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Share Name | Share Symbol | Market | Type |
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Westell Technologies | NASDAQ:WSTL | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 0.7183 | 0.73 | 0.755 | 0 | 01:00:00 |
1.
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To elect the Board nominated slate of seven (7) directors.
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2.
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To consider and act upon a proposal to amend the Company’s Amended and Restated Certificate of Incorporation (the “Charter”) to effect a reverse stock split of our Class A Common Stock and Class B Common Stock whereby, each outstanding one thousand (1,000) shares of the Company's Class A Common Stock and Class B Common Stock, respectively, would be combined into and become one (1) share of the Company's Class A Common Stock or Class B Common Stock, as applicable (the “Reverse Stock Split”).
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3.
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To consider and vote upon a proposal to amend the Charter to effect, immediately after the Reverse Stock Split, a forward stock split of our Class A Common Stock and Class B Common Stock whereby, each one (1) share of the Company's Class A Common Stock and Class B Common Stock would divide into and become one thousand (1,000) shares of the Company's Class A Common Stock or Class B Common Stock, as applicable (the “Forward Stock Split,” and together with the Reverse Stock Split, the “Transaction”).
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4.
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To ratify the appointment of our independent auditors.
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5.
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To conduct an advisory vote to approve executive compensation (“Say-on-Pay”).
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To consider any other matters that may properly come before the meeting.
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A Special Committee of the Company’s Board of Directors comprised solely of independent directors (the “Special Committee”) unanimously approved and the Company’s Board of Directors (the “Board of Directors” or the “Board”) has approved amendments to the Company’s certificate of incorporation to effect a 1-for-1,000 reverse stock split of the Company's Class A Common Stock and Class B Common Stock, both with a par value $0.01 per share (collectively referred to herein as the “common stock”) (the “Reverse Stock Split”), followed immediately by a 1,000-for-1 forward stock split of our common stock (the “Forward Stock Split,” and together with the Reverse Stock Split, the “Transaction”), as part of the Company’s plan to terminate the registration of (or “deregister”) the Company’s Class A Common Stock under Section 12(g) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and suspend the Company’s duty to file periodic reports and other information with the SEC under Section 13(a) thereunder, and to delist the Company’s Class A Common Stock from the NASDAQ Capital Market.
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Stockholders owning fewer than 1,000 shares of Class A Common Stock or Class B Common Stock immediately prior to the effective time of the Reverse Stock Split, whom we refer to as “Cashed Out Stockholders,” will receive $1.48 in cash, without interest, for each share held at the effective time of the Reverse Stock Split (the “effective time”), and they will no longer be stockholders of the Company.
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Stockholders who own 1,000 or more shares Class A Common Stock or Class B Common Stock immediately prior to the effective time, whom we refer to as “Continuing Stockholders,” will not be entitled to receive any cash for their fractional share interests resulting from the Reverse Stock Split, if any. The Forward Stock Split that will immediately follow the Reverse Stock Split will convert shares held by the Continuing Stockholders back into the same number of shares of the Company's Class A Common Stock and Class B Common Stock they held immediately before the effective time. As a result, the total number of shares of the Company's Class A Common Stock and Class B Common Stock held by a Continuing Stockholder will not change, but their ownership percentage will increase.
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We expect to reduce the number of our stockholders of record of our Class A Common Stock below 300 (using the SEC’s method of counting for these purposes), which will allow us to cease the registration of our shares of Class A Common Stock under the Exchange Act. Effective on and following the termination of the registration of our Class A
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We will no longer be subject to the provisions of the Sarbanes-Oxley Act and other requirements applicable to a public company, including those required by the listing standards of a national stock exchange.
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•
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Our officers, directors and 10% stockholders will no longer be subject to the reporting requirements of Section 16 of the Exchange Act, or be subject to the prohibitions against retaining short-swing profits in our shares of our common stock. Persons acquiring 5% of our common stock will no longer be required to report their beneficial ownership under the Exchange Act.
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We will have no ability to access the public capital markets or to use public securities in attracting and retaining executives and other employees, and we will have a decreased ability to use our stock as a form of consideration to acquire other companies.
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Our shares of Class A Common Stock will no longer be traded on the NASDAQ Capital Market and will not be eligible for listing on the New York Stock Exchange or the NASDAQ Stock Market. Any trading in our Class A Common Stock after the Transaction and deregistration under the Exchange Act will only occur in privately negotiated sales and potentially on the OTC Pink Open Market, if one or more brokers choose to make a market for our common stock there and complies with applicable regulatory requirements; however, there can be no assurances regarding any such trading.
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Holders of fewer than 1,000 shares of our Class A Common Stock or Class B Common Stock immediately prior to the effective time of the Reverse Stock Split will receive a cash payment of $1.48, without interest, for each share of common stock they hold, will no longer have any ownership interest in us, and will cease to participate in any of our future earnings and growth.
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Holders of 1,000 or more shares of Class A Common Stock or Class B Common Stock immediately prior the effective time of the Reverse Stock Split will not receive any payment for their shares and, immediately following the Transaction, will continue to hold the same number of shares as before the Transaction.
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Restricted Stock Units and Options evidencing rights to purchase shares of our Class A Common Stock would be unaffected by the Transaction.
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Since our obligation to file periodic and other filings with the SEC will be suspended, Continuing Stockholders will no longer have access to publicly filed audited financial statements, information about executive compensation and other information about us and our business, operations and financial performance. We intend to continue to prepare audited annual financial statements and periodic unaudited financial statements and plan to make available to our stockholders audited annual financial statements through March 31, 2021 and may choose to do so thereafter after first considering the expenses. Nonetheless, Continuing Stockholders will have significantly less information about the Company and our business, operations, and financial performance than they have currently. We will continue to hold stockholder meetings as required under Delaware law, including annual meetings, or to take actions by written consent of our stockholders in lieu of meetings.
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Upon the effectiveness of the Transaction, the ownership percentage of our shares of common stock held by our directors and executive officers (see “DISCUSSION AND SPECIAL FACTORS - Potential Conflicts of Interests of Officers, Directors, and Certain Affiliated Persons” beginning on page 33) is expected to increase by approximately 13%, as a result of the reduction of the number of shares of Class A Common Stock outstanding. We anticipate that reduction to be approximately 5.3 million shares (or approximately 43% of the shares of our Class A Common Stock currently outstanding). However, the ownership percentage and the reduction in the number of shares outstanding following the Transaction may increase or decrease depending on purchases, sales and other transfers of our shares of Class A Common Stock by our stockholders prior to the effective time of the Transaction and the number of “street name” shares that are actually cashed out in the Transaction.
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The fairness opinion prepared by Emory that the $1.48 cash-out price is fair from a financial point of view to unaffiliated stockholders;
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•
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The limited trading volume and liquidity of our shares of Class A Common Stock and the effect of this Transaction enables our smallest stockholders, who represent a disproportionately large number of our record holders, to liquidate their holdings in shares of our common stock and receive a premium over market prices prevailing at the time of our public announcement of the Transaction (approximately a 72% premium over the $0.86 closing price on July 10, 2020, the last trading day before the announcement of the Transaction), without incurring brokerage commissions;
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•
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The effect of the proposed transaction on the relative voting power of Continuing Stockholders; and
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•
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That following the Transaction our business and operations are expected to continue substantially as presently conducted and with reduced operating costs as the public reporting costs are no longer necessary.
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Name
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Age
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Principal Occupation and Other Information
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Kirk R. Brannock
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62
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Kirk R. Brannock has served as Chairman of Westell's Board of Directors since September 2017. He served as Interim President and Chief Executive Officer at Westell from November 2017 through May 2018 after serving in that capacity from October 2016 through July 2017. Previously Mr. Brannock served as a member of Westell’s Board of Directors from February 2011 to September 2014. He retired in 2010 from his position as Senior Vice President -Ethernet Deployment at AT&T, a leading provider of voice, video, data and broadband delivery services, after a career spanning more than 30 years. Previously Mr. Brannock served in leadership positions at AT&T, Ameritech and SBC, including Senior Vice President - AT&T National Installation & Maintenance and President - SBC/Ameritech Midwest Network Services. Mr. Brannock holds a Bachelor of Arts in Business Administration from Michigan State University and is currently a Board Member and Board President for a Marriott International $42 million Cooperative. Mr. Brannock's extensive knowledge of Westell operations and the telecommunications industry along with his other board experience qualify him to serve as the Chairman of the Board.
