to be considered in selecting nominees for director. Further, the gender, racial, experience, and skills diversity of the Board is also a factor in our director recruitment process. However, the Nominating Committee and the Board believe that at this time, it is unnecessary to adopt criteria for the selection of directors. Instead, the Nominating Committee and the Board believes that the desirable background of a new individual member of the Board may change over time and that a thoughtful, thorough selection process is more important than adopting criteria for directors. See Appendix A for the Board diversity disclosure required by Nasdaq Rule 5606.

They will also identify, recruit, and screen candidates for the Board, consistent with criteria approved by the Board. The Nominating Committee and Board is fully open to utilizing whatever methodology is efficient in identifying new, qualified directors when needed, including industry contacts of our directors or professional search firms. The Nominating Committee also considers any director candidates recommended by our stockholders pursuant to the procedures described in this Proxy Statement and any nominations of director candidates validly made by stockholders in accordance with applicable laws, rules, and regulations, and the provisions of our charter documents.

There were no fees paid or due to third parties in fiscal year 2022 to identify or evaluate, or to assist in evaluating or identifying potential director nominees.

Any stockholder wishing to propose that a person be nominated for or appointed to the Board may submit such a proposal, according to the procedure described in the stockholder proposal section on page 11 of this Proxy Statement, to:

Corporate Secretary

LightPath Technologies, Inc.

2603 Challenger Tech Court, Suite 100

Orlando, Florida 32826

The Corporate Secretary will promptly forward any such correspondence to the Chair of the Nominating Committee for review and consideration by the Nominating Committee in accordance with the criteria described above.

Director Independence

In accordance with the NCM and SEC rules, the Board affirmatively determines the independence of each director and director nominee in accordance with guidelines it has adopted, which include all elements of independence set forth in the NCM listing standards. Based on these standards, the Board has determined that as of the end of fiscal year 2022, each of the following non-employee directors was independent and has no relationship with us, except as one of our directors and stockholders:

Based on these standards, the Board determined Shmuel Rubin, currently a Class III Director, is not independent.

All of the members of the Audit, Nominating, and Compensation Committees are also independent.

The Board approved an Amended and Restated Code of Business Conduct and Ethics (the “Code”) on April 28, 2016. The Code applies to all of our employees, officers, and directors, including our principal executive officers, principal financial officers, and principal accounting officer or controller, or persons performing similar functions. The Board also approved an Amended and Restated Code of Business Conduct and Ethics for Senior Financial Officers (the “Senior Financial Officer Code”), which applies to our Chief Executive Officer, Chief Financial Officer, principal accounting officer, controller, accounting manager, and persons performing similar functions. Copies of the Code and the Senior Financial Officer Code are available on our website at www.lightpath.com, under the “Investors” tab, or may be obtained free of charge by writing to: Corporate Secretary, LightPath Technologies, Inc., 2603 Challenger Tech Court, Suite 100, Orlando, Florida 32826.

Related Party Transactions

When we are contemplating entering into any transaction in which any executive officer, director, director nominee, or any family member of the foregoing would have any direct or indirect interest, regardless of the amount involved, the terms of such transaction have to be presented to the Audit Committee (other than any interested director) for approval or disapproval. Neither the Audit Committee nor the Board have adopted a written policy for reviewing related party transactions but when presented with such transaction, the transaction is discussed by the Audit Committee and documented in its meeting minutes.

The Code also requires our employees, officers, and directors to provide prompt and full disclosure of all potential conflicts of interest to the appropriate person. These conflicts of interest may be specific to the individual or may extend to his or her family members. Any officer who has a conflict of interest with respect to any matter is required to disclose the matter to our Chief Executive Officer or, in the case of the Chief Executive Officer, to the Chair of the Audit Committee. All other employees are required to make prompt and full disclosure of any conflict of interest to his or her immediate supervisor, who will then make prompt and full disclosure to our Chief Executive Officer. Directors are required to disclose any conflict of interests to the Chair of the Audit Committee and are prohibited from voting on any matter(s) in which they have a conflict of interest. In addition, directors and executive officers are required to disclose in an annual questionnaire, any current or proposed conflict of interests (including related party transactions).

From the period beginning July 1, 2021 and ending September 26, 2022, there were no current or proposed material related party transactions.

