Blueprint
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant ☑
Filed by a Party other than the Registrant
☐
Check the appropriate box:
☐
Preliminary
Proxy Statement
☐
Confidential,
for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
☑
Definitive
Proxy Statement
☐
Definitive
Additional Materials
☐
Soliciting
Material under § 240.14a-12
NOBLE ROMAN’S, INC.
(Name
of Registrant as Specified in Its Charter)
Payment of Filing Fee (Check the appropriate box):
☐
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 the
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:
☐
Fee
paid previously with preliminary materials.
☐
Check
the 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.
(1)
Amount
previously paid:
(2)
Form,
Schedule or Registration No.:
NOBLE ROMAN’S, INC.
ONE VIRGINIA AVENUE, SUITE 300
INDIANAPOLIS, INDIANA 46204
(317) 634-3377
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JULY 2, 2019
To the
Shareholders of Noble Roman’s, Inc.:
We are
notifying you that the 2019 annual meeting of shareholders of Noble
Roman’s, Inc., an Indiana corporation (“Noble
Roman’s” or the “Company”), will be held at
9:30 a.m. local time on Tuesday, July 2, 2019, at the conference
room in Heritage Park at 6612 E. 75th Street, Indianapolis, Indiana
46250, for the following purposes:
1.
To elect one Class
III director, to serve until the 2022 annual meeting of
shareholders or until his successor is elected and
qualified;
2.
To approve on an
advisory basis the compensation of the Company’s named
executive officers as disclosed pursuant to Item 402 of Regulation
S-K;
3.
To propose on an
advisory basis the frequency of future advisory votes on executive
compensation;
4.
To ratify the
selection of Somerset CPAs, P.C. as the Company’s independent
registered public accounting firm for the year ending December 31,
2019; and
5.
To transact any
other business that is properly brought before the annual meeting
or any adjournment thereof.
Noble
Roman’s board of directors has fixed the close of business on
April 30, 2019 as the record date to determine the shareholders who
are entitled to notice of, and to vote at, the annual meeting. Only
holders of record of Noble Roman’s common stock at the close
of business on that date will be entitled to notice of, and to vote
at, the annual meeting or any adjournments or postponements
thereof.
Please
read carefully the accompanying proxy statement. The proxy
statement is deemed incorporated by reference in and forms a part
of this Notice.
Important Notice Regarding the Availability of Proxy Materials for
the Shareholder Meeting to be held on July 2, 2019 – the
Proxy Statement and the Annual Report on Form 10-K are available at
www.nobleromans.com under the heading “Investor
Relations.”
Whether
or not you plan to attend the annual meeting in person, please
promptly complete, sign, date and return the enclosed proxy card in
the enclosed envelope, which requires no postage if mailed in the
United States. You may revoke your proxy in the manner described in
the proxy statement at any time before the proxy has been voted at
the annual meeting. If you sign and send in your proxy card and do
not indicate how you want to vote, your proxy will be counted as a
vote “FOR” the matters considered at the annual
meeting, except for the advisory vote on frequency of votes on
executive compensation, on which it will be counted as proposing
that the vote be held every “THREE YEARS.”
By
Order of the Board of Directors of Noble Roman’s,
Inc.
Paul W.
Mobley
Executive Chairman
and Chief Financial Officer
May 20,
2019
NOBLE ROMAN’S, INC.
ONE VIRGINIA AVENUE, SUITE 300
INDIANAPOLIS, INDIANA 46204
(317) 634-3377
PROXY STATEMENT
Annual
Meeting of Shareholders
July 2,
2019
This
proxy statement is furnished in connection with the solicitation of
proxies by the board of directors of Noble Roman’s, Inc., an
Indiana corporation (“Noble
Roman’s,”“we” or the
“Company”), for use at the annual meeting of
shareholders to be held on Tuesday, July 2, 2019 at 9:30 a.m.,
local time, in the conference room in Heritage Park at 6612 E. 75th
Street, Indianapolis, Indiana 46250, and any adjournment or
postponement thereof, for the purposes set forth in the
accompanying notice of the annual meeting of
shareholders.
Unless
otherwise directed by the giver of the proxy, the persons named in
the enclosed form of proxy, or the one of them who acts, will vote
all shares subject to the proxy as follows:
1.
FOR the election of
Mr. A. Scott Mobley as a Class III director of the Company, to
serve until the 2022 annual meeting of shareholders or until his
successor is elected and qualified;
2.
FOR the advisory
approval of the compensation of the Company’s named executive
officers as disclosed pursuant to Item 402 of Regulation
S-K;
3.
With respect to the
frequency of future advisory approval of the compensation of the
Company’s named executive officers, that the vote be held
every THREE YEARS;
4.
FOR the
ratification of the engagement of Somerset CPAs, P.C. as the
Company’s
independent
registered public accounting firm for the year ending December 31,
2019; and
5.
In their discretion
on the transaction of such other business as may properly come
before the annual meeting.
This
proxy statement, the notice of annual meeting and the accompanying
proxy form were first mailed to the holders of our common stock on
or about May 20, 2019. We will bear the entire expense of
soliciting proxies. Proxies will be solicited by mail initially.