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Scott C. Chandler
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59
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Scott C. Chandler has served as a Director of the Company since September 2018. Mr. Chandler is the Managing Partner of Franklin Court Partners, LLC, a consulting firm that provides management and financial consulting services, a position he has held since 2002. From 1998 to 2001, Mr. Chandler was Chief Financial Officer and then Senior Vice President for Rhythms Netconnections Inc. (former NASDAQ: RTHM). Mr. Chandler was a member of the senior management team that led this international provider of DSL networking and services prior to the sale of a majority of its assets to MCI Worldcom, now Verizon. From 1996 to 1998, Mr. Chandler served as President and Chief Executive Officer of C-COR Incorporated (former NASDAQ: CCBL), a publicly-traded corporation that, prior to its acquisition in 2007, was a leading supplier of broadband telecommunications equipment. He earned an MBA from the Wharton School of Business at the University of Pennsylvania and a BA from Whitworth University. Mr. Chandler currently serves as a member of the board of directors of PetroShare Corp. (OTCMKTS: PRHR) and several privately-held and non-profit entities and has in the past served as a member of several public company boards, such as Cimetrix Incorporated (OTCMKTS: CMXX), Tollgrade Communications Inc. (NASDAQ: TLGD), and Paradyne Networks Inc. (NASDAQ: PDYN). Mr. Chandler's experience in the cable and telecom industries, his extensive management and financial experience along with his prior board experience qualify him to serve as a member of the Audit, Compensation, and Corporate Governance and Nominating Committees.
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Timothy L. Duitsman
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58
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Timothy L. Duitsman was named as President and CEO in September 2019 after being appointed to the Westell Board of Directors in June 2019. Previously, Mr. Duitsman served as the Senior Vice President of Product Development at Klein Tools, a manufacturer of hand tools, where he was responsible for product development launches, a position he held since 2012. Mr. Duitsman initially joined Klein Tool in 2009 as the Vice President of Engineering. Prior to Klein Tools, Mr. Duitsman served as Vice President of Research and Development at Intermatic, from 2004 to 2008, where he increased sales of new industrial products. Previously, Mr. Duitsman served in various engineering and leadership roles at Westell. Mr. Duitsman earned an MBA from Northwestern University Kellogg School of Management, as well as MS and BS degrees in Mechanical Engineering from the University of Illinois at Chicago and the University of Illinois at Champaign-Urbana, respectively. Mr. Duitsman's technical and leadership experience qualify him to serve on the Board of Directors.
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Robert W. Foskett(1)
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43
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Robert W. Foskett has served as a Director of the Company since September 2009. Mr. Foskett is the Managing Partner and Investment Committee Member of Table Mountain Capital LLC, a private investment company, a position he has served since 2006. Prior to joining Table Mountain Capital LLC, he served from 2002 to 2006 as a Research Director at L.H. Investments, a private investment company. Mr. Foskett holds an MBA from the University of Denver, Daniels College of Business. Mr. Foskett’s investment experience and education qualify him to serve on the Board of Directors and as a member of the Corporate Governance and Nominating Committee.
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Robert C. Penny III(1)
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67
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Robert C. Penny III has served as a Director of the Company since September 1998. He is the owner of Eastwood Land & Cattle, a private business. Mr. Penny’s years of service as a board member and his knowledge of the Company’s business and technology qualify him to serve as a member of the Board of Directors and as the Chair of the Corporate Governance and Nominating Committee.
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Cary B. Wood
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53
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Cary B. Wood has served as a Director of the Company since March 2017. In December 2019, Mr. Wood rejoined Grede Holdings LLC, a privately held manufacturer of innovative metal components for the automotive, industrial and commercial marketplaces, as Chief Executive Officer and as a Member of its Board of Directors, where he previously held leadership positions between August 2004 and November 2008, including as interim CEO of its predecessor company, Citation Corporation. He currently serves as the Chairman of the Board of Directors of Duravent Corporation, a privately held venting systems firm, since January 2017. From June 2017 until January 2019, Mr. Wood was President and Chief Executive Officer of Angelica Corporation, a leading provider in the healthcare and medical textile processing and related services. Mr. Wood serves as the Lead Independent Director, Chairman of the Compensation Committee and as a member of the Audit Committee of the Board of Directors of Broadwind Energy (NASDAQ: BWEN), a precision manufacturer of structures, equipment and components for clean energy technology and other specialized applications, since May 2016. Mr. Wood served as Chairman of the Operating Committee and as a member of the Nominating and Corporate Governance Committee of the Board of Directors of Vishay Precision Group, Inc. (NYSE: VPG), an internationally-recognized designer, manufacturer and marketer of resistive foil technology, sensors, and sensor-based systems to niche, industrial applications, from March 2016 to May 2018. Mr. Wood served as President, Chief Executive Officer, and as a member of the Board of Directors of Sparton Corporation (NYSE: SPA), a global manufacturer of complex and regulated electronic services as well as engineering products in the medical, avionics, industrial and defense sectors, from November 2008 until February 2016. Mr. Wood received a Bachelor of Science in Technology from Purdue University, a Master of Science in Industrial Operations from the School of Management at Lawrence Technological University, and an MBA in Finance from Loyola University-Chicago. Mr. Wood’s executive experience and his service on public company boards qualify him to serve on the Board of Directors, as a Chair of the Compensation Committee, and as a member of the Audit Committee.
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Mark A. Zorko
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68
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Mark A. Zorko has served as Director of the Company since January 2017. Mr. Zorko is a principal with executive management and business support services firm Brentwood Advisory Group. In January 2016, Mr. Zorko founded Brentwood 401k, LLC, to provide 401(k) plan advisory services to middle market firms. Mr. Zorko previously chaired the Nominating and Corporate Governance Committee and from 2009 to 2019 served on both the Audit and Compensation Committees of Perma-Pipe International Holdings, Inc. (NASDAQ:PPIH) (formerly MFRI [NASDAQ: MFRI]), a firm in the piping solutions industry. He was the interim Chief Financial Officer at radiation science and services firm Landauer Inc. (NYSE: LDR) from June 2014 until April 2015. Mr. Zorko served as the CFO of Steel Excel, Inc. (NASDAQ: SXCL), a public energy industry firm, from August 2011 until May 2013. He also served as the President and CEO of SXCL's subsidiary Wells Services Ltd. (WSL), a $30-million Steel Excel business, in 2012 and CFO of DGT Holdings (DGTC), a medical imaging firm, from 2006 through 2012. SXCL, WSL and DGTC are all affiliated with Steel Partners Holding, L.P., a publicly traded diversified global holding company. Mr. Zorko was on the Audit Committee for Opportunity International, a microfinance bank, and was on the Finance Committee for the Alexian Brothers Health System. He received an MBA in IT from the University of Minnesota and a Bachelor of Science in Accounting from The Ohio State University. After completing his MBA, Mr. Zorko began his career as a CPA at Arthur Andersen, and worked his way up via the controllership ranks at Honeywell and Zenith Data Systems in the United States and Europe. He is a Certified Public Accountant and a NACD Board Leadership Fellow and recently earned the NACD’s CERT Certificate in Cybersecurity Oversight. Mr. Zorko's executive experience and his service on public company boards qualify him to serve on the Board of Directors, as the Chair of the Audit Committee, and as a member of the Compensation Committee.
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(1)
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Mr. Robert W. Foskett is the nephew of Mr. Robert C. Penny III.
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•
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Filing a written notice of revocation of any prior delivered proxy or filing a duly executed proxy bearing a later date with our Corporate Secretary, in each case at our principal executive office (750 North Commons Drive, Aurora, Illinois 60504 ); or
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Attending the Annual Meeting, filing a written notice of revocation of your proxy with our corporate secretary, and voting in person (although attendance at the meeting will not, by itself, revoke a proxy).
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Eliminating significant ongoing costs and management and employee time and effort associated with filing documents under the Exchange Act with the SEC and eliminating the requirements under the NASDAQ Capital Market rules, including those applicable to directors;
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Eliminating significant ongoing costs and management and employee time and effort of compliance with the Sarbanes-Oxley Act and related regulations, and other regulatory requirements;
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Reducing the ongoing costs and management and employee time and effort for our investor relations program;
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Allowing our management and directors to focus on long-term growth and enhancing the long-term stockholder value without the burdens of being a public company; and
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Enabling our small stockholders (those holding fewer than 1,000 shares), who represent a large number of our stockholders, to liquidate their holdings in the Company and receive a premium over market prices prevailing at the time of our public announcement of the Transaction, without incurring brokerage commissions.
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The Company currently realizes very few of the traditional benefits of public company status. For example, as a public reporting and NASDAQ-listed company, we expected to be able to leverage our public company equity to raise capital and pursue acquisitions to help grow our business and expand our operations. However, due to the consistently low-volume and erratic trading of our Class A Common Stock, we have not raised capital from the public markets in over a decade, nor have we effectively used our common stock as deal consideration or otherwise attracted interest from institutional investors or market analysts. Further, liquidity for holders of our Class A Common Stock has been limited on the NASDAQ Stock Market. Despite the lack of benefits, we incur all of the significant annual expenses and indirect costs associated with being a public company.