Board of Directors Leadership Structure and Role in Risk Oversight

Board Leadership Structure

Our Board has chosen to separate the positions of Chair and Chief Executive Officer, with Mr. Louis Leeburg serving as Chair, effective May 11, 2021, and Mr. Shmuel Rubin serving as President and Chief Executive Officer. As President and Chief Executive Officer, Mr. Rubin is responsible for our day-to-day leadership and performance, with the Board being responsible for setting our strategic direction, as well as overseeing and advising our management. The Board believes that the current independent leadership of the Board by our non-executive Chair enhances the effectiveness of its oversight of management and provides a perspective that is separate and distinct from that of management.

Role of the Board in Risk Oversight

Our Board is responsible for the oversight of our operational risk management process. Our Board has delegated authority for addressing certain risks, and accessing the steps management has taken to monitor, control, and report such risks, to our Audit and Finance Committees. Such risks include risks relating to execution of our growth strategy, the effects of the contracting in the global economy and general financial condition and outlook on customer purchases, component inventory supply, or ability to expand our partner network, communication with investors, certain actions of our competitors, the protection of our intellectual property, sufficiency of our capital, inventory investment and risk of obsolescence, security of information systems and data, integration of new information systems, credit risk, product liability, and costs of reliance on external advisors. The Audit or Finance Committee, as applicable, then reports such risks as appropriate to the Board. The Board initiates discussions with appropriate members of our senior management if, after discussion of such risks, the Board determines that such risks raise questions or concerns about the status of operational risks then facing us.

Our Board relies on our Compensation Committee to address significant risk exposures we face with respect to compensation, including risks relating to retention of key employees, protection of partner relationships, management succession, and benefit costs, and, when appropriate, reports these risks to the full Board.

Stockholder Communications with the Board

Stockholders and other parties interested in communicating directly with the Board, a committee of the Board, or any individual director, may do so by sending a written communication to the attention of the intended recipient(s) in care of the Corporate Secretary, LightPath Technologies, Inc., 2603 Challenger Tech Court, Suite 100, Orlando, Florida USA 32826. The Corporate Secretary will forward all appropriate communications.

SECURITY OWNERSHIP OF

CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth, as of September 21, 2022, the number and percentage of outstanding shares of our Class A common stock, owned by: (i) each of our directors (which includes all nominees), (ii) each of the named executive officers, (iii) our directors and executive officers as a group, and (iv) each person known by us to be the beneficial owner of more than 5% of our outstanding Class A common stock. The number of shares of Class A common stock outstanding as of September 21, 2022 was 27,071,929.

The number of shares beneficially owned by each director, named executive officer, and greater than 5% beneficial owner is determined under SEC rules, and the information is not necessarily indicative of the beneficial ownership for any other purpose. Under such rules, beneficial ownership includes any shares to which the individual has the sole or shared voting power or investment power and also any shares which the individual has the right to acquire within 60 days of September 21, 2022, through the exercise of any stock option or other right to purchase, such as a warrant. Unless otherwise indicated, each person has sole investment and voting power (or shares such power with his or her spouse) with respect to the shares set forth in the following table. In certain instances, the number of shares listed may include, in addition to shares owned directly, shares held by the spouse or children of the person, or by a trust or estate of which the person is a trustee or an executor or in which the person may have a beneficial interest. The table that follows is based upon information supplied in a questionnaire completed by each named executive officer and director and stockholders beneficially owning greater than 5% of our Class A common stock.

*Less than 1%

Notes:

Change-in-Control Arrangements

We do not know of any arrangements, which may, at a subsequent date, result in a change in control.

Delinquent Section 16(a) Reports

Section 16(a) of the Exchange Act, requires that our directors and executive officers, and persons who beneficially own more than 10% of our common stock (referred to herein as the “Reporting Persons”) file with the SEC various reports as to their ownership of and activities relating to our Class A common stock. To the best of our knowledge, all Reporting Persons complied on a timely basis with all filing requirements applicable to them with respect to transactions during our most recent fiscal year, except for the Form 3 that was filed on July 1, 2021 reporting the initial ownership of Steven Creviston, who was elected as a director on March 4, 2021, and the Form 4 that was filed on July 1, 2021 reporting the restricted stock unit grant to Steven Creviston on June 25, 2021 . In making these statements, we have relied solely on our review of copies of the reports furnished to us, representations that no other reports were required, and other knowledge relating to transactions involving the Reporting Persons.