Our directors, officers and employees also may solicit proxies
personally or by telephone or other means, but they will not be
specially compensated for such services. Certain holders of record,
such as brokers, custodians and nominees, may be requested to
distribute proxy materials to beneficial owners and will be
reimbursed by us for their reasonable expenses incurred in sending
proxy materials to beneficial owners.
A
shareholder who executes a proxy may revoke it at any time before
it is exercised by delivering to us another proxy bearing a later
date, by submitting written notice of the revocation to our
corporate secretary, or by personally appearing at the annual
meeting and casting a contrary vote.
VOTING RIGHTS AND SOLICITATION OF PROXIES
Only
common shareholders of record at the close of business on April 30,
2019 are entitled to notice of, and to vote at, the annual meeting.
On such date, there were 21,683,032 shares of our common stock
outstanding. There are approximately 260 holders of record of our
common stock. Holders of common stock are entitled to one vote for
each share held on each matter to be voted upon at the annual
meeting.
The
Company’s Amended and Restated By-Laws (the
“By-Laws”) provide that the holders of a majority of
the Company’s outstanding 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 at the meeting.
Abstentions and “broker non-votes” will be counted as
present for the purpose of determining the presence of a
quorum.
A
“broker non-vote” occurs when a broker lacks
discretionary voting power to vote on a “non-routine”
proposal and a beneficial owner fails to give the broker voting
instructions on that matter. The election of directors, the
advisory approval of executive compensation (a so-called
“say-on-pay” vote), and the frequency of the
“say-on-pay” votes are not considered
“routine” matters. Beneficial owners who hold their
shares through stock brokerage accounts will have to give voting
instructions to their brokers in order for the brokers to vote on
the election of directors, the advisory approval of executive
compensation, and the advisory vote regarding frequency of future
“say-on-pay” votes. If you are a beneficial owner,
failure to provide instructions to your broker will result in your
shares not being voted in connection with the election of
directors, the advisory approval of executive compensation, and the
advisory vote regarding frequency of future
“say-on-pay” votes. The ratification of the selection
of Somerset CPAs, P.C. as the Company’s independent
registered public accounting firm for 2019 is considered a
“routine” matter and a broker has the discretionary
voting power to vote on this matter without any instructions from
the beneficial owner. Broker non-votes are counted for purposes of
determining a quorum, but will have no effect on: the election of
directors; the advisory vote on executive compensation; the
advisory vote on the frequency of future advisory votes on
executive compensation; or the ratification of the selection of
Somerset CPAs, P.C. An abstention will not count as a vote against
the ratification of the selection of Somerset CPAs,
P.C.
The
affirmative vote of the holders of a plurality of the shares
present in person or represented by proxy at the meeting and
eligible to vote is required for the election of the director
nominee. At this year’s meeting there is one duly nominated
individual for election as a Class III director. Therefore, the
nominee will be elected if he receives any votes “FOR”
his election, regardless of how many votes to “WITHHOLD
AUTHORITY” that nominee receives.
The
affirmative vote of holders of a majority of the shares present in
person or represented by proxy at the meeting and voting on such
matter will be required for: (1) the advisory approval of executive
compensation; (2) ratification of Somerset CPAs, P.C. as the
Company’s independent registered public accounting firm for
the year ending December 31, 2019; and (3) for the approval of any
other matter that might be properly raised and submitted to a vote
at the meeting. The advisory vote recommending the frequency (i.e.,
every one, two, or three years) of future “say-on-pay”
votes that receives the greatest number of votes will be considered
our shareholders’ advice on the issue. Consistent with our
By-Laws, the agenda for this year’s meeting is set and no
additional matters, other than the proposals described in this
proxy statement, may be submitted for consideration by our
shareholders at the meeting, other than procedural issues such as
adjournment, postponement or continuation. On procedural issues,
all shares represented by proxy may be voted at the discretion of
the attorneys-in-fact named in the proxies, to the extent permitted
by law.
ELECTION OF DIRECTORS
At the
2019 annual meeting of shareholders, in accordance with the
Company’s By-Laws, the shareholders will elect one Class III
director to serve until the 2022 annual meeting of shareholders or
until his successor is duly elected and qualified. The board of
directors has nominated Mr. A. Scott Mobley as a Class III
director. Mr. Mobley is currently a director of the Company, has
consented to being named in this proxy statement, and has agreed to
continue to serve as a director, if elected.
Should
the nominee become unavailable or decline to serve for any reason,
the Company expects that each person named in the proxy will vote
for the election of another person as may be designated by the
board of directors. The board of directors is not aware of any
circumstances likely to cause the nominee to be unavailable for
election or to decline to serve.
The
board of directors recommends a vote “FOR” the election
of the director nominee.
Set
forth below is certain information regarding the director nominee,
the executive officers and the directors of the
Company:
|
Name
|
|
Age
|
|
Positions with
the Company
|
|
Paul W.
Mobley
|
|
78
|
|
Executive
Chairman of the Board, Chief Financial Officer and Class II
Director
|
|
A.
