UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
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 x
Filed by
a Party other than the Registrant o
Check the appropriate box:
o Preliminary Proxy
Statement
o Confidential, for
Use of the Commission Only (as permitted by Rule 14a-6(e)2))
x Definitive Proxy
Statement
o Definitive
Additional Materials
o Soliciting
Material Pursuant to Rule 14(a)-12
NATIONAL
HOLDINGS CORPORATION
(Name of
Registrant as Specified in Charter)
Payment
of filing fee (check the appropriate box):
x No fee
required.
o Fee computed on
table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1)
|
Title
of each class of securities to which transaction
applies:
|
(2)
|
Aggregate
number of securities to which transaction
applies:
|
(3)
|
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):
|
(4)
|
Proposed
maximum aggregate value of
transaction:
|
o Fee paid
previously with preliminary materials.
o 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.
(2)
|
Form,
Schedule or Registration Statement
No.:
|
NATIONAL
HOLDINGS CORPORATION
Notice of
Annual Meeting of Shareholders
To Be
Held Tuesday, March 16, 2010 at 9:00 A.M.
To the
Shareholders:
The
Annual Meeting of Shareholders of National Holdings Corporation will be held on
March 16, 2010 at 9:00 A.M. at the Company’s offices, located at 1200 North
Federal Highway, Suite 400, Boca Raton, FL 33432, for the following
purposes:
1.
|
To
elect three (3) Class III directors to serve until the 2013 Annual Meeting
of Shareholders and until their successors are elected and
qualified;
|
2.
|
To
ratify the appointment of Sherb & Co., LLP as independent public
accountants for the fiscal year ending September 30, 2010;
and
|
3.
|
To
transact such other business as may properly come before the Annual
Meeting or any adjournment thereof.
|
Owners of
record at the close of business on January 22, 2010 will be entitled to vote at
the Annual Meeting or at any adjournments or postponements thereof. A
complete list of the shareholders entitled to vote at the Annual Meeting will be
made available for inspection by any shareholder of record at the offices of the
Company during market hours from March 5, 2010 through the time of the Annual
Meeting.
Your vote
is very important. For this reason, our Board of Directors is
soliciting your proxy to vote your shares of common stock at the
meeting. The entire cost of soliciting proxies will be borne by the
Company. The cost of solicitation will include the cost of supplying
necessary additional copies of the solicitation materials and the Company's 2009
Annual Report to Shareholders (the "Annual Report") to beneficial owners of
shares held of record by brokers, dealers, banks, trustees, and their nominees,
including the reasonable expenses of such record holders for completing the
mailing of such materials and Annual Report to such beneficial
owners.
In voting
at the Annual Meeting, each shareholder of record on the Record Date shall be
entitled to one vote on all matters. Holders of a majority of the outstanding
shares of Common Stock must be represented in person or by proxy in order to
achieve a quorum to vote on all matters other than the election of
directors. The Proxy Statement, the attached Notice of Meeting, the
enclosed proxy card and the Annual Report to Shareholders are being mailed to
shareholders on or about January 28, 2010.
NO PERSON
IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION OTHER THAN
THOSE CONTAINED IN THIS PROXY STATEMENT, AND, IF GIVEN OR MADE, SUCH INFORMATION
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED AND THE DELIVERY OF THIS PROXY
STATEMENT SHALL, UNDER NO CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE OF THIS
PROXY.
Important Notice regarding the
Availability of Proxy Materials for our Shareholders Meeting to be held on March
16, 2010. The Proxy Statement and a copy of our Annual Report on Form 10-K for
the year ended September 30, 2009 are available at www.nationalsecurities.com under About National / Annual
Meeting. This website does not have “cookies” that identify visitors to
the site.
|
|
|
By
Order of the Board of Directors |
|
|
|
|
|
|
|
|
|
/s/
Alan B. Levin
|
|
|
|
|
|
|
Boca
Raton, Florida
January
28, 2010
|
|
|
|
|
NATIONAL
HOLDINGS CORPORATION
120
Broadway, 27th Floor
New
York, New York 10271
PROXY
STATEMENT
ANNUAL
MEETING OF SHAREHOLDERS
To Be
Held March 16, 2010
General
The
enclosed proxy is solicited on behalf of the Board of Directors of National
Holdings Corporation, a Delaware corporation (the “Company”), for use at the
Annual Meeting of Shareholders to be held on March 16, 2010, and any adjournment
or postponement thereof. The Annual Meeting will be held at 9:00 A.M.
(local time) at the Company’s offices, located at 1200 North Federal Highway,
Suite 400, Boca Raton, FL 33432. This Proxy Statement, the enclosed
proxy card and the Company’s Annual Report for the fiscal year ended September
30, 2009 are being mailed on or about January 28, 2010 to shareholders entitled
to vote at the meeting.
Record
Date and Voting Shares
The close
of business on January 22, 2010 has been fixed as the record date (the “Record
Date”) for determining the shareholders of record entitled to notice of and to
vote at the Annual Meeting. At the close of business on the Record
Date, there were outstanding and entitled to vote 17,151,704 shares of Common
Stock, $.02 par value (the “Common Stock”) and 42,957 shares of Series A
Convertible Preferred Stock, $.01 par value (the “Series A Preferred
Stock”). Each share of Series A Preferred Stock is convertible into
Common Stock at the current conversion price of $1.25 per share. The
holder of each share of Series A Preferred Stock is entitled to the number of
votes equal to the number of shares of Common Stock into which such share of
Series A Preferred Stock could be converted at the Record
Date. Accordingly, as of the Record Date, there were 20,588,264
shares entitled to vote, consisting of 17,151,704 shares of Common Stock
outstanding and 3,436,560 shares of Common Stock issuable upon conversion of the
Series A Preferred Stock. Each share of Common Stock entitles the
holder thereof to one vote upon any proposal submitted for a vote at the Annual
Meeting.
Directors
are elected by a plurality of the votes, which means that the nominee who
receives the largest number of properly executed votes will be elected as a
director. Shares that are represented by proxies that are marked
“withhold authority” for the election of the director nominee will not be
counted in determining the number of votes cast for that person. Any
other matters properly considered at the meeting will be determined by a
majority of the votes cast.
Voting of Proxies
Shares of
Common Stock represented by Proxies, which are properly executed, duly returned
and not revoked, will be voted in accordance with the instructions contained
therein. If no instruction is indicated on the Proxy, the shares of Common Stock
represented thereby will be voted: (i) FOR the election of the Class
III Directors for a term ending in 2013; (ii) FOR the ratification of the
appointment of Sherb & Co., LLP as our independent public accountants for
the year ending September 30, 2010; and (iii) at the discretion of the person or
persons voting the Proxy, with respect to any other matter that may properly be
brought before the Meeting. The execution of a Proxy will in no way
affect a shareholder's right to attend the Meeting and vote in
person. Abstentions and broker non-votes are counted for purposes of
determining the presence or absence of a quorum for the transaction of
business.
Pursuant
to a recent amendment of the rules of the New York Stock Exchange (“NYSE”),
brokers no longer have the discretion to vote the shares of customers who fail
to provide voting instructions on the proposal to elect directors but they still
have the discretion to vote such shares on the proposals to ratify the Audit
Committee’s appointment of Sherb & Co, LLP to serve as the Company’s
registered independent public accounting firm for fiscal 2010. If the shares you
own are held in “street name” by a bank or brokerage firm, your bank or
brokerage firm, as the record holder of your shares, is required to vote your
shares according to your instructions. In order to vote your shares, you will
need to follow the directions your bank or brokerage firm provides to
you. Accordingly, if you do not give instructions to your bank or
brokerage firm with respect to the election of directors, or if your bank or
brokerage firm does not exercise its discretionary authority with respect to the
ratification of the appointment of our independent registered public accounting
firm, your shares will be treated as “broker non-votes” on these particular
matters. Broker non-votes do not count as votes cast on such a
proposal. Under Section 216 of the Delaware General Corporation Law,
on matters other than the election of directors, an action of the stockholders
generally requires the affirmative vote of a majority of shares present in
person or represented by proxy at the meeting and entitled to vote on the
matter. Accordingly, an abstention on any matter other than the election of
directors will have the same effect as a vote against that matter.
Because of a change in NYSE rules, we
note that, unlike at our previous annual general meetings, your broker
will not be able to vote your shares with
respect to the election of directors if you have not provided instructions to
your broker. We strongly encourage you to submit your proxy card and exercise
your right to vote as a shareholder. The Company believes that
the tabulation procedures to be followed by the Inspector of Elections are
consistent with the general requirements of Delaware law concerning voting of
shares and determination of a quorum.
Revocation
of Proxies
You may
revoke or change your proxy at any time before the Annual Meeting by filing with
the Secretary of the Company, at 1200 North Federal Highway, Suite 400, Boca
Raton, FL 33432, a notice of revocation or another signed proxy with a later
date. You may also revoke your proxy by attending the Annual Meeting and voting
in person.
If any
shareholder is unable to attend the Annual Meeting, such shareholder may vote by
proxy. If a proxy is properly executed and returned to the Company in
time to be voted at the Annual Meeting, it will be voted as specified in the
proxy, unless it is properly revoked prior thereto. Votes cast in
person or by proxy at the Annual Meeting will be tabulated by the Inspector of
Elections appointed for the meeting and will determine whether or not a quorum
is present. The holders of a majority of the shares of stock
entitled to vote at the meeting, present in person or represented by proxy,
shall constitute a quorum for the transaction of business.