EXECUTIVE COMPENSATION

Named Executive Officers

During fiscal year 2022, our named executive officers were as follows:

Compensation Philosophy and Objectives

Our compensation policy is designed to attract and retain qualified key executive officers critical to our achievement of reaching and maintaining profitability and positive cash flow, and subsequently our growth and long-term success. To attract, retain, and motivate the executive officers to accomplish our business strategy, the Compensation Committee establishes our executive compensation policies and oversees our executive compensation practices.

The Compensation Committee believes that the most effective executive compensation program is one that is designed to recognize the achievement of our specific short-term and long-term goals, and which aligns executives’ interests with those of the stockholders by rewarding performance that meets or exceeds established goals, with the ultimate objective of improving stockholder value.

It is the objective of the Compensation Committee to have a portion of each named executive officer’s compensation contingent upon our performance as well as upon the individual’s personal performance. Accordingly, each named executive officer’s compensation package is comprised of two elements: (i) base salary, which reflects individual performance and expertise and (ii) short-term and long-term incentive awards, which are tied to the achievement of certain performance goals that the Compensation Committee establishes from time to time. The Compensation Committee has structured compensation of our named executive officers to incentivize achievement of our business goals and reward our named executive officers for achieving such goals.

The Compensation Committee also evaluates our compensation program to ensure that we maintain the ability to attract and retain superior employees in key positions and that compensation provided to key employees remains competitive relative to the compensation paid to similarly situated executive officers.

In accordance with the advisory “say-on-frequency” vote of our stockholders at the fiscal year 2017 annual meeting of stockholders, held in January 2017, and as approved by the Board, we will include an annual advisory “say-on-pay” vote in our proxy statement, including this Proxy Statement for the fiscal year 2023 Annual Meeting. Our next required stockholder advisory “say-on-frequency” vote will occur at our fiscal year 2023 Annual Stockholders’ Meeting. The most recent “say-on-pay” advisory vote occurred at the fiscal year 2022 Annual Meeting, at which our stockholders approved, on an advisory basis, the compensation of our named executive officers.

Setting Executive Compensation

In making compensation decisions, the Compensation Committee relies on the following:

There is no pre-established policy or target for the allocation between either cash and non-cash or short-term and long-term incentive compensation. Rather, the Compensation Committee annually reviews information to determine the appropriate level and mix of incentive compensation when determining our executive compensation plan. Based on these factors, the Compensation Committee makes compensation decisions, including salary adjustments, annual short-term cash incentive awards, and long-term equity incentive awards for our named executive officers.

Retirement Benefits

We offer a qualified 401(k) defined contribution plan. The ability of named executive officers to participate fully in this plan is limited under the requirements of the Internal Revenue Code of 1986, as amended, and the Employment Retirement Income Security Act of 1974, as amended. We currently match 100% of the first 2% of employee contributions.

Executive Compensation and Risk

Although a substantial portion of the compensation paid to our named executive officers is performance-based, we believe our executive compensation programs do not encourage excessive and unnecessary risk-taking by our named executive officers because these programs are designed to encourage our named executive officers to remain focused on both our short-term and long-term operation and financial goals. We achieve this balance through a combination of elements in our overall compensation plans, including: (i) elements that reward different aspects of short-term and long-term performance; (ii) incentive compensation that rewards performance on a variety of different measures; and (iii) cash awards and stock option awards, to encourage alignment with the interests of stockholders.

Executive Officer Stock Ownership Requirements

Our Board established certain guidelines requiring that each of our executive officers acquire and maintain a minimum level of ownership of our securities during the period in which he or she is an executive officer. The guidelines set the target ownership level at five times the annual base salary for our Chief Executive Officer and three times the annual base salary for each of our other executive officers, as measured at fiscal year-end. The Board reviews the target ownership levels on an annual basis to determine whether such target ownership levels should be increased.