Scott Mobley
|
|
55
|
|
Chief
Executive Officer, President, Secretary and Class III
Director
|
|
Douglas
H. Coape-Arnold
|
|
73
|
|
Class I
Director
|
|
Marcel
Herbst
|
|
48
|
|
Class I
Director
|
|
Troy
Branson
|
|
55
|
|
Executive
Vice President of Franchising
|
The
officers of the Company serve at the discretion of the board of
directors and are elected at the annual meeting of the board of
directors. The board of directors has a classified structure in
which the directors are divided into three classes with
approximately one-third of the directors standing for election each
year. Under this structure, directors serve staggered three-year
terms or until their successors are duly elected and qualified. At
this year’s meeting, one Class III director is standing for
re-election.
The
following is a brief description of the previous business
background of the director nominees and our executive officers and
directors:
Paul W.
Mobley has been Executive Chairman of the Board and Chief
Financial Officer since November 2014. Prior to November 2014, Mr.
Mobley was Chairman of the Board, Chief Executive Officer and Chief
Financial Officer since December 1991, and a director since 1974.
Mr. Mobley was President of the Company from 1981 to 1997. From
1975 to 1987, Mr. Mobley was a significant shareholder and
president of a company which owned and operated 17 Arby’s
franchise restaurants. From 1974 to 1978, he also served as Vice
President and Chief Operating Officer of the Company and from 1978
to 1981 as its Senior Vice President. Mr. Mobley has a B.S. in
Business Administration from Indiana University and is a CPA. He is
the father of A. Scott Mobley.
A. Scott
Mobley has been President and Chief Executive Officer since
November 2014. Prior to November 2014, Mr. Mobley was President and
Chief Operating Officer since 1997. He has served as a director
since 1992, and Secretary since 1993. Mr. Mobley was Vice President
from 1988 to 1997, and from 1987 until 1988 he also served as
Director of Marketing for the Company. Prior to joining the Company
Mr. Mobley was a strategic planning analyst with a division of
Lithonia Lighting Company. Mr. Mobley has a B.S. in Business
Administration from Georgetown University, and an MBA from Indiana
University. He is the son of Paul W. Mobley.
Douglas H.
Coape-Arnold has been a director of the Company since 1999.
Mr. Coape-Arnold has been Managing General Partner of Geovest
Capital Partners, L.P. since 1997, and was Managing Director of
TradeCo Global Securities, Inc. from 1994 to 2002. Mr. Coape-Arnold
is a Chartered Financial Analyst.
Marcel
Herbst has been a director of the Company since July
2016.Mr. Herbst is the co-founder and portfolio manager of Herbst
Capital Management, LLC and has over 15 years of investment
experience in equities, fixed income and commodities. Mr. Herbst
started his professional career in 1991 in Germany with a
commercial diploma in banking. Prior to founding Herbst Capital
Management, LLC, Mr. Herbst had more than 10 years’
experience in the management of hospitality services for large,
upscale, branded properties in the US and Europe. Most recently he
served as the Director of Food and Beverage at the 1544 room Hilton
Chicago, overseeing $40 million in annual food and beverage
revenue. Mr. Herbst has a Bachelor degree of Business
Administration from Schiller International University in
Heidelberg, Germany and a Master’s degree of Management in
Hospitality concentrating in food and beverage from Cornell
University.
Troy Branson
has been Executive Vice President of Franchising for the Company
since 1997, and from 1992 to 1997, he was Director of Business
Development. Before joining the Company, Mr. Branson was an owner
of Branson-Yoder Marketing Group from 1987 to 1992. Mr. Branson
received a B.S. in Business from Indiana University.
When
determining whether the directors and the director nominee have the
experience, qualifications, attributes, diversity and skills, taken
as a whole, to enable the board of directors to satisfy its
responsibilities to the Company effectively in light of the
Company’s business and structure, the board focused primarily
on the information discussed in each of the directors’
individual biographies above, in particular with respect to: (a)
Paul W. Mobley, his financial acumen and his extensive knowledge
and understanding of the Company and its operations, other
franchisor business and the industries in which the Company
competes; (b) A. Scott Mobley, his extensive knowledge and
understanding of the Company and its operations, as well as the
industries in which the Company competes; (c) Douglas H.
Coape-Arnold, his financial acumen and strong business background;
and (d) Marcel Herbst, his financial acumen and his strong
background in business and finance.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
As of
April 30, 2019, there were 21,683,032 shares of the Company’s
common stock outstanding. The following table sets forth the amount
and percentage of the Company’s common stock beneficially
owned on April 30, 2019, including shares that may be acquired by
the exercise of options, by: (A) each director and named executive
officer individually; (B) each beneficial owner of more than 5% of
the Company’s outstanding common stock known to the Company;
and (C) all executive officers and directors as a
group.
|
Name of
Beneficial Owner
|
Number of Shares
Beneficially Owned (1)
|
Percent of
Common Stock (2)
|
|
Paul W.
Mobley
|
3,819,368(3)
|
16.2%
|
|
A. Scott
Mobley
|
1,771,245(4)
|
7.9
|
|
Douglas H.