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The annual cost savings we expect to realize as a result of the termination of the registration of our shares of Class A Common Stock under the Exchange Act and the delisting of our Class A Common Stock from the NASDAQ Capital Market, including ongoing expenses for compliance with the Sarbanes-Oxley Act, NASDAQ listing fees, and other
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The reduction in time spent by our management and employees preparing the periodic and other reports required of SEC reporting companies under the Exchange Act, complying with the Sarbanes-Oxley Act, and managing stockholder relations and communications, is expected to enable them to focus more on managing the Company’s business and growing stockholder value. Our management will be able to focus more on long-term growth without an undue emphasis on short-term financial results. The Company will continue to be subject to the general anti-fraud provisions of applicable federal and state securities laws.
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Our small stockholders (those holding fewer than 1,000 shares), who represent a large number of our stockholders, will have the ability to liquidate their holdings in us and receive a significant premium over market prices prevailing at the time of our public announcement of the Transaction, without incurring brokerage commissions.
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the fairness opinion prepared by Emory & Co., LLC ("Emory") that the $1.48 cash out price is fair from a financial point of view to unaffiliated stockholders;
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the limited trading volume and liquidity of our shares of Class A Common Stock and the effect of enabling our smallest stockholders, who represent a disproportionately large number of our record holders, to liquidate their holdings in shares of common stock and receive a premium over market prices prevailing at the time of our public announcement of the Transaction, without incurring brokerage commissions;
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the small effect of the proposed transaction on the relative voting power of Continuing Stockholders;
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the likelihood of some trading market in the pink sheets and the ability of the Company to later choose to establish a repurchase pool, if needed or advisable, to meet stockholders’ requests;
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that, after the Transaction, our business and operations are expected to continue substantially as presently conducted and the Company would have available cash to use in its efforts to return to profitability given the unlikelihood of it being able to obtain a loan on commercially reasonable terms; and
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our shares of Class A Common Stock will no longer be traded on the NASDAQ Capital Market and will not be eligible for listing on the New York Stock Exchange or the NASDAQ Stock Market. Any trading in our Class A Common Stock after the Transaction and deregistration under the Exchange Act will only occur in privately negotiated sales and potentially on the OTC Pink Open Market, if one or more brokers choose to make a market for our common stock there and complies with applicable regulatory requirements; however, there can be no assurances regarding any such trading.
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We expect to reduce the number of our stockholders of record below 300, which will allow us to cease the registration of our shares of Class A Common Stock under the Exchange Act. Effective on and following the termination of the registration of our Class A Common Stock under the Exchange Act, we will no longer be subject to any reporting requirements under the Exchange Act or the rules applicable to SEC reporting companies. We will, therefore, cease to file annual, quarterly, current, and other reports and documents with the SEC, and stockholders will cease to receive annual reports and proxy statements.
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We will no longer be subject to the provisions of the Sarbanes-Oxley Act and other requirements applicable to a public company, including those required by the listing standards of a national stock exchange.
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Our officers, directors and 10% stockholders will no longer be subject to the reporting requirements of Section 16 of the Exchange Act or be subject to the prohibitions against retaining short-swing profits in our shares of common stock. Persons acquiring 5% of our common stock will no longer be required to report their beneficial ownership under the Exchange Act.
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We will have no ability to access the public capital markets or to use public securities in attracting and retaining executives and other employees, and we will have a decreased ability to use our stock as a form of consideration to acquire other companies.
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Our shares of Class A Common Stock will no longer be traded on the NASDAQ Capital Market and will not be eligible for listing on the New York Stock Exchange or the NASDAQ Stock Market. Any trading in our Class A Common Stock after the Transaction and deregistration under the Exchange Act will occur only in privately negotiated sales and potentially on the OTC Pink Open Market, if one or more brokers choose to make a market for our Class A Common Stock there and complies with applicable regulatory requirements; however, there can be no assurances regarding any such trading.
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Holders of fewer than 1,000 shares of our Class A Common Stock or Class B Common Stock immediately prior to the effective time of the Transaction will receive a cash payment of $1.48, without interest, for each share of Class A Common Stock or Class B Common Stock they hold, will no longer have any ownership interest in us, and will cease to participate in any of our future earnings and growth.
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Holders of 1,000 or more shares of our Class A Common Stock or Class B Common Stock immediately prior the effective time of the Transaction will not receive any payment for their shares and, immediately following the Transaction, will continue to hold the same number of shares as before the Transaction.
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Restricted Stock Units and Options evidencing rights to purchase shares of our Class A Common Stock would be unaffected by the Transaction.
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Since our obligation to file periodic and other filings with the SEC will be suspended, Continuing Stockholders will no longer have access to publicly filed audited financial statements, information about executive compensation and other information about us and our business, operations and financial performance. We intend to continue to prepare audited annual financial statements and periodic unaudited financial statements and plan to make available to our stockholders audited annual financial statements through March 31, 2021 and may do so thereafter. Continuing Stockholders will have significantly less information about the Company and our business, operations, and financial performance than they have currently. We will continue to hold stockholder meetings, including annual meetings, or to take actions by written consent of our stockholders in lieu of meetings, all as required under Delaware law.
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Upon the effectiveness of the Transaction, the ownership percentage of our shares of common stock held by our directors and executive officers is expected to increase by approximately 13%, as a result of the reduction of the number of shares of common stock outstanding by approximately 5.3 million shares (or approximately 43% of the shares of our Class A Common Stock currently outstanding). However, the ownership percentage and the reduction in the number of shares outstanding following the Transaction may increase or decrease depending on purchases, sales and other transfers of our shares of common stock by our stockholders prior to the effective time of the Transaction and the number of “street name” shares that are actually cashed out in the Transaction.
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The fairness opinion prepared by Emory & Co., LLC ("Emory") that the $1.48 cash out price is fair from a financial point of view to unaffiliated stockholders;
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The limited trading volume and liquidity of our shares of Class A Common Stock and the effect of enabling our smallest stockholders, who represent a disproportionately large number of our record holders, to liquidate their holdings in shares of common stock and receive a premium over market prices prevailing at the time of our public announcement of the Transaction, without incurring brokerage commissions;
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The effect of the Transaction on the relative voting power of Continuing Stockholders;
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The likelihood of some trading market in the pink sheets and the ability of the Company to later choose to establish a repurchase pool, if needed or advisable, to meet stockholders’ requests; and
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That, after the Transaction, our business and operations are expected to continue substantially as presently conducted.
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the fairness opinion prepared by Emory & Co., LLC ("Emory") that the $1.48 cash out price is fair from a financial point of view to unaffiliated stockholders;
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the limited trading volume and liquidity of our shares of Class A Common Stock and the effect of enabling our smallest stockholders, who represent a disproportionately large number of our record holders, to liquidate their holdings in shares of common stock and receive a premium over market prices prevailing at the time of our public announcement of the Transaction, without incurring brokerage commissions;
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the small effect of the proposed transaction on the relative voting power of Continuing Stockholders;
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the likelihood of some trading market in the pink sheets and the ability of the Company to later choose to establish a repurchase pool, if needed or advisable, to meet stockholders’ requests;
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that, after the Transaction, our business and operations are expected to continue substantially as presently conducted; and
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our shares of Class A Common Stock will no longer be traded on the NASDAQ Capital Market and will not be eligible for listing on the New York Stock Exchange or the NASDAQ Stock Market. Any trading in our Class A Common Stock after the Transaction and deregistration under the Exchange Act will only occur in privately negotiated sales and potentially on the OTC Pink Open Market, if one or more brokers choose to make a market for our common stock there and complies with applicable regulatory requirements; however, there can be no assurances regarding any such trading.