Solicitation
The
Company will bear the entire cost of solicitation, including the preparation,
assembly, printing and mailing of this Proxy Statement, the proxy and any
additional solicitation materials furnished to the
shareholders. Copies of solicitation materials will be furnished to
brokerage houses, fiduciaries and custodians holding shares in their names that
are beneficially owned by others so that they may forward this solicitation
material to such beneficial owners. In addition, the Company shall
reimburse such persons for their costs in forwarding the solicitation materials
to such beneficial owners. The original solicitation of proxies by
mail may be supplemented by a solicitation by telephone, telegram or other means
by directors, officers or employees of the Company. No additional
compensation will be paid to these individuals for any such
services. Except as described above, the Company does not presently
intend to solicit proxies other than by mail.
Shareholder
Proposals for 2011 Annual Meeting
Any
shareholder who intends to present a proposal at the Company's 2011 Annual
Meeting of Shareholders must ensure that the proposal is received by the
Corporate Secretary at 1200 North Federal Highway, Suite 400, Boca Raton, FL
33432:
·
|
not
later than September 29, 2010, if the proposal is submitted for inclusion
in our proxy materials for that meeting pursuant to Rule 14a-8 under the
Securities Exchange Act of 1934; or
|
·
|
on
or after December 16, 2010, and on or before December 29, 2010, if the
proposal is submitted at the 2011 annual meeting pursuant to the Company’s
by-laws, in which case the notice of the proposal must meet certain
requirements set forth in our
by-laws.
|
Dissenters’
Right of Appraisal
Under
Delaware law, shareholders are not entitled to dissenters’ rights on any
proposal referred to herein.
Householding
of Proxy Materials
The
Securities and Exchange Commission (the “SEC”) has adopted rules that permit
companies and intermediaries such as brokers to satisfy delivery requirements
for proxy statements with respect to two or more shareholders sharing the same
address by delivering a single proxy statement addressed to those
shareholders. This process, which is commonly referred to as
“householding,” potentially provides extra convenience for shareholders and cost
savings for companies. The Company and some brokers household proxy
materials, delivering a single proxy statement to multiple shareholders sharing
an address unless contrary instructions have been received from the affected
shareholders. Once you have received notice from your broker or the
Company that they or the Company will be householding materials 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, or if you
are receiving multiple copies of the proxy statement and wish to receive only
one, please notify your broker if your shares are held in a brokerage account or
the Company if you hold common stock directly. Requests in writing
should be addressed to: National Holdings Corporation, 1200 North Federal
Highway, Suite 400, Boca Raton, FL 33432, Attention: Secretary. Requests may
also be made by calling the Secretary at (561) 981-1007.
Security
Ownership of Certain Beneficial Owners and Management
Certain
Beneficial Owners
The
following table sets forth certain information with respect to persons known by
the management of the Company to own beneficially more than five percent (5%) of
the voting securities of the Company as of January 28, 2010:
Name
and Address of
Beneficial
Owner
|
Amount
and Nature
of
Beneficial
Ownership
(1)
|
Percentage
of
Class
|
Marshall
S. Geller
c/o
St. Cloud Capital Partners, L.P.
10866
Wilshire Boulevard, Suite 1450
Los
Angeles, CA 90024
|
6,651,383
(2)
|
30.60%
|
Mark
Goldwasser
120
Broadway, 27th Floor
New
York, NY 10271
|
2,011,858
(3)
|
10.54%
|
Leonard
J. Sokolow
1200
North Federal Highway, Suite 400
Boca
Raton, FL 33432
|
1,751,623
(4)
|
9.69%
|
Triage
Partners LLC
90
Park Avenue, 39th Floor
New
York, NY 10016
|
1,178,894
(5)
|
6.50%
|
Strategic
Turnaround Equity Partners, LP
c/o
Galloway Capital Management, LLC
720
Fifth Avenue, 10th Floor
New
York, NY 10019
|
880,625
(6)
|
5.13%
|
Bedford
Oak Advisors, LLC
100
South Bedford Road
Mt.
Kisco, NY 10549
|
2,659,141
(7)
|
15.22%
|
DellaCamera
Capital Management, LLC
200
Park Avenue, Suite 3300
New
York, NY 10166
|
988,142
(8)
|
5.69%
|
Timothy
E. Mahoney
68
Cayman Place
Palm
Beach Gardens, FL
|
963,201
(9)
|
5.55%
|
(1)
|
All
securities are beneficially owned directly by the persons listed on the
table (except as otherwise
indicated).
|
(2)
|
Includes
(i) 2,004,083 shares of common stock and 317,500 shares issuable upon
exercise of warrants owned indirectly through St. Cloud Capital Partners,
L.P., (ii) 843,750 shares issuable upon exercise of warrants and 3,375,000
shares issuable upon conversion of notes owned indirectly through St.
Cloud Capital Partners II, L.P. and (ii) 50,000 shares issuable upon
exercise of vested stock options. Mr. Geller disclaims
beneficial ownership of the securities owned by St. Cloud Capital
Partners, L.P. and St. Cloud Capital Partners II,
L.P.
|
(3)
|
Includes
979,840 shares issuable upon conversion of 12,248 shares of Series A
Preferred Stock owned indirectly through One Clark LLC, 20,425 shares
owned by direct family members and 960,125 shares issuable upon exercise
of vested stock options.
|
(4)
|
Includes
31,110 shares held by or on behalf of Mr. Sokolow’s sons, 1,763 shares
held by Mr. Sokolow and his wife as joint tenants and 920,000 shares
issuable upon exercise of vested stock options. Mr. Sokolow
disclaims beneficial ownership of the shares held by his
sons.
|
(5)
|
Includes
979,920 shares issuable upon conversion of 12,249 shares of Series A
Preferred Stock.
|
(6)
|
Includes
shares owned directly and indirectly as provided in information filed with
the SEC in a Schedule 13D/A filed September 12,
2007.
|
(7)
|
Includes
shares owned directly and indirectly as provided in information filed with
the SEC in Schedules 13G filed November 17, 2009 and January 4, 2011 and a
Form 4 filed January 4, 2010 and includes 87,500 shares issuable upon
exercise of warrants. Harvey Eisen holds voting and investment
power over these securities.
|
(8)
|
Includes
shares owned directly and indirectly as provided in information filed with
the SEC in a Schedule 13G filed on February 17, 2009, and includes 225,920
shares issuable upon conversion of 2,824 shares of Series A preferred
stock.
|
(9)
|
Includes
210,000 shares issuable upon exercise of vested stock options and 304,500
shares of common stock issued in the name of Highland Group Holdings,
Inc.
|
Security
Ownership of Management
The
following information is furnished as of January 28, 2010 as to each class of
equity securities of the Company beneficially owned by all directors and named
executive officers of the Company:
Name
of Beneficial Owner
|
|
Amount
and
Nature
of
Beneficial
Ownership
|
|
Percent
of
Class
|
Mark
Goldwasser – Chairman, Chief Executive Officer and
Director
|
|
2,011,858
(1)
|
|
10.54%
|
Leonard
J. Sokolow – Vice Chairman, President and
Director
|
|
1,751,623
(2)
|
|
9.69%
|
Christopher
C. Dewey – Vice Chairman and Director
|
|
833,174
(3)
|
|
4.74%
|
Marshall
S. Geller – Director
|
|
6,651,383
(4)
|
|
30.60%
|
Robert
W. Lautz, Jr. – Director
|
|
20,000
(5)
|
|
0.12%
|
Charles
R. Modica – Director
|
|
48,000
(6)
|
|
0.28%
|
Jorge
A. Ortega – Director
|
|
48,000
(6)
|
|
0.28%
|
Alan
B. Levin – Chief Financial Officer and Secretary
|
|
184,900
(7)
|
|
1.07%
|
Brian
Friedman – Executive Vice President
|
|
183,750
(8)
|
|
1.06%
|
Jonathan
C. Rich – Executive Vice President
|
|
110,600
(9)
|
|
0.64%
|
William
L. Groeneveld – President of vFinance Investments and Equity Station,
and Head Trader at vFinance Investments
|
|
120,225
(10)
|
|
0.70%
|
All
executive officers and directors of the Company as a group (eleven
persons)
|
|
11,963,513
(11)
|
|
46.48%
|
(1)
|
Includes
979,840 shares issuable upon conversion of 12,248 shares of Series A
Preferred Stock owned indirectly through One Clark LLC, 20,425 shares
owned by direct family members and 960,125 shares issuable upon exercise
of vested stock options.
|
(2)
|
Includes
31,110 shares held by or on behalf of Mr. Sokolow’s sons, 1,763 shares
held by Mr. Sokolow and his wife as joint tenants and 920,000 shares
issuable upon exercise of vested stock options. Mr. Sokolow
disclaims beneficial ownership of the shares held by his
sons.
|
(3)
|
Includes
25,000 shares owned by Mr. Dewey’s daughters, 225,000 shares issuable upon
exercise of warrants and 210,000 shares issuable upon exercise of vested
stock options. Mr. Dewey disclaims beneficial ownership of the
securities owned by his daughters.
|
(4)
|
Includes
(i) 2,004,083 shares of common stock and 317,500 shares issuable upon
exercise of warrants owned indirectly through St. Cloud Capital Partners,
L.P., (ii) 843,750 shares issuable upon exercise of warrants and 3,375,000
shares issuable upon conversion of notes owned indirectly through St.
