American Software, Inc.
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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 Pursuant to §240.14a-12
AMERICAN SOFTWARE, INC.
(Name of Registrant as Specified In Its Charter)
 
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check all boxes that apply):

No fee required.

Fee paid previously with preliminary materials.

Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a6(i)(1) and 0-11.

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AMERICAN SOFTWARE, INC.
470 East Paces Ferry Road, N.E.
Atlanta, Georgia 30305
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO THE SHAREHOLDERS:
NOTICE IS HEREBY GIVEN that the 2024 annual meeting of shareholders (the “Annual Meeting”) of AMERICAN SOFTWARE, INC. (the “Company”) will be held at the principal offices of the Company, 470 East Paces Ferry Road, N.E., Atlanta, Georgia, on Tuesday, August 20, 2024 at 3:00 p.m. Eastern Daylight Time, for the following purposes:
1.
To elect eight directors of the Company.
2.
To ratify the appointment of KPMG LLP as the Company’s independent registered public accounting firm for the fiscal year ending on April 30, 2025.
3.
To conduct an advisory vote on the compensation of our named executive officers.
4.
To approve the adoption of the 2024 Equity Compensation Plan.
5.
To approve the Reclassification for the purpose of eliminating the Company’s dual-class share structure.
6.
To approve the amendment and restatement of the Company’s Amended and Restated Articles of Incorporation to give effect to the Reclassification.
7.
To approve the amendment and restatement of the Company’s Amended and Restated Articles of Incorporation to give effect to the indemnification of directors and officers amendment.
8.
To approve the amendment and restatement of the Company’s Amended and Restated Articles of Incorporation to give effect to the blank check preferred stock amendment.
9.
To consider and transact such other business as may properly come before the Annual Meeting.
Only shareholders of record of the Company at the close of business on July 1, 2024 will be entitled to vote at the Annual Meeting.
Shareholders are requested to vote, date, sign and mail their proxies in the form enclosed even if they plan to attend the Annual Meeting. If shareholders are present at the Annual Meeting, their proxies may be withdrawn, and they may vote personally on all matters brought before the Annual Meeting, as described more fully in the enclosed Proxy Statement.
BY ORDER OF THE BOARD OF DIRECTORS

July 8, 2024

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IMPORTANT
We encourage you to attend the Annual Meeting. In order that there may be a proper representation at the Annual Meeting, each shareholder is requested to return his or her proxy in the enclosed envelope, which requires no postage if mailed in the United States. Attention by shareholders to this request will reduce the Company’s expense in soliciting proxies.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL
MEETING OF SHAREHOLDERS TO BE HELD ON AUGUST 20, 2024:
This Proxy Statement, the proxy card and the Company’s Annual Report on Form 10-K for the fiscal year
ended April 30, 2024 are available at: http://materials.proxyvote.com/029683

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PROXY STATEMENT SUMMARY
This Proxy Statement summary highlights information contained elsewhere in this Proxy Statement, which is first being sent or made available to shareholders on or about July 8, 2024. This is only a summary, and we encourage you to read the entire Proxy Statement carefully before voting.
Annual Meeting Details:
Time and Date:
3:00 p.m. Eastern Daylight Time on Tuesday, August 20, 2024
Place:
470 East Paces Ferry Road, N.E., Atlanta, Georgia 30305
Record Date:
Monday, July 1, 2024
Voting:
Holders of Class A Shares as of the Record Date are entitled to vote. Each share of Class A common stock is entitled to one vote for each Class A director nominee and one vote for each of the proposals.
Entry:
You are entitled to attend the Annual Meeting only if you were a shareholder as of the close of business on the Record Date or hold a valid proxy for the Annual Meeting. You should be prepared to present valid photo identification for admittance. If you do not provide photo identification, you will not be admitted to the Annual Meeting. Please let us know if you plan to attend the Annual Meeting by marking the appropriate box on the enclosed proxy card if you requested to receive printed proxy materials, or, if you vote by telephone or over the internet, by indicating your plans when prompted.
Meeting Agenda and Board Voting Recommendations:
Proposals
Board Voting
Recommendation
Page
Reference
1. To elect each of H. Allan Dow, W. Dennis Hogue, Thomas L. Newberry, V, Celena Matlock, Matthew G. McKenna, James B. Miller, Jr., Lizanne Thomas and Nicole Wu as Class A directors.
For
4
2. To ratify the appointment of KPMG LLP as our independent registered public accounting firm for the fiscal year ending on April 30, 2025.
For
3. To approve, on an advisory basis, the compensation of our named executive officers.
For
4. To approve the adoption of the 2024 Equity Compensation Plan.
For
5. To approve the Company’s Reclassification.
For
6. To approve the amendment and restatement of the Company’s Amended and Restated Articles of Incorporation to give effect to the Reclassification.
For
7. To approve the amendment and restatement of the Company’s Amended and Restated Articles of Incorporation to give effect to the indemnification of directors and officers amendment.
For
8. To approve the amendment and restatement of the Company’s Amended and Restated Articles of Incorporation to give effect to the blank check preferred stock amendment.
For
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In addition to the above matters, we will transact any other business that may properly come before the Annual Meeting or any adjournment or postponement thereof.
Voting Matters
Whether or not you plan to attend the Annual Meeting, we urge you to vote as soon as possible to ensure that your shares will be represented and voted at the Annual Meeting. If you were a shareholder of record as of the Record Date, you have four voting options. You may vote using one of the following methods:




Over the Internet, which you are encouraged to do if you have access to the Internet
By telephone
For those shareholders who request a paper proxy card in the mail, by completing, signing and returning the proxy
By attending the Annual Meeting and voting in person
Current Composition of the Board
The Company’s board of directors (the “Board”) consists of eight directors, each currently serving terms that expire at the Annual Meeting. On February 21, 2024, Mr. James C. Edenfield (“Mr. Edenfield”) retired from service as Executive Chairman and director of the Board. In light of Mr. Edenfield’s retirement, the Board formally resolved to decrease the size of the Board from nine members to eight members. Additionally, the Board appointed Mr. James B. Miller, Jr. to serve as Chairman of the Board effective February 21, 2024.
Reclassification
On April 10, 2024, the Company entered into a reclassification agreement (the “Reclassification Agreement”) with Mr. Edenfield, the sole owner of all of the issued and outstanding shares of the Company’s Class B Shares. Pursuant to the Reclassification Agreement, subject to the terms and conditions set forth therein, the Company will reclassify its equity capital structure to eliminate the Class B Common Stock effected through the filing of an amendment to the Company’s Amended and Restated Articles of Incorporation (the “Reclassification Amendment”), which provides, among other things, for the automatic reclassification and exchange of each issued and outstanding share of Class B Shares into 1.2 shares of Class A common stock (the “Reclassification”). The Reclassification and the Reclassification Amendment are subject to shareholder approval at the Annual Meeting. See “Proposal 5 – Summary of Reclassification Agreement” on page 43 for a description of the Reclassification Agreement. A copy of the Reclassification Agreement is attached as Appendix A to this Proxy Statement and is incorporated by reference. We refer to Proposal 5 as the “Reclassification Proposal.” See also “Proposal 6 – Approval of the Amendment and Restatement of the Company’s Amended and Restated Articles of Incorporation to give effect to the Reclassification” on page 57 for a description of the Reclassification Amendment. A copy of the proposed Reclassification Amendment filing (the “Second Amended and Restated Articles of Incorporation”) is attached as Appendix B to this Proxy Statement and is incorporated by reference. We refer to Proposal 6 as the “Reclassification Amendment Proposal.”
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Director Nominees:
At the Annual Meeting, shareholders are being asked to re-elect the director nominees identified below. If re-elected at the Annual Meeting, the director nominees identified below will serve until the annual meeting of shareholders to be held in 2025.
NAME OF NOMINEE
AGE
PRINCIPAL
OCCUPATION;
DIRECTORSHIPS
INDEPENDENT
YEAR
FIRST
ELECTED
DIRECTOR
COMMITTEES1
H. Allan Dow
60
Chief Executive Officer
and President of
American Software, Inc.
No
2020
N/A
W. Dennis Hogue
71
Chief Executive Officer of
Hogue Enterprises, Inc.;
Former Senior Partner and
Managing Director of
ChampionScott Partners
Yes
2001
AC
CC
NGC
Thomas L. Newberry, V
57
Author; Founder and Chief
Executive Officer of
The 1% Club, Inc.
Yes
2001
AC
CC
Celena Matlock
52
Chief Audit, Risk & ESG
Officer of Sierra Space
Yes
2023
AC
CC
Matthew G. McKenna
67
Principal of McKenna &
Associates, LLC
Yes
2017
AC
CC
NGC
James B. Miller, Jr.
84
Chairman and Director of
Ameris Bancorp, the parent
company of Ameris Bank
Yes
2002
AC±†
CC±
Lizanne Thomas
67
Partner (retired), Jones Day
Yes
2019
AC
CC
NGC±
Nicole Wu
45
Chief Financial Officer of
PDI Technologies, Inc.
Yes
2023
AC
CC
1 AC - Audit Committee
 CC - Compensation Committee
 NGC - Nominating and Governance Committee
 (±) - Chairman
 (†) - Audit Committee Financial Expert
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PROXY STATEMENT
FOR ANNUAL MEETING OF SHAREHOLDERS
OF AMERICAN SOFTWARE, INC.
TO BE HELD AT
AMERICAN SOFTWARE, INC.
470 EAST PACES FERRY ROAD, N.E.
ATLANTA, GEORGIA
ON AUGUST 20, 2024
GENERAL INFORMATION
This Proxy Statement is furnished to Class A shareholders of American Software, Inc. (the “Company”) by the Board of Directors of the Company (the “Board”), in connection with the solicitation made by the Company of proxies for use at the annual meeting of shareholders (the “Annual Meeting”) to be held at the Company’s principal offices on Tuesday, August 20, 2024 at 3:00 p.m. Eastern Daylight Time, and at any adjournment or adjournments thereof, for the purposes set forth in the accompanying Notice of Annual Meeting of Shareholders. This Proxy Statement and accompanying proxy card and Notice of Annual Meeting are first being mailed to shareholders on or about July 8, 2024.
The mailing address of the Company’s executive office is 470 East Paces Ferry Road, N.E., Atlanta, Georgia 30305. The Company’s website is www.amsoftware.com. Information from the Company’s website is not incorporated by reference into any portion of this Proxy Statement.
Proposals
If the enclosed form of proxy is properly executed and returned, the shares represented thereby will be voted in accordance with its terms. If no choices are specified, subject to the broker non-vote rules discussed under “Broker Non-Votes” below, the proxy will be voted:
FOR -
Election of H. Allan Dow, W. Dennis Hogue, Thomas L. Newberry, V, Celena Matlock, Matthew G. McKenna, James B. Miller, Jr., Lizanne Thomas and Nicole Wu as directors.
FOR -
Ratification of the appointment of KPMG LLP as the Company’s independent registered public accounting firm for the fiscal year ending on April 30, 2025.
FOR -
Approval of the advisory resolution regarding the compensation of our named executive officers.
FOR -
Approval of the adoption of the 2024 Equity Compensation Plan.
FOR -
Approval of the Company’s Reclassification.
FOR -
Approval of the amendment and restatement of the Company’s Amended and Restated Articles of Incorporation to give effect to the Reclassification.
FOR -
Approval of the amendment and restatement of the Company’s Amended and Restated Articles of Incorporation to give effect to the indemnification of directors and officers amendment.
FOR -
Approval of the amendment and restatement of the Company’s Amended and Restated Articles of Incorporation to give effect to the blank check preferred stock amendment.
In addition, a properly executed and returned proxy card gives the authority, subject to the broker non-vote rules, to vote in accordance with the proxy holder’s best judgment on such other business as may properly come before the Annual Meeting or any adjournment or adjournments thereof. Any proxy given pursuant to this solicitation
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may be revoked, either in writing furnished to the Secretary of the Company prior to the Annual Meeting or personally by attendance at the Annual Meeting, by the person giving the proxy insofar as the proxy has not been exercised at the Annual Meeting and the shareholder attending the Annual Meeting informs the Secretary of the Company of his or her intent to revoke the proxy.
Record Date
The Board has fixed the close of business on July 1, 2024 as the record date for determining the holders of common stock entitled to notice of and to vote at the Annual Meeting. On July 1, 2024, the Company had outstanding and entitled to vote a total of 31,459,011 Class A Common Stock (“Class A Shares”) and 1,821,587 Class B Common Stock (“Class B Shares”).
Reclassification and Elimination of Dual Class Capital Structure
Our Company’s dual class capital structure, consisting of Class A Shares and Class B Shares, has been in place since the Company’s inception. At their option, Class B shareholders may convert their Class B Shares into Class A Shares at any time. Neither the Company nor the Company’s Class A shareholders have the right or power to unilaterally “recapitalize” the Company’s equity capital structure to eliminate the dual class structure (whether by conversion, buyback, redemption or amendment of the Company’s articles of incorporation), but rather can only do so with the approval of the Class B shareholders. The Company has consistently provided disclosure regarding the control rights of the Class B shareholders to new and existing public shareholders to inform their investment decisions regarding the Company’s Class A Shares. Historically, unlike many companies with dual class structures, the Company’s Class A directors were elected by the holders of the Company’s Class A stock without any influence from the holders of the Class B stock and the Class B directors were elected by the Class B shareholders without any influence from the holders of the Class A stock. Once elected, there was no distinction between Class A or Class B directors, and they had the same duties and responsibilities to protect the interests of all shareholders.
As a part of the Board’s commitment to enhancing its corporate governance practices, the Board is proposing to its shareholders that they approve the Reclassification which would eliminate the Company’s dual class capital structure. Pursuant to the Reclassification Agreement (as described below), subject to the terms and conditions set forth therein, the Company will reclassify its equity capital structure to eliminate the Class B Shares effected through the filing of an amendment to the Company’s Amended and Restated Articles of Incorporation, which provides, among other things, for the automatic reclassification and exchange of each issued and outstanding share of Class B Shares into 1.2 Class A Shares (the “Reclassification Amendment”). See “Proposal 5 – Summary of Reclassification Agreement” on page 43 for a description of the Reclassification Agreement. A copy of the Reclassification Agreement is attached as Appendix A to this Proxy Statement and is incorporated by reference. We refer to Proposal 5 as the “Reclassification Proposal.” See also “Proposal 6 – Approval of the Amendment and Restatement of the Company’s Amended and Restated Articles of Incorporation to give effect to the Reclassification” on page 57 for a description of the Reclassification Amendment. A copy of the proposed Second Amended and Restated Articles of Incorporation is attached as Appendix B to this Proxy Statement and is incorporated by reference. We refer to Proposal 6 as the “Reclassification Amendment Proposal.”
In light of the proposed Reclassification and Reclassification Amendment (each as described below in Proposals 5 and 6, respectively), Mr. James C. Edenfield (referred to herein as “Mr. Edenfield”, or, the “Class B Shareholder”), the owner of 100% of the issued and outstanding Class B Shares, has agreed to waive his right to nominate any individual for election to serve as a Class B director. As such, there will be no Class B director nominees elected at the Annual Meeting. Instead, each director currently serving as a Class B director has been nominated for election as a Class A director at the Annual Meeting. If the Reclassification and the Reclassification Amendment proposals are each approved, effective upon the closing of the Reclassification, the Company’s sole remaining class of common stock outstanding will no longer be referred to as “Class A Common Stock”. Accordingly, if the proposed Reclassification and Reclassification Amendment are approved, directors on the Board will no longer be referred to as Class A directors and will instead be referred to as the “director nominees.”
Class A and Class B Shareholder Voting
Other than in the election of directors, each outstanding Class A share is entitled to one-tenth of a vote per share and each outstanding Class B share is entitled to one vote per share on all matters to be brought before the Annual Meeting.
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A one-third quorum of 10,486,337 Class A Shares and 607,196 Class B Shares is required to be present or represented by proxy at the Annual Meeting in order to conduct all of the business expected to come before the Annual Meeting. Votes that are withheld, broker non-votes and votes of abstention cast by any shareholder on a particular action will be counted towards the quorum requirement but will not be counted as a vote for or against the action.
The Class A directors will be elected by a majority of the votes cast by the holders of shares entitled to vote. The approval of the Reclassification Proposal and the Reclassification Amendment Proposal (each as described below) will require the affirmative vote of the holders of (a) a majority of the issued and outstanding shares of Class A Shares and Class B Shares held by all holders of Class A Shares and Class B Shares, voting as a single voting class, and (b) a majority of the issued and outstanding shares of Class A Shares held by the Unaffiliated Common Shareholders (as defined below), voting as a separate voting class. Any other matter submitted to the Annual Meeting must be approved or ratified by a majority vote of the outstanding shares (adjusted as described above) present or represented by proxies at the Annual Meeting.
Additionally, in light of the Reclassification Proposal and as described below in “Proposal 5- Approval of the Reclassification,” Mr. Edenfield has agreed to waive his right to nominate any individual for election to serve as a Class B Director on the Board; has irrevocably appointed each of H. Allan Dow, Vincent Klinges and Mark Grant as Mr. Edenfield’s proxy and attorney-in-fact with authority to vote Mr. Edenfield’s shares at the Annual Meeting; and has agreed to not grant any other proxies or enter into any voting trusts, transfer any shares of Class B Shares (except in limited circumstances) and enter into any hedging, derivative or swap transactions.
Broker Non-Votes
Broker non-votes occur when a broker or nominee holding shares for a beneficial owner does not vote on a non-routine proposal because the broker or nominee has not received voting instructions from the beneficial owner and does not have discretionary voting power with respect to such proposal. Rule 452 of the New York Stock Exchange, which has been adopted by the NASDAQ Stock Market, provides that a broker or other nominee holding shares for a beneficial owner may generally vote on routine matters, but not non-routine matters, without receiving voting instructions. The uncontested election of directors (Proposal 1), the advisory vote on the compensation of our named executive officers (Proposal 3), the vote to approve the 2024 Equity Compensation Plan (Proposal 4), the vote to approve the Reclassification (Proposal 5), the vote to approve the amendment and restatement of the Company’s Amended and Restated Articles of Incorporation that would give effect to the Reclassification (Proposal 6), the vote to approve the amendment and restatement of the Company’s Amended and Restated Articles of Incorporation that would give effect to the indemnification of directors and officers amendment (Proposal 7) and the vote to approve the amendment and restatement of the Company’s Amended and Restated Articles of Incorporation that would give effect to the blank check preferred stock amendment (Proposal 8) are non-routine matters. Please provide instructions to your broker or nominee on how to vote your shares. If you do not provide such voting instructions, your shares will not be voted for Proposals 1, 3, 4, 5, 6, 7 and 8. The ratification of the appointment of KPMG LLP as the Company’s independent registered public accounting firm for the Company’s fiscal year ending on April 30, 2024 (“fiscal 2024”) (Proposal 2) is considered a routine matter. Because at least one routine item is to be voted on at the Annual Meeting, shares held in the name of brokers or other nominees and voted on Proposal 2 will be counted for purposes of the quorum requirement, as noted above.
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PROPOSAL 1: ELECTION OF DIRECTORS
Overview
The directors of the Company are elected annually to hold office until the election and qualification of their successors at the next annual meeting of shareholders. The Class A director nominees for election are named on the enclosed proxy card and include H. Allan Dow, W. Dennis Hogue, Thomas L. Newberry, V, Celena Matlock, Matthew G. McKenna, James B. Miller, Jr., Lizanne Thomas and Nicole Wu. The persons named on the enclosed proxy card intend to vote Class A Shares for the election of these Class A director nominees. If any of these individuals should be unavailable to serve as a director, the proxy will be voted in accordance with the best judgment of the person or persons acting under it. The Boards of Directors has no reason to believe that any Class A director nominees will be unavailable for election as a director. If any of the nominees is unable to serve, the remaining Board members may elect a substitute to fill the resulting vacancy.
Director Background and Qualifications
The Board seeks directors with strong reputations and experience in areas relevant to the strategy and operations of the Company’s business, particularly industries and segments that the Company serves. Each of the nominees for election as a director at the Annual Meeting has substantial and meaningful experience in core management skills, such as strategic, financial and operational planning, financial reporting, corporate governance, risk management, and leadership development. The information set forth below includes a summary of each director nominee’s individual qualifications, experience, attributes and skills that we believe add to the strength of our Board.
Candidates for membership on the Board are recommended by current members of the Board or management. When evaluating candidates for membership on the Board, the Board considers a number of factors, including:
business expertise and skills;
understanding of the Company’s business and industry;
judgment and integrity;
educational and professional background; and
commitments to other businesses and responsibilities
The directors, their ages, their principal occupations for at least the past five years, other public company directorships held by them and the year each was first elected as a director of the Company are set forth below.
Director Skills
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Required Vote
The Class A directors will be elected by a majority of the votes cast by the holders of shares entitled to vote. Votes that are withheld, broker non-votes and votes of abstention will not be counted as a vote for or against Proposal 1.
Class A Director Nominees
H. Allan Dow

Age: 60
Director Since: 2020
Mr. Dow was elected as our President in March 2017 and was elected Chief Executive Officer in May 2020. Mr. Dow has served as president of Logility, Inc. (“Logility”), a provider of collaborative supply chain planning solutions and a wholly owned subsidiary of the Company, since August 2015. Mr. Dow also served as Logility’s Executive Vice President of Sales from September 2000 to July 2015.

Mr. Dow holds a Bachelor of Science degree in Chemical Engineering from the University of Maine.

Mr. Dow brings to the Board, among other skills and qualifications, his leadership experience as Chief Executive Officer and President of the Company, as well as his track record of sound business judgment and achievement, as demonstrated in over 30 years of experience in strategic planning, sales development, implementation services, and product innovation, particularly in the streamlining, acceleration and optimization of supply chain and retail planning enterprises.
W. Dennis Hogue

Age: 71
Director Since: 2001
Mr. Hogue has served as Chief Executive Officer of Hogue Enterprises, Inc., a commercial manufacturing company, since January 2005. Previously, he served as a Senior Partner and Managing Director of ChampionScott Partners, a global management consulting firm specializing in technology and technology-enabled companies, from November 2013 to September 2019. Since November 2007, Mr. Hogue has also served as President of American Durahomes, a provider of durable and affordable homes. From July 2003 to January 2005, he served as Chief Executive Officer of Datatrac Corporation, a software developer and wireless communications provider for the expedited product delivery industry.

Mr. Hogue earned a Bachelor of Science degree in Psychology from Florida State University in 1974.

Mr. Hogue’s many years of executive-level experience at other companies, his education and training and his in-depth knowledge of the Company’s operations and technology gained from more than twelve years with the Company, from 1983 to 1996, where he served as Group Vice President and in other positions, enable him to provide our Board with strong and capable leadership.
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Celena Matlock

Age: 52
Director Since: 2023
Ms. Matlock has served as Chief Audit, Risk and ESG Officer of Sierra Space, a privately held aerospace company, since March 2023. Ms. Matlock previously served as Senior Vice President, ESG, Internal Audit & Compliance for Sierra Space from January 2022 to July 2023. Prior to joining Sierra Space, Ms. Matlock served as the Senior Vice President, Internal Audit to Aerion Supersonic, an aircraft manufacturer, from January 2021 to January 2022, as an executive consultant at a variety of companies across industries, with an emphasis on diversity, equity and inclusion, and in several executive positions at Warner Media. Prior to that, Ms. Matlock held several executive positions at Turner Broadcasting System, from 2003 to 2014, in financial compliance.

Ms. Matlock holds a Bachelor of Business Administration, Accounting from Boston University.

Among other things, Ms. Matlock’s strong enterprise risk management, financial and IT controls, diversity, equity & inclusion (DEI), and internal audit background make her well-suited to serve on the Board of Directors.
Matthew G. McKenna

Age: 67
Director Since: 2017
Mr. McKenna has served as Principal of McKenna & Associates, LLC, a management and consulting advisory firm, since July 2016. Mr. McKenna previously served as Managing Director of Strategy&, a global strategy consulting firm and subsidiary of PricewaterhouseCoopers, from July 2015 to June 2016, and as Senior Executive Advisor of Booz & Company, a global management consulting firm, from January 2008 to June 2015. Prior to serving at Booz & Company, Mr. McKenna held a variety of positions at Booz Allen Hamilton over a 22-year period, including Managing Partner of the company’s Houston office and Energy Operations Sector Practice Leader. From 1981 to 1985, Mr. McKenna served as a Supply Chain Applications Consultant for the Company.

Mr. McKenna holds a B.S. in Engineering from the Georgia Institute of Technology and an MBA from Harvard University.

Mr. McKenna brings to the Board of Directors significant strategy development and implementation experience gained from his long career in management consulting.
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James B. Miller, Jr.

Age: 84
Director Since: 2002
Mr. Miller has served as our Chairman since February 2024. Mr. Miller is currently the Chairman and a member of the board of directors of each of Ameris Bancorp, a publicly held bank holding corporation, and its wholly-owned subsidiary. Prior to July 2019, Mr. Miller was the Chairman of the Board and Chief Executive Officer of Fidelity Southern Corporation, a publicly held bank holding corporation and the parent corporation of Fidelity Bank, positions he held since 1979. He became Chairman of Fidelity Bank in 1998 and served as President of Fidelity Bank from 1977 to 1997 and from 2003 to 2004. Mr. Miller is also the chairman of Brandenburg Trust Co. and managing partner of several privately held family real estate businesses.