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stock-based compensation
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amortization of acquisition related intangibles
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restructuring expense
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intangible asset impairments
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non-recurring transaction costs
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The underlying business decision of the Board of Directors, the Special Committee, the Company or its stockholders, or any other party to proceed with or effect the Transaction;
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The fairness of any portion or aspect of the Transaction not expressly addressed in its opinion;
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The fairness of any portion or aspect of the Transaction to the holders of any class of securities, creditors or other constituencies of the Company, or any other party other than the Company’s unaffiliated stockholders as set forth in its opinion;
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The relative merits of the Transaction as compared to any alternative business strategies that might exist for the Company or the effect of any other transaction in which the Company might engage;
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The tax or legal consequences of the proposed Transaction to either the Company, its stockholders, or any other party;
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How any stockholder should act or vote, as the case may be, with respect to the Transaction; or
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•
|
The solvency, creditworthiness, or fair value of the Company or any other participant in the Transaction under any applicable laws relating to bankruptcy, insolvency, or similar matters.
|
•
|
Reviewed a draft of this proxy statement;
|
•
|
Reviewed and analyzed certain publicly available financial and other data, including the Company’s Annual Reports on Forms 10-K for the three fiscal years ended March 31, 2018 through March 31, 2020 and the Company’s Quarterly Reports on Form 10-Q for the three-month periods ended June 30, 2019; September 30, 2019 and December 31, 2019;
|
•
|
Reviewed and analyzed certain historical financial and operating data relating to the Company, prepared and made available to Emory by the management of the Company;
|
•
|
Reviewed and analyzed certain non-public projected financial and operating data relating to the Company, prepared and made available to Emory by the management of the Company;
|
•
|
Conducted discussions with members of the senior management of the Company with respect to the business prospects and financial outlook the Company;
|
•
|
Reviewed current and historical market prices and trading activity of the Common Stock;
|
•
|
Compared certain financial information for the Company with similar information for certain other companies, the securities of which are publicly traded;
|
•
|
Reviewed the financial terms, to the extent publicly available, of selected precedent transactions which Emory deemed generally comparable to the Company and the Transaction; and
|
•
|
Conducted such other financial studies, analyses, and investigations and considered such other information as Emory deemed appropriate.
|
•
|
Comparative Stock Analysis - Emory analyzed public companies with similar characteristics to the Company.
|
◦
|
Emory performed a Comparative Stock Analysis, wherein Emory compared the Company's financial data, both historical and projected, with similar data available for publicly held companies that were selected for valuation guideline purposes.
|
◦
|
Westell and its segments were compared to sixteen publicly traded guideline companies that were considered sufficiently similar to Westell and its segments:
|
◦
|
In comparing the Company, Emory arrived at an enterprise value range of $6.0 million to $9.0 million.
|
•
|
Comparative Transactions Analysis - Emory analyzed recent transactions involving interests and transactions of similar companies that it independently selected.
|
◦
|
Emory determined multiples implied by transactions involving companies with similar characteristics to the Company. These implied multiples were applied to the Company’s relevant financial results.
|
◦
|
In comparing the Company to a selection of 31 transactions, Emory arrived at an enterprise value range of $7.5 million to $9.0 million.
|
•
|
Discounted Cash Flow Analysis - Emory determined the present value of future cash flows based on a weighted average cost of capital (WACC) discount rate that Emory independently determined.
|
◦
|
Emory discounted free cash flows for the fiscal year end periods ending March 31, 2021 through 2025 based on projections prepared by management:
|
◦
|
Using the Discounted Cash Flow Analysis (DCF), Emory determined an enterprise value range of $6.618 million to $8.896 million.
|
•
|
Market Price Analysis - Emory analyzed the Company’s market price per share and applied an appropriate premium to represent a control value per share. Emory reviewed various sources of premiums.
|
◦
|
Based on its analysis, Emory determined that a 50% to 60% premium above the prior 6 months volume weighted average price (VWAP) of $0.87 was appropriate.
|
◦
|
This arrives at a control value of between $1.31 per share and $1.39 per share under this method.
|
◦
|
This indicates an enterprise value range of between $5.740 million and $7.061 million
|
•
|
Adjusted Balance Sheet Analysis - Emory adjusted the balance sheet assets and liabilities to reflect an orderly liquidation of the Company based on discussions with management and Emory’s knowledge and experience.
|
◦
|
Emory’s balance sheet analysis results in a range of indicated enterprise values between $4.746 million and $7.479 million.
|
•
|
A citizen or resident of the United States;
|
•
|
A corporation or an entity taxable as a corporation created or organized under U.S. law (federal or state);
|
•
|
An estate the income of which is subject to federal income taxation regardless of its sources; or
|
•
|
A trust if a U.S. court is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have authority to control all substantial decisions of the trust or a valid election is in effect under applicable Treasury Regulations to be treated as a United States person.
|
•
|
$200,000 estimate for legal expenses (including the Special Committee’s legal expenses)
|
•
|
$70,000 for the investment banker’s fairness opinion, of which $70,000 has been paid; and
|
•
|
$30,000 for filing, printing, mailing and other miscellaneous fees
|
•
|
The completion of the Transaction, the delisting of the Company’s Class A Common Stock from the NASDAQ Stock Market, and the termination of the registration of the Company’s Class A Common Stock under the Exchange Act and the suspension of the Company’s SEC reporting requirements;
|
•
|
The estimated number of shares of the Company’s Class A Common Stock to be cashed-out in the Transaction;
|
•
|
The expected cost to the Company of the Transaction, including the estimated amount to be paid to cash-out the holders of fewer than 1,000 shares of the Company’s common stock immediately prior to the effective time of the Reverse Stock Split and the other related costs of the Transaction;
|
•
|
The cost savings that the Company expects to realize following the consummation of the Transaction;
|
•
|
The ability of Continuing Stockholders to sell their shares of the Company’s common stock over-the-counter following the Transaction; and
|
•
|
The percentage of the outstanding shares of the Company’s common stock owned by the Company’s directors and executive officers and their respective affiliates following the completion of the Transaction.
|
•
|
The occurrence of any event, change, or other circumstances that could give rise to the abandonment of the Transaction;
|
•
|
The commencement of any legal proceedings relating to the Transaction or the termination of the registration of the Company’s common stock with the SEC, and the outcome of any such proceedings that may be instituted;
|
•
|
The occurrence of any event, change, or other circumstance that could prevent or delay the Company from terminating the registration of its Class A Common Stock under the Exchange Act;
|
•
|
The amount of the costs, fees, expenses, and charges that the Company incurs in connection with the Transaction; and
|
•
|
The Company’s inability to realize the cost savings and operational benefits it expects to achieve as a result of the Transaction.
|
|
High
|
|
Low
|
Fiscal Year 2021
|
|
|
|
First Quarter ended June 30, 2020
|
$1.09
|
|
$0.71
|
Second Quarter ended September 30, 2020 (1)
|
$1.23
|
|
$0.78
|
Fiscal Year 2020
|
|
|
|
First Quarter ended June 30, 2019
|
$2.21
|
|
$1.69
|
Second Quarter ended September 30, 2019
|
$1.93
|
|
$1.31
|
Third Quarter ended December 31, 2019
|
$1.38
|
|
$0.83
|
Fourth Quarter ended March 31, 2020
|
$1.17
|
|
$0.61
|
Fiscal Year 2019
|
|
|
|
First Quarter ended June 30, 2018
|
$3.46
|
|
$2.74
|
Second Quarter ended September 30, 2018
|
$2.97
|
|
$2.52
|
Third Quarter ended December 31, 2018
|
$2.78
|
|
$1.88
|
Fourth Quarter ended March 31, 2019
|
$2.32
|
|
$1.89
|
|
|
|
|
Range of Prices Paid
|
|
|
|||||||||
|
|
No. of Shares Purchased
|
|
High
|
|
Low
|
|
Average Purchase Price
|
|||||||
Fiscal Year 2021
|
|
|
|
|
|
|
|
|
|||||||
First Quarter ended June 30, 2020
|
55,167
|
|
|
$
|
0.8299
|
|
|
$
|
0.7300
|
|
|
$
|
0.7634
|
|
|
Second Quarter ending September 30, 2020 (1)
|
3,755
|
|
|
$
|
1.1800
|
|
|
$
|
1.1000
|
|
|
$
|
1.1172
|
|
|
Fiscal Year 2020
|
|
|
|
|
|
|
|
|
|||||||
First Quarter ended June 30, 2019
|
80,936
|
|
|
$
|
2.2000
|
|
|
$
|
1.7200
|
|
|
$
|
2.1499
|
|
|
Second Quarter ended September 30, 2019
|
9,621
|
|
|
$
|
1.8300
|
|
|
$
|
1.4300
|
|
|
$
|
1.5970
|
|
|
Third Quarter ended December 31, 2019
|
1,626
|
|
|
$
|
0.8750
|
|
|
$
|
0.8750
|
|
|
$
|
0.8750
|
|
|
Fourth Quarter ended March 31, 2020
|
856
|
|
|
$
|
1.0334
|
|
|
$
|
1.0334
|
|
|
$
|
1.0334
|
|
|
Fiscal Year 2019
|
|
|
|
|
|
|
|
|
|||||||
First Quarter ended June 30, 2018
|
133,557
|
|
|
$
|
3.3500
|
|
|
$
|
2.7579
|
|
|
$
|
3.0309
|
|
|
Second Quarter ended September 30, 2018
|
71,353
|
|
|
$
|
2.8842
|
|
|
$
|
2.5600
|
|
|
$
|
2.8080
|
|
|
Third Quarter ended December 31, 2018
|
191,796
|
|
|
$
|
2.7815
|
|
|
$
|
1.8825
|
|
|
$
|
2.2561
|
|
|
Fourth Quarter ended March 31, 2019
|
91,837
|
|
|
$
|
2.3378
|
|
|
$
|
1.9000
|
|
|
$
|
2.1186
|
|
Name
|
|
Number of
Class A
Shares(1)(2)(3)
|
|
Number of
Class B
Shares (3)
|
|
Percent of
Class A
Common
Stock(4)
|
|
Percent of
Class B
Common
Stock(4)
|
|
Percent of
Total Voting
Power(4)
|
|
Kirk R. Brannock
|
|
200,354
|
|
(5)
|
—
|
|
1.6%
|
|
—
|
|
*
|
Scott C. Chandler
|
|
38,653
|
|
|
—
|
|
*
|
|
—
|
|
*
|
Timothy L. Duitsman
|
|
52,500
|
|
|
—
|
|
*
|
|
—
|
|
*
|
Robert W. Foskett
|
|
64,634
|
|
|
3,484,287
|
(6) (7)
|
*
|
|
100.0%
|
|
53.3%
|
Robert C. Penny III
|
|
55,884
|
|
|
3,237,878
|
(7)
|
*
|
|
92.9%
|
|
49.5%
|
Cary B. Wood
|
|
45,884
|
|
|
—
|
|
*
|
|
—
|
|
*
|
Mark A. Zorko
|
|
45,884
|
|
|
—
|
|
*
|
|
—
|
|
*
|
Jeniffer L. Jaynes
|
|
32,750
|
|
|
—
|
|
*
|
|
—
|
|
*
|
Jesse Swartwood
|
|
99,429
|
|
|
—
|
|
*
|
|
—
|
|
*
|
All Current Directors and
Executive Officers as a
group (9 Persons)
|
|
635,972
|
|
|
3,484,287
|
|
5.2%
|
|
100.0%
|
|
55.5%
|
Former Executive Officers
|
|
|
|
|
|
|
|
|
|
|
|
Alfred S. John
|
|
15,513
|
|
|
—
|
|
*
|
|
—
|
|
*
|
Thomas P. Minichiello
|
|
139,049
|
|
(8)
|
—
|
|
1.1%
|
|
—
|
|
*
|
(1)
|
Includes options to purchase shares that are exercisable within 60 days of June 30, 2020, as follows: Ms. Jaynes: 2.500 shares; Mr. Swartwood: 41,250 shares; and all current directors and executive officers as a group: 43,750 shares.