Cloud Capital Partners II, L.P. and (ii) 50,000 shares issuable upon
exercise of vested stock options. Mr. Geller disclaims
beneficial ownership of the securities owned by St. Cloud Capital
Partners, L.P. and St. Cloud Capital Partners II,
L.P.
|
(5)
|
Includes
20,000 shares issuable upon exercise of vested stock
options.
|
(6)
|
Includes
48,000 shares issuable upon exercise of vested stock
options.
|
(7)
|
Includes
169,400 shares issuable upon exercise of vested stock
options.
|
(8)
|
Includes
173,750 shares issuable upon exercise of vested stock
options.
|
(9)
|
Includes
110,600 shares issuable upon exercise of vested stock
options.
|
(10)
|
Includes
113,225 shares issuable upon exercise of vested stock
options.
|
(11)
|
Includes
979,840 shares issuable upon conversion of 12,248 shares of Series A
Preferred Stock, 2,823,100 shares issuable upon exercise of vested stock
options, 3,375,000 shares issuable upon conversion of convertible notes
and 1,386,250 shares issuable upon exercise of
warrants.
|
PROPOSAL
1
ELECTION
OF DIRECTORS
Our Board
of Directors currently consists of seven (7) members and is divided into three
(3) classes, one class of which is elected at each Annual Meeting of
Shareholders to hold office for a three-year term and until successors of such
class have been elected and qualified. A majority of the Board of
Directors is comprised of independent directors. The nominees to
serve as Class III Directors of the Board of Directors are set forth below and
each has consented to being named in this proxy statement and has agreed to
serve if elected. The proxy holders intend to vote all proxies
received by them in the accompanying form for the nominees for director listed
below. In the event that a nominee is unable or declines to serve as
a director at the time of the Annual Meeting, the proxies will be voted for any
nominee who shall be designated by the present Board of Directors to fill the
vacancy. In the event that additional persons are nominated for
election as a director, the proxy holders intend to vote all proxies received by
them for the nominees listed below. As of the date of this Proxy
Statement, the Board of Directors is not aware of any nominee who is unable or
will decline to serve as a director.
Each
shareholder will be entitled to one (1) vote for each share of Common Stock held
as of the Record Date. Shares represented by your proxy will be voted
in accordance with your direction as to the election as a director of the person
listed below as a nominee. In the absence of direction, the shares
represented by your proxy will be voted FOR such
election. Directors are elected by a plurality of the votes, which
means that the nominee who receives the largest number of properly executed
votes will be elected as a director.
Nominees
for Director
Name
|
|
Age |
|
|
|
Class
and Year
In
Which Term
Will
Expire
|
Mark
Goldwasser (1)
|
|
51 |
|
2001 |
|
Class
III, 2013
|
Leonard
J. Sokolow (2)
|
|
53
|
|
2008
|
|
Class
III, 2013 |
Robert
W. Lautz, Jr. (2)
|
|
61
|
|
2008
|
|
Class
III, 2013 |
Directors
Continuing in Office
Name
|
|
Age
|
|
|
|
Class and
Year
In Which
Term
Will
Expire
|
Marshall
S. Geller (1)(3)
|
|
70
|
|
2006
|
|
Class
I, 2011 |
Christopher
C. Dewey (3)
|
|
65
|
|
2006
|
|
Class
I, 2011 |
Charles
R. Modica (2)(3)
|
|
62
|
|
2008
|
|
Class
II, 2012 |
Jorge
A. Ortega (1)
|
|
46
|
|
2008
|
|
Class
II, 2012 |
(1)
|
Member
of Governance Committee
|
(2)
|
Member
of Audit Committee
|
(3)
|
Member
of Compensation Committee
|
Set forth
below is the principal occupations of each director during the past five (5)
years.
Mark Goldwasser has served as
a director of National since December 28, 2001. Mr. Goldwasser joined
National in June 2000. Mr. Goldwasser was named President in August
2000, Chief Executive Officer in December 2001 and Chairman in April
2005. Prior to joining National, Mr. Goldwasser was the Global High
Yield Sales Manager at ING Barings from 1997 to 2000. From 1995 to
1997, Mr. Goldwasser was the Managing Director of High Yield Sales at Schroders
& Co., and from 1991 to 1995, the Vice President of Institutional High Yield
Sales at Lazard Freres & Co. From 1984 to 1991, Mr. Goldwasser
served as the Associate Director of Institutional Convertible Sales and
Institutional High Yield Sales at Bear Stearns & Co., Inc. From
1982 to 1984, Mr. Goldwasser was a Floor member of the New York Mercantile
Exchange (NYMEX) and the Commodity Center (COMEX). Mr. Goldwasser
received his B.A. with Honors from the University of Capetown in
1979.
Leonard J. Sokolow served as
the chairman of the board of directors of vFinance since January 1, 2007, one of
its directors since November 8, 1997 and its Chief Executive Officer since
November 8, 1999. Following the merger, Mr. Sokolow joined National
as its Vice Chairman and President and become a member of the board of directors
as the nominee of vFinance. From January 5, 2001 through December 31,
2006, Mr. Sokolow was President of vFinance. From November 8, 1999
through January 4, 2001, Mr. Sokolow was Vice Chairman of vFinance's board of
directors. Since September 1996, Mr. Sokolow has been President of
Union Atlantic LC, a merchant banking and strategic consulting firm specializing
domestically and internationally in technology industries that is a wholly owned
subsidiary of vFinance. Union Atlantic LC has been inactive since
September 16, 2005. Since August 1993, Mr. Sokolow has been
President of Genesis Partners, Inc., a private financial business-consulting
firm. Genesis Partners, Inc. has been inactive since December 31,
2002. From August 1994 through December 1998, Mr. Sokolow was
the Chairman and Chief Executive Officer of the Americas Growth Fund, Inc., a
public closed-end management investment company. Mr. Sokolow received
his B.A. degree in Economics from the University of Florida in 1977, a J.D.
degree from the University of Florida Levin College of Law in 1980 and an LL.M.
degree in Taxation from the New York University Graduate School of Law in 1982.
Mr. Sokolow is a Certified Public Accountant. He is also a director
of Consolidated Water Co. Ltd. (Nasdaq: CWCO) and Chairman of its audit and
nominations committees, positions he has held since May 2006 and October 2009
respectively.
Marshall S. Geller has served
as a director of National since January 11, 2006. Mr. Geller is
Founder and Senior Managing Director of St. Cloud Capital, a Los Angeles based
private equity fund formed in December 2001. Mr. Geller
has spent more than 40 years in corporate finance and investment banking,
including 21 years as Senior Managing Director for Bear, Stearns & Co., with
oversight of all operations in Los Angeles, San Francisco, Chicago, Hong Kong
and the Far East. Currently he serves as a director on the boards of,
California Pizza Kitchen (NASDAQ: CPKI), GP Strategies Corporation (NYSE.GPX),
Guidance Software, Inc. (Nasdaq:GUID), Johnson Products Company, Inc. and World
Industries. Mr. Geller is also on the Board of Governors of Cedars
Sinai Medical Center, Los Angeles, and serves on the Dean’s Advisory Council for
the College of Business & Economics at California State University, Los
Angeles, and has been appointed as a Commissioner to the Little Hoover
Commission, an independent California state oversight agency. Mr.
Geller graduated from California State University, Los Angeles, with a BS in
Business Administration.
Christopher C. Dewey has
served as Vice Chairman since July 1, 2008 and as a director of National since
December 27, 2006. From 1993 to prior to joining National, Mr. Dewey
served as Executive Vice President of Jefferies & Company,
Inc. Prior to joining Jefferies & Company, Inc., Mr. Dewey
was a partner of Merrion Group (1990-1993) and Bear Stearns
(1979-1990). Mr. Dewey currently serves as a director of Mako
Surgical Corp. (Nasdaq: MAKO). Mr. Dewey earned an M.B.A. from
the Wharton School in 1987.
Robert W. Lautz, Jr. has
served as a director of National since July 1, 2008. Mr. Lautz has
served as a Managing Director of St. Cloud Capital, a Los Angeles based private
equity fund formed, since December 2001. Mr. Lautz was formerly
the Chairman of REO.com, the nations leading Internet-based sales mechanism for
bank foreclosed properties. Prior to that he served as the CEO of ListingLink,
the original Internet-based residential property multiple listing service. Mr.
Lautz formed and was Chairman and CEO of Indenet, Inc., a Nasdaq listed private
satellite-based network that delivered digital advertisements and programming to
the 3000+ national broadcast and cable television networks. From 1994 to 1997,
he built Indenet from a public shell with $4 million in cash to a company with
over $50 million in revenue, $120 million in market value and 650 employees in
19 facilities around the world. Mr. Lautz also owned and operated Peerless
Capital, a venture capital business which invested in various management led
leveraged buyouts and private equity transactions. Mr. Lautz began his career
within Citibank's Operating Group where he rose to become the Senior Financial
Officer, responsible for all financial functions and strategic planning for his
division. He currently serves on the board of directors of Mertz Manufacturing,
LLC, Compact Power Equipment Center, LLC, Security Contractor Services, Inc.,
TMS, Inc., and SecureOne Data Solutions, LLC. Mr. Lautz earned a Master's degree
from the American Graduate School of International Management (Thunderbird), and
a BS in Business Administration from Miami University in Oxford,
Ohio.
Charles R. Modica has served
as a director of National since July 1, 2008. He had been a director
of vFinance since January 3, 2007. Mr. Modica has served as Chairman
of the Board of Trustees and Chancellor of St. George's University located in
Grenada, West Indies, since founding the university as a School of Medicine in
1976. He has served on the Board of Trustees of Barry University, Miami,
Florida, since 1983, and as Chairman of such Board of Trustees from 1997 -
2001. Additionally, he served on the Board of Trustees of Rosarian
Academy, West Palm Beach, Florida, from 1995 to 2001, and as Chairman of such
Board of Trustees from 1998 to 2001. Mr. Modica also has served on the Board of
Trustees of WXEL Public Radio and Television of Florida since 1998. Mr. Modica
received his B.S. degree in Biology from Bethany College in 1970 and his J.D.
degree from the Delaware Law School in 1975.
Jorge A. Ortega has served as
a director of National since July 1, 2008. He had been a director of
vFinance since June 6, 2007. Mr. Ortega has served as President of
The Jeffrey Group, Inc., a marketing, communications and public relations
consulting firm since February 2005. From October 1991 to January
2005, Mr. Ortega was Managing Director of Burson-Marsteller, LLC, a global
public relations and public affairs firm. Mr. Ortega received his B.A. degree in
Business Administration from The American University in 1985.