Coape-Arnold
|
450,000(5)
|
2.0
|
|
Marcel
Herbst
|
1,122,900(6)
|
5.0
|
|
|
|
|
|
Troy
Branson
|
535,000(7)
|
2.4
|
|
All executive
officers and directors as a group (5 persons)
|
7,698,513
|
29.9%
|
(1)
All shares owned
directly with sole investment and voting power, unless otherwise
noted.
(2)
The percentage
calculations are based upon 21,683,032 shares of the
Company’s common stock issued and outstanding as of the most
recent practicable date and, for each officer or director of the
group, the number of shares subject to options, warrants or
conversion rights exercisable within 60 days of April 30,
2019.
(3)
The total includes
1,413,333 shares of common stock subject to options granted under a
stock option plan, 300,000 shares issuable upon conversion of
convertible notes and 150,000 shares issuable upon exercise of
warrants. Mr. Mobley’s address is 6612 E. 75th Street, Suite
450, Indianapolis, Indiana 46250.
(4)
The total includes
778,334 shares of common stock subject to options granted under a
stock option plan. Mr. Mobley’s address is 6612 E. 75th
Street, Suite 450, Indianapolis, Indiana 46250.
(5)
The total includes
450,000 shares of common stock subject to options granted under a
stock option plan.
(6)
The total includes
115,000 shares of common stock subject to options granted under a
stock option plan, 400,000 shares issuable upon conversion of
convertible notes and 200,000 shares issuable upon exercise of
warrants.
(7)
The total includes
240,000 shares of common stock subject to options granted under a
stock option plan.
CORPORATE GOVERNANCE
For a
number of years until November 2014, the Company operated using a
common U.S. board leadership structure under which the Chief
Executive Officer also served as Chairman of the board of
directors. In November 2014, the Company determined to separate
these roles and appointed Paul W. Mobley to serve as the Executive
Chairman of the board of directors and A. Scott Mobley to serve as
Chief Executive Officer. The Company may elect to combine these
positions in the future if it determines it is best for the Company
and its shareholders.
Our
whole board of directors has responsibility for the oversight of
risk management. Our whole board of directors from time to time
discusses with management areas of material risk exposures, their
potential impact on the Company, the steps we take to monitor risk
exposure, and controls to mitigate such exposures.
The
Company has adopted a code of ethics for its senior executive and
financial officers. The code of ethics can be obtained without
charge by contacting the Company’s executive office at 6612
E. 75th Street, Suite 450, Indianapolis, Indiana, and requesting a
copy of the code of ethics.
In
2018, the board of directors met one time, and each of the
directors of the Company attended the meeting of the board of
directors. All directors are encouraged to attend our annual
meeting of shareholders. The Company held an annual meeting of
shareholders on
July 6,
2018, at which all directors were in attendance. The Company does
not have standing audit, compensation, or nominating and corporate
governance committees.
Certain Relationships and Transactions
The
Company has reviewed all transactions to which the Company and
officers and directors of the Company are a party or have a
financial interest. The board of directors of the Company has
adopted a policy that all transactions between the Company and its
officers, directors, principal shareholders and other affiliates
must be approved by a majority of the Company’s disinterested
directors, and be conducted on terms no less favorable to the
Company than could be obtained from unaffiliated third
parties.
The
Company sold 48 units in a private placement which began in October
2016 and was completed in January 2017. Each unit consists of a
note in the principal amount of $50,000 with interest at the rate
of 10% per annum and convertible to the Company’s common
stock at the rate of $.50 per share and a warrant to purchase
50,000 shares of the Company’s common stock at $1.00 per
share. Three of those units were purchased by Paul W. Mobley, and
four units were purchased by Mr. Herbst. The units purchased by Mr.
Mobley and Mr. Herbst were on the same terms and conditions as the
other 41 units that were purchased by independent investors. In
December 2018, the Company offered to extend the maturity of the
convertible notes and the expiration date of the warrants to
January 2023. The holders of $650,000 of the convertible notes and
corresponding warrants, including Mr. Mobley and Mr. Herbst,
accepted the Company’s offer.
The
Company’s board of directors is currently comprised of: Paul
W. Mobley, our Executive Chairman and Chief Financial Officer; A.
Scott Mobley, our President and Chief Executive Officer; Douglas H.
Coape-Arnold; and Marcel Herbst. For the purpose of determining
director independence, the Company has adopted the New York Stock
Exchange definition of independence. The board of directors has
determined that Mr. Coape-Arnold and Mr. Herbst are independent
directors under that definition.
Board Role in Audit Process
The
board of directors does not have a separately established audit
committee. Because no separate audit committee has been
established, the board of directors, as a whole, performs certain
functions ordinarily delegated to an audit committee. The board of
directors has determined that each of Mr. Coape-Arnold and Mr.
Herbst qualify as an “Audit Committee Financial
Expert.”