|
(2)
|
Includes unvested restricted stock awards where the holder has voting rights but not dispositive rights as follows: Mr. Brannock: 21,014 shares; Mr. Chandler: 21,014 shares; Mr. Foskett: 21,014 shares; Mr. Penny: 21,014 shares; Mr. Wood: 21,014 shares; Mr. Zorko: 21,014 shares; and all current directors and executive officers as a group: 126,084 shares.
|
(3)
|
Class A Common Stock is freely transferable and Class B Common Stock is transferable only to certain transferees but is convertible into Class A Common Stock on a share-for-share basis. Holders of Class A Common Stock have one vote per share and holders of Class B Common Stock have four votes per share.
|
(4)
|
Percentage of beneficial ownership and voting power is based on 12,329,880 shares of Class A Common Stock and 3,484,287 shares of Class B Common Stock outstanding as of June 30, 2020.
|
(5)
|
169,201 shares are held by Revocable Trust.
|
(6)
|
Includes 246,409 shares held in trust for the benefit of Mr. Penny’s children for which Mr. Foskett is trustee and has sole voting and dispositive power. Mr. Foskett disclaims beneficial ownership of these shares.
|
(7)
|
Includes 3,237,878 shares of Class B Common Stock held in the Voting Trust Agreement dated February 23, 1994, as amended (the “Voting Trust”), among Robert C. Penny III and certain members of the Penny family. Mr. Penny, Mr. Foskett, and Mr. Patrick J. McDonough, Jr. are co-trustees and have joint voting and dispositive power over all shares in the Voting Trust. Messrs. Penny, Foskett and McDonough each disclaim beneficial ownership with respect to all shares held in the Voting Trust in which they do not have a pecuniary interest. For additional information on the Voting Trust, see the Schedule 13D/A filed with the SEC on May 5, 2015. The Voting Trust contains 953,208 shares held for the benefit of Mr. Penny and 120,656 shares held for the benefit of Mr. Foskett. The address for Messrs. Penny, Foskett and McDonough is Robert W. Foskett, 1035 Pearl St. #400, Boulder, Colorado 80302.
|
(8)
|
5,000 shares are held by IRA.
|
Name and Address of Beneficial Owner
|
|
Number of
Class A
Shares(2)
|
|
Number of
Class B
Shares(2)
|
|
Percent of
Class A
Common
Stock
|
|
Percent of
Class B
Common
Stock
|
|
Percent of
Total Voting
Power(3)
|
Renaissance Technologies LLC (1)
800 Third Avenue New York, NY 10022 |
|
906,770
|
|
—
|
|
7.4%
|
|
—
|
|
3.5%
|
David C. Hoeft
555 California Street, 40th Floor San Francisco, CA 94104 |
|
959,033
|
|
—
|
|
7.8%
|
|
—
|
|
3.7%
|
Silk Investment Advisors
24 Hearthstone Drive Medfield, MA 02052 |
|
761,787
|
|
—
|
|
6.2%
|
|
—
|
|
2.9%
|
(1)
|
In its capacity as an investment manager, the beneficial owner may be deemed to beneficially own the shares of Class A Common Stock listed in the table. The shares listed in the table are held by the beneficial owner for its own account or for the account of its clients.
|
(2)
|
Class A Common Stock is freely transferable and Class B Common Stock is transferable only to certain transferees but is convertible into Class A Common Stock on a share-for-share basis. Holders of Class A Common Stock have one vote per share and holders of Class B Common Stock have four votes per share.
|
(3)
|
Percentage of beneficial ownership and voting power is based on 12,329,880 shares of Class A Common Stock and 3,484,287 shares of Class B Common Stock outstanding as of June 30, 2020.
|
(In thousands, except share and per shares amounts)
|
March 31, 2020
|
|
March 31, 2019
|
|
||||
Assets
|
|
|
|
|
||||
Current assets:
|
|
|
|
|
||||
Cash and cash equivalents
|
$
|
20,869
|
|
|
$
|
25,457
|
|
|
Accounts receivable (net of allowance of $100 at both March 31, 2020 and 2019)
|
4,047
|
|
|
6,865
|
|
|
||
Inventories
|
6,807
|
|
|
9,801
|
|
|
||
Prepaid expenses and other current assets
|
1,298
|
|
|
1,706
|
|
|
||
Total current assets
|
33,021
|
|
|
43,829
|
|
|
||
Non-current assets:
|
|
|
|
|
||||
Land, property and equipment, gross
|
7,987
|
|
|
8,109
|
|
|
||
Less accumulated depreciation and amortization
|
(6,911
|
)
|
|
(6,811
|
)
|
|
||
Land, property and equipment, net
|
1,076
|
|
|
1,298
|
|
|
||
Intangible assets, net
|
2,728
|
|
|
3,278
|
|
|
||
Right-of-use assets on operating leases, net
|
628
|
|
|
—
|
|
|
||
Other non-current assets
|
73
|
|
|
492
|
|
|
||
Total assets
|
$
|
37,526
|
|
|
$
|
48,897
|
|
|
|
|
|
|
|
||||
Liabilities and Stockholders’ Equity
|
|
|
|
|
||||
Current liabilities:
|
|
|
|
|
||||
Accounts payable
|
$
|
1,065
|
|
|
$
|
2,313
|
|
|
Accrued expenses
|
3,136
|
|
|
3,567
|
|
|
||
Deferred revenue
|
1,099
|
|
|
1,217
|
|
|
||
Total current liabilities
|
5,300
|
|
|
7,097
|
|
|
||
Deferred revenue non-current
|
221
|
|
|
444
|
|
|
||
Other non-current liabilities
|
344
|
|
|
176
|
|
|
||
Total liabilities
|
5,865
|
|
|
7,717
|
|
|
||
Commitments and contingencies (see Note 7)
|
|
|
|
|
||||
Stockholders’ equity:
|
|
|
|
|
||||
Class A common stock, par $0.01, Authorized – 109,000,000 shares
Outstanding – 12,224,450 and 11,909,979 shares at March 31, 2020 and 2019, respectively |
122
|
|
|
119
|
|
|
||
Class B common stock, par $0.01, Authorized – 25,000,000 shares
Issued and outstanding – 3,484,287 shares at both March 31, 2020 and 2019 |
35
|
|
|
35
|
|
|
||
Preferred stock, par $0.01, Authorized – 1,000,000 shares Issued and outstanding – none
|
—
|
|
|
—
|
|
|
||
Additional paid-in capital
|
419,630
|
|
|
418,859
|
|
|
||
Treasury stock at cost – 5,215,453 and 5,122,414 shares at March 31, 2020 and 2019, respectively
|
(37,326
|
)
|
|
(37,135
|
)
|
|
||
Accumulated deficit
|
(350,800
|
)
|
|
(340,698
|
)
|
|
||
Total stockholders’ equity
|
31,661
|
|
|
41,180
|
|
|
||
Total liabilities and stockholders’ equity
|
$
|
37,526
|
|
|
$
|
48,897
|
|
|
(In thousands, except per share amounts)
|
Fiscal Year Ended March 31,
|
||||||
|
2020
|
|
2019
|
||||
Revenue
|
$
|
29,956
|
|
|
$
|
43,570
|
|
Cost of revenue
|
20,309
|
|
|
25,206
|
|
||
Gross profit
|
9,647
|
|
|
18,364
|
|
||
Operating expenses
|
|
|
|
||||
Research and development
|
5,346
|
|
|
6,790
|
|
||
Sales and marketing
|
7,592
|
|
|
8,342
|
|
||
General and administrative
|
4,757
|
|
|
6,699
|
|
||
Intangibles amortization
|
1,233
|
|
|
3,435
|
|
||
Restructuring
|
234
|
|
|
—
|
|
||
Long-lived assets impairment
|
1,007
|
|
|
4,722