Corporate
Governance
The
Company’s business affairs are conducted under the direction of the Board of
Directors in accordance with the Delaware General Corporation Law and the
Company’s Certificate of Incorporation and Bylaws. Members of the Board of
Directors are informed of the Company’s business through discussions with
management, by reviewing materials provided to them and by participating in
meetings of the Board of Directors and its committees. Certain
corporate governance practices that the Company follows are summarized
below.
Code
of Ethics and Business Conduct
We have
adopted the National Holdings Corporation Code of Ethics and Business Conduct
(the “Code of Conduct”), a code of conduct that applies to our directors,
officers and employees. The Code of Conduct was filed as an exhibit
to our Annual Report on Form 10-K for the fiscal year ended September 30, 2003
and is publicly available on the SEC’s website at www.sec.gov. If
we make any substantive amendments to the Code of Conduct or grant any waiver,
including any implicit waiver from a provision of the Code of Conduct to our
directors or executive officers, we will disclose the nature of such amendment
or waiver in a report on Form 8-K.
Meetings
and Committees of the Board of Directors and Corporate Governance
Matters
During
the fiscal year ended September 30, 2009, the Company’s Board of Directors met
or acted by unanimous written consent a total of 13 times. Each
director attended or participated in 75% or more of the aggregate of the total
number of meetings of the Board of Directors and committees on which he served
during the time he served as a director.
Committees
of the Board of Directors
The Board
of Directors has an Audit Committee, a Compensation Committee, and a Governance
Committee, all the members of which, with the exception of Messrs. Goldwasser,
Sokolow and Dewey, are independent, as defined by SEC rules.
Director
Qualifications. The Board of Directors does not currently have
a nominating committee, as the Company believes that having the full Board
deliberate the nomination process is in the Company’s best
interest. Board of Director nominations are recommended by the
directors, which has recommended the nominees named above for election at the
2010 Annual Meeting. In making its nominations, the Board of Director
identifies candidates who meet the current challenges and needs of the Board of
Directors. In determining whether it is appropriate to add or remove
individuals, the Board of Directors will consider issues of judgment, diversity,
age, skills, background and experience. In making such decisions, the
Board of Directors considers, among other things, an individual’s business
experience, industry experience, financial background and
experiences. The Board of Directors also considers the independence,
financial literacy and financial expertise standards required by our Board of
Directors committees’ charters and applicable laws, rules and regulations, and
the ability of the candidate to devote the time and attention necessary to serve
as a director and a committee member.
Identifying and Evaluating Nominees
for Director. In the event that vacancies are anticipated or
otherwise arise, the Board of Directors considers various potential candidates
for director. Candidates may come to the attention of the Board
through current directors, professional search firms engaged by us, shareholders
or other persons. Candidates are evaluated at regular or special meetings of the
Board of Directors and may be considered at any point during the
year.
Shareholder Nominees.
Candidates for director recommended by shareholders will be
considered by the Board of Directors. Such recommendations should include the
candidate’s name, home and business contact information, detailed biographical
data, relevant qualifications for membership on our Board of Directors,
information regarding any relationships between the candidate and us within the
last three years, including stockholdings in us, and a written indication by the
recommended candidate of the candidate’s willingness to serve, and should be
sent to the Board of Directors at the address listed on page ten of this proxy
statement.
The Board
of Directors will evaluate recommendations for director nominees submitted by
directors, management or qualifying shareholders in the same manner, using the
criteria stated above. All directors and director nominees will
submit a completed form of directors’ and officers’ questionnaire as part of the
nominating process. The process may also include interviews and additional
background and reference checks for non-incumbent nominees, at the discretion of
the Board of Directors.
Audit
Committee
The Audit
Committee currently consists of Leonard J. Sokolow, Robert W. Lautz, Jr. and
Charles R. Modica. Messrs. Lautz and Modica are “independent” as
defined in SEC Rule 10A-3 under the Securities Exchange Act of 1934, as amended
(the “Exchange Act”) and Rule 4200 of the Nasdaq Market Place Rules
..
On
January 22, 2003, the Board adopted a charter for the Audit Committee, as
amended and restated on January 12, 2004 and January 27, 2009, a copy of which
is available on our website, www.nationalsecurities.com. The Audit
Committee oversees the Company's financial reporting process on behalf of the
Board of Directors. Management is responsible for the Company's internal
controls, financial reporting process and compliance with laws and regulations
and ethical business standards. The independent public accountants are
responsible for performing an independent audit of the Company's consolidated
financial statements in accordance with generally accepted auditing standards
and to issue a report thereon. The Audit Committee has the power and authority
to engage the independent public accountants, reviews the preparations for and
the scope of the audit of the Company’s annual financial statements, reviews
drafts of the statements and monitors the functioning of the Company’s
accounting and internal control systems through discussions with representatives
of management and the independent public accountants.
Under SEC
rules, companies are required to disclose whether their audit committees have an
“audit committee financial expert” as defined in Item 401(h) of Regulation S-K
under the Securities Exchange Act of 1934 and whether that expert is
“independent” as that term is used in Item 7(d)(3)(iv) of Schedule 14A under the
Exchange Act. The Board of Directors has determined
that Mr. Sokolow is a “financial expert” but not “independent” under
SEC Rule 10A-3 under the Exchange Act and Rule 4200 of the Nasdaq Market Place
rules. The Audit
Committee meets quarterly and on an on-needed basis. The Committee
met 3 times during the year ended September 30, 2009. Mr. Sokolow has
been the Chairman of the Audit Committee since the July 1, 2008 merger with
vFinance, Inc.
The Audit
Committee has submitted the following report:
On
December 24, 2009, the Audit Committee met to review the results of the fiscal
year 2009 audit. The Audit Committee reviewed the Company's audited
financial statements as of and for the fiscal year ended September 30, 2009 with
management and the Company's independent public accountants, Sherb & Co.,
LLP. This review included the matters required to be discussed by
Statement on Auditing Standards No. 61, “Communication with Audit Committees,”
as issued and amended by the Auditing Standards Board of the American Institute
of Certified Public Accountants. The Audit Committee discussed with
Sherb & Co., LLP their independence from management and from the Company,
and has received the written disclosures and the letter required by Independent
Standards Board Standard No. 1, as adopted by the Public Company Accounting
Oversight Board in Rule 3600T from Sherb & Co., LLP confirming their
independence.
Based on
the above review and discussions, the Audit Committee recommended to the Board
of Directors that the audited financial statements as of and for the fiscal year
ended September 30, 2009 be included in the Company's Annual Report on Form 10-K
for the fiscal year ended September 30, 2009.
Audit
Committee:
Leonard
J. Sokolow
Robert W.
Lautz, Jr.
Charles
R. Modica
Compensation
Committee
The
Company’s Compensation Committee currently consists of Marshall S. Geller,
Christopher C. Dewey and Charles R. Modica. Messrs. Geller and Modica
are considered to be “independent.” Mr. Dewey is not considered to be
“independent” under SEC Rule 10A-3 under the Exchange Act and Rule 4200 of the
Nasdaq Market Place rules. On January 12, 2004, the Compensation
Committee adopted a formal Compensation Committee Charter, as amended and
restated on January 27, 2009, which contains a detailed description of the
committee's duties and responsibilities, a copy of which is available on our
website, www.nationalsecurities.com. The Compensation Committee meets
annually and on an on-needed basis. The Committee met or acted by
unanimous written consent 4 times during the year ended September 30,
2009.
Governance
Committee
The
Governance Committee currently consists of Mark Goldwasser, Marshall S. Geller
and Jorge A. Ortega. Messrs. Geller and Ortega are considered to be
“independent.” Mr. Goldwasser is not considered to be “independent”
as defined in SEC Rule 10A-3 under the Exchange Act and Rule 4200 of the Nasdaq
Market Place rules. The Governance Committee was created with certain
duties and responsibilities, including setting the Company’s trading policy,
monitoring Sarbanes-Oxley matters, resolving Board conflicts and/or such other
duties and responsibilities as set forth in the Corporate Governance Committee
charter. The Governance Committee meets on an on-needed basis. The
Committee did not meet during the year ended September 30, 2009.
Compensation
Committee Interlocks and Insider Participation
No
interlocking relationships existed between any members of the Company’s Board of
Directors or Compensation Committee and the board of directors or compensation
committee of any other company during the fiscal year ended September 30, 2009,
nor has any such interlocking relationship existed in the past.
Procedures
for Shareholder Communications to Directors
Shareholders
may communicate directly with the Board of Directors. All communications should
be directed to our Corporate Secretary at the address below and should
prominently indicate on the outside of the envelope that it is intended for the
Board of Directors or for non-management directors. If no director is specified,
the communication will be forwarded to the entire Board. Shareholder
communications to the Board should be sent to:
Corporate
Secretary
Attention:
Board of Directors
1200
North Federal Highway, Suite 400
Boca
Raton, FL 33432
Director
Attendance Policy
Attendance
of directors at our annual meetings of shareholders can provide our shareholders
with an opportunity to communicate with directors about issues affecting the
Company. Accordingly, all directors are encouraged to attend annual
meetings of shareholders; however, attendance is not mandatory. All
of the Company’s directors other than Charles Modica attended the last annual
meeting of shareholders, which was held in March 2009.
THE
BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THE
NOMINEES
AS
A DIRECTOR OF THE COMPANY.