The
board of directors has reviewed, and communicated with management
and with Somerset CPAs, P.C., the Company’s independent
auditor, with respect to, the Company’s audited consolidated
financial statements as of December 31, 2018 and for the year then
ended. The board of directors also has communicated with Somerset
CPAs, P.C. with respect to the matters required to be discussed by
Statement on Auditing Standard No. 1301, “Communication with
Audit Committees.” The board of directors has received the
written disclosures and the letter from Somerset CPAs, P.C.
required by applicable requirements of the Public Company
Accounting Oversight Board regarding the independent
accountant’s communications with the board of directors
concerning independence, and has communicated with the independent
accountant with respect to the independent accountant’s
independence. Based upon the board of directors’ review and
communications noted above, the board of directors authorized the
audited consolidated financial statements of the Company to be
included in the Company’s Annual Report on Form 10-K for the
year ended December 31, 2018, as filed with the Securities and
Exchange Commission.
Board
of Directors of Noble Roman’s, Inc.
Paul W.
Mobley, A. Scott Mobley, Douglas Coape-Arnold
and
Marcel Herbst
Board Role in Nominations
The
Company does not have a standing nominating committee. The board of
directors does not believe that a nominating committee is necessary
due to the Company’s relatively small size, the relatively
small size of its board of directors, and its historically limited
need to add new directors. When the Company has had a vacancy on
the board of directors, the entire board has participated in the
nomination process. The board expects all of the directors to
participate in the nomination process and in the review of
potential nominees. The board of directors does not have a formal
policy regarding the consideration of shareholder nominees;
however, the board will consider candidates on a case-by-case
basis. There are no specific qualifications that a candidate must
have in order to be considered. When a vacancy exists, the board
generally relies on the personal knowledge and references of the
directors and publicly available data to identify potential
nominees.
The
Company’s By-Laws contain the procedures by which
shareholders may nominate directors. Among other items, these
provisions set forth the procedures that shareholders must follow
in order for a shareholder nominee to be considered at a meeting,
the information that a shareholder must provide to the Company with
respect to itself and the nominee, and the deadlines by which a
shareholder nomination must be received in order to be considered
at a meeting.
Board Role in Compensation Determinations
The
Company does not have a standing compensation committee. The
compensation program is supervised by the entire board of
directors. The board of directors does not believe that a
compensation committee is necessary due to the Company’s
relatively small size and the relatively small size of its board of
directors. All directors participate in compensation discussions. A
director that is also an officer does not vote on his own
compensation. The compensation of the Executive Chairman/Chief
Financial Officer and the President/Chief Executive Officer of the
Company has been set by long-term contracts with those individuals.
The compensation of other executive officers of the Company is
recommended by the Executive Chairman/Chief Financial Officer and
President/Chief Executive Officer and reviewed by the
Company’s board of directors as it deems appropriate. Other
than the Executive Chairman/Chief Financial Officer and
President/Chief Executive Officer, no other executive officer
participates in the compensation process.
Communication with the Board
Communications by
shareholders or by other parties may be sent to the board of
directors by U.S. mail or overnight delivery and should be
addressed to the board of directors c/o Secretary, Noble
Roman’s, Inc., 6612 E. 75th Street, Suite 450, Indianapolis,
Indiana 46250. Communications directed to the entire board of
directors, or one or more directors, will be reviewed by the
Secretary and forwarded to the board of directors as appropriate
and may be made anonymously.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING
COMPLIANCE
Based
solely on a review of the copies of reports of ownership and
changes in ownership of the Company’s common stock, furnished
to the Company, the Company believes that all filing requirements
under Section 16(a) of the Securities Exchange Act of 1934, as
amended, during the year ended December 31, 2018, were complied
with.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER
PARTICIPATION
Because
no separate Compensation Committee has been established, the board
of directors, as a whole, performs certain functions ordinarily
delegated to a Compensation Committee. Paul W. Mobley, A. Scott
Mobley, Douglas H. Coape-Arnold and Marcel Herbst all participated
in executive compensation decisions for the year ended December 31,
2018.
EXECUTIVE COMPENSATION
Summary Compensation Table for 2017 and 2018
The
following table sets forth the cash and non-cash compensation
awarded to or earned by the Executive Chairman of the Board and
Chief Financial Officer, the Chief Executive Officer, President and
Secretary and the one other highest paid executive officer of the
Company.
|
Name and
Principal Position(s)
|
|
|
Non-Equity
Incentive Compensation
|
|
|
|
Paul W.
Mobley
|
2018
|
$225,000
|
$-
|
$3,850
|
$228,850
|
|
Executive Chairman
of the Board and Chief Financial Officer
|
2017
|
$300,000
|
$-
|
$3,150
|
$303,150
|
|
|
|
|
|
|
|
A. Scott
Mobley
|
2018
|
$443,720
|
$-
|
$4,950
|
$448,670
|
|
Chief Executive
Officer, President and Secretary
|
2017
|
$418,672
|
$-
|
$4,050
|
$422,722
|
|
|
|
|
|
|
|
Troy
Branson
|
2018
|
$109,615
|
$81,938
|
$2,338
|
$193,891
|
|
Executive Vice
President
|
2017
|
$105,000
|
$78,799
|
$1,913
|
$185,712
|
(1)
These
amounts represent the grant date fair value of the option awards.