|
|
||
Total operating expenses
|
20,169
|
|
|
29,988
|
|
||
Operating income (loss)
|
(10,522
|
)
|
|
(11,624
|
)
|
||
Other income (expense), net
|
456
|
|
|
626
|
|
||
Income (loss) before income taxes
|
(10,066
|
)
|
|
(10,998
|
)
|
||
Income tax (expense) benefit
|
(36
|
)
|
|
(39
|
)
|
||
Net income (loss) from continuing operations
|
(10,102
|
)
|
|
(11,037
|
)
|
||
Discontinued operations (Note 1):
|
|
|
|
||||
Income (loss) from discontinued operations, net of tax benefit (expense) of $0 and $0 for fiscal years 2020 and 2019, respectively
|
—
|
|
|
(345
|
)
|
||
Net income (loss)
|
$
|
(10,102
|
)
|
|
$
|
(11,382
|
)
|
|
|
|
|
||||
Basic net income (loss) per share:
|
|
|
|
||||
Basic net income (loss) from continuing operations
|
$
|
(0.65
|
)
|
|
$
|
(0.71
|
)
|
Basic net income (loss) from discontinued operations
|
—
|
|
|
(0.02
|
)
|
||
Basic net income (loss) per share
|
$
|
(0.65
|
)
|
|
$
|
(0.73
|
)
|
Diluted net income (loss) per share:
|
|
|
|
||||
Diluted net income (loss) from continuing operations
|
$
|
(0.65
|
)
|
|
$
|
(0.71
|
)
|
Diluted net income (loss) from discontinued operations
|
—
|
|
|
(0.02
|
)
|
||
Diluted net income (loss) per share
|
$
|
(0.65
|
)
|
|
$
|
(0.73
|
)
|
Weighted-average number of shares outstanding:
|
|
|
|
||||
Basic
|
15,530
|
|
|
15,517
|
|
||
Effect of dilutive securities: restricted stock, restricted stock units, performance stock units and stock options
|
—
|
|
|
—
|
|
||
Diluted
|
15,530
|
|
|
15,517
|
|
(In thousands, except share and per shares amounts)
|
March 31, 2020
|
|
|
|
March 31, 2020
|
||||||
|
(as reported)
|
|
Pro Forma Adjustments
|
|
(as adjusted)
|
||||||
Assets
|
|
|
|
|
|
||||||
Current assets:
|
|
|
|
|
|
||||||
Cash and cash equivalents
|
$
|
20,869
|
|
|
(8,100
|
)
|
(1)
|
$
|
12,769
|
|
|
Accounts receivable (net of allowance of $100 at March 31, 2020)
|
4,047
|
|
|
—
|
|
|
4,047
|
|
|||
Inventories
|
6,807
|
|
|
—
|
|
|
6,807
|
|
|||
Prepaid expenses and other current assets
|
1,298
|
|
|
—
|
|
|
1,298
|
|
|||
Total current assets
|
33,021
|
|
|
(8,100
|
)
|
|
24,921
|
|
|||
Non-current assets:
|
|
|
|
|
|
||||||
Land, property and equipment, gross
|
7,987
|
|
|
—
|
|
|
7,987
|
|
|||
Less accumulated depreciation and amortization
|
(6,911
|
)
|
|
—
|
|
|
(6,911
|
)
|
|||
Land, property and equipment, net
|
1,076
|
|
|
—
|
|
|
1,076
|
|
|||
Intangible assets, net
|
2,728
|
|
|
—
|
|
|
2,728
|
|
|||
Right-of-use assets on operating leases, net
|
628
|
|
|
—
|
|
|
628
|
|
|||
Other non-current assets
|
73
|
|
|
—
|
|
|
73
|
|
|||
Total assets
|
$
|
37,526
|
|
|
$
|
(8,100
|
)
|
|
$
|
29,426
|
|
|
|
|
|
|
|
||||||
Liabilities and Stockholders’ Equity
|
|
|
|
|
|
||||||
Current liabilities:
|
|
|
|
|
|
||||||
Accounts payable
|
$
|
1,065
|
|
|
—
|
|
|
$
|
1,065
|
|
|
Accrued expenses
|
3,136
|
|
|
—
|
|
|
3,136
|
|
|||
Deferred revenue
|
1,099
|
|
|
—
|
|
|
1,099
|
|
|||
Total current liabilities
|
5,300
|
|
|
—
|
|
|
5,300
|
|
|||
Deferred revenue non-current
|
221
|
|
|
—
|
|
|
221
|
|
|||
Other non-current liabilities
|
344
|
|
|
—
|
|
|
344
|
|
|||
Total liabilities
|
5,865
|
|
|
—
|
|
|
5,865
|
|
|||
Commitments and contingencies (see Note 7)
|
|
|
|
|
|
||||||
Stockholders’ equity:
|
|
|
|
|
|
||||||
Class A common stock, par $0.01, Authorized – 109,000,000 shares
Outstanding – 6,954,450 shares at March 31, 2020 |
122
|
|
|
(53
|
)
|
(2)
|
69
|
|
|||
Class B common stock, par $0.01, Authorized – 25,000,000 shares
Issued and outstanding – 3,484,287 shares at March 31, 2020 |
35
|
|
|
—
|
|
|
35
|
|
|||
Preferred stock, par $0.01, Authorized – 1,000,000 shares Issued and outstanding – none
|
—
|
|
|
|
|
—
|
|
||||
Additional paid-in capital
|
419,630
|
|
|
(7,747
|
)
|
(3)
|
411,883
|
|
|||
Treasury stock at cost – 5,215,453 shares at March 31, 2020
|
(37,326
|
)
|
|
—
|
|
|
(37,326
|
)
|
|||
Accumulated deficit
|
(350,800
|
)
|
|
(300
|
)
|
(4)
|
(351,100
|
)
|
|||
Total stockholders’ equity
|
31,661
|
|
|
(8,100
|
)
|
|
23,561
|
|
|||
Total liabilities and stockholders’ equity
|
$
|
37,526
|
|
|
$
|
(8,100
|
)
|
|
$
|
29,426
|
|
(In thousands, except per share amounts)
|
Fiscal Year Ended March 31,
|
||||||||||
|
2020 (as reported)
|
|
Pro Forma Adjustments
|
|
2020 (as adjusted)
|
||||||
Revenue
|
$
|
29,956
|
|
|
$
|
—
|
|
|
$
|
29,956
|
|
Cost of revenue
|
20,309
|
|
|
—
|
|
|
20,309
|
|
|||
Gross profit
|
9,647
|
|
|
—
|
|
|
9,647
|
|
|||
Operating expenses
|
|
|
|
|
|
||||||
Research and development
|
5,346
|
|
|
—
|
|
|
5,346
|
|
|||
Sales and marketing
|
7,592
|
|
|
—
|
|
|
7,592
|
|
|||
General and administrative
|
4,757
|
|
|
(900
|
)
|
(1)
|
3,857
|
|
|||
Intangibles amortization
|
1,233
|
|
|
—
|
|
|
1,233
|
|
|||
Restructuring
|
234
|
|
|
—
|
|
|
234
|
|
|||
Long-lived assets impairment
|
1,007
|
|
|
—
|
|
|
1,007
|
|
|||
Total operating expenses
|
20,169
|
|
|
(900
|
)
|
|
19,269
|
|
|||
Operating income (loss)
|
(10,522
|
)
|
|
900
|
|
|
(9,622
|
)
|
|||
Other income (expense), net
|
456
|
|
|
(65
|
)
|
(2)
|
391
|
|
|||
Income (loss) before income taxes
|
(10,066
|
)
|
|
835
|
|
|
(9,231
|
)
|
|||
Income tax (expense) benefit
|
(36
|
)
|
|
—
|
|
(3)
|
(36
|
)
|
|||
Net income (loss)
|
$
|
(10,102
|
)
|
|
$
|
835
|
|
|
$
|
(9,267
|
)
|
|
|
|
|
|
|
||||||
Basic net income (loss) per share:
|
$
|
(0.65
|
)
|
|
|
|
$
|
(0.90
|
)
|
||
Diluted net income (loss) per share:
|
$
|
(0.65
|
)
|
|
|
|
$
|
(0.90
|
)
|
||
Weighted-average number of shares outstanding:
|
|
|
|
|
|
||||||
Basic
|
15,530
|
|
|
5,270
|
|
(4)
|
10,260
|
|
|||
Effect of dilutive securities: restricted stock, restricted stock units, performance stock units and stock options
|
—
|
|
|
|
|
—
|
|
||||
Diluted
|
15,530
|
|
|
5,270
|
|
(4)
|
10,260
|
|
Director
|
|
Audit
|
|
Compensation
|
|
Corporate
Governance and
Nominating
|
Kirk R. Brannock
|
|
|
|
|
|
(1)
|
Scott C. Chandler
|
|
Member
|
|
Member
|
|
Member
|
Timothy L. Duitsman
|
|
|
|
(2)
|
|
|
Robert W. Foskett
|
|
|
|
|
|
Member
|
Robert C. Penny III
|
|
|
|
|
|
Chair
|
Cary B. Wood
|
|
Member
|
|
Chair
|
|
|
Mark A. Zorko
|
|
Chair
|
|
Member
|
|
|
(1)
|
Effective September 11, 2018, Mr. Brannock was appointed as a Member of the Corporate Governance and Nominating Committee. Effective September 12, 2019 Mr. Brannock resigned from the Corporate Governance and Nominating Committee.