Mr. Miller holds a Bachelor of Arts Degree from Florida State University and an L.L.B. from Vanderbilt University Law School.

Mr. Miller’s extensive leadership experience at two publicly traded bank holding corporations and their wholly-owned subsidiary banks, as well as his board experience with other companies in a variety of industries, bring to the Board the business and financial acumen of an experienced senior executive. We believe his financial expertise and legal background and his prior service on the audit committee of Interface, Inc., a publicly held textile manufacturing company, make him well-qualified to serve on our Board, and in particular to serve as chair of our Audit Committee. The Board has determined that Mr. Miller is an “audit committee financial expert.”
Thomas L. Newberry, V

Age: 57
Director Since: 2001
Mr. Newberry founded The 1% Club, Inc. in October 1992 and has acted as its Chief Executive Officer since that time. The 1% Club sponsors programs designed to assist entrepreneurs and their families in accomplishing their goals. He is also the author of motivational books and audio programs dedicated to improving performance in business operations and salesmanship.

Mr. Newberry earned a Bachelor of Science degree from Georgia State University in 1989.

Mr. Newberry’s experience as an entrepreneur and a business executive, combined with his leadership in the field of executive performance and motivation, allow him to provide unique and important insights to the Board of Directors whenever the Board addresses motivational and management issues.
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Lizanne Thomas

Age: 67
Director Since: 2019
Ms. Thomas retired at the end of 2023 as Partner and Chair of the Governance and Activism practice of the global law firm Jones Day after 41 years of service. In addition to leading the firm’s corporate governance and activism practice, she has substantial experience in public company mergers and acquisitions, having led many of the firm’s multi-billion dollar transactions. Ms. Thomas served in various senior management roles at Jones Day, including most recently as Partner-in-Charge of the firm’s Southeast U.S. Region from 2014 through 2022. Ms. Thomas serves on the board of directors of the Southern Company, a publicly traded power utility company, and is a trustee for several non-profit organizations. She previously served on the Boards of Popeyes Louisiana Kitchen, Inc., Atlantic Capital Bancshares and Krispy Kreme Doughnuts, Inc. Among her many honors and distinctions, in 2016, Ms. Thomas was named one of the top 100 directors by the National Association of Corporate Directors (NACD).

Ms. Thomas holds a B.A. from Furman University and received her law degree from Washington and Lee University, where she served as Managing Editor of the Law Review.

Ms. Thomas’s substantial corporate governance experience and extensive mergers and acquisitions experience make her well-qualified to serve on the Board.
Nicole Wu

Age: 45
Director Since: 2023
Since 2019, Ms. Wu has served as the Chief Financial Officer of PDI Technologies, Inc., a cloud-based technology company serving convenience retail and petroleum wholesale clients that has successfully grown both organically and via acquisitions during her tenure. Prior to PDI Technologies, Ms. Wu served as the Chief Financial Officer to eVestments, Inc., leading a number of M&A transactions including the sale of that company to NASDAQ. Previously, Ms. Wu held several executive positions at General Electric in division finance, internal audit, and acquisition integrations.

Ms. Wu holds a Bachelor of Science in Business from Shanghai Jiao Tong University in Shanghai, China.

Ms. Wu’s extensive financial and accounting acumen, and her knowledge of and experience with tax, audit and M&A matters makes her well-qualified to serve on the Board.
THE BOARD OF DIRECTORS RECOMMENDS THAT CLASS A SHAREHOLDERS VOTE “FOR” MR. DOW,
MR. HOGUE, MS. MATLOCK, MR. MCKENNA, MR. MILLER, MR. NEWBERRY, MS. THOMAS AND MS. WU
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CORPORATE GOVERNANCE
Board Meetings
The Board held nine meetings during fiscal 2024. No director of the Company attended fewer than 75% of the total meetings of the Board of Directors and committee meetings on which such Board member served and was eligible to attend during this period.
Director Attendance at Annual Meetings
Although the Company does not have a policy with regard to Board members’ attendance at the Company’s annual meetings of shareholders, all of the directors are encouraged to attend such meetings. All of the Company’s then serving directors attended the 2023 Annual Meeting.
Director Independence
Because the holders of Class B Shares have the right to elect six of the eight directors and because Mr. Edenfield owns 100% of the issued and outstanding Class B Shares, the Company currently qualifies as a “controlled company” as defined in Rule 5615(c)(1) of the NASDAQ Marketplace Rules (the “NASDAQ Rules”). Please see “Security Ownership of Management and Certain Beneficial Owners” below. Notwithstanding the foregoing, in an effort to continuously improve its corporate governance practices, all of the members of the Board’s Audit Committee, Compensation Committee and Nomination and Corporate Governance Committee are “Independent” under the NASDAQ rules. See the table under the heading “Director Nominees” on page iii of the Proxy Statement Summary to see the determinations of independence for each director nominee.
If, however, the Reclassification Proposal and Reclassification Amendment Proposal are both approved, as described below in Proposal 5, the Class B Shares will be eliminated. Thus, the Company will no longer qualify as a “controlled company” as defined in the NASDAQ rules and cannot rely on the exemption afforded to controlled companies under NASDAQ rules with respect to Board and committee independence.
Director Nominations
As a part of the Company’s commitment to regularly enhance its corporate governance practices, the Company formed the Nomination and Corporate Governance Committee of the Board for the purpose of identifying qualified individuals to serve as members of the Board and recommending those individuals for nomination to the Board and submission for shareholder approval. In light of the Nomination and Corporate Governance Committee’s efforts in this regard, the Board has determined that it would not be productive to have a fixed policy with respect to consideration of candidates recommended by security holders. However, if a shareholder communication includes a recommendation of a candidate for director, the Nomination and Corporate Governance Committee will consider that candidate along with any other candidates for a Board position.
Board Tenure
The Board does not have a mandatory retirement age. Instead, the Board believes that directors should be evaluated on their unique perspectives, experiences and ability to contribute to the Board and that long-serving directors provide important perspective and insight based on industry experience and a deep understanding of our long-term plans and objectives. The Board is focused on maintaining a balance between longer serving directors and newer directors with complementary skills, expertise, diverse backgrounds and points of view, which allows for natural turnover and an appropriate pace of Board refreshment. As part of the Board’s ongoing efforts to seek this balance of skills, experience and tenure, the Board has elected four new directors since 2019, representing half of the members of the Board.
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Board Diversity
Although the Company does not have a formal policy with regard to the consideration of diversity in identifying director nominees, the Board is making a conscious effort to increase the diversity of Board members by recruiting from a highly qualified and diverse pool of candidates. The Board strives to nominate directors with a variety of complementary skills so that, as a group, the Board will possess the appropriate talent, skills, and expertise to oversee the Company’s businesses.
BOARD DIVERSITY MATRIX (As of July 8, 2024)
Total Number of Directors
8
Female
Male
Non-
Binary
Did Not
Disclose
Gender
Part I: Gender Identity
Directors
3
4
1
Part II: Demographic Background
African American or Black
1
Alaskan Native or Native American
Asian
1
Hispanic or Latinx
Native Hawaiian or Pacific Islander
White
1
4
Two or More Races or Ethnicities
LGBTQ+
Did Not Disclose Demographic Background
1
Board Leadership Structure
We believe that our current Board leadership model combined with our corporate governance policies and documents, strikes an appropriate balance between informed and consistent leadership and independent oversight and perspective, allowing for efficiency and accountability, ultimately creating an environment for the effective execution of the Board’s responsibilities. The Board does not have a policy regarding the separation of the roles of Chief Executive Officer and Chairman of the Board, as the Board believes it is in the best interest of the Company to make that determination based on the position and direction of the Company and the membership of the Board. Currently, H. Allan Dow, our Chief Executive Officer and President, is serving as the Company’s principal executive officer and Mr. James B. Miller, Jr. serves as the Chairman.
Committees of the Board of Directors
Audit Committee
The Board has an Audit Committee, which presently consists of Messrs. Miller (Chairman), Hogue, McKenna and Newberry, Mmes. Thomas, Matlock and Wu. The Audit Committee held ten (10) meetings during fiscal 2024, in addition to its consultations with our independent registered public accounting firm and management in connection with review of interim financial statements. The NASDAQ Rules require audit committees to be composed of not less than three members who are “independent,” as that term is defined in the NASDAQ Rules. The Board has determined that all of the Audit Committee members meet the NASDAQ definition of “independent.”
The Audit Committee has a written charter, which can be found on our website at www.amsoftware.com. The Audit Committee’s charter outlines the composition requirements of the Audit Committee, as described above, as well as its duties and responsibilities. The primary responsibility of the Audit Committee is to oversee the Company’s financial reporting process on behalf of the Board and report the results of the Audit Committee’s activities to the Board. The functions of the Audit Committee include making an annual recommendation of the independent registered public accounting firm to the Company, reviewing the scope and results of the independent registered public accounting firm’s audit, monitoring the adequacy of the Company’s accounting, financial and operating controls, pre-approving audit services and permitted non-audit services and related fees, and reviewing with
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management and the independent registered public accounting firm the financial statements to be included in the Company’s annual and quarterly reports and other financial reports. The Board has determined that James B. Miller, Jr., Chairman of the Audit Committee, is an “audit committee financial expert” as defined in the rules of the United States Securities and Exchange Commission (the “SEC”).
Compensation Committee
The Board has a Compensation Committee, consisting of Messrs. Miller (Chairman), Hogue, McKenna and Newberry, Mmes. Thomas, Matlock and Wu. During fiscal 2024, the Compensation Committee met on one occasion. The Board has determined that all of the Compensation Committee members meet the NASDAQ definition of “independent.” The Compensation Committee has a written charter, which can be found on our website at www.amsoftware.com.
The Compensation Committee’s charter outlines the composition requirements of the Compensation Committee, as well as its duties and responsibilities. The Compensation Committee has authority to establish the compensation of our Chief Executive Officer and President, and prior to his retirement, our former Executive Chairman. The Compensation Committee also consults with our Chief Executive Officer and President about the compensation of the other named executive officers.
In addition, the Compensation Committee, which acted through the Special Stock Option Committee until May 29, 2024, has the authority to grant stock options to our named executive officers, including prior to his retirement, our former Executive Chairman, under the Company’s Amended and Restated 2020 Equity Compensation Plan (the “2020 Plan”) and, if approved the Company’s 2024 Equity Compensation Plan (the “2024 Plan”). See “Executive Compensation - Compensation Discussion and Analysis” below for a further discussion of the Compensation Committee and the functions it performs.
Until May 29, 2024, two different committees of the Board, the Special Stock Option Committee and the Stock Option Committee, administered the 2020 Plan (see “Executive Compensation - Stock Options”), depending on whether the option grant was made to an executive officer, a director or another person. Prior to May 29, 2024, the Special Stock Option Committee, which consisted of Messrs. Miller, Hogue, McKenna and Newberry and Mmes. Thomas, Matlock and Wu, each a member of the Compensation Committee, administered stock option grants to executive officers and directors. Prior to May 29, 2024, the Stock Option Committee, which consisted of H. Allan Dow and, prior to his retirement, Mr. Edenfield, administered stock option grants to other employees. The functions of these committees were to grant stock options and establish the terms of those stock options, as well as to construe and interpret the 2020 Plan and previous plans and to adopt related rules and procedures. During fiscal 2024, the Special Stock Option Committee acted by written consent on one (1) occasion and the Stock Option Committee acted by written consent on four (4) occasions in connection with the grant of stock options under the Company’s 2020 Plan.
On May 29, 2024, the Board acted to dissolve the Special Stock Option Committee and the Stock Option Committee and to delegate the duties of each of the two committees to the Compensation Committee, effective immediately. Accordingly, the Compensation Committee will henceforth assume the duties and functions previously delegated to the Special Stock Option Committee and the Stock Option Committee described above.
Nomination and Corporate Governance Committee
Notwithstanding the fact that the Company qualifies as a “controlled company” as defined in Rule 5615(c)(1) of the NASDAQ Rules, the Board of Directors formed the Nomination and Corporate Governance Committee in fiscal 2023 as a part of its effort to regularly enhance its corporate governance practices. The Nomination and Corporate Governance Committee consists of Ms. Thomas (Chairwoman) and Messrs. McKenna and Hogue, and held one meeting during fiscal 2024. The NASDAQ Rules require nominating committees to be composed of not less than three members who are “independent,” as that term is defined in the NASDAQ Rules. The Board has determined that all of the Nomination and Corporate Governance Committee members meet the NASDAQ definition of “independent.”
The Nomination and Corporate Governance Committee will be instrumental in assisting the Board by (i) identifying qualified individuals to serve as members of the Board and recommending those individuals for shareholder approval; (ii) overseeing and periodically reviewing the Company’s corporate governance practices and procedures; and (iii) overseeing the evaluation of the Board and standing committees of the Board. In connection with its recruiting of director candidates, the Nomination and Corporate Governance Committee will, consistent with its
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fiduciary duties, continue to (a) consider factors such as the individual’s experience, integrity, competence, skills, and dedication in the context of the needs of the Board, and (b) seek to recruit from a diverse pool, taking into account diversity factors such as gender, race, ethnicity, age, experience, and occupation, and NASDAQ’s listing rules regarding Board diversity.
The Nomination and Corporate Governance Committee has the authority to select and retain a search firm and other third-party advisors to assist the committee in identifying director candidates and otherwise support the committee’s responsibilities. No fees were paid to any third party in connection with the identification of the director nominees identified in this Proxy Statement.
The Nomination and Corporate Governance Committee has a written charter, which can be found on our website at www.amsoftware.com. The Nomination and Corporate Governance Committee’s charter outlines the committee’s composition requirements, as well as its duties and responsibilities.
Risk Oversight
We believe that understanding and managing risk is the responsibility of each employee of the Company. However, management is ultimately accountable to our Board of Directors and shareholders for the day-to-day management of risks we face. Our Board, as a whole and through its committees, oversees planning and responding to risks arising from changing business conditions or the initiation of new activities, strategies or products. Our Board also is responsible for overseeing compliance with laws and regulations, responding to recommendations from auditors and supervisory authorities, and overseeing management’s conformance with internal policies and controls addressing the operations and risks of significant activities.
Code of Business Conduct and Ethics
The Company has adopted a Code of Business Conduct and Ethics (the “Code of Conduct”), which applies to all directors, officers and employees of the Company. As part of its review of the corporate governance policies of the Company, the Board adopted certain amendments to the Code of Conduct, effective May 20, 2020, to (i) better address applicable law and regulatory guidance, (ii) provide additional clarity on acceptable and unacceptable behaviors and actions, and (iii) make other technical, administrative, and non-substantive amendments. Furthermore, the Board further amended the Code of Conduct, effective November 23, 2023, to provide additional clarity on anti-bribery compliance. The Code of Conduct is available on the Company’s website at www.amsoftware.com/investor-relations/.
Hedging Policy
Our Code of Conduct prohibits our directors and employees from engaging in certain hedging transactions.
Insider Trading Policy
The Company maintains a policy (which was recently updated in July 2023) that mandates compliance with insider trading laws and institutes safeguards to mitigate the risk of insider trading.
Communications Between Shareholders and Directors
Shareholders may contact the Board or any individual director by writing to them c/o Mr. Vincent C. Klinges, Chief Financial Officer, American Software, Inc., 470 East Paces Ferry Road, N.E., Atlanta, Georgia 30305. Inquiries sent by mail may be sorted and summarized by Mr. Klinges or his designee before they are forwarded to the addressee.
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PROPOSAL 2: RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
The Board, upon the recommendation of the Audit Committee, has appointed KPMG LLP (“KPMG”) to serve as its independent registered public accounting firm for the fiscal year ending on April 30, 2025. KPMG acted in such capacity during the fiscal year ended April 30, 2024. This appointment is being presented to the shareholders for ratification. Although the Company is not required to obtain shareholder ratification, the Company has elected to do so in order to provide the shareholders with an opportunity to participate in this decision. In the event that the shareholders do not ratify the appointment of KPMG as the independent registered public accounting firm of the Company, the Board will consider the retention of another independent registered public accounting firm.
The Company expects that representatives of KPMG will attend the 2024 Annual Meeting. These representatives will be available to respond to appropriate questions raised orally and will be given the opportunity to make a statement if they so desire.
During the fiscal year ended April 30, 2024, the Company engaged KPMG to provide certain audit services, including the integrated audit of the annual consolidated financial statements, quarterly reviews of the consolidated financial statements included in our Quarterly Reports on Form 10-Q, services performed in connection with filing this Proxy Statement and the Annual Report on Form 10-K by the Company with the SEC, attendance at meetings with the Audit Committee and consultation on matters relating to accounting, tax and financial reporting. KPMG has acted as independent registered public accounting firm for the Company since 1982. Neither KPMG nor any of its associates has any relationship to the Company or any of its subsidiaries except in its capacity as independent registered public accounting firm.
The aggregate fees billed to the Company by KPMG for services rendered during fiscal 2023 and fiscal 2024 are summarized below:
Audit Fees. Fees for audit services totaled approximately $884,000 in fiscal 2023 and approximately $1,231,000 in fiscal 2024, including fees associated with the annual audit and the reviews of consolidated financial statements in Quarterly Reports on Form 10-Q, including Sarbanes-Oxley 404 audit fees.
Audit-Related Fees. There were no fees for audit related services incurred for fiscal 2023 or fiscal 2024.
Tax Fees. There were no fees for tax services, including tax compliance, tax advice and tax planning, billed to the Company by KPMG in fiscal 2023 or in fiscal 2024.
All Other Fees. The Company’s independent registered public accounting firm did not receive fees for other services not described above in fiscal 2023 or in fiscal 2024.
In accordance with the NASDAQ Rules and rules and regulations promulgated by the SEC, the approval of the Audit Committee is required for all independent audit engagement fees, terms and conditions and all permitted non-audit engagements (including the fees, terms and conditions thereof) that the independent registered public accounting firm performs for the Company.
Board Recommendation
The Board believes it is in the best interest of the Company and its shareholders to ratify the appointment of KPMG as its independent registered public accounting firm for the fiscal year ending on April 30, 2025. Approval of this proposal requires the affirmative vote of a majority of the shares present or represented by proxy and entitled to vote on this proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE RATIFICATION OF THE APPOINTMENT OF KPMG AS ITS INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING ON APRIL 30, 2025.
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AUDIT COMMITTEE REPORT
The following is the Report of the Audit Committee of the Board of Directors of American Software, Inc. for the fiscal year ended April 30, 2024.
The Board of Directors has adopted a written charter for the Audit Committee. As set forth in the charter, the Audit Committee’s job is one of oversight. It is not the duty of the Audit Committee to prepare the financial statements of the Company, to plan or conduct audits, or to determine that the financial statements of the Company are complete and accurate and are in accordance with U.S. generally accepted accounting principles. The Company’s management is responsible for preparing the Company’s consolidated financial statements and for maintaining internal controls. The independent registered public accounting firm of the Company is responsible for auditing the consolidated financial statements and for expressing an opinion as to whether those audited financial statements fairly present, in all material respects, the financial position, results of operations, and cash flows to the Company in conformity with U.S. generally accepted accounting principles.
In fulfilling its responsibilities with respect to the fiscal 2024 audit, the Audit Committee: (1) reviewed and discussed the audited consolidated financial statements for the fiscal year ended April 30, 2024 with Company management and KPMG, the Company’s independent registered public accounting firm; (2) discussed with KPMG the matters required to be discussed pursuant to Statement on Auditing Standards No. 1301, “Communications Audit Committees,” as adopted by the Public Company Accounting Oversight Board (“PCAOB”); and (3) received the disclosure and the presentation from KPMG required by the applicable requirements of the PCAOB regarding the independent registered public accounting firm’s communications with the Audit Committee concerning independence and discussed with KPMG its independence from the Company.
Based on the Audit Committee’s review of the audited consolidated financial statements and discussions with management and KPMG, the Audit Committee recommended to the Board that the audited consolidated financial statements be included in the Company’s Annual Report on Form 10-K for the fiscal year ended April 30, 2024 for filing with the SEC.
The NASDAQ Rules require audit committees to be composed of not less than three members who are “independent directors,” as that term is defined in the listing requirements. The Audit Committee believes that its members meet the definition of “independent directors” set forth in those rules.
By the Audit Committee:

James B. Miller, Jr., Chairman
W. Dennis Hogue
Celena Matlock
Matthew G. McKenna
Thomas L. Newberry, V
Lizanne Thomas
Nicole Wu
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EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
We believe that attracting, retaining and motivating effective executive officers is critical to the overall success of our business. To achieve these goals we have adopted executive compensation programs designed to reward performance and emphasize the creation of shareholder value. For fiscal 2024, our Compensation Committee and, prior to his retirement, our Executive Chairman, were responsible for establishing executive compensation policies and overseeing executive compensation practices. In the following Compensation Discussion and Analysis, we describe the material elements of compensation for our executive officers identified in the Summary Compensation Table (the “named executive officers”). Our named executive officers for fiscal 2024 are: H. Allan Dow, our Chief Executive Officer and President; Vincent C. Klinges, our Chief Financial Officer and Treasurer, and James C. Edenfield, our former Executive Chairman and Treasurer. Please see “Director Background and Qualifications” above for additional information regarding Mr. H. Allan Dow. Additional information about Mr. Edenfield and Mr. Klinges appears below.
Please see the Summary Compensation Table below for detailed components of our named executive officers’ fiscal 2024 compensation.
Non-Director Executive Officers
Vincent C. Klinges

Age: 61
Mr. Klinges joined American Software in February 1998 as Vice President of Finance. In September 1999, Mr. Klinges was promoted to Chief Financial Officer, and also became the Chief Financial Officer of Logility, Inc, a provider of collaborative supply chain planning solutions and a wholly owned subsidiary of the Company. From July 1995 to February 1998, Mr. Klinges was employed by Indus International, Inc. (formerly known as TSW International, Inc.), a data management company, as Controller. From November 1986 to July 1995, Mr. Klinges held various positions with Dun & Bradstreet, Inc., a publicly traded data management company, including Controller of its software subsidiary, Sales Technologies.

Mr. Klinges holds a Bachelor of Business Administration from St. Bonaventure University.
James C. Edenfield

Age: 89
Mr. Edenfield is a co-founder of the Company and served as our Executive Chairman from September 2014 to February 2024. In February 2024, Mr. Edenfield retired from service as Executive Chairman and Director of the Board and Treasurer of the Company. Mr. Edenfield previously served as Chief Executive Officer and President from November 1989 to May 2014 and as Co-Chief Executive Officer prior to that time. Prior to founding the Company, Mr. Edenfield held several executive positions with, and was a director of, Management Science America, Inc., an Atlanta-based applications software development and sales company.

Mr. Edenfield holds a Bachelor of Industrial Engineering degree from the Georgia Institute of Technology.