See “—Equity Incentive Awards” for information
regarding valuation of stock option grants.
Equity Incentive Awards
The
Company maintains an employee stock option plan for our employees,
officers and directors that is designed to motivate them to
increase shareholder value. Any employee, officer or director of
the Company is eligible to be awarded options under the plan. The
employee stock option plan provides that any options issued
pursuant to the plan for non-director employees will have a
three-year vesting period and for director employees will vest
one-third each year and both will expire ten years after the date
of grant. The vesting period is intended to provide incentive for
longevity with the Company. Awards under the plan are periodically
made at the recommendation of the Executive Chairman/Chief
Financial Officer and President/Chief Executive Officer, and then
approved by the board of directors. The employee stock option plan
does not have a limit on the number of shares that may be issued
under the plan.
The
Summary Compensation Table includes the grant date fair value for
stock options granted in 2017 and 2018 to the named executive
officers under the Company’s employee stock option plan. The
Company determines the grant date fair value of stock options
calculated in accordance with Financial Accounting Standards Board
Accounting Standards Codification Topic 718. See Note 7 to the
Notes to the Company’s Consolidated Financial Statements in
the Company’s Annual Report on Form 10-K for the year ended
December 31, 2018 for a discussion of the Company’s
determination of the grant date fair value of stock
options.
In
2017, the Company granted options to purchase 410,500 shares on
July 7, 2017 at an exercise price equal to the then-current market
price of $0.51 per share. There were no employee stock options
exercised in 2017 and stock options for 42,000 shares were
forfeited. In 2018, the Company granted options to purchase 415,000
shares on July 6, 2018 at an exercise price equal to the
then-current market price of $0.623 per share. There were no
employee stock options exercised in 2018 and stock options for
105,500 were forfeited.
Employment Agreements
Paul W.
Mobley has an employment agreement with the Company which: (A)
fixes his base compensation at approximately $650,000 per year for
2018 (although Mr. Mobley voluntarily reduced his base compensation
to $225,000 for 2018); (B) provides for reimbursement of travel and
other expenses incurred in connection with his employment,
including the furnishing of an automobile and health and accident
insurance similar to that provided other employees; and (C)
provides life insurance in an amount related to his base salary.
The initial term of the agreement is seven years and the term
automatically renews each year for a seven-year period unless the
board of directors takes specific action to not renew. The
agreement is terminable by the Company for cause as defined in the
agreement. The agreement does not provide for any benefits payable
as a result of a change of control of the Company.
A.
Scott Mobley has an employment agreement with the Company which:
(A) fixes his base compensation at approximately $525,000 per year
for 2018 (although Mr. Mobley voluntarily reduced his base
compensation to $443,720 for 2018); (B) provides for reimbursement
of travel and other expenses incurred in connection with his
employment, including the furnishing of an automobile and health
and accident insurance similar to that provided other employees;
and (C) provides life insurance in an amount related to his base
salary. The initial term of the agreement is five years and the
term automatically renews each year for a five-year period unless
the board of directors takes specific action to not renew. The
agreement is terminable by the Company for cause as defined in the
agreement. The agreement does not provide for any benefits payable
as a result of a change of control of the Company.
Non-Equity Incentive Arrangements
The
Company currently has a non-equity incentive arrangement with our
Executive Vice President under which he may earn additional
compensation. For 2018, his compensation was based on 2.5% of the
Company’s earnings before interest, taxes, depreciation and
amortization (“EBITDA”) (from Consolidated Statement of
Operations - operating income plus depreciation and amortization)
for the first $2.5 million and 3.0% of EBITDA above $2.5 million.
For 2017, his compensation was based on 2.5% of all royalty and fee
revenue associated with non-traditional franchising/licensing less
the direct expenses of those activities excluding any
administrative cost. Under these plans, the Executive Vice
President was paid an incentive compensation in 2017 of $78,799
and, in 2018, was paid $81,938 in incentive
compensation.
Outstanding Equity Awards at Fiscal Year-End
The
following table sets forth information concerning the number of
outstanding equity awards of the executive officers named in the
Summary Compensation Table as of December 31, 2018.
|
|
|
|
Name
|
Number of
Securities Underlying Unexercised Options (#)
Exercisable
|
Number of
Securities Underlying Unexercised Options (#)
Unexercisable
|
Option Exercise
Price ($)
|
|
|
Paul W.