For purposes of determining ownership levels, all forms of equity and derivative securities, including stock, stock options, restricted stock, and RSUs, count towards satisfaction of the ownership guidelines; however, with respect to any stock option award, only the number of shares equal to (i) the difference between the closing price of the Class A common stock as reported on the NCM at the end of the fiscal year and the exercise price of the stock option multiplied by (ii) the number of shares underlying the stock option, then (iii) divided by the closing price of the Class A common stock as reported on the NCM at the end of the fiscal year, are included for purposes of determining whether the stock ownership target is met. For example, if an officer is awarded a stock option of 100 shares of Class A common stock, with an exercise price of $1.00 per share, and the closing price of the Class A common stock as reported on the NCM on June 30^th is $2.00, the number of shares of Class A common stock included from such stock option award for purposes of meeting the stock ownership target is 50 shares.

The Board may grant waivers of the guidelines in the event of financial hardship or other good cause. Once an executive officer attains his or her required stock ownership level, he or she will remain in compliance with the guidelines despite future changes in the stock price and base salary, as long as the executive officer’s holdings do not decline below the number of shares owned at the time the required stock ownership level was met. Each executive officer will have five years after his or her date of becoming an executive officer to meet the required ownership level.

Our named executive officers did not meet their respective ownership targets as of June 30, 2022. Mr. Rubin has until February 24, 2025 to meet the target, and Mr. Miranda has until May 7, 2026 to meet the target.

(1)    Does not include stock options with an exercise price that exceeds the closing stock price as of June 30, 2022.

Hedging Policy and Pledging of Securities

Pursuant to our Guide for Trading in Securities by Employees, Officers, and Directors, our employees, officers, and directors cannot engage in hedging transactions related to our securities, which includes our Class A common stock. Employees, officers, and directors are also prohibited from holding our securities, which includes our Class A common stock, in a margin account or otherwise pledging our securities as collateral for a loan.

2022 Incentive Program

Our fiscal year 2022 incentive program has two key components: (i) the Short-Term Incentive (“STI”) program, and (ii) the Long-Term Incentive (“LTI”) program. The STI program is comprised of awards based on our achievement of specific fiscal year 2022 financial objectives (the “2022 STI Award”). The LTI program is comprised of (i) an individual RSU award, based on total shareholder return (the “2022 TSR Award”), which is calculated based on the overall change in LPTH stock price per share, as compared to the Russell MicroCap Index, and (ii) retention RSUs that will vest in three equal annual installments (the “2022 Retention RSU Award” and, together with the 2022 LTI TSR Award, the “2022 LTI Awards”).

Our incentive program includes different levels of bonus opportunity based on a participant’s position with the Company. For fiscal year 2022, Mr. Rubin was the only “level one” participant, and Mr. Miranda was a “level two” participant. Bonus opportunities for Mr. Rubin and Mr. Miranda for fiscal year 2022 were calculated by applying designated portions of their respective bonus pool amounts, which were set by the Compensation Committee, to formulas for each of the components of the STI and LTI programs, as applicable.

STI Program

For both the level one and level two participant, the 2022 STI Award was based on the achievement of corporate financial objectives and personalized goals, with a minimum of 60% of the EBITDA target required to earn any bonus. The corporate financial objectives are as follows: (i) EBITDA (which is earnings before income, taxes, depreciation, and amortization) (the “EBITDA Component”); and (ii) revenue growth over that of the prior fiscal year (the “Revenue Component”). The EBITDA Component was weighted at 60%, the Revenue Component was weighted at 20%, and the personalized goals were weighted at 20%. For fiscal year 2022, the bonus pool amounts for the 2022 STI Award for Mr. Rubin and Mr. Miranda were set at $186,377 and $94,500, respectively. The Compensation Committee determined that achievement of the 2022 STI Award would be paid in cash and stock options, with the percentage split of the payout to be determined at the discretion of the Board.

 EBITDA Component

In order for the participants to earn a bonus with respect to the EBITDA Component, we had to meet or exceed a minimum EBITDA target established by the Compensation Committee for fiscal year 2022. Further, we had to meet or exceed at least 60% of that EBITDA target in order to earn any portion of the 2022 STI Award.

We achieved an EBITDA of $1.2 million for fiscal year 2022, which was below the target amount. The achieved EBITDA also did not meet 60% of the EBTIDA target. Accordingly, Mr. Rubin and Mr. Miranda did not earn any portion of the 2022 STI Award.