As a co-founder and Executive Chairman of the Company, and with more than 40 years of experience in our industry, Mr. Edenfield provided essential insight and guidance to our Board of Directors from an insider perspective regarding the strategic direction of the Company.
Oversight of Fiscal 2024 Compensation Program
The Compensation Committee of the Board of Directors is responsible for establishing and reviewing our overall compensation philosophy. The Compensation Committee reviews and establishes all elements of compensation of our Chief Executive Officer and President and, prior to his retirement, our Executive Chairman.
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Prior to our Executive Chairman’s retirement in February 2024, the Compensation Committee consulted with our Executive Chairman about salaries and cash compensation of our other named executive officer (other than stock option compensation), but the Executive Chairman had the authority to establish the compensation for such other executive officer, except for stock option compensation. The Compensation Committee acted as the Special Stock Option Committee (which is further described below) with respect to stock option grants to all named executive officers, including the Executive Chairman. With respect to the major elements of executive compensation plans, the Executive Chairman consulted with the Compensation Committee and made recommendations regarding levels of option grants to specific individuals, as input to the Compensation Committee’s final decision regarding stock option grants.
However, in light of our Executive Chairman’s retirement, our Compensation Committee now reviews and establishes all elements of compensation for our named executive officers.
Executive Compensation Philosophy
We believe that a compensation program which promotes our ability to attract, retain and motivate outstanding executives will help us meet our long-range objectives, thereby serving the interests of the Company’s shareholders. Our executive officer compensation program is designed to achieve the following objectives:
Provide compensation opportunities that are competitive with those of companies of a similar size.
Create a strong connection between executives’ compensation and our annual and long-term financial performance.
Include performance-based incentive compensation that offers an opportunity for above-average financial reward to executives without creating incentives for undue business risks.
Design incentive compensation benchmarks that closely align the interests of executive officers with those of our shareholders.
Consideration of Peer Companies
In making compensation decisions, the Compensation Committee reviews publicly available information on practices and programs and compensation levels of members of a peer group selected by the Compensation Committee, consisting of technology companies similar to us. The Compensation Committee reviews our compensation peer group at least annually and makes adjustments to its composition if warranted, taking into account changes in both our business and the businesses of the companies in the peer group.
During fiscal 2024, the Compensation Committee used the following compensation peer group to assist with the determination of compensation for our executive officers: Agilysys Inc., Aspen Technology, Inc., Asure Software, Inc., PROS Holdings Inc., The Descartes Systems Group, Inc., eGain Corporation, E2open Parent Holdings, Inc., Kinaxis, Inc., Manhattan Associates, Inc., Model N, Inc., and SPS Commerce, Inc.
While we believe this compensation data provides useful insight into the competitiveness of our compensation packages, the data serves only a reference point and we do not currently target any particular benchmark.
Elements of Compensation
General. We have selected and structured the components of our executive officer compensation in order to achieve our objectives of attracting, retaining and motivating such officers. We consider the components of our compensation program - salary, bonus plan, stock options, and personal benefits such as life insurance and retirement plans - together to achieve a balanced compensation package that addresses the objectives described above, and separately in order to evaluate their reasonableness. Taken as a whole, we believe that these elements of our compensation structure reward past performance and provide appropriate motivation to achieve both long- and short-term objectives that benefit shareholders.
In our approach to executive compensation we generally have emphasized bonus plans and stock options, as we believe those components have the greatest potential for directly aligning the future interests of executive officers with those of shareholders. We also believe that our practice of emphasizing stock option grants, which we
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have followed for many years, has helped motivate our executives to develop strategies that further our long-term interests. We intend for our executive bonus plans to motivate executive officers in the short term, based upon achieving operating results that enhance shareholder value without taking undue business risks. In reviewing salaries of executive officers, we consider the executive’s previous salary level in light of prior year performance, rate of inflation and trends in executive compensation among our competitors. In selecting insurance and retirement plans, we have taken into account the needs of our entire workforce, on the principle that these plans are most effective and most valued if they are made available across all levels of compensation within the Company.
Base Salaries. We establish the salaries of our named executive officers at levels that we believe are, when viewed in conjunction with their potential bonus income and stock option grants, competitive and reasonable in light of their experience, prior performance and level of responsibility. For fiscal 2024, the Committee reviewed and established the base salary of our Executive Chairman and our Chief Executive Officer and President. With respect to our other named executive officer, the Committee consulted with the Executive Chairman, but the Executive Chairman retained the authority to establish the base salary for such executive officer.
The following table summarizes the salary arrangements for the named executive officers in the fiscal years ended April 30, 2024 and 2025:
Name
Fiscal 2024
($)
Fiscal 2025
($)
Percent Change
James C. Edenfield(1)
297,658
H. Allan Dow
741,000
741,000
Vincent C. Klinges
421,000
421,000
(1)
Mr. Edenfield retired from the Company, effective February 21, 2024.
Bonuses. Each of our named executive officers has a bonus plan established during the first quarter of a fiscal year, covering that fiscal year. For fiscal 2024, the Compensation Committee established the bonus plan for James C. Edenfield, our former Executive Chairman, and H. Allan Dow, our Chief Executive Officer and President. Mr. Edenfield, after consulting with the Compensation Committee, established the bonus plans for our other named executive officers. In each case, the bonus plan is customized for the individual executive officer. We use these bonus plans, in tandem with stock option grants, as tools to (i) attract and retain qualified executives, (ii) reward executives for their role in achieving specified annual performance goals, and (iii) align our executives’ interests with those of our shareholders. To accomplish this, we establish annual bonus plans with attainable, pre-established, objective performance goals, using formulas tied to important factors that positively affect return on investment. Each year, the Compensation Committee evaluates the performance goals selected for the bonus plan and may select new or additional performance goals for the following fiscal year bonus plan.
Fiscal 2024 Bonuses. For fiscal 2024, the Compensation Committee selected the following financial performance metrics as the general set of metrics upon which to base the bonus plan: revenue, recurring revenue and adjusted EBITDA. Revenue is a GAAP measure reported in the Company’s Annual Report on Form 10-K. The Compensation Committee believes that revenue is one of the most recognizable and objective measures of corporate growth and performance. Recurring revenue consists of revenue received by the Company from its subscription and maintenance businesses. The Committee believes that recurring revenue is a commonly reported GAAP financial measure utilized in our industry that highlights current trends with respect to cloud revenue growth and the retention or conversion of maintenance revenue. Adjusted EBITDA represents our GAAP net earnings adjusted for amortization of intangibles, depreciation, interest income & other, net, and income tax expense, and has been further adjusted to exclude acquisition activity during the year. The Committee believes that adjusted EBITDA is a meaningful measure that enables the Company to evaluate its cash flow performance relative to annual performance targets.
For each financial performance metric selected for fiscal 2024, our executive officers, including our named executive officers, will receive a minimum bonus amount if the Company achieves its minimum performance goal, with the remaining bonus amount being pro-rated to 100% of a target bonus amount, which would be paid if the Company achieves its target performance goal. If the Company exceeds its target performance goal, the executive officer will receive a bonus amount equal to such executive’s target bonus amount multiplied by the percentage of the Company’s actual performance relative to the Company’s target performance goal. Revenue, recurring revenue, and adjusted EBITDA related to any acquisition made during the fiscal year are excluded for purposes of determining whether a bonus has been earned.
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For fiscal 2024, the Company’s minimum and target performance goals, and actual performance, are summarized in the following table:
Financial
Performance Metric
Minimum
Performance Goal
($)
Target
Performance Goal
($)
Actual Fiscal 2024
Performance
($)
Achievement %
Revenue
108,500
118,300
102,515
(0%)
Recurring Revenue
90,000
94,000
86,712
(0%)
Adjusted EBITDA
13,050
14,550
8,547
(0%)
Mr. James C. Edenfield’s bonus for fiscal 2024 was determined as follows:
Financial
Performance Metric
Minimum
Bonus Amount
($)
Target
Bonus Amount
($)
Weighting
Actual Bonus
Award
($)
Revenue
13,933
139,333
33.33%
Recurring Revenue
13,933
139,333
33.33%
Adjusted EBITDA
13,933
139,333
33.33%
Total
 
 
100%
Mr. Dow’s bonus for fiscal 2024 was determined as follows:
Financial
Performance Metric
Minimum
Bonus Amount
($)
Target
Bonus Amount
($)
Weighting
Actual Bonus
Award
($)
Revenue
46,667
466,667
33.33%
Recurring Revenue
46,667
466,667
33.33%
Adjusted EBITDA
46,667
466,667
33.33%
Total
 
 
100%
Mr. Klinges’ bonus for fiscal 2024 was determined as follows:
Financial
Performance Metric
Minimum
Bonus Amount
($)
Target
Bonus Amount
($)
Weighting
Actual Bonus
Award
($)
Revenue
8,800
88,000
33.33%
Recurring Revenue
8,800
88,000
33.33%
Adjusted EBITDA
8,800
88,000
33.33%
Total
 
 
100%
Adjusted EBITDA Target Bonus Amounts and Minimum Bonus Amounts were adjusted during fiscal 2024 to account for the Company’s divestiture of The Proven Method on September 18, 2023.
Fiscal 2025 Bonuses. Similar to the fiscal 2024 bonuses, bonuses for the Company’s fiscal year ending on April 30, 2025 (“fiscal 2025”) will only be funded to the extent that the Company achieves its minimum targets, which are based on fiscal 2025 results.
Stock Option Awards. The Compensation Committee, which is responsible for grants of stock options to the named executive officers, believes that granting stock options to executive officers is an effective means to reward them for their prior performance, serve as an incentive for promotion of Company profitability and other long-term objectives, and maintain their overall compensation at competitive levels. Thus, option grants reflect both a retrospective and prospective approach to executive compensation. As compared to our executive bonus plans, stock options address longer term compensation and incentives. To establish option grant levels, the Compensation Committee has monitored developments and trends among publicly held technology companies regarding equity and non-equity based incentive compensation. The Compensation Committee continues to believe that stock options represent the most efficient and effective means for the Company to achieve the objectives described above.
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The Compensation Committee, which acted through the Special Stock Option Committee until May 29, 2024, typically grants stock options to executive officers once annually, usually during the month of June or July, while the salary and bonus plans for executives are being considered and finalized and preliminary results are available for the fiscal year just ended. The option exercise prices are fixed as of the close of trading on the grant date and are based on the closing price of our Class A Shares, as quoted on the NASDAQ Stock Market. Options granted to executives during the past several years have terms of six years and vest ratably over a five-year period. We expect this practice to continue.
The Compensation Committee did not rely on a quantitative analysis when determining the levels of stock option grants to named executive officers for the 2024 or 2025 fiscal years.
The Compensation Committee developed its decisions on stock option grants based on a qualitative analysis considering the following factors:
Executive Chairman Recommendations. Prior to his retirement, the Compensation Committee placed substantial weight on the stock option grant recommendations of the Executive Chairman in fiscal 2024, particularly as to stock option grants to named executive officers other than himself. The Compensation Committee considered several factors, including our former Executive Chairman’s intimate knowledge of the role and performance level of each of the named executive officers over an extended time period, demonstrated skill in retaining and motivating our officers and key employees, and emphasis on and effectiveness in managing the business of the Company on a fiscally conservative basis. In part because of these factors, the Compensation Committee ultimately decided to grant stock options in accordance with our former Executive Chairman’s stock option grant recommendations.
Current and Past Years’ Financial Results. The Compensation Committee observed that our operating performance in fiscal 2024 failed to meet expectations, resulting in none of the three annual target performance goals being met. Based on this performance, the Compensation Committee determined to eliminate salary increases to our named executive officers for fiscal 2025. To continue incentivizing improved performance in fiscal 2025, the Compensation Committee will continue to provide a significant percentage of our executives’ overall compensation in the form of equity, which further aligns our executives’ interests with those of our shareholders.
Perceived Value of Named Executive Officers. The stock option grants to the named executive officers were not at the same level for each individual. The Compensation Committee considered the roles of the named executive officers and their ability, individually, to influence our profitability and position in the marketplace. In fiscal 2024, this resulted in the largest stock option grant being made to Mr. Dow (300,000 shares), followed by a smaller grant to Mr. Klinges (150,000 shares). Our former Executive Chairman, Mr. James C. Edenfield, received a Restricted Stock Unit (“RSU”) grant equal to $240,000. In the Compensation Committee’s judgment, these equity awards reasonably reflected the relative ability of officers holding these positions to affect the performance of the Company.
Current and Past Years’ Compensation Packages. The Compensation Committee establishes the overall compensation package of our Chief Executive Officer and President and, prior to his retirement, our Executive Chairman. Until May 29, 2024, the Compensation Committee advised on, but did not have the authority to establish, the compensation packages of our other named executive officers, except for stock option grants. As of May 29, 2024, however, the Compensation Committee now establishes compensation packages for all named executive officers, including stock option grants. Compensation packages for each of our executive officers are established after considering, among other things, the Company’s performance and prior modifications to each executive officer’s compensation.
In reviewing the compensation package of H. Allan Dow, the Compensation Committee noted that his fiscal 2024 salary remained flat, as compared to the prior year, and his fiscal 2024 target bonus remained flat for the prior year. Mr. Dow’s salary for fiscal 2025 remained flat at $741,000 and the target bonus decreased to $1,175,000, respectively.
In reviewing the compensation package of Vince Klinges, the Compensation Committee noted that his fiscal 2024 salary remained flat, as compared to the prior year, and his fiscal 2024 target bonus remained flat, compared to the prior year. Mr. Klinges’ salary for fiscal 2025 remained flat at $421,000 and his target bonus decreased to $225,000, respectively.
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Personal Benefits and Perquisites. We provide a variety of health, retirement and other benefits to all employees. Our executive officers are eligible to participate in the benefit plans on the same basis as all other employees. These benefit plans include participation in the Company’s 401(k) plan (with matching contributions from the Company) and medical, dental, vision, life and disability insurance. Historically, the Company permitted Mr. James C. Edenfield to use a Company-owned automobile and paid for multiple club memberships. However, in December 2021, Mr. Edenfield discontinued his use of the Company-owned automobile. The Company paid for one club membership, which the company also used for corporate events, until Mr. Edenfield’s retirement. Our Chief Executive Officer and President received a car allowance in fiscal 2024. Otherwise, our executive officers do not receive any personal benefits or perquisites that are not available on a non-discriminatory basis to all employees. The perquisites of the named executive officers in fiscal 2024 were as set forth in the “All Other Compensation” column and footnote 2 to the Summary Compensation Table below.
Other Benefits. We do not provide pension benefit plans, non-qualified contribution plans or other non-qualified deferred compensation options to any of our employees, including our named executive officers.
Consideration of Shareholder Votes on Executive Compensation
In determining executive compensation for fiscal 2024, the Compensation Committee considered the overwhelming shareholder support that the “say-on-pay” proposal received at our 2023 Annual Meeting. After carefully considering such feedback, along with the other factors described above, the Compensation Committee determined to continue to utilize the same elements it has used in previous years, with certain adjustments to provide appropriate motivation to achieve both long- and short-term objectives that benefit shareholders, and to recruit, retain and incentivize key employees.
Impact of Regulatory Requirements
For taxable years beginning before January 1, 2018, Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”), generally disallowed a tax deduction to a public company for compensation in excess of $1 million paid to the Company’s chief executive officer and any other executive officer (other than the chief financial officer) required to be reported to its shareholders under the Securities Exchange Act of 1934 (the “Exchange Act”) by reason of such executive officer being one of the four most highly compensated executive officers. However, qualifying performance-based compensation was not subject to the deduction limitation if certain requirements were met.
Congress repealed the exemption for performance-based compensation in new tax legislation enacted December 22, 2017, effective for tax years beginning after December 31, 2017, and expanded the number of employees who will be considered “covered employees” subject to the 162(m) limit to include the Chief Financial Officer (who was previously excluded) and certain former named executive officers. As a result of these changes, compensation exceeding $1 million paid to executive officers covered by Section 162(m)’s deduction limit was not deductible in 2018 nor will it be in future years.
Although we consider the tax implications of Section 162(m) of the Code, we do not have a formal policy in place requiring that part or all compensation must qualify under this section, in order to preserve flexibility with respect to the design of our compensation programs.
Section 409A of the Code provides for certain requirements that a plan that provides for the deferral of compensation must meet, including requirements relating to when payments under such a plan may be made, acceleration of benefits, and the timing of elections under such a plan. Failure to satisfy these requirements will generally lead to an accelerated of timing of inclusion in income of deferred compensation, as well as certain penalties and interest.
Compensation Policies and Risk
We do not believe that risks arising from our compensation policies and practices for our employees are reasonably likely to have a material adverse effect on the Company. We are aware that incentive compensation arrangements can be structured in such a way as to encourage undue risk-taking by executives who make decisions that tend to maximize short-term compensation at the expense of the long-term interests of the enterprise. We believe that in the past, our incentive compensation plans have motivated management to act in ways that are consistent with the long-term interests of our shareholders: promoting growth while maintaining substantial cash reserves, avoiding
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debt, managing expenses and carefully evaluating potential acquisitions. We have structured current incentive compensation arrangements for executive officers in a manner consistent with past practices, and believe that those arrangements contribute to our long-term goals without encouraging undue risk-taking.
Compensation Committee Interlocks and Insider Participation
Since the beginning of fiscal 2024, no member of our Compensation Committee was an officer or employee of the Company, a former officer of the Company or had any relationship with the Company requiring disclosure under SEC regulations. During fiscal 2024, none of our executive officers served as a director or member of the compensation committee of any other entity whose executive officers served on our Board of Directors or Compensation Committee.
Compensation Committee Report
The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis with management, and based on the Compensation Committee’s review and discussions with management, has recommended to the full Board of Directors that the Compensation Discussion and Analysis be included in our Annual Report on Form 10-K for the year ended April 30, 2024, as well as the Proxy Statement for the Annual Meeting.
Respectfully submitted by the Compensation Committee of the Board of Directors