Mobley
|
100,000
|
|
0.58
|
4/28/20
|
|
|
900,000
|
|
0.58
|
1/25/21
|
|
|
33,333
|
|
0.58
|
6/27/22
|
|
|
50,000
|
|
1.00
|
7/2/23
|
|
|
60,000
|
|
1.00
|
7/2/24
|
|
|
70,000
|
|
1.00
|
6/23/25
|
|
|
40,000
|
20,000
|
0.53
|
7/7/26
|
|
|
23,333
|
46,667
|
0.51
|
7/7/27
|
|
|
|
70,000
|
0.623
|
7/6/28
|
|
A. Scott
Mobley
|
25,000
|
|
0.58
|
8/28/20
|
|
|
300,000
|
|
0.58
|
1/25/21
|
|
|
33,334
|
|
0.58
|
6/27/22
|
|
|
50,000
|
|
1.00
|
7/2/23
|
|
|
60,000
|
|
1.00
|
7/2/24
|
|
|
70,000
|
|
1.00
|
6/23/25
|
|
|
46,667
|
23,333
|
0.53
|
7/7/26
|
|
|
30,000
|
60,000
|
0.51
|
7/7/27
|
|
|
|
80,000
|
0.623
|
7/6/28
|
|
Troy
Branson
|
10,000
|
|
0.58
|
8/28/20
|
|
|
40,000
|
|
1.00
|
7/2/23
|
|
|
30,000
|
|
1.00
|
7/2/24
|
|
|
40,000
|
|
1.00
|
6/23/25
|
|
|
|
35,000
|
0.53
|
7/7/26
|
|
|
|
42,500
|
0.51
|
7/7/27
|
|
|
|
42,500
|
0.623
|
7/6/28
|
The
employee stock option plan provides that any options issued
pursuant to the plan for non-director employees will have a
three-year vesting period and for director employees will vest
one-third each year, so long as the optionee continues to be
employed by the Company, and both will expire ten years after the
date of grant.
DIRECTOR COMPENSATION
|
Name
|
Fees Earned or
Paid in Cash ($)
|
|
All Other
Compensation ($)
|
|
|
Douglas H.
Coape-Arnold
|
15,000
|
-
|
-
|
15,000
|
|
Marcel
Herbst
|
15,000
|
2,200
|
-
|
17,200
|
Each
non-employee director is compensated: $14,000 as an annual retainer
fee paid quarterly; a $1,000 fee for each board of directors
meeting attended; a $1,000 annual fee for each committee on which
such director serves; and a $900 fee for each committee meeting
attended. The directors are all eligible for stock option grants
and are reimbursed for out-of-pocket expenses incurred in
connection with their board service. The board of directors
currently does not have any standing committees.
The
Company does not pay any separate compensation for directors that
are also employees of the Company.
NON-BINDING, ADVISORY VOTE TO APPROVE NAMED EXECUTIVE OFFICER
COMPENSATION
We are
requesting our shareholders to provide advisory approval of the
compensation of our named executive officers as disclosed in this
proxy statement pursuant to Item 402 of Regulation S-K. This vote,
on what is sometimes referred to as a “say-on-pay”
proposal, is required by the Dodd-Frank Wall Street Reform and
Consumer Protection Act of 2010 (the “Dodd-Frank Act”).
At the 2016 annual meeting of the Company’s shareholders (the
last annual meeting in which our shareholders considered our
“say-on-pay” proposal), our “say-on-pay”
proposal received the affirmative vote of holders of majority of
the shares represented in person or by proxy at the
meeting.
The
Company’s executive compensation program is designed to
attract, motivate, and retain our executive officers, who are
critical to the Company’s continuing success. As set forth in
the “Summary Compensation” and “Outstanding
Equity Awards at Fiscal Year-End” tables above, including the
accompanying narrative disclosure to those tables, our executive
compensation program is comprised of cash and equity-based
compensation. We believe this program: enables the Company to
effectively compete for qualified executive personnel; aligns the
interests of named executive officers with those of our
shareholders; and appropriately rewards our named executive
officers for achievement of both short- and long-term financial and
strategic goals of the Company.
The
Company’s board of directors is therefore asking our
shareholders to approve a non-binding advisory vote on the
following resolution:
RESOLVED, That the
shareholders approve the compensation of the Company’s named
executive officers as disclosed in its proxy statement for the 2019
annual meeting of shareholders pursuant to the compensation
disclosure rules of the Securities and Exchange Commission (which
includes the compensation tables and related narrative
disclosure).
While
this “say-on-pay” proposal is a non-binding advisory
vote, the Company’s board of directors values the opinion of
the Company’s shareholders, and will consider the outcome of
this vote when making future compensation decisions for the
Company’s named executive officers.
The
affirmative vote of the holders of a majority of the shares present
in person or represented by proxy and voting is required to approve
this “say-on-pay” vote.
The
board of directors recommends a vote “FOR” the proposal
approving the compensation of the Company’s named executive
officers.
NON-BINDING, ADVISORY VOTE ON THE FREQUENCY OF FUTURE ADVISORY
VOTES TO APPROVE EXECUTIVE COMPENSATION
We are
also requesting the Company’s shareholders to vote to
recommend that future “say-on-pay” votes be held every
three years. This vote, on what is sometimes referred to as a
“frequency of say-on-pay proposal,” is required under
the Dodd-Frank Act. As previously determined by the board of
directors and supported by the vote of the stockholders in 2013
(the last year in which the shareholders voted on the frequency of
the “say-on-pay” votes), the board of directors
believes that holding future “say-on-pay” votes every
three years is most consistent with the Company’s approach to
executive compensation, in which the Company seeks to enhance the
long-term growth of the Company, and to attract, retain and
motivate our executive officers over the long term.