PROPOSAL
2
RATIFICATION
OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board
of Directors, acting on the recommendation of the Audit Committee, has appointed
Sherb & Co., LLP (“Sherb & Co.”), as the independent public accountants
for the Company for the fiscal year ending September 30, 2010. The
Board of Directors requests that the shareholders ratify the
appointment. If the shareholders do not ratify the appointment, the
Board of Directors will consider the selection of another public accounting firm
for fiscal year 2010 and future years. One or more representatives of
Sherb & Co. may attend the Annual Meeting and, if so, will have an
opportunity to make a statement if they so desire, and would be available to
answer questions.
On
October 14, 2008, the Company, upon the recommendation and approval of its Audit
Committee, elected to dismiss Marcum & Kliegman, LLP (“Marcum &
Kliegman”) as the Company’s independent public accounting firm. The
reports of Marcum & Kliegman on the Company’s financial statements for the
fiscal years ended September 30, 2007 and 2006 did not contain an adverse
opinion or a disclaimer of opinion, nor were they qualified or modified as to
uncertainty, audit scope or accounting principle.
During
the fiscal year ended September 30, 2008 and through October 14, 2008, there
were no disagreements with Marcum & Kliegman on any matter of accounting
principles or practices, financial statement disclosure or auditing scope or
procedure, which, if not resolved to Marcum & Kliegman’s satisfaction, would
have caused it to make a reference to the subject matter of the disagreement in
connection with its reports on the Company’s financial statements for such
years. During the fiscal years ended September 30, 2008 and
through October 14, 2008, there were no “reportable” events requiring
disclosure pursuant to Item 304(a)(1)(v) of
Regulation S-K.
On
October 14, 2008, the Audit Committee approved the appointment of Sherb &
Co. as the Company’s independent public accounting firm. During the
Company’s fiscal years ended September 30, 2007 and 2006 and through October 14,
2008, no one acting on behalf of the Company had consulted Sherb & Co.
regarding (i) the application of accounting principles to a specific
completed or contemplated transaction, or the type of audit opinion that might
be rendered on the Company’s financial statements; or (ii) any matter that
was either the subject of a disagreement or a reportable event, as defined in
Item 304(a) of Regulation S-K.
Sherb
& Co. was previously the independent public accounting firm of vFinance
prior to its July 1, 2008 merger with the Company.
Audit Fees. Fees for services
performed by Sherb & Co. during fiscal year 2009 relating to the audit of
our consolidated annual financial statements, the review of our consolidated
quarterly financial statements included in our Forms 10-Q and preparation of
Federal and state income tax returns were $285,000. Fees for services
performed by Sherb & Co during fiscal year 2008 relating to the audit of our
consolidated annual financial statements, the review of our consolidated
quarterly financial statements included in our Forms 10-Q and preparation of
Federal and state income tax returns were $255,000.
Audit-Related Fees.
“Audit-related fees” include fees billed for assurance and related services that
are reasonably related to the performance of the audit and not included in the
“audit fees” mentioned above. There were no such fees paid in fiscal years 2009
or 2008.
Tax Fees. The fees billed in
fiscal years 2009 and 2008 for tax compliance, tax advice or tax planning are
included in Audit Fees above.
All Other Fees. Fees for services performed
by Marcum & Kliegman LLP / Sherb & Co., LLP during fiscal year 2008
relating to the Company’s registration statement and merger were
$30,000.
During
the 12 month period ended September 30, 2008, vFinance paid Sherb & Co. a
total of $111,000 consisting of audit fees, audit-related fees, tax fees and all
other accounting related fees.
Pre-Approval
Policies
Pursuant
to the rules and regulations of the SEC, before the Company’s independent public
accountant is engaged to render audit or non-audit services, the engagement must
be approved by the Company’s audit committee or entered into pursuant to the
committee’s pre-approval policies and procedures. The policy granting
pre-approval to certain specific audit and audit-related services and specifying
the procedures for pre-approving other services is set forth in the Amended and
Restated Charter of the Audit Committee.
Required
Vote
The
affirmative vote of the holders of a majority of the shares present, or
represented, and entitled to vote at the Annual Meeting is needed to ratify the
appointment of Sherb & Co., LLP as the Company's independent public
accountants.
THE
BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF THE
APPOINTMENT
OF SHERB & CO., LLP AS INDEPENDENT PUBLIC ACCOUNTANTS FOR THE
COMPANY
IN FISCAL YEAR 2010.
COMPENSATION
DISCUSSION AND ANALYSIS
Introduction
This
Compensation Discussion and Analysis is intended to provide a context for the
disclosures contained in this Proxy Statement with respect to the compensation
paid to our Named Executive Officers. Their compensation is detailed
in the tables that follow this Compensation Discussion and
Analysis. Specifically, this Compensation Discussion and Analysis
will explain the objectives and material elements of the compensation of the
Named Executive Officers during the fiscal year ended September 30,
2009.
The
Compensation Committee of our Board of Directors has the responsibility of
developing and overseeing a comprehensive compensation philosophy, with
strategies and principles that have the support of the Board of Directors and
management, and that ensure the fair and consistent administration of our
compensation program. The Compensation Committee makes
recommendations to the full Board for approval relating to the total
compensation to be paid to the Named Executive Officers, including salary,
performance bonus, equity awards, long-term awards, benefits and
perquisites.
Philosophy
and Objectives of Our Compensation Program
The
primary objectives of the Compensation Committee are to ensure that our
executive compensation and benefits programs are structured to: attract and
retain executive talent by offering compensation that is competitive with pay at
other companies of a similar size in the same or similar industries; safeguard
our interests and the interests of our shareholders; and cost-efficient and fair
to our employees, management and shareholders.
Our
Compensation Committee believes that an effective compensation program is one
that provides certain incentives, while also providing a reasonable level of
security to the Named Executive Officers through competitive base salaries and
bonus opportunities. To this end, our executive compensation reflects
a balance of cash and non-cash compensation
. The
Compensation Committee does not set a rigid target for these mixes, and the mix
will necessarily vary from year to year based upon our underlying financial
performance. Our incentive plans reward performance with time-based vesting in
order to assist in employee retention.
Committee
Purposes and Responsibilities
The
Committee carries out the duties and responsibilities set forth
below. These functions serve as a guide with the understanding that
the committee may determine to carry out additional functions and adopt
additional policies and procedures as may be appropriate in light of changing
business, legislative, regulatory, legal, or other conditions. The
committee shall also carry out any other responsibilities and duties delegated
to it by the Board of Directors, from time to time, related to the purposes of
the Committee.
In
discharging its oversight role, the committee is empowered to study or
investigate any matter of interest or concern that the committee deems
appropriate and shall have the sole authority to retain, without seeking Board
approval, outside counsel or other experts for this purpose, including the
authority to approve the fees payable to such counsel or experts and any other
terms of retention.
Setting
Compensation for Executive Officers and Directors
·
|
Establish
and review the overall compensation philosophy of the
Company.
|
·
|
Review
and approve the Company's corporate goals and objectives relevant to the
Chief Executive Officer and President and other executive officers'
compensation, including annual performance
objectives.
|
·
|
Evaluate
the performance of the Chief Executive Officer and President and other
executive officers in light of those goals and objectives and, based on
such evaluation, review and approve the annual salary, bonus, stock
options, and other benefits, direct and indirect, of such
officers.
|
·
|
In
determining the long-term incentive component of compensation for the
Chief Executive Officer and President and other executive officers, the
Committee considers the Company's performance and relative shareholder
return, the value of similar incentive awards to the Chief Executive
Officer and President and other executive officers at comparable
companies, and the awards given to the Company's Chief Executive Officer
and President and other executive officers in past years. The Committee is
not precluded from approving awards (with the ratification of the Board of
Directors) as may be required to comply with applicable tax laws, such as
Rule 162(m) of the Internal Revenue
Code.
|
·
|
In
connection with executive compensation programs: (a) review and recommend
to the full Board of Directors, or approve, new executive compensation
programs; (b) review on a periodic basis the operations of the Company's
executive compensation programs to determine whether they are properly
coordinated and achieving their intended purposes; (c) establish and
periodically review policies for the administration of executive
compensation programs; and (d) take steps to modify any executive
compensation program that yields payments and benefits that are not
reasonably related to executive and corporate
performance.
|
·
|
Establish
and periodically review policies in the area of senior management
perquisites.
|
·
|
Consider
policies and procedures pertaining to expense accounts of senior
executives.
|
·
|
Review
and recommend to the full Board of Directors compensation of directors as
well as directors and officers indemnification and insurance
matters.
|
·
|
Review
and make recommendations to the full Board of Directors, or approve, any
contracts or other transactions with current or former executive officers
of the Company, including consulting arrangements, employment contracts,
change-in-control, severance, or termination arrangements, and loans to
employees made or guaranteed by the
Company.
|
Monitoring Incentive and
Equity-Based Compensation Plans
·
|
Review
and make recommendations to the Board of Directors with respect to the
Company's incentive-compensation plans and equity-based plans, and review
the activities of the individuals responsible for administering those
plans.
|
·
|
Review
and approve all equity compensation plans of the Company that are not
otherwise subject to the approval of the Company's
shareholders.
|
·
|
Review
and make recommendations to the full Board of Directors, or approve all
awards of shares or share options pursuant to the Company's equity-based
plans.
|
·
|
Monitor
compliance by executives with the rules and guidelines of the Company's
equity-based plans.
|
·
|
Select,
retain, and/or replace, as needed, compensation and benefits consultants
and other outside consultants to provide independent advice to the
Committee. In that connection, in the event the Committee retains a
compensation consultant, the Committee shall have the sole authority to
approve such consultant's fees and other retention
terms.
|
Role
of Executive Officers in Compensation Decisions
Our
compensation committee makes all determinations affecting the compensation for
our Named Executive Officers, including our Chief Executive Officer and
President, and recommends those determinations to the full Board of Directors
for approval. Our Chief Executive Officer and President may attend
meetings of the committee as a non-voting advisory member, except that they are
not present for any discussion of their own compensation. The
compensation committee receives and carefully considers our Chief Executive
Officer's and President’s evaluations of all Named Executive Officers other than
themselves, as well as their recommendations with respect to all components of
compensation of the other Named Executive Officers. The committee
expressly reserves the right to exercise its discretion in modifying any
adjustments or awards recommended by our Chief Executive Officer and President,
although historically the committee has given significant weight to the
recommendations of our Chief Executive Officer and President with respect to the
other Named Executive Officers.