James B. Miller, Jr., Chairman
W. Dennis Hogue
Celena Matlock
Matthew G. McKenna
Thomas L. Newberry, V
Lizanne Thomas
Nicole Wu
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FISCAL 2024 EXECUTIVE COMPENSATION
Summary Compensation Table
The following table reflects compensation paid to the Company’s named executive officers for fiscal 2022, fiscal 2023 and fiscal 2024.
Name
Fiscal
Year
Salary
($)
Bonus
($)
Stock
Awards
($)
Option
Awards(2)
($)
Non-
Equity
Incentive
Plan
Compen-
sation
($)
Change in
Pension
Value and
Nonqualified
Deferred
Compen-
sation
Earnings
($)
All Other
Compen-
sation(3)
($)
Total
($)
James C. Edenfield,
Executive Chairman and Treasurer(1)
2024
297,658
240,000
2,628(4)
540,286
2023
548,448
124,209
319,412
5,872
997,941
2022
554,698
283,599
427,057
13,727
1,279,081
H. Allan Dow,
Chief Executive Officer and President
2024
741,000
1,095,258
19,682(5)
1,855,940
2023
741,000
404,793
1,597,060
18,716
2,759,912
2022
720,000
951,548
2,135,283
 
18,620
3,825,451
Vincent C. Klinges,
Chief Financial Officer
2024
421,000
547,629
4,421(6)
973,050
2023
421,000
77,062
798,530
3,966
1,300,558
2022
400,000
179,115
1,067,642
4,048
1,650,805
(1)
Mr. Edenfield retired from the Company, effective February 21, 2024.
(2)
The value of stock option awards in this column represents the aggregate grant date fair value of stock option grants made during the year computed in accordance with Financial Accounting Standards Board Accounting Standards Codification (“FASB ASC”) Topic 718, Compensation-Stock Compensation. For discussion of relevant assumptions used in calculating the grant date fair value, see Note 6 to the Company’s Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended April 30, 2024.
(3)
Amounts shown as “All Other Compensation” are attributable to perquisites, other personal benefits, and other items of compensation that are not reported elsewhere in the Summary Compensation Table.
(4)
Mr. Edenfield’s other compensation includes $2,122 in club membership dues and $506 in matching contributions to the Company’s 401(k) plan.
(5)
Mr. Dow’s other compensation includes $13,260 for a car allowance and $6,422 in matching contributions to the Company’s 401(k) plan.
(6)
Mr. Klinges’ other compensation includes $4,421 in matching contributions to the Company’s 401(k) plan.
Employment Agreements
We do not have formal employment contracts with our executive officers covering compensation matters. Accordingly, we set their compensation annually, under compensation plans individualized for each executive officer.
Retention Agreements
Upon recommendation and approval of the Compensation Committee, we entered into retention agreements with each of Messrs. James C. Edenfield, H. Allan Dow and Vincent C. Klinges on July 11, 2016 to provide for severance compensation should their employment be terminated under certain defined circumstances. We believe that such severance arrangements are key components to a competitive compensation package and are in line with companies in our peer group. In addition, we believe that these retention arrangements will help us retain our executive leadership in the event of a possible change in control and should such change in control occur, will help retain executive talent for the new organization.
The retention agreements provide for compensation to the executive in the event the executive’s employment is terminated following the consummation of a “change in control” for reasons other than the executive’s death, retirement, disability or for “cause” (as defined in the respective agreements), or if the executive voluntarily
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terminates employment for “good reason” (as defined in the respective agreements). The compensation payable under the retention agreements is a lump sum severance payment equal to a multiple of the sum of the executive’s annual base salary plus the executive’s bonus for the prior year as of the date of the change in control. The multiples applicable to each person are as follows:
Name
Multiple
James C. Edenfield(1)
2x
H. Allan Dow
2x
Vincent C. Klinges
1.5x
(1)
Mr. Edenfield retired from the Company, effective February 21, 2024. Accordingly, his retention agreement has terminated.
In addition, following termination of employment after a change in control, each of Messrs. James C. Edenfield, H. Allan Dow and Vincent C. Klinges are entitled to receive health insurance coverage (subject to a COBRA election) and certain other fringe benefits equivalent to those in effect at the date of termination for a period of twenty-four, twenty-four, and eighteen months, respectively. The retention agreements require the executive to comply with certain covenants that preclude the executive from competing with the Company or soliciting customers or employees of the Company for a period following termination of employment equal to the period for which fringe benefits are continued under the applicable agreement. The retention agreements expire upon the earlier of the executive’s termination or three years after a change in control of the Company or any successor to the Company. Accordingly, Mr. Edenfield’s retention agreement terminated on February 21, 2024, in connection with his retirement.
These retention agreements do not influence the vesting status of outstanding stock options under the 2020 Plan. However, under the 2020 Plan and, if approved, the 2024 Plan, upon the determination by the Compensation Committee in its role as the Stock Option Committee, in the event of a change in control as defined in the applicable plan, all awards may vest and become immediately exercisable in full.
A calculation of the potential post-employment payments due to our named executive officers under the agreements discussed above, assuming the triggering event for the payments occurred on the last business day of the year ended April 30, 2024, is set forth below under the heading “Potential Payments Upon Termination or Change in Control.”
Stock Options
Stock Option Plan
As of April 30, 2024, we had outstanding stock options and RSUs granted under the 2011 Plan and the 2020 Plan. All directors of the Company and all employees of the Company and its subsidiaries, totaling 331 persons as of April 30, 2024, are eligible to participate in the 2020 Plan and, if approved, the 2024 Plan. The 2020 Plan became effective on May 29, 2019 and expired on May 29, 2024. Accordingly, the Company is seeking shareholder approval for the 2024 Plan as a successor plan to the 2020 Plan.
As of April 30, 2024, there were 6,502,017 options outstanding that were issued under the 2011 Plan and 2020 Plan, in the aggregate, that remain unexercised, of which 2,725,704 were exercisable as of that date.
Stock Option Committees
Until May 29, 2024, two separate committees administered our stock option plans: (i) the Special Stock Option Committee (comprised of Messrs. Miller, Hogue, McKenna and Newberry and Mmes. Thomas, Matlock and Wu, as members of the Compensation Committee) was responsible for option grants to named executive officers and directors, and (ii) the Stock Option Committee (comprised of H. Allan Dow and, prior to his retirement, Mr. Edenfield) was responsible for other option grants. The members of these Committees were not eligible to participate in the portion of the plan that they administered, except pursuant to the formula option grant program for non-employee directors. Under the plans, the functions of these committees were to grant options and establish the terms of those options, as well as to construe and interpret the plans and adopt rules in connection with options that the particular
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committee grants. Except for the 2020 Plan, the function of these committees was limited to continuing and interpreting the plans. As of May 29, 2024, the Compensation Committee consolidated and absorbed the responsibilities of these two committees and is now responsible for their prior responsibilities and functions.
Fiscal 2024 Grants of Stock Options
The following table discloses the potential payouts under the stock options awarded to the named executive officers during the fiscal year ended April 30, 2024.
Name
Grant
Date
All Option
Awards: Number
of Securities
Underlying
Options
(#)(1)
Exercise or
Base Price of
Option
Awards
($/Sh)(2)
Closing
Market
Price
($/Sh)
Grant Date Fair
Value of Option
Awards
($)(3)
James C. Edenfield
H. Allan Dow
9/27/2023
300,000
11.40
11.40
1,095,258
Vincent C. Klinges
9/27/2023
150,000
11.40
11.40
547,629
(1)
The stock options vest ratably on the first, second, third, fourth, and fifth anniversaries of the option grant date and expire in six years.
(2)
The exercise price is determined based on the closing price of the shares as traded on the NASDAQ Stock Market on the grant date.
(3)
For purposes of FASB ASC Topic 718, Compensation–Stock Compensation and this table, the grant date fair value of options is determined using the Black-Scholes option valuation model. The following assumptions were made with respect to options issued to Messrs. Dow and Klinges on September 27, 2023: exercise price equal to fair market value of stock on the grant date ($11.40); dividend yield (3.86%); expected volatility rate (43.81%); risk-free interest rate (4.67%); and expected option term of 5 years.
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2024 Outstanding Equity Awards at Fiscal Year-End
The table below discloses outstanding exercisable and unexercisable equity awards outstanding as of April 30, 2024 for the named executive officers.
Option Awards
Stock Awards
Name
Number of
Securities
Underlying
Unexercised
Options
Exercisable
(#)
Number of
Securities
Underlying
Unexercised
Options
Unexercisable
(#)
Option
Exercise
Price
($)(1)
Option
Expiration
Date(2)
Number of
shares or
units of
stock that
have not
vested
(#)
Market
value of
shares
or units
of stock
that
have not
vested
($)
Equity
incentive
plan
awards:
number
of
unearned
shares,
units or
other
rights
that have
not
vested
(#)
Equity
incentive
plan
awards:
market
or
payout
value of
unearned
shares,
units or
other
rights
that have
not
vested
($)
James C. Edenfield
18,000
0
13.68
6/15/2024
 
 
 
 
31,200
18,000
14.55
8/21/2025
 
 
 
 
36,000
36,000
15.56
6/24/2026
 
 
 
 
24,000
36,000
22.00
8/18/2027
 
 
 
 
12,000
48,000
16.00
6/13/2028
 
 
 
 
 
 
 
 
21,053(3)
240,000
 
 
H. Allan Dow
300,000
0
13.68
6/15/2024
 
 
 
 
240,000
60,000
14.55
8/21/2025
 
 
 
 
180,000
120,000
15.56
6/24/2026
 
 
 
 
120,000
180,000
22.00
8/18/2027
 
 
 
 
60,000
240,000
16.00
6/13/2028
 
 
 
 
0
300,000
11.40
9/27/2029
 
 
 
 
Vincent C. Klinges
80,000
0
13.68
6/15/2024
 
 
 