|
(2)
|
Effective June 18, 2019, Mr. Duitsman was appointed as a Member of the Compensation Committee. Concurrent with this appointment as CEO on September 1, 2019, Mr. Duitsman was no longer deemed an independent director and therefore resigned as a member of the Compensation Committee.
|
Name
|
|
Age
|
|
Position
|
Timothy L. Duitsman
|
|
58
|
|
President and Chief Executive Officer
|
Jeniffer L. Jaynes
|
|
48
|
|
Interim Chief Financial Officer, Vice President, Corporate Controller and Secretary
|
Jesse Swartwood
|
|
46
|
|
Senior Vice President, Worldwide Sales
|
Timothy L. Duitsman – Timothy L. Duitsman is a Member of the Board in addition to his role as President and Chief Executive Officer. His biographical information is included under Proposal No.1: Election of Directors.
|
|
Jeniffer L. Jaynes – Jeniffer L. Jaynes has served as the Company’s interim Chief Financial Officer since August 24, 2019. Prior to assuming the role of the CFO, she served as the Vice President and Corporate Controller since July 1, 2018, and will continue to serve in these capacities. She previously served as the Company’s Assistant Vice President of Financial Reporting from 2016 until 2018, and as Director of SEC Reporting from 2007 to 2016. Ms. Jaynes initially joined the Company in 1996 and held various accounting positions with the Company through 2000. Prior to rejoining the Company in 2007, Ms. Jaynes served as the Director of SEC Reporting at Infinity Property and Casualty Corporation (NASDAQ: IPCC), and as the Manager of Financial Reporting at Pemco Aviation Group, Inc. (subsequently known as Alabama Aircraft Industries, Inc. (NASDAQ: AAII)). Ms. Jaynes is a Certified Public Accountant and began her career as an auditor with Arthur Andersen LLP.
|
|
Jesse Swartwood - Jesse Swartwood joined Westell in 2005, in connection with the acquisition of HyperEdge, a manufacturer of network service access products, as Regional Sales Vice President with responsibility for the AT&T account and assumed the role of Senior Vice President, Worldwide Sales, in September 2016, and became an executive officer effective January 1, 2017. During his tenure at Westell, Mr. Swartwood served in a number of roles including Vice President, North American Sales. From 1996 to 2005, Mr. Swartwood held various positions with increasing responsibility including Director and Vice President of Sales at HyperEdge, a manufacturer of network service access products which was acquired by Westell. Mr. Swartwood earned a Bachelor of Arts in Telecom Management from DeVry University and a Bachelor of Arts in Economics and Management and a Bachelor of Arts in Sociology from Beloit College.
|
Name & Principal
Position
|
Year
|
Salary
($)
|
|
Bonus
($)
|
|
Stock
Awards
($)(1)
|
|
Option
Awards
($)(1)
|
Non-Equity
Incentive
Plan
Compensation
($)
|
|
All Other Compensation ($)(2)
|
Total
($)
|
|||||
Timothy L. Duitsman
President and CEO |
2020
|
175,000
|
|
(3)
|
—
|
|
211,300
|
|
(4)
|
92,828
|
—
|
|
|
7,856
|
|
486,984
|
|
Alfred S. John
Former President and CEO |
2020
|
137,308
|
|
(5)
|
—
|
|
236,998
|
|
|
—
|
—
|
|
|
29,859
|
|
404,165
|
|
|
2019
|
294,231
|
|
(6)
|
—
|
|
314,000
|
|
|
144,319
|
—
|
|
|
21,489
|
|
774,039
|
|
Jeniffer L. Jaynes
Interim CFO, Vice President, Corporate Controller and Secretary
|
2020
|
253,962
|
|
(7)
|
—
|
|
52,800
|
|
|
—
|
—
|
|
|
500
|
|
307,262
|
|
Thomas P. Minichiello
Former Senior Vice President, CFO, Treasurer and Secretary
|
2020
|
121,154
|
|
(8)
|
—
|
|
—
|
|
—
|
—
|
|
|
500
|
|
121,654
|
|
|
|
2019
|
300,000
|
|
|
—
|
|
38,640
|
|
|
—
|
11,800
|
|
(9)
|
500
|
|
350,940
|
|
Jesse Swartwood
Senior Vice President, Worldwide Sales |
2020
|
225,000
|
|
|
—
|
|
94,275
|
|
|
—
|
—
|
|
|
500
|
|
319,775
|
|
|
2019
|
216,346
|
|
|
—
|
|
80,500
|
|
|
—
|
7,260
|
|
(9)
|
500
|
|
304,606
|
|
(1)
|
Represents the fair value of the award on the grant date, computed in accordance with ASC 718. A discussion of the assumptions used in calculation of these values may be found in footnote 10 to our audited financial statements of the Company’s 2020 Annual Report on Form 10-K filed with the SEC on June 18, 2020. For awards containing a performance-based vesting condition, the value reported in the table above reflects the grant date probable outcome of the performance condition, which assumes earning 100% of the targeted amount. In fiscal year 2019, Mr. John earned 5,000 shares or 10% of the targeted amount. In fiscal year 2020, no performance-based awards were earned.
|
(2)
|
All other compensation consists of Company 401(k) match, and in fiscal year 2019 for Mr. John $20,489 for relocation and temporary housing and in fiscal year 2020 for Mr. John $10,000 for temporary housing and $19,359 for severance which included a lease buy-out. In fiscal year 2020, includes $6,856 of Board fees for Mr. Duitsman, which he received prior to being appointed as the Company’s President and CEO on September 1, 2019.
|
(3)
|
Represents Mr. Duitsman’s salary ($300,000 per annum) from his hire date of September 1, 2019 through March 31, 2020.
|
(4)
|
Includes $4,300 for a restricted stock award for services as a Director during the period from June 2019 until his appointment as President and CEO on September 1, 2019.
|
(5)
|
Represents Mr. John’s salary ($340,000 per annum) from April 1, 2019, through August 23, 2019, his termination date.
|
(6)
|
Represents Mr. John’s salary ($340,000 per annum) from his hire date of May 21, 2018, through March 31, 2019.
|
(7)
|
Represents Ms. Jaynes’ salary for fiscal year 2020, which temporarily increased to $300,000 in connection with her appointment as Interim Chief Financial Officer effective August 24, 2019.
|
(8)
|
Represents Mr. Minichiello’s salary ($300,000 per annum) from April 1, 2019, through August 23, 2019, his termination date.
|
(9)
|
The bonus plan is a performance-based plan that provides for cash-based awards tied to the achievement of our quarterly and annual financial objectives. For fiscal 2019, the cash bonus payouts were based on revenue and non-GAAP operating profit results as compared to plan targets. The actual amount paid was 6.6% of the NEO’s target bonus.