Principal
Elements of our 2009 Compensation Program
The
principal elements of compensation for our Named Executive Officers during
fiscal year 2009 were as follows:
·
|
corporate
finance cash and non cash compensation;
and
|
·
|
other
compensation or perquisites
|
Base Salary.
Generally, we set executive base salaries at levels comparable with
those of executives in similar positions and with similar responsibilities at
comparable companies. We seek to maintain base salary amounts at or
near the industry norms while avoiding paying amounts in excess of what we
believe is necessary to motivate executives to meet corporate
goals. Base salaries are generally reviewed annually, subject to
terms of employment agreements, and our compensation committee and board will
seek to adjust base salary amounts to realign such salaries with industry norms
after taking into account individual responsibilities, performance and
experience.
Brokerage Commissions.
If the executive is a registered representative, part of the
executive’s total compensation is a percentage of the brokerage commissions with
respect to customer accounts for which such individuals were the designated
account representatives. We believe this form of additional compensation creates
incentives for our executives.
Annual Cash Bonus.
The Company previously adopted on an annual basis an incentive bonus
plan that must be approved annually by the compensation committee that rewards
senior management for their performance in building revenues and shareholder
value of the Company and acts as an incentive to continue to improve
performance. The most recent plan adopted by the compensation
committee was for fiscal year 2007. No incentive bonus plan was
approved for fiscal years 2008 or 2009. For fiscal years 2008 and
2009, the Company accrued bonuses for Messrs. Goldwasser and Sokolow as set
forth in their respective employment agreements.
Equity Awards. We
also use stock options and other stock-based awards to reward long-term
performance. We believe that providing a meaningful portion of our
executives’ total compensation package in stock options and other stock-based
awards will align the incentives of our executives with the interests of our
shareholders and with our long-term success. The Compensation
Committee and Board develop their equity award determinations based on their
judgments as to whether the complete compensation packages provided to our
executives, including prior equity awards, are sufficient to retain, motivate
and adequately award the executives.
Equity
awards were granted through the 2006 Stock Option Plan, which was adopted by our
shareholders in March 2006. The 2006 Plan will terminate when no
further awards may be granted and awards granted are no longer outstanding,
provided that options may not be granted after December 31, 2015. The
2008 Stock Option Plan was adopted by our shareholders in March
2008. The 2008 Plan will terminate when no further awards may be
granted and awards granted are no longer outstanding, provided that options may
not be granted after March 31, 2018. The plan is intended to comply
with the regulations issued under Section 162(m) of the Internal Revenue
Code and is administered by our Compensation Committee. To the extent
permitted under the provisions of the plan, the Compensation Committee has
authority to determine the selection of participants, allotment of shares,
price, vesting period and other conditions of awards.
Corporate Finance
Compensation. In addition to cash compensation paid, as part
of our corporate finance compensation, the Company generally receives
underwriter or placement agent warrants exercisable to purchase securities
similar to those sold to the public by the companies whose offerings we
underwrite or privately place. The warrants generally have a
five-year expiration date, are subject to a restriction period and the exercise
price is typically 100 percent to 120 percent of the price at which the
securities are initially sold to the public. For the fiscal year
ended September 30, 2009, some of the Company’s senior officers and members of
its corporate finance department were entitled to a portion of the underwriter
or placement agent warrants received in the course of the Company’s corporate
finance activities. For the 2010 fiscal year only members of our
corporate finance department are entitled to such warrants. Such
warrants are allocated in part based upon the individual’s contribution to both
the Company’s overall business activities and the particular corporate finance
transaction in which they are issued.
Other Compensation.
We have established and maintain various employee benefit plans,
including medical, dental, life insurance and 401(k) plans. These plans are
available to all salaried employees and do not discriminate in favor of
executive officers. Additionally, certain senior level management may
have negotiated addition perquisites such as automobile allowances or club
memberships.
Compensation
Committee Report
This
report of the Compensation Committee shall not be deemed incorporated by
reference by any general statement incorporating the Proxy Statement by
reference into any filing under the Securities Act of 1933 or the Securities
Exchange Act of 1934 (the “Acts”), except to the extent that the Company
specifically incorporates this information by reference, and shall not otherwise
be deemed filed under such Acts.
The
Committee is responsible for reviewing and approving the compensation of the
Company's Chief Executive Officer and recommending to the Board of Directors the
compensation of the Company's other officers and the Company’s chairman,
consistent with employment contracts, where appropriate. The Committee believes
the compensation paid to the Company’s Executive Officers is competitive with
companies within its industry that are comparable in size and by companies
outside the industry with which the Company competes for executive
talent.
The
overall executive compensation philosophy is based upon the premise that
compensation should be aligned with and support the Company's business strategy
and long-term goals. The Company believes it is essential to maintain
an executive compensation program that provides overall compensation competitive
with that paid executives with comparable qualifications and
experience. This is critical to attract and retain competent
executives.
Annual
cash bonuses are determined by the Compensation Committee. Stock
options may be granted to key employees of the Company pursuant to the Company's
stock option plan that provides additional incentive to maximize shareholder
value. The plans may also utilize vesting periods to encourage option
recipients to continue in the employ of the Company. The Company
grants stock options to its officers, directors, employees, investment
executives and consultants.
The
Compensation Committee regularly evaluates its policies with respect to
executive compensation. The Compensation Committee believes that a
combination of salary, commissions, as applicable, bonus, and stock options
provides a mix of short and long-term rewards necessary to attract motivate and
retain an excellent management team.
The
Company believes it has complied with in 2009 and intends to comply with in the
future, the requirements of Section 162 (m) of the Internal Revenue Code of
1986.
Compensation of the Chief Executive
Officer and President. On July 1, 2008, concurrent with the
closing of the merger of the Company and vFinance, Inc., Messrs. Goldwasser and
Sokolow (the “Executives”) each entered into substantially identical
five-year employment agreements with us, pursuant to which Mr. Goldwasser is
employed by us as Chairman and Chief Executive Officer and Mr. Sokolow is
employed by us as Vice Chairman and President. Under the terms of the employment
agreements, the Executives were entitled to each receive an annual base salary
of $450,000, which will increase 5% per year, and a non-accountable automobile
expense allowance of $1,000 per month. In addition, each of them was entitled to
receive on a fiscal year basis a cash bonus determined in the discretion of our
Compensation Committee of not less than: (i) $225,000, (ii) 5% of our fiscal
year consolidated net income in excess of $4.5 million, up to 100% of the
difference between their then current base salaries and $225,000 and (iii) such
additional bonuses as the board of directors may determine based upon the
Board's assessment of their performance in the following areas: revenue growth,
new business development, investor relations, communications with the board of
directors, and special projects as assigned by the board of
directors. As of September 30, 2009, each of the Executives had
accrued a bonus of $206,250, which amounts remain unpaid as of the date
hereof.
On
November 23, 2009, each of Messrs. Goldwasser’s and Sokolow’s employment
agreements were amended to revise the bonus payable under such
agreements. As revised, for the fiscal year beginning October 1,
2009, the bonus will be payable quarterly in an amount equal to seven and
one-half (7.5%) percent of the Company’s annual Adjusted EBITDA (as defined
below) in excess of $1,500,000 (of which 50% will be paid as soon as practicable
in cash after the end of each fiscal quarter (“Paid Portion”), and 50% will
accrue until the conclusion of the fiscal year (“Accrued Portion”).
To the
extent that the Adjusted EBITDA for any fiscal year is between $1,500,000 and
$4,500,000, up to 100% of the Accrued Portion may, at the Board’s discretion, be
satisfied by the issuance of the Company’s restricted common stock, at its then
fair market value. To the extent that the Adjusted EBITDA for such
fiscal year exceeds $4,500,000, the Accrued Portion shall be paid in
cash.
For the
purpose of the bonuses, “Adjusted EBITDA” means the net income of the Company
for a particular fiscal quarter before interest, taxes, depreciation and
amortization, adjusted to exclude non-cash compensation expense (including the
amortization of costs associated with the issuance of stock options) and write
down of forgivable loans. At the conclusion of the fiscal year, the
Company and the Executives shall ‘true up’ the Annualized Bonus, the Paid
Portion and the Accrued Portion, with payment (if any) to made as soon as
practicable following the determination of such ‘true up’ amount. To the extent
that the ‘true up’ calculation results in a negative amount (i.e., the Paid
Portion exceeds the Annualized Bonus) then (i) the Company will have no right to
clawback such amount from the Executive but (ii) such amount will first be
deducted from the Annualized Bonus (if any) to be paid for future
periods. All bonuses will be subject to applicable withholding taxes
which will be paid by the Company and other similar deductions and any payment
of Accrued Bonus payable in Company common stock shall accordingly be calculated
net of such withholding on the aggregate bonus amount paid.
The
Executives will continue to be eligible to such additional bonuses as the Board
of Directors of the Company will determine based upon the Board’s assessment of
their performance in the various areas, which bonuses may be paid in cash and/or
Company common stock at the Board’s discretion.