 
68,000
17,000
14.55
8/21/2025
 
 
 
 
60,000
40,000
15.56
6/24/2026
 
 
 
 
60,000
90,000
22.00
8/18/2027
 
 
 
 
30,000
120,000
16.00
6/13/2028
 
 
 
 
0
150,000
11.40
9/27/2029
 
 
 
 
(1)
The number of shares underlying options awarded and the related exercise prices shown in the table are the amounts on the applicable grant date.
(2)
The stock option grants expire in six years and vest ratably on the first, second, third, fourth and fifth anniversaries of the option grant date.
(3)
Reflects RSUs that vest over one year.
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2024 Option Exercises and Stock Vested
The following table sets forth the actual value received by the named executive officers upon the exercise of stock options in fiscal 2024.
Option Awards
Name
Number of Shares
Acquired on
Exercise
(#)
Value Realized
on Exercise
($)
James C. Edenfield
H. Allan Dow
18,253
35,228
Vincent C. Klinges
Potential Payments upon Termination or Change of Control
We entered into retention agreements with Messrs. James C. Edenfield, Dow and Klinges on July 11, 2016. Given Mr. Edenfield’s retirement from the Company, effective as of February 21, 2024, Mr. Edenfield is no longer eligible for such potential payments upon termination or change of control under his respective retention agreement. See “Compensation Discussion and Analysis-Retention Agreements.” The following table sets forth in tabular form estimates of the potential post-employment payments due to these named executive officers pursuant to the retention agreements discussed above, assuming the triggering events for the payments occurred on the last business day of the fiscal year ended April 30, 2024 and, in the case of Mr. Edenfield, assumes that he was employed by the Company on April 30, 2024.
Name
Cash
Severance(1)
($)
Estimated Value of
Accelerated Equity
Awards
($)
Total
($)
James C. Edenfield(2)
843,734
1,479,623
2,323,357
H. Allan Dow
2,291,586
7,823,162
10,114,748
Vincent C. Klinges
747,093
3,307,831
4,054,924
(1)
Consists of a multiple of the executive’s annual base salary plus the executive’s bonus for the prior year as of the date of the change in control. See “Compensation Discussion and Analysis—Retention Agreements” for the multiples applicable to each named executive officer.
(2)
Mr. Edenfield retired from the Company, effective February 21, 2024. Effective as of February 21, 2024, he is no longer eligible for such potential payments upon termination or change of control.
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PAY RATIO DISCLOSURE
As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(u) of Regulation S-K, below is a reasonable estimate about the relationship of the annual total compensation of our employees and the annual total compensation of Mr. H. Allan Dow, our Chief Executive Officer, President and Principal Executive Officer. For fiscal 2024, our last completed fiscal year:
The median of the total annual compensation of all employees of our Company (other than Mr. Dow) was $117,877;
The total annual compensation of Mr. Dow, as reported in the Summary Compensation Table shown elsewhere in this Proxy Statement, was $1,855,940; and
Based on this information and calculated in a manner consistent with Item 402(u) of Regulation S-K, for fiscal 2024, the reasonable estimate of the ratio of the total annual compensation of Mr. Dow, to the median of the total annual compensation of all employees, was 16 to 1.
We used the following methodologies, estimates and assumptions as permitted under SEC rules to identify and select the median employee for purposes of determining our reasonable estimate of pay ratio as set forth above:
Reference Date. We chose April 30, 2024, the last day of our fiscal year, as the date to identify our “median employee.”
Employee Population. Our employee population on April 30, 2024, after taking into consideration the adjustment permitted by SEC rules relating to independent contractors, consisted of approximately 331 individuals. Although independent contractors are part of our workforce, they are not employees of the Company and accordingly, were not included in our employee population.
No Exclusions or Adjustments. Although permitted by SEC rules, we did not exclude any of our employees from our employee population in order to determine the median employee, nor did we make any cost-of-living adjustments in identifying the median employee.
Annualized Compensation. We annualized the compensation of all employees.
Relative Compensation. With respect to the annual total compensation of Mr. Dow, as required by SEC rules, we used the amount reported in the “Total” column of our 2024 Summary Compensation Table included in this Proxy Statement and incorporated by reference under Item 11 of Part III of our Annual Report.
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PAY VERSUS PERFORMANCE DISCLOSURE
Value of Initial Fixed $100
investment based on:
Year
Summary
Compensation
Table Total for
CEO
Compensation
Actually Paid
to CEO
Average
Summary
Compensation
Table Total for
non-CEO NEOs
Average
Compensation
Actually Paid
to Non-CEO
NEOs
Total
Shareholder
Return
Peer Group
Total
Shareholder
Return
Net
Income
($mm)
Adj.
EBITDA
($mm)
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)(i)
(j)(k)
2024
$1,855,940
942,317
756,668
444,209
$ 69
$241
$ 11.4
$ 8.5
2023
2,759,911
(24,534)
1,149,249
243,292
78
166
10.4
13.7
2022
3,825,451
2,454,375
1,464,943
1,030,883
108
159
12.8
17.3
2021
2,524,100
4,400,545
1,037,363
1,702,074
129
163
8.1
10.0
(a)
Refers to the Company’s fiscal year.
(b)
Reflects compensation amounts reported in the Summary Compensation Table (“SCT”) in the Fiscal 2024 Executive Compensation Section of this Proxy Statement for our CEO, Mr. Dow, for the respective fiscal years shown.
(c)
“Compensation actually paid” to our CEO in each of 2024, 2023, 2022 and 2021 reflects the respective amounts set forth in column (b) of the table above, adjusted as set forth in the table below, as determined in accordance with SEC rules. “Compensation Actually Paid” may not reflect the actual amount of compensation earned by or paid to the CEO during the applicable year. Allan Dow was CEO for all years presented. For a complete discussion of the Company’s executive compensation program and the Committee’s philosophy and approach, please refer to the Compensation Discussion and Analysis beginning on page 15.
The following table is part of footnote (c):
Amounts Deducted or Added to CEO Compensation Reported in SCT
Equity Addition to SCT Total for CEO
Year
SCT
Total
Less Equity
Deductions
from SCT
Value of
Current Year
Equity
Awards at
April 30 value
Change in
value of
unvested
prior year
awards at
April 30
Change in
value of prior
year awards
vested in
current year
Total Equity
Addition to
SCT
Total
Compensation
Actually
Paid
(1)
(2)
(3)
(4)
(5)
2024
$1,855,940
(1,095,258)
865,302
(496,369)
(187,298)
181,635
942,317
2023
2,759,911
(1,597,060)
790,318
(2,012,501)
34,797
(1,187,385)
(24,534)
2022
3,825,451
(2,135,283)
1,250,894
(1,060,416)
573,729
764,207
2,454,375
2021
2,524,100
(1,189,495)
2,203,851
630,459
231,630
3,065,940
4,400,545
(1)
Represents the grant date fair value of equity-based awards made during each fiscal year.
(2)
Represents the year-end fair value of equity-based awards that were made during the fiscal year.
(3)
Represents the change in fair value during the fiscal year of equity-based awards granted in prior fiscal years that were still unvested as of year-end, with such change in fair value reflecting the change in the year-end stock price during each year.
(4)
Represents the change in fair value during the fiscal year of equity-based awards granted in prior fiscal years that vested during the year, with such change in fair value reflecting the change in stock price from the prior fiscal year-end until the vesting date.
(5)
The amounts in this column are calculated by subtracting the amounts under “Less Equity Deduction from SCT” from, and adding the amounts under “Total Equity Addition to SCT” to, the amounts under “SCT Total” with respect to our CEO.
(d)
Reflects an average of compensation amounts reported in the “Summary Compensation Table” for our non-CEO named executive officers (“NEOs”), for the respective years shown. Included in the averages for the years shown is compensation for James C. Edenfield and Vincent Klinges.
(e)
Average “compensation actually paid” for our non-CEO NEOs in each of 2024, 2023, 2022 and 2021 reflects the respective amounts set forth in column (d) of the table above, adjusted as set forth in the table below, as determined in accordance with SEC rules. Average “Compensation Actually Paid” may not reflect the actual amount of compensation earned by or paid to the NEOs during the applicable year.
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The following table is part of footnote (e):
Amounts Deducted or Added to Non-CEO NEO Average Compensation Reported in SCT
Equity Addition to SCT Average for Non-CEO NEOs
Year
SCT
Average
Less Equity
Deductions
from SCT
Value of
Current Year
Equity Awards
at April 30
value
Change in
value of
unvested prior
year awards at
April 30
Change in
value of prior
year awards
vested in
current year
Total Equity
Addition to
SCT
Average
Compensation
Actually
Paid
(1)
(2)
(3)
(4)
(5)
2024
$ 756,668
(393,814)
323,801
(165,309)
(77,136)
81,356
444,209
2023
1,149,249
(558,971)
276,611
(639,105)
15,508
(346,986)
243,292
2022
1,464,943
(747,349)
437,813
(324,197)
199,674
313,290
1,030,883
2021
1,037,363
(376,673)
697,886
246,220
97,278
1,041,384
1,702,074
(1)
Represents the grant date fair value of equity-based awards made during each fiscal year.
(2)
Represents the year-end fair value of equity-based awards that were made during the fiscal year.
(3)
Represents the change in fair value during the fiscal year of equity-based awards granted in prior fiscal years that were still unvested as of year-end, with such change in fair value reflecting the change in the year-end stock price during each year.
(4)
Represents the change in fair value during the fiscal year of equity-based awards granted in prior fiscal years that vested during the year, with such change in fair value reflecting the change in stock price from the prior fiscal year-end until the vesting date.
(5)
The amounts in this column are calculated by subtracting the amounts under “Less Equity Deduction from SCT” from, and adding the amounts under “Total Equity Addition to SCT” to, the amounts under “SCT Average” with respect to our Non-CEO NEOs.
(f)
For the relevant fiscal year, represents the cumulative total shareholder return (TSR) of the Company for the measurement periods ending on April 30, 2024, 2023, 2022 and 2021, respectively.
(g)
Based on the NASDAQ Computer Index included in our stock performance graph in our annual report to shareholders.
(h)
Reflects “Net Income” in the Company’s Consolidated Income Statements included in the Company’s Annual Reports for the measurement periods ending on April 30, 2024, 2023, 2022 and 2021, respectively.
(i)
Net Income based on continuing operations.
(j)
The Company-selected measure is Adjusted EBITDA. Adjusted EBITDA represents our GAAP net earnings adjusted for amortization of intangibles, depreciation, interest income & other, net, and income tax expense, and has been further adjusted to exclude acquisition activity during the year.
(k)
Adjusted EBITDA based on continuing operations.
Financial Performance Measures
As further discussed in our Compensation Discussion and Analysis, with performance-based pay comprising the majority of executive compensation, we believe our current executive compensation program directly links compensation to our financial performance and aligns the interests of our executive officers with those of our shareholders. The following table sets forth financial performance measures that we considered to be the most important to link compensation actually paid to Company performance during 2024.
Key Financial Measures
Revenue
Recurring Revenue
Adjusted EBITDA
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Analysis of the Information Presented in the Pay versus Performance Table
As demonstrated by the following table, the amount of Compensation Actually Paid to our CEO is aligned with our cumulative total shareholder return (“TSR”) over the three years presented in the table. The alignment of Compensation Actually Paid with the Company’s cumulative TSR over the period presented is because a significant portion of the Compensation Actually Paid to our CEO is comprised of equity awards.
Relationships between Pay and Performance
2021
2022
2023
2024
CEO Compensation Actually Paid (in millions)
$ 4.4
$ 2.5
($ 0.0)
$ 0.9
Average NEO Compensation Actually Paid (in millions)
$ 1.7
$ 1.0
$ 0.2
$ 0.4
 
 
 
 
 
Company Net Income (in millions)
$ 8.1
$12.8
$10.4
$11.4
% Yearly Change
20%
58%
-19%
10%
 
 
 
 
 
Company Adjusted EBITDA (in millions)
$10.0
$17.3
$13.7
$ 8.5
% Yearly Return
-15%
73%
-21%
-38%
 
 
 
 
 
Company Total Shareholder Return
$ 129
$ 108
$ 78
$ 69
% Yearly Return
29%
-16%
-28%
-12%
3 year CAGR
 
 
 
-31%
 
 
 
 
 
Peer Total Shareholder Return
$ 163
$ 159
$ 166
$ 241
% Yearly Return
63%
-2%
4%
45%
3 year CAGR
 
 
 