LTI Program

The 2022 LTI Awards are comprised of two components: (i) the 2022 Retention RSU Award and (ii) the 2022 TSR Award. For fiscal year 2022, the bonus pool amounts for the 2022 LTI Award for Mr. Rubin and Mr. Miranda were set at $158,635 and $68,871, respectively. The bonus pool amounts for the 2022 Retention RSU Award and the 2022 TSR Award would each be 50% of the respective bonus pool amount for the 2022 LTI Award.

2022 Retention RSU Award

The 2022 Retention RSU Award was calculated to be $79,318 and $34,436 for Mr. Rubin and Mr. Miranda, respectively. The RSUs were granted on November 11, 2021, based on the closing bid price of $1.87 on that day, with one-third of the RSUs to vest on each of the first, second and third anniversaries of the grant date.

2022 TSR Award

In order to earn the 2022 TSR Award, the TSR calculated for LPTH stock was measured against the Russell MicroCap Index. TSR is calculated as the overall change in LPTH’s stock price per share from the beginning of fiscal year 2022 to the end of fiscal year 2022, divided by the stock price per share at the beginning of the fiscal year. The calculated TSR for fiscal year 2022 was less favorable than the change in the Russell MicroCap Index, therefore the 2022 TSR Award was not earned.

2021 Incentive Program

Our fiscal year 2021 incentive program has two key components: (i) the STI program, and (ii) the LTI program. The STI program is comprised of awards based on our achievement of specific fiscal year 2021 financial objectives (the “2021 STI Award”). The LTI program is comprised of (i) an individual discretionary stock option award, based on an executive officer’s achievement of individual goals evaluated over a one-year performance period (the “2021 LTI Discretionary Award”), which goals were set early in fiscal year 2021, and (ii) a corporate performance-based equity award based on the achievement of pre-established financial performance metrics evaluated over a three-year performance period (the “2021 LTI Multi-Year Award” and, together with the 2021 LTI Discretionary Award, the “2021 LTI Awards”). The metrics for the 2021 LTI Multi-Year Award were set early in fiscal year 2021 for the three-year period beginning on July 1, 2020 through June 30, 2023.

Our incentive program includes different levels of bonus opportunity based on a participant’s position with the Company. For fiscal year 2021, Mr. Rubin was the only “level one” participant, and there were no other eligible named executive officer participants. Bonus opportunities for Mr. Rubin as a “level one” participant for fiscal year 2021 was calculated by applying designated portions of his respective bonus pool amounts, which was set by the Compensation Committee, to formulas for each of the components of the STI and LTI programs, as applicable. For fiscal year 2021, Mr. Rubin’s bonus pool amount for the 2021 STI Award was set at $180,000. The Compensation Committee determined that achievement of the 2021 STI Award would be paid in cash; however, the Compensation Committee retained the discretion to adjust the allocation of the 2021 STI Award between cash and RSUs prior to payment.

Mr. Miranda was not eligible to participate in either the STI or LTI programs for fiscal year 2021 because of his hire date.

STI Program

                For the level one participant, the 2021 STI Award is based solely on the achievement of corporate financial objectives. The corporate financial objectives are as follows: (i) revenue growth over that of the prior fiscal year (the “Revenue Component”); (ii) EBITDA margin (which is earnings before income, taxes, depreciation, and amortization, as a percentage of revenue) (the “EBITDA Component”); (iii) gross margin as a percentage of revenue (the “Gross Margin Component”); and the return on assets (ratio of net income to total assets, excluding cash, goodwill, and operating lease assets) (the “ROA Component”). The Revenue Component was weighted at 30%, the EBITDA Component was weighted at 30%, the Gross Margin Component was weighted at 20%, and the ROA Component was weighted at 20%. Each component of the 2021 STI Award is evaluated independently of the other components, and the 2021 LTI Awards are evaluated independently of the 2021 STI Award.

                Revenue Component

The maximum bonus pool amount with respect to the Revenue Component of the 2021 STI Award, was $54,000 for Mr. Rubin (the “Revenue Pool Amount”). Based on the 2021 STI Award, Mr. Rubin would only earn the Revenue Component if we achieved the target of 10% year-over-year revenue growth in fiscal year 2021. If we achieved this year-over-year revenue growth target in fiscal year 2021, then he would be entitled to a bonus award under the Revenue Component equal to the Revenue Pool Amount.