Each employment
agreement terminates upon the earliest to occur of: (i) the death of the
employee; (ii) a termination by National by reason of the disability of the
employee; (iii) a termination by National with or without cause; (iv) a
termination by the employee with or without good reason; (v) upon a "Change in
Control" (as defined in the employment agreements); or (vi) the non-renewal of
the agreement. Upon the termination due to the death or disability of the
employee, by National without cause, by the employee with good reason, (upon a
"Change of Control") or upon the expiration of the employment agreement if
National or the employee refuses to extend the term of the employment agreement,
the employee will be entitled to: (i) any accrued but unpaid salary or bonus or
unreimbursed expenses; (ii) any bonus payable for the portion of the fiscal year
during which the termination occurs; (iii) 100% of the employee's base salary
(150% in the event of termination by National without cause or by the employee
with good reason); (iv) the continuation of health benefits until the earlier of
(a) 18 months after termination and (b) the date the employee accepts other
employment; and (v) all unvested options granted pursuant to the employment
agreements will become immediately vested and be exercisable for a period of
nine months.
Pursuant
to each employment agreement, each of Messrs. Goldwasser and Sokolow were
granted non-qualified stock options to purchase 1,000,000 shares of National's
common stock at an exercise price of $1.64 per share, which was equal to the
average of the 10-day closing market price of National's common stock prior to
the Effective Date. As of September 30, 2009, 500,000 shares of each
of the Messrs. Goldwasser’s and Sokolow’s options have vested, with an
additional 25% shares underlying the options vesting on the third and fourth
anniversaries of the date of grant. The options expire June 30,
2015.
Compensation
Committee:
Marshall
S. Geller
Christopher
C. Dewey
Charles
R. Modica
Executive
Officers
The
following sets forth information as to persons who serve as our executive
officers as of December 31, 2009:
Mark Goldwasser, 51 years
old. Chief Executive Officer and Chairman of the
Board. For information regarding Mr. Goldwasser, see “Proposal 1
– Election of Directors.”
Leonard J. Sokolow, 53 years
old. President and Vice Chairman of the Board. For
information regarding Mr. Sokolow see “Proposal 1 – Election of
Directors.”
Christopher C. Dewey, 65
years old. Vice Chairman of the Board. For information
regarding Mr. Dewey, see “Proposal 1 – Election of Directors.”
Alan B. Levin, 46 years old,
has been the Chief Financial Officer since the merger with vFinance, Inc. on
July 1, 2008. Prior to that he served as Chief Financial Officer of
vFinance since January 2007. Prior to that date, he served as its
Interim Chief Financial Officer since July 2006 and its Controller since June
2005. Prior to joining vFinance, Mr. Levin served as Chief Financial Officer for
United Capital Markets, Inc. from September 2000 to January 2005. Mr.
Levin has over thirteen years experience in the brokerage industry serving as a
Financial and Operations Principal and 23 years experience serving in accounting
management roles in various industries. He received a B.S. degree in
Economics with a concentration in Accounting from Southern Connecticut State
University in New Haven, Connecticut in 1986.
Brian Friedman, 38 years old,
has served as an Executive Vice President of National since March
2006. Mr. Friedman joined National Securities in 1997 as
a member of the Corporate Finance Department. From 1997 until 2001,
Mr. Friedman worked primarily in the areas of corporate finance and
business development. From 2001 until present, Mr. Friedman was
instrumental in implementing business changes to improve the profitability and
business of National. Mr. Friedman continues to serve as a Managing
Director in Investment Banking of National Securities. Prior to
joining National, he worked as an associate at Liberty Hampshire, LLC, a
boutique investment bank. Mr. Friedman earned his J.D./M.B.A. in
finance at Illinois Institute of Technology's Chicago Kent College of Law and
his BA in finance from the University of Iowa.
Jonathan C. Rich, 40 years
old, has been the Executive Vice President and Director of Investment Banking of
vFinance Investments since July 1, 2005. Since the Merger, Mr.
Rich is serving as an Executive Vice President of vFinance. From
January 15, 2001 through December 30, 2005, Mr. Rich was a Senior Vice President
in the Investment Banking division of vFinance Investments. From
April 1, 1997 through January 15, 2001, Mr. Rich was a Vice President and Senior
Vice President in the Investment Banking division of First Colonial Securities
Group, Inc., a 13 office investment banking and brokerage firm based out of
Marlton, New Jersey. Mr. Rich received his B.A. degree in Political
Economy from Tulane University and a J.D./M.B.A. from Fordham
University.
William L. Groeneveld, 44
years old, was promoted to President of vFinance Investments in September 2008
and has been Head Trader of vFinance Investments since October 2002. Mr.
Groeneveld had been vFinance Investments' Trading Manager from October of 2001
to October 2002. In addition to his Head Trader duties, Mr.
Groeneveld also has been President of Equity Station since March
2006. Prior to joining vFinance, Mr. Groeneveld was a partner of
Program Trading Corp., a registered broker-dealer specializing in algorithmic
and "black box" trading, where he was Executive Vice President and Head Trader
from 1994 until 2001. Mr. Groeneveld attended West Virginia
University majoring in Aerospace Engineering.
Summary
Compensation Table
The
following table sets forth the cash compensation paid by the Company to each of
its Named Executive Officers during the fiscal years ended September 30, 2009
and 2008:
|
|
|
|
|
|
|
|
Options
|
|
Other
|
|
Total
|
Name and Capacity
|
|
Year
|
|
Salary (1)
|
|
Bonus
|
|
Awards (2)
|
|
Compensation(3)
|
|
Compensation
|
Mark
Goldwasser
|
|
2009
|
|
438,825
|
|
75,000
|
|
-
|
|
30,600
|
|
544,425
|
Chairman
and Chief Executive
Officer
|
|
2008
|
|
464,075 |
|
-
|
|
900,000 |
|
30,400
|
|
1,394,475
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Leonard
J. Sokolow(4)
|
|
2009
|
|
438,825
|
|
75,000
|
|
-
|
|
30,600
|
|
544,425
|
President
and Vice Chairman
|
|
2008
|
|
112,950
|
|
-
|
|
1,330,000
|
|
3,000
|
|
1,445,950
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Christopher
C. Dewey
|
|
2009
|
|
120,000
|
|
-
|
|
-
|
|
9,000
|
|
129,000
|
Vice
Chairman
|
|
2008
|
|
120,000
|
|
-
|
|
-
|
|
-
|
|
120,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Alan
B. Levin (4)
|
|
2009
|
|
180,000
|
|
25,200
|
(5)
|
-
|
|
16,800
|
|
221,995
|
CFO
& Secretary
|
|
2008
|
|
45,000
|
|
-
|
|
159,700
|
|
-
|
|
204,700
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brian
Friedman
|
|
2009
|
|
149,191
|
|
-
|
|
-
|
|
25,800
|
|
174,991
|
Executive
VP
|
|
2008
|
|
166,734
|
|
-
|
|
-
|
|
9,000
|
|
175,734
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Johathan
C. Rich (4)
|
|
2009
|
|
223,122
|
|
-
|
|
-
|
|
16,800
|
|
239,922
|
Executive
VP
|
|
2008
|
|
67,868
|
|
-
|
|
178,000
|
|
-
|
|
245,868
|
|
|
|
|
|
|
|
|
|
|
|
|
|
William
L. Groeneveld (4) President-(vFinance |
|
2009 |
|
262,527 |
|
- |
|
- |
|
- |
|
262,527 |
Investments,
Inc. and EquityStation, Inc.) |
|
2008 |
|
46,763 |
|
- |
|
125,876 |
|
- |
|
172,639 |
(1)
|
Amounts
include, if any, commissions earned in the normal course of business, fees
received for corporate finance services and profit from the sale during
the year of the Company’s Common Stock obtained through the exercise of
options.
|
(2)
|
Represents
compensation cost of option awards as described in
FAS 123R.
|
(3)
|
Represents
perquisite payments for auto allowance and club
memberships.
|
(4)
|
Messrs.
Sokolow, Levin, Rich and Groeneveld joined the Company on July 1,
2008.
|
(5)
|
Represents
bonus due and payable to Mr. Levin from his employment with vFinance, Inc.
prior to July 1, 2008.
|
Grants
of Plan-Based Awards
The
Company did not grant any stock options or non-equity incentive compensation in
the fiscal year ended September 30, 2009 to the Named Executive
Officers.
No
options were exercised by the Named Executive Officers in the fiscal year ended
September 30, 2009.
Outstanding
Equity Awards at Fiscal Year-End
The following table summarizes the outstanding option awards as of
September 30, 2009 for each Named Executive Officer.