|
|
Option Awards
|
|
Stock Awards
|
|||||||||||||
Name
|
Number of
Securities
Underlying
Unexercised
Options
Exercisable
(#)
|
|
Number of
Securities
Underlying
Unexercised
Options
Unexercisable
(#)
|
|
Option
Exercise
Price
($)
|
Option
Expiration
Date
|
|
Number of
Shares or
Units of
Stock that
Have Not
Vested
(#)
|
|
Market
Value of
Shares or
Units of
Stock that
Have Not
Vested
($) (1)
|
|
|||||
Timothy L. Duitsman
|
—
|
|
|
150,000
|
|
(2)
|
1.35
|
|
09/01/2026
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
100,000
|
|
(3)
|
78,000
|
|
|
|||
|
|
|
|
|
|
|
|
2,500
|
|
(4)
|
1,950
|
|
|
|||
Jeniffer L. Jaynes
|
1,250
|
|
|
—
|
|
|
4.70
|
|
09/18/2022
|
|
|
|
|
|
||
|
1,250
|
|
|
—
|
|
|
4.64
|
|
04/01/2023
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
3,334
|
|
(5)
|
2,601
|
|
|
|||
|
|
|
|
|
|
|
|
7,667
|
|
(6)
|
5,980
|
|
|
|||
|
|
|
|
|
|
|
|
15,000
|
|
(7)
|
11,700
|
|
|
|||
|
|
|
|
|
|
|
|
15,000
|
|
(8)
|
11,700
|
|
|
|||
Jesse Swartwood
|
3,750
|
|
|
—
|
|
|
4.70
|
|
09/18/2022
|
|
|
|
|
|
||
|
37,500
|
|
|
—
|
|
|
2.16
|
|
09/06/2023
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
6,667
|
|
(5)
|
5,200
|
|
|
|||
|
|
|
|
|
|
|
|
16,667
|
|
(6)
|
13,000
|
|
|
|||
|
|
|
|
|
|
|
|
15,000
|
|
(7)
|
11,700
|
|
|
(1)
|
The market value is calculated by multiplying the number of shares that have not vested by $0.78, the closing price of the Class A Common Stock as of March 31, 2020.
|
(2)
|
Non-qualified stock option award vests in equal annual installments of 33% per year commencing on September 1, 2020.
|
(3)
|
Restricted stock unit award vests in equal annual installments of 33% per year commencing on September 1, 2020.
|
(4)
|
Restricted stock award vests 100% on June 18, 2020.
|
(5)
|
Restricted stock unit award vests in equal annual installments of 33% per year commencing on April 1, 2018.
|
(6)
|
Restricted stock unit award vests in equal annual installments of 33% per year commencing on April 2, 2019.
|
(7)
|
Restricted stock unit award vests in equal annual installments of 33% per year commencing on April 2, 2020.
|
(8)
|
Restricted stock unit award vests 100% on August 26, 2020.
|
|
|
Termination without
Cause or for Good
Reason following a
change in control
($)
|
|
Change in
Control without
Termination
($)
|
|
Termination for
Good Reason
($)
|
|
Termination
without Cause
($)
|
||||
Cash Compensation
|
|
300,000
|
|
|
—
|
|
|
—
|
|
|
300,000
|
|
Health Benefits
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Stock Option Vesting Acceleration (1)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Stock Award Vesting Acceleration (2)
|
|
79,950
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Total
|
|
379,950
|
|
|
—
|
|
|
—
|
|
|
300,000
|
|
(1)
|
The market value is calculated by multiplying the number of options that have not vested by the difference between $0.78, the closing price of the Class A Common Stock as of the last business day of fiscal year 2020, less the strike price of the option.
|
(2)
|
The market value is calculated by multiplying the number of shares that have not vested by $0.78, the closing price of the Class A Common Stock as of the last business day of fiscal year 2020.
|
|
|
Termination without
Cause or for Good
Reason following a
change in control
($)
|
|
Change in
Control without
Termination
($)
|
|
Termination for
Good Reason
($)
|
|
Termination
without Cause
($)
|
||||
Cash Compensation
|
|
300,000
|
|
|
—
|
|
|
300,000
|
|
|
300,000
|
|
Health Benefits
|
|
11,170
|
|
|
—
|
|
|
11,170
|
|
|
11,170
|
|
Stock Option Vesting Acceleration (1)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Stock Award Vesting Acceleration (2)
|
|
31,981
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Total
|
|
343,151
|
|
|
—
|
|
|
311,170
|
|
|
311,170
|
|
(1)
|
The market value is calculated by multiplying the number of options that have not vested by the difference between $0.78, the closing price of the Class A Common Stock as of the last business day of fiscal year 2020, less the strike price of the option.
|
(2)
|
The market value is calculated by multiplying the number of shares that have not vested by $0.78, the closing price of the Class A Common Stock as of the last business day of fiscal year 2020.
|
|
|
Termination without
Cause following a
change in control
($)
|
|
Change in
Control without
Termination
($)
|
|
Termination for
Good Reason
($)
|
|
Termination
without Cause
($)
|
||||
Cash Compensation
|
|
112,500
|
|
|
—
|
|
|
—
|
|
|
112,500
|
|
Health Benefits
|
|
8,245
|
|
|
—
|
|
|
—
|
|
|
8,245
|
|
Stock Option Vesting Acceleration (1)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Stock Award Vesting Acceleration (2)
|
|
29,901
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Total
|
|
150,646
|
|
|
—
|
|
|
—
|
|
|
120,745
|
|
(1)
|
The market value is calculated by multiplying the number of options that have not vested by the difference between $0.78, the closing price of the Class A Common Stock as of the last business day of fiscal year 2020, less the strike price of the option.
|
(2)
|
The market value is calculated by multiplying the number of shares that have not vested by $0.78, the closing price of the Class A Common Stock as of the last business day of fiscal year 2020.
|
Name
|
|
Fees Earned
or Paid in Cash ($)
|
|
Stock Awards
($)(2)(3)
|
|
Total ($)
|
Timothy L. Duitsman (1)
|
|
—
|
|
—
|
|
—
|
Kirk R. Brannock (4)
|
|
49,250
|
|
28,999
|
|
78,249
|
Scott C. Chandler(4)
|
|
39,250
|
|
28,999
|
|
68,249
|
Robert W. Foskett(4)
|
|
29,250
|
|
28,999
|
|
58,249
|
Robert C. Penny III(4)
|
|
29,250
|
|
28,999
|
|
58,249
|
Cary B. Wood(4)
|
|
44,250
|
|
28,999
|
|
73,249
|
Mark A Zorko(4)
|
|
44,250
|
|
28,999
|
|
73,249
|
(1)
|
Mr. Duitsman, a Director and our President and CEO, is not included in this table as compensation received by Mr. Duitsman is shown in the Summary Compensation Table. Since becoming an employee of the Company, on September 1, 2019, Mr. Duitsman has received no additional compensation for his service as director. Mr. Duitsman’s equity holdings as of March 31, 2020 are presented in the Outstanding Equity Awards at Fiscal Year-End table.
|
(2)
|
The values reflect the aggregate grant date fair value as determined under ASC 718. Assumptions used in the calculation of these amounts are included in footnote 10 to the Company’s audited financial statements for fiscal year 2020 included in the Company’s Annual Report on Form 10-K filed with the SEC on June 18, 2020.
|
(3)
|
The equity portion of the annual grant to directors vests annually on the date of grant over a one-year period.
|
(4)
|
As of March 31, 2020, each director had 21,014 shares of unvested restricted stock.
|
Plan category
|
|
Number of securities to be
issued upon exercise of
outstanding options,
warrants and rights
(#)(1)
|
|
Weighted-average exercise
price of outstanding
options, warrants and
rights
($)(2)
|
|
Number of securities
remaining available for
future issuance (excluding
securities reflected in the
first column)
(#)
|
Equity compensation plans
approved by security holders (3)
|
|
667,920
|
|
1.87
|
|
1,520,134
|
Equity compensation plans not
approved by security holders
|
|
—
|
|
—
|
|
—
|
Total
|
|
667,920
|
|
1.87
|
|
1,520,134
|
(1)
|
Includes outstanding options, RSUs and PSUs.
|
(2)
|
Represents weighted-average exercise price of outstanding options.
|
(3)
|
All amounts in this row relate to the 2019 Omnibus Incentive Compensation Plan.
|
Fee Category
|
|
Fiscal
2020 |
|
Fiscal
2019 |
||||
Audit Fees
|
|
$
|
346,655
|
|
|
$
|
434,500
|
|
Audit-Related Fees
|
|
3,500
|
|
|
21,450
|
|
||
Tax Fees
|
|
—
|
|
|
—
|
|
||
All Other Fees
|
|
—
|
|
|
—
|
|
||
Total
|
|
$
|
350,155
|
|
|
$
|
455,950
|
|
|
|
|
|
|
WESTELL TECHNOLOGIES, INC.
|
|
|
|
By:
|
|
Name:
|
|
Title:
|
1 Year Westell Technologies Chart |
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