Our revenue in fiscal year 2021 increased by 10%, as compared to fiscal year 2020; therefore, the target was met. Accordingly, Mr. Rubin earned 100% of the Revenue Pool Amount of the 2021 STI Award.

EBITDA Component

In order for Mr. Rubin to earn a bonus with respect to the EBITDA Component, we had to meet or exceed a minimum EBITDA margin target established by the Compensation Committee for fiscal year 2021. The EBITDA margin was calculated by dividing the fiscal year 2021 EBITDA, by the fiscal year 2021 revenues. The maximum bonus pool amount with respect to the EBITDA Component of the 2021 STI Award, was $54,000 for Mr. Rubin.

We achieved an EBITDA margin of 4% for fiscal year 2021, which was below the target amount. Accordingly, Mr. Rubin did not earn the EBITDA Component of the 2021 STI Award.

Gross Margin Component

In order for Mr. Rubin to earn a bonus with respect to the Gross Margin Component, we had to meet or exceed a minimum gross margin target established by the Compensation Committee for fiscal year 2021. The gross margin target was calculated by dividing the fiscal year 2021 gross margin by the fiscal year 2021 revenues. The maximum bonus pool amount with respect to the EBITDA Component of the 2021 STI Award, was $36,000 for Mr. Rubin.

We achieved a gross margin of 35% for fiscal year 2021, which was below the target amount. Accordingly, Mr. Rubin did not earn the Gross Margin Component of the 2021 STI Award.

ROA Component

In order for Mr. Rubin to earn a bonus with respect to the ROA Component, we had to meet or exceed a minimum ROA target established by the Compensation Committee for fiscal year 2021. The ROA was calculated by dividing the fiscal year 2021 net income, by the June 30, 2021 total assets, excluding cash, goodwill and operating lease assets. The maximum bonus pool amount with respect to the ROA Component of the 2021 STI Award, was $36,000 for Mr. Rubin.

We achieved an ROA of -9% for fiscal year 2021, which was below the target amount. Accordingly, Mr. Rubin did not earn the ROA Component of the 2021 STI Award.

LTI Program

The 2021 LTI Awards are comprised of two components: (i) the 2021 LTI Discretionary Award and (ii) the 2021 LTI Multi-Year Award.

2021 LTI Discretionary Award

The 2021 LTI Discretionary Award is an individual discretionary award made by our Compensation Committee that is based on an executive officer’s achievement of certain individual goals approved by the Compensation Committee for fiscal year 2021. Mr. Rubin was our only named executive officer that was eligible to earn the 2021 LTI Discretionary Award. Mr. Rubin’s 2021 LTI Discretionary Award bonus opportunity was calculated by multiplying the 2021 LTI Awards bonus pool amount, or $120,000, by 40%. Thus, the bonus opportunity for the 2021 LTI Discretionary Award was $48,000 for Mr. Rubin. He could earn any portion of the bonus opportunity for the 2021 LTI Discretionary Award. The Compensation Committee determined that if earned, the 2021 LTI Discretionary Award would be paid in cash.

At the end of fiscal year 2021, an executive summary was presented to the Compensation Committee, which summarized Mr. Rubin’s achievements with respect to his individual goals, which were based on certain operational, strategic, and business development objectives. After review and consideration, the Compensation Committee determined that Mr. Rubin earned 100% of his 2021 LTI Discretionary Award.

2021 LTI Multi-Year Award

The 2021 LTI Multi-Year Award is a corporate performance-based equity award based on the achievement of pre-established financial performance metrics over a three-year performance period. In order to determine Mr. Rubin’s 2021 LTI Multi-Year Award bonus opportunity, the portion of such participant’s bonus pool amount applicable to the 2021 LTI Awards calculation, or $120,000, was multiplied by 60%. Thus, Mr. Rubin’s bonus opportunity for the 2021 LTI Multi-Year Award was $72,000.