|
|
Number
of Securities
|
|
|
|
|
|
|
|
|
|
|
Underlying
Unexercised
|
|
|
|
Option
|
|
Option
|
|
Option
|
|
|
Options
at Fiscal Year End
|
|
|
|
Exercise
|
|
Grant
|
|
Expiration
|
Name
|
|
Exercisable
|
|
|
Unexercisable
|
|
|
|
Price
|
|
Date
|
|
Date
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark
Goldwasser
|
|
|
367,000 |
|
|
|
- |
|
|
|
$ |
1.375 |
|
02/14/05
|
|
02/14/10
|
|
|
|
37,500 |
|
|
|
12,500 |
|
(1) |
|
$ |
1.705 |
|
03/14/07
|
|
03/14/12
|
|
|
|
43,125 |
|
|
|
14,375 |
|
(2) |
|
$ |
2.44 |
|
08/01/07
|
|
08/01/12
|
|
|
|
500,000 |
|
|
|
500,000 |
|
(3) |
|
$ |
1.64 |
|
07/01/08
|
|
06/30/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Leonard
J. Sokolow
|
|
|
500,000 |
|
|
|
500,000 |
|
(3) |
|
$ |
1.64 |
|
07/01/08
|
|
06/30/15
|
|
|
|
157,500 |
|
|
|
52,500 |
|
(4) |
|
$ |
1.11 |
|
07/01/08
|
|
12/29/10
|
|
|
|
140,000 |
|
|
|
140,000 |
|
(4) |
|
$ |
1.50 |
|
07/01/08
|
|
12/28/11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Christopher
C. Dewey
|
|
|
150,000 |
|
|
|
- |
|
|
|
$ |
1.30 |
|
12/27/06
|
|
12/27/11
|
|
|
|
22,500 |
|
|
|
7,500 |
|
(1) |
|
$ |
1.55 |
|
03/14/07
|
|
03/14/12
|
|
|
|
20,000 |
|
|
|
20,000 |
|
(2) |
|
$ |
2.22 |
|
08/01/07
|
|
08/01/12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Alan
B. Levin
|
|
|
22,400 |
|
|
|
- |
|
(4) |
|
$ |
1.29 |
|
07/01/08
|
|
06/13/10
|
|
|
|
70,000 |
|
|
|
- |
|
(4) |
|
$ |
1.43 |
|
07/01/08
|
|
07/23/11
|
|
|
|
70,000 |
|
|
|
- |
|
(4) |
|
$ |
1.50 |
|
07/01/08
|
|
12/28/11
|
|
|
|
5,250 |
|
|
|
1,750 |
|
(4) |
|
$ |
1.11 |
|
07/01/08
|
|
12/29/10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brian
Friedman
|
|
|
125,000 |
|
|
|
- |
|
|
|
$ |
1.25 |
|
02/14/05
|
|
02/14/10
|
|
|
|
22,500 |
|
|
|
7,500 |
|
(1) |
|
$ |
1.55 |
|
03/14/07
|
|
03/14/12
|
|
|
|
26,250 |
|
|
|
8,750 |
|
(2) |
|
$ |
2.22 |
|
08/01/07
|
|
08/01/12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jonathan
C. Rich
|
|
|
35,000 |
|
|
|
- |
|
(4) |
|
$ |
1.80 |
|
07/01/08
|
|
01/25/10
|
|
|
|
42,000 |
|
|
|
14,000 |
|
(4) |
|
$ |
1.11 |
|
07/01/08
|
|
12/29/10
|
|
|
|
36,400 |
|
|
|
54,600 |
|
(4) |
|
$ |
1.50 |
|
07/01/08
|
|
10/30/12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
William
L. Groeneveld
|
|
|
4,375 |
|
|
|
- |
|
(4) |
|
$ |
1.86 |
|
07/01/08
|
|
12/31/09
|
|
|
|
42,000 |
|
|
|
14,000 |
|
(4) |
|
$ |
1.11 |
|
07/01/08
|
|
12/29/10
|
|
|
|
1,750 |
|
|
|
1,750 |
|
(4) |
|
$ |
1.50 |
|
07/01/08
|
|
12/28/11
|
|
|
|
36,400 |
|
|
|
54,600 |
|
(4) |
|
$ |
1.50 |
|
07/01/08
|
|
10/30/12
|
(1)
|
These
shares vest on March 14, 2010.
|
(2)
|
These
shares vest on August 1,
2010.
|
(3)
|
These
shares vest in two equal annual installments beginning on July 1,
2010.
|
(4)
|
These
options were issued in connection with the merger with vFinance, Inc. in
exchange for outstanding vFinance options held by such
individuals.
|
Directors
Compensation
Each
outside director is paid a directors fee of $15,000 per annum, payable
quarterly. Outside directors are also granted options to purchase
10,000 shares of the Company’s Common Stock each year of their tenure on the day
after the date of the Company’s Annual Meeting of Shareholders, which fully vest
six (6) months after the date of issuance. Outside directors may also
be granted options to purchase shares of the Company’s Common Stock based on
their service to the Company, which fully vest six (6) months after the date of
issuance. The exercise price of such options equal or exceed fair market value
of the Common Stock on the date of grant. The Company reimburses all
directors for expenses incurred traveling to and from Board
meetings. The Company does not pay inside directors any compensation
as a director. The compensation for directors was approved by the
disinterested members of the Board of Directors. The following table
summarizes the compensation of our outside directors for fiscal year
2009.
|
|
|
|
Fees
|
|
|
Option
Awards
|
|
|
Total
|
|
Name
|
|
Year
|
|
Paid
|
|
|
Number
|
|
|
Value
(1)
|
|
|
Compensation
|
|
Marshall
S. Geller
|
|
2009
|
|
$ |
15,000 |
|
|
|
10,000 |
|
|
$ |
6,400 |
|
|
$ |
21,400 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert
W. Lautz, Jr.
|
|
2009
|
|
$ |
15,000 |
|
|
|
10,000 |
|
|
$ |
6,400 |
|
|
$ |
21,400 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charles
R. Modica
|
|
2009
|
|
$ |
15,000 |
|
|
|
10,000 |
|
|
$ |
6,400 |
|
|
$ |
21,400 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jorge
A. Ortega
|
|
2009
|
|
$ |
15,000 |
|
|
|
10,000 |
|
|
$ |
6,400 |
|
|
$ |
21,400 |
|
(1)
|
Represents
compensation cost of option awards as described in
FAS 123R.
|
Equity
Compensation Plan Information
The
following table sets forth information as of September 30, 2009 with respect to
compensation plans under which equity securities of the Company are authorized
for issuance.
Plan
Category
|
Number
of securities to be
issued
upon exercise of
outstanding
options,
warrants
and rights
|
Weighted-average
exercise
price of
outstanding
options,
warrants
and rights
|
Number
of securities
remaining
available for
future
issuance under
equity
compensation plans
(excluding
securities
reflected
in column (a)
|
|
(a)
|
(b)
|
(c)
|
Equity
compensation
plans
approved by
security
holders
|
5,912,165
(1)
|
$1.55
|
3,344,835(2)
|
(1)
|
Includes
options issued and outstanding under the 2001 and 2006 Stock Option
Plans.
|
(2)
|
Includes
options available for issuance under the 2006 and 2008 Stock Option
Plans.
|
Employment
Agreements
Messrs.
Goldwasser and Sokolow entered into Employment Agreements with the Company dated
July 1, 2008, as amended on November 23, 2009. See “Compensation of the Chief Executive
Officer and President” on page 16.
Mr. Dewey
entered into a Compensation Agreement with the Company dated December 27,
2006. The Agreement is at will. In accordance with the
Agreement, the initial base salary is $120,000 per annum, subject to annual
increases, and Mr. Dewey was granted an option to purchase 150,000 shares of
Common Stock at $1.30 per share, all of which are currently
exercisable. Mr. Dewey is also entitled to receive commissions and
fees in accordance with programs established at National Securities, including,
without limitation, warrants received by National Securities in connection with
corporate financing activities. Mr. Dewey also participates in
any senior management bonus pools, and receives normal employee
benefits.
Mr. Levin
entered into an automatically renewing one-year employment agreement on July 1,
2008 pursuant to which he is employed as the Chief Financial Officer of the
Company. Under the terms of the agreement, Mr. Levin receives an annual base
salary of $180,000. This agreement renewed on July 1, 2009. In
addition to his base salary, he is entitled to receive an annual cash bonus
determined in the discretion of the Compensation Committee of the board of
directors of National based upon its assessment by the President of
National of Mr. Levin's performance in the following areas: revenue, net income
and revenue growth, new business development, investor relations, communications
with the board of directors, and other factors including, without limitation,
special projects as assigned by the Chief Executive Officer or the board of
directors of National.
Other
than our 401(k) plan, we do not maintain any other plan that provides for
payments or other benefits at, following, or in connection with
retirement.
Non-Qualified
Deferred Compensation
We do not
maintain any deferred compensation plans.
Potential
Termination and Change in Control Payments
Mark
Goldwasser, Leonard Sokolow and Alan Levin are the only Named Executive Officers
who have an employment agreement with us that provides for potential payments in
the event of his termination.
Pursuant
to the employment agreements governing the employment of the aforementioned with
us, they would be entitled to compensation upon termination of their agreement
by us without cause by the individuals for “good reason,” or as a result of
non-renewal of the agreement by either party, or as a result of his disability
or his death, or upon a change of control. According to the
employment agreement:
|
•
|
“Good
reason” means: (i) the assignment to the Executive of any duties
inconsistent in any material respect with the Executive’s position , (ii)
the Company's material failure or refusal to perform any of the
compensation obligations required to be performed in accordance with this
Agreement after a reasonable notice and an opportunity to cure same, (iii)
a material diminution in Mr. Goldwasser’s title, duties, responsibilities,
reporting relationship or positions, (iv) the relocation of Mr.
Goldwasser’s principal office location more than fifty (50) miles from its
current location, (v) any decrease in salary or bonuses payable pursuant
to the terms of this Agreement without the Executive’s written
consent and (v) in the case of Mr. Levin, the cessation of his
position for any reason without his written consent. Notwithstanding the
occurrence of any such event or circumstance above, such occurrence shall
not be deemed to constitute Good Reason hereunder if, within a thirty-day
notice period, the event or circumstance giving rise to Good Reason has
been fully corrected by the
Company.
|
|
•
|
“Cause”
shall mean (i) the Executive’s commission of a felony or other crime
involving moral turpitude, or the commission of any other act or omission
involving dishonesty or fraud with respect to the Company or any of its
subsidiaries or affiliates; (ii) the alcoholism or drug addiction of Mr.
Goldwasser; (iii) the substantial and repeated failure to perform duties
as reasonably directed by the Board (or in the case of Mr. Levin, the
President), , after reasonable notice and an opportunity to cure same;
(iv) any material breach or violation of Executive's fiduciary duty owed
to the Company or any of its subsidiaries or affiliates; (v) acts of
willful misconduct or gross negligence with respect to the Company or any
of its subsidiaries or affiliates, (vi) any material breach of this
Agreement which are not cured by Mr. Goldwasser after reasonable notice is
provided; or (vii) action taken by a regulatory body or self regulatory
organization that substantially impairs Mr. Goldwasser performing his
duties pursuant to the agreement.
|