As an
advisory vote, this proposal is not binding upon the Company or its
board of directors; however, the board of directors values the
opinion of the Company’s shareholders, and will consider the
outcome of this vote when making future decisions regarding the
frequency of shareholder votes on named executive officer
compensation.
The
frequency (e.g., every one, two, or three years) that receives the
greatest number of votes of holders of shares present in person or
represented by proxy will be deemed to be the shareholders’
recommendation with respect to the frequency of future
“say-on-pay” voting.
The
board of directors recommends a vote of “EVERY THREE
YEARS” on the frequency of future shareholder
“say-on-pay” votes.
RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
The board of directors has appointed the firm of Somerset CPAs, P.C.
(“Somerset”) as the Company’s independent
registered public accounting firm for 2019. Somerset has served as
the Company’s independent registered public accounting firm
since 2006. Although action by the shareholders in this matter is
not required, the board of directors believes that in light of the critical role played
by the independent registered public accounting firm in maintaining
the integrity of the Company’s financial controls and
reporting, it is a matter of good practice.
In the event our shareholders fail to approve the
proposal to appoint Somerset as the Company’s independent
registered public accounting firm, the board of directors
will reconsider retaining another
firm. Even if the selection is ratified, the
board of directors in its discretion
may direct the appointment of a different independent registered
public accounting firm at any time during the year if it determines
that such a change would be in the best interest of the Company and
our shareholders.
The board of directors recommends a vote “FOR” the
proposal to ratify the selection of Somerset CPAs, P.C. as the
Company’s independent registered public accounting firm for
the year ending December 31, 2019.
INDEPENDENT AUDITOR’S FEES
The
following table presents fees for professional audit services
rendered by Somerset for the audit of our annual financial
statements and review of our quarterly financial statements, and
fees billed for other services rendered by Somerset during 2018 and
2017.
|
|
|
|
|
Audit fees and
review fees (1)
|
$110,000
|
$112,000
|
(1)
Audit fees consist
of fees rendered for professional services rendered by Somerset for
the audit of our financial statements included in our annual
reports on Form 10-K for the years ended December 31, 2018 and
2017, and the review of the unaudited financial statements included
in our quarterly reports on Form 10-Q during 2018 and
2017.
The
engagement of Somerset, for conducting the audit of the
Company’s financial statements for the years ended December
31, 2018 and 2017, and for the review of its financial statements
included in its Form 10-Q’s during 2018 and 2017, was
pre-approved by the Company’s board of directors. Somerset
has not been engaged by the Company to perform any services other
than audits of the financial statements included in its Form 10-Ks
and review of the financial statements in its Form 10-Qs. The board
of directors does not have a pre-approval policy with respect to
work performed by the Company’s independent
auditor.
Representatives of
Somerset are not expected to attend the annual
meeting.
SHAREHOLDER PROPOSALS FOR 2020 ANNUAL MEETING
If a
shareholder wishes to have a proposal included in the
Company’s proxy statement for an annual meeting, the
shareholder must satisfy the requirements established under our
By-Laws and the requirements established by the Securities and
Exchange Commission. Rule 14a-8 under the Securities Exchange Act
of 1934, as amended, requires that shareholders requesting to have
a proposal included in the Company’s proxy statement for an
annual meeting of shareholders must submit their proposal in
writing to the Company at least 120 days before the anniversary
date of the date the Company’s proxy statement was released
to shareholders for the prior year’s annual meeting.
Therefore, any shareholder requesting to submit a proposal for
inclusion in the Company’s proxy statement for the 2020
annual shareholders’ meeting must deliver a proposal to the
Secretary of the Company no later than December 21,
2019.
Any shareholder
of Noble
Roman’s eligible to vote in an election may also make
shareholder proposals and nominations for the 2020 annual meeting
outside of the process described above for proposals subject to
Rule 14a-8. In order to be considered at the 2020 annual
meeting, all shareholder proposals, nominations and notifications
submitted outside of the process described above for proposals
subject to Rule 14a-8 must (1) comply with the procedures set forth
in the Company’s By-Laws, and (2) be delivered to the
Secretary of the Company no earlier than March 4, 2020 and no later
than April 3, 2020.
OTHER MATTERS
The
board of directors does not intend to bring any matters before the
meeting other than as stated in this proxy statement, and the
Company is not aware that any other matters will be presented for
action at the meeting. If any other matters properly come before
the meeting, the persons named in the enclosed form of proxy will
vote the proxy with respect thereto in accordance with their best
judgment, pursuant to the discretionary authority granted by the
proxy. However, consistent with the Company’s By-Laws, the
agenda for this year’s meeting is set and no additional
matters may be submitted for consideration by our shareholders at
the meeting, other than procedural issues such as adjournment,
postponement or continuation. Whether or not you plan to attend the
Meeting in person, please complete, sign, date and return the
enclosed proxy form promptly.
/s/ Paul W.
Mobley
Paul W.
Mobley,
Executive Chairman
and Chief Financial Officer
April
19, 2019
Indianapolis,
Indiana