The performance metrics upon which the 2021 LTI Multi-Year Award was based are as follows: (i) revenue (the “LT Revenue Component”); (ii) book value per share of Class A common stock (the “LT Book Value Component”); and (iii) EBITDA margin (the “LT EBITDA Component”). The Compensation Committee set a target for each component for each year during the three-year period (July 1, 2020 through June 30, 2023). Each performance component is valued at “one point” for each year during the three-year period. For each performance component for which the target is achieved, the participants each earn “one point.” Thus, the LT Revenue Component is worth one point per year during the three-year performance period, the LT Book Value Component is worth one point per year during the three-year performance period, and the LT EBITDA Component is worth one point per year during the three-year performance period.

The payout opportunity based on the number of total points earned during the three-year performance period is shown in the table below.

Each component of the 2021 LTI Multi-Year Award is evaluated independently of the other components during each year of the performance. During fiscal year 2021, the Compensation Committee determined that in connection with the 2021 LTI Multi-Year Award, the RSU award would be granted in the first year of the three-year period, but would not vest until the end of the period, with such vesting based on the number of points earned.

LT Revenue Component – Fiscal year 2021 (Year 1)

The Compensation Committee set a target for the LT Revenue Component for fiscal year 2021 of $38.5 million, which represented year-over-year revenue growth of 10%, compared to fiscal year 2021. Our total revenue for fiscal year 2021 was equal to the target; thus, the Mr. Rubin earned 1 point for the LT Revenue Component in fiscal year 2021.

LT Revenue Component – Fiscal year 2022 (Year 2)

The Compensation Committee set a target for the LT Revenue Component for fiscal year 2022 of $42.9 million. Our total revenue for fiscal year 2022 was less than the target; thus, the Mr. Rubin did not earn a point for the LT Revenue Component in fiscal year 2022.

LT Book Value Component – Fiscal year 2021 (Year 1)

The Compensation Committee set a target for the LT Book Value Component for fiscal year 2021 of $1.45 book value per share of our Class A common stock. Our book value per share of Class A common stock for fiscal year 2021 was less than the target; thus, Mr. Rubin did not earn a point for the LT Book Value Component in fiscal year 2021.

LT Book Value Component – Fiscal year 2022 (Year 2)

The Compensation Committee set a target for the LT Book Value Component for fiscal year 2022 of $1.63 book value per share of our Class A common stock. Our book value per share of Class A common stock for fiscal year 2022 was less than the target; thus, Mr. Rubin did not earn a point for the LT Book Value Component in fiscal year 2022.

LT EBITDA Component – Fiscal year 2021 (Year 1)

The Compensation Committee set the LT EBITDA Component for fiscal year 2021 at a target EBITDA margin of 19%. Our EBITDA margin for fiscal year 2021 was less than the target; thus, Mr. Rubin did not earn a point for the LT EBITDA Component in fiscal year 2021.

LT EBITDA Component – Fiscal year 2022 (Year 2)

The Compensation Committee set the LT EBITDA Component for fiscal year 2022at a target EBITDA margin of 22%. Our EBITDA margin for fiscal year 2022 was less than the target; thus, Mr. Rubin did not earn a point for the LT EBITDA Component in fiscal year 2022.

Summary Compensation Table

                The following table sets forth certain compensation awarded to, earned by or paid to (i) any individuals serving as our Chief Executive Officer during fiscal year 2022 and (ii) our two other most highly compensated executive officers serving as executive officers at the end of fiscal year 2022. Mr. Miranda was the only other individual serving as an executive officer at the end of fiscal year 2022.

Notes:

Narrative Discussion of Summary Compensation Table of Executive Officers

The following is a narrative discussion of the material information that we believe is necessary to understand the information disclosed in the foregoing Summary Compensation Table. The following narrative disclosure is separated into sections, with a separate section for each of our named executive officers.

With respect to fiscal year 2022, each named executive officer received a base salary and certain named executive officers were eligible for a 2022 STI Award, a 2022 Retention RSU Award, and a 2022 TSR Award. Information on the specific components of executive compensation for fiscal year 2022 can be found above under the heading “2022 Incentive Program.” With respect to fiscal year 2021, each named executive officer received a base salary and certain named executive officers were eligible for a 2021 STI Award, a 2021 LTI Discretionary Award, and a 2021 LTI Multi-Year Award. Information on the specific components of executive compensation for fiscal year 2021 can be found above under the heading “2021 Incentive Program.”

Additional details regarding the awards granted to each named executive officer is set forth below.

Shmuel Rubin

Albert Miranda

Employment Agreement

In connection with Mr. Miranda’s appointment, we entered into an employment agreement with Mr. Miranda on April 19, 2021 (the “Miranda Employment Agreement”). Pursuant to the Miranda Employment Agreement, Mr. Miranda served as Vice President of Finance beginning on April 19, 2021 until May 7, 2021, at which time, Mr. Miranda transitioned into the role of Chief Financial Officer. The Miranda Employment Agreement does not provide for a specified term of employment and Mr. Miranda’s employment is on an at-will basis. Mr. Miranda will receive an initial annual base salary of $225,000, payable in equal bi-weekly installments, and is eligible to participate in all of our bonus, incentive compensation, and performance based compensation plans, including, but not limited to, the Incentive Plan, under which our executive officers are eligible to earn incentive compensation consisting of cash and/or equity awards based upon the achievement of certain individual and/or performance goals set by the Compensation Committee.

Mr. Miranda is eligible to participate in our employee benefit, welfare, and other plans, as may be maintained by us from time to time. We agreed to provide a relocation allowance of up to $10,000 payable by us on receipt of relocation expense receipts. The total period for relocation reimbursement concludes six months from the effective date of the Miranda Employment Agreement; however, exceptions may be granted by the Compensation Committee. Mr. Miranda must reimburse the Company a prorated portion of all expenses paid by us if he leaves us for any reason other than death, disability, or discharge without cause within twelve (12) months of his relocation.

Pursuant to the Miranda Employment Agreement, we granted Mr. Miranda an option to purchase up to 75,000 shares of Class A common stock, having an exercise price per share equal to the greater of (i) our book value per share on that date or (ii) 115% of the closing bid price of the Class A common stock as reported on the NCM on the grant date. The stock options will have a four-year vesting period with 25% vesting each year. The option award will have a ten-year term, subject to earlier expiration as provided in the Incentive Plan or the option agreement, as defined below. The option award will be in all respects subject to the Incentive Plan and any amendments thereto, and the option award.

Potential Payments Upon Termination or Change-of-Control

Neither Mr. Rubin nor Mr. Miranda are entitled to any payments upon termination or change-of-control.

Outstanding Equity Awards at Fiscal Year-End

The stock options were issued pursuant to the Incentive Plan and have a ten-year life. The options will terminate 90 days after termination of employment, or in the case of termination due to death or permanent disability, the options will terminate one year after the date of termination.

DIRECTOR COMPENSATION

Director Compensation

The table below summarizes the compensation paid by us to non-employee directors for fiscal year 2022.

Discussion of the Summary Compensation Table of Directors

The following is a discussion of the material information that we believe is necessary to understand the information disclosed in the Summary Compensation Table. We use a combination of cash and stock-based incentive compensation to attract and retain qualified candidates to serve on our Board. In setting director compensation, we consider the significant amount of time that directors expend in fulfilling their duties as a director as well as the skill-level required by us of members of our Board. For fiscal year 2022, the cash and stock-based incentive compensation awarded to directors remained essentially at the same levels set in fiscal year 2021. The annual cash portion of the directors’ compensation remained at $36,000 and the annual value of restricted stock awards remained at $60,000. For fiscal year 2023, the cash and stock-based incentive compensation awarded to directors is expected to remain at the same levels set in fiscal 2022, with the exception of the Chair Fee, which has been reduced to $15,000.

Cash Compensation Paid to Board Members

During fiscal year 2022, directors received a monthly retainer of $3,000 per month. There are no meeting attendance fees paid unless, by action of the Board, such fees are deemed advisable due to a special project or other effort requiring extra-normal commitment of time and effort. Additionally, fees are paid to the Chair of the Board and Committee Chairmen for their additional responsibilities in overseeing their respective functions. The following table sets forth the annual fees paid to each director for fiscal year 2022:

Stock Option/Restricted Stock Program

All directors are eligible to receive equity incentives under the Incentive Plan, including stock options, restricted stock awards, or RSUs. In fiscal year 2022, the following directors received grants under the Incentive Plan:

Additional details regarding the RSUs granted to each director, other than Mr. Rubin, is set forth below.

Louis Leeburg