80%
Because a majority of total compensation provided to the CEO and the Non-CEO NEOs is through equity-based grants that vest over multi-year periods, the primary driver of changes in “Compensation Actually Paid” totals for the CEO and Non-CEO NEOs is the change in Company stock price. During fiscal 2021, our stock price increased 29% during the year with stock price increases resulting in higher “Compensation Actually Paid” values for the CEO and Non-CEO NEOs. During fiscal 2023 and fiscal 2024, our stock price declined by 28% and 12%, respectively, compared to a return of 4% and 45% for the NASDAQ Computer Index. We closed fiscal 2023 and fiscal 2024 decreasing Adjusted EBITDA when compared to fiscal 2022 so our stock price changes resulted in 2023 and 2024 “Compensation Actually Paid” values for the CEO and average NEO that were lower than those values in 2022.
With the emphasis on annual equity-based grants that vest over multi-year periods for the CEO and our other Non-CEO NEOs, the Compensation Committee believes that compensation value actually realized by the Company’s officers is directly and strongly aligned with shareholder returns over a multi-year period.
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DIRECTOR COMPENSATION
For fiscal 2024, Directors received cash compensation of $70,000 annually, paid on a per-fiscal quarter basis, following scheduled quarterly Board meetings. New Board members will be compensated on a pro-rated basis based on the date they join the Board. The additional annual amount of $5,000 paid to each Board Committee Chair remains unchanged and will be paid annually. In connection with Mr. Miller’s appointment as the Company’s Chairman in February 2024, the Board approved an additional annual payment of $50,000 to the Chairman of the Board. The Company will also reimburse all reasonable out-of-pocket expenses incurred by non-employee directors in attending meetings of the Board or any Committee.
Board members will also receive annual grants of Restricted Stock Units (“RSUs”) worth approximately $120,000, based on the Company’s closing share price on the award date. The award of RSUs will be subject to the 2020 Plan, or the 2024 Plan, if approved. The RSUs will vest as Class A Shares of the Company in full one year after the date of grant, subject to the Board members’ continued service on the Board through the vesting date. Until vesting, the RSUs will not entitle a Board member to voting rights, dividends, or other rights or privileges of owning Class A Shares of the Company. In addition, new Board members will receive a grant of RSUs worth approximately $25,000, based on the Company’s closing share price on the date they join the Board.
The following table provides compensation information for non-employee members of our Board for the fiscal year ended April 30, 2024.
Name
Fees
Earned
or Paid in
Cash
($)
Stock
Awards
($)
Option
Awards
($)
Non-
Equity
Incentive
Compen-
sation
($)
Change in
Pension Value
and
Nonqualified
Deferred
Compensation
Earnings
($)
All Other
Compen-
sation
($)
Total
($)
W. Dennis Hogue
70,000
119,997
189,997
James B. Miller, Jr.
80,000
119,997
199,997
Thomas L. Newberry, V
70,000
119,997
189,997
Matthew G. McKenna
70,000
119,997
189,997
Lizanne Thomas
75,000
119,997
194,997
Nicole Wu
70,000
144,997
214,997
Celena Matlock
52,500
144,996
197,496
CERTAIN TRANSACTIONS
On December 8, 2003, our Board of Directors adopted a resolution directing the Audit Committee of the Board of Directors to establish and implement procedures for identifying and conducting an appropriate review of any proposed transaction that meets the definition of “related party transaction” within the meaning of Item 404 of SEC Regulation S-K. In January 2004, the Audit Committee adopted written procedures in accordance with such direction. Under those procedures, the Audit Committee reviews and evaluates any proposed related party transaction and determines whether the terms of such transaction, judged at the time of the determination, are fair to the Company. Our officers are instructed that when a related party transaction is proposed they are to bring it to the attention of the Audit Committee, which then reviews the transaction and makes a determination of whether it meets the above standard. The Audit Committee is required to prepare a report of its deliberations, conclusions and recommendations, and furnish that report to the full Board of Directors. Since May 1, 2023, we were not a party to any transactions involving amounts in excess of $120,000 in which any related person had a direct or indirect interest, and no such transactions are currently proposed.
LEGAL PROCEEDINGS
We are not aware of any current legal proceedings involving any of our directors, director nominees, or executive officers and either the Company or any of its subsidiaries.
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PROPOSAL 3: ADVISORY VOTE ON THE COMPENSATION OF OUR
NAMED EXECUTIVE OFFICERS
Pursuant to Section 14A of the Exchange Act, we are requesting that our shareholders approve, on an advisory basis, the compensation of our executive officers, each of whom is named in the Summary Compensation Table, as described in the “Compensation Discussion and Analysis” section and disclosed in the Summary Compensation Table and related compensation tables and the narrative discussion presented under “Executive Compensation” in this Proxy Statement.
Our executive compensation program has been designed to attract, retain and motivate our executive team by providing competitive compensation within our market. We believe that our executive compensation program provides an appropriate balance between salary and “at-risk” forms of incentive compensation, as well as a mix of incentives that encourage our executives to focus on both long- and short-term objectives without encouraging inappropriate risks to achieve performance.
As an advisory vote, this proposal is not binding on the Company. However, our Compensation Committee and our Board of Directors value the opinions of our shareholders expressed through your vote on this proposal and will consider the outcome of this vote in making future compensation decisions for our executive officers.
Accordingly, we will present the following resolution for vote at our 2024 Annual Meeting:
“RESOLVED, that the shareholders of the Company approve, on an advisory basis, the compensation of the Company’s named executive officers, as described in the Compensation Discussion and Analysis section and disclosed in the Summary Compensation Table and related tables and narrative discussion set forth in the Proxy Statement.”
At the 2023 Annual Meeting, held on August 22, 2023, our shareholders approved the frequency of future votes on executive compensation on an annual basis. Accordingly, our next advisory say-on-pay vote (following the non-binding advisory vote at this Annual Meeting) is expected to occur at our 2025 Annual Meeting.
The proposal to approve, on an advisory basis, the compensation of our executive officers requires the affirmative vote of the majority of the shares represented in person or by proxy at the Annual Meeting and entitled to vote on the proposal.
Each proxy solicited on behalf of our Board of Directors will be voted “FOR” the approval of the compensation of our named executive officers unless the shareholder instructs otherwise in the proxy.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE APPROVAL, ON AN ADVISORY BASIS, OF THE FOREGOING RESOLUTION REGARDING THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS AS PRESENTED IN THIS PROXY STATEMENT.
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PROPOSAL 4: APPROVAL OF THE 2024 EQUITY COMPENSATION PLAN
On May 29, 2024, the Board approved, adopted and resolved to submit for shareholder approval the Company’s 2024 Equity Compensation Plan (the “2024 Plan”). If approved by our shareholders, the 2024 Plan reserves for issuance under the 2024 Plan 1,400,000 Class A Shares plus (i) the number of shares, if any, remaining available for issuance under the Company’s 2020 Equity Compensation Plan (the “2020 Plan”), and (ii) the number of shares, if any, subject to awards granted under the 2020 Plan that, after May 29, 2024, cease to be subject to such awards due to cancellation, forfeiture, or expiration of such awards.
We believe that granting equity awards to executive officers and other employees is an effective means to reward them for their prior performance, to serve as an incentive for promotion of Company profitability and other long-term objectives, and to maintain their overall compensation at competitive levels. As noted above, as of April 30, 2024, there were 248,930 shares available for future awards under the 2020 Plan.
Under the 2024 Plan, the Company may grant options, stock appreciation rights (“SARs”), shares of restricted stock, restricted stock units and performance stock units to officers and other employees of the Company or any subsidiary, consultants and other service providers to the Company or any subsidiary, and members of the Board. Options may be either incentive stock options or nonqualified stock options. The number of options, SARs, shares of restricted stock, restricted stock units or performance stock units granted is determined by the particular committee that administers such grants. See “Administration” below. Option grants to non-employee directors can only be nonqualified stock options. SARs, shares of restricted stock, restricted stock units and performance stock units may be granted to any plan participant.
The following summary of the 2024 Plan is qualified in its entirety by reference to the full text of the 2024 Plan, which governs in the event of any conflict. A copy of the 2024 Plan included as Appendix C to this Proxy Statement.
We intend to register the Class A Shares that would be available for awards under the 2024 Plan on a Registration Statement on Form S-8 under the Securities Act of 1933, as amended, as soon as practicable after receiving shareholder approval of the 2024 Plan.
Purpose of the 2024 Plan
The purpose of the 2024 Plan is to aid the Company in recruiting and retaining key employees, directors, consultants and other service providers of outstanding ability and to motivate such persons to exert their best efforts on behalf of the Company and its affiliates.
Information Regarding Overhang and Burn Rate
In developing our share request for the 2024 Plan and analyzing the impact of utilizing equity as a means of compensation on our shareholders, we considered both our “overhang” and our “burn rate”.
Overhang is a measure of potential dilution which we define as the sum of (i) the total number of shares underlying all equity awards outstanding and (ii) the total number of shares available for future award grants, divided by the sum of (a) the total number of shares underlying all equity awards outstanding, (b) the total number of shares available for future awards and (c) the number of shares outstanding. As of June 5, 2024, there were 6,685,135 shares underlying all equity awards outstanding, 0 shares available for future awards under the 2020 Plan, and 33,280,598 shares of common stock outstanding. Of the 6,685,135 shares underlying all equity awards that are outstanding as of June 5, 2024, 118,731 shares relate to issued and outstanding RSUs and 6,566,404 shares relate to issued and outstanding stock options, which options have a weighted average strike price of $15.51 and term of 3.21. Accordingly, our fully diluted overhang as of June 5, 2024 was 16.73%. If the 1,400,000 shares proposed to be authorized for grant under the 2024 Plan are included in the calculation, our fully diluted overhang on June 5, 2024 would have been 19.55%.
Burn rate provides a measure of the potential dilutive impact of our equity award program, which we define as the number of shares covered by awards granted in a given fiscal year minus shares subject to outstanding equity awards forfeited during that year, divided by the weighted-average number of shares of common stock outstanding for that year. We believe a net burn rate measure (that is, burn rate calculated to reflect forfeitures of awards)
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indicates the rate at which we actually create potential future shareholder dilution. The following table sets forth information regarding historical award granted and awards forfeited in each of the 2022 through 2024 fiscal periods, and the corresponding annual net burn rate, for each of such three fiscal years, as well as the average net burn rate for those three years:
Fiscal 2022
Fiscal 2023
Fiscal 2024
Awards Granted
1,458,500
1,549,000
1,580,613
Less: Forfeitures
232,000
273,500
202,400
Net Shares Awarded
1,226,500
1,275,500
1,378,213
Weighted Average Number of Shares of Common Stock Outstanding
33,364,684
33,761,316
33,689,056
Net Burn Rate
3.68%
3.78%
4.09%
Three-year Average Net Burn Rate
 
3.85%
 
We recognize that equity awards dilute existing shareholders, and, therefore, we and our Compensation Committee are mindful to responsibly manage our equity compensation program. We review market data on equity compensation with our Compensation Committee on a regular basis with the goal of ensuring that our pay packages are competitive for all levels of employees, including our executives, and align with the compensation practices of our peers.
We have been and are committed to continuing to be careful, responsible stewards of our equity compensation program. We recognize that each equity award that we make dilutes our shareholders and intend to continue to actively monitor our share reserve and burn rate to ensure that we maximize shareholders’ value by granting the appropriate number of equity awards necessary to reward, motivate and retain our employees and directors. This requires prudence, process and sound judgement, all of which we are committed to because we know that we will not be able to compete for talent and deliver sustainable success to our shareholders without an equity compensation program.
Shares Subject to the 2024 Plan
The maximum number of Class A Shares that may be issued under the 2024 Plan is 1,400,000 plus the number of shares remaining available for issuance under the 2020 Plan, if any, subject to adjustment as provided below. Such shares may be shares of original issuance or treasury shares. Shares that are subject to awards granted under the 2024 Plan that are terminated, expire unexercised, lapse or are forfeited generally will be available again for issuance under the 2024 Plan. However, the following shares will not be available again for grant under the 2024 Plan: (i) cancelled on settlement of options or SARs in payment of the exercise price thereof; (ii) repurchased by Company using option exercise proceeds; (iii) withheld to pay taxes; and (iv) share-settled awards where only the actual shares delivered are counted against the plan reserve.
In the event of any change in the outstanding shares by reason of any share dividend or split, reorganization, recapitalization, merger, consolidation, spin-off, combination or exchange of shares or other corporate exchange or change in capital structure, distribution to shareholders (other than regular cash dividends) or any similar event, the applicable stock option committee, without liability to any person, will make such substitution or adjustment, if any, as it deems to be equitable as to the number or kind of shares or other securities issued or reserved for issuance. The committee will determine in its sole discretion the manner in which such substitution or adjustment shall be made.
Administration
The 2024 Plan is administered by the Compensation Committee (or any other committee of the Board to which the Board has delegated full or partial power to act), which is responsible for the administration and granting of stock options to other employees and eligible persons. The Compensation Committee is composed of two or more independent directors. References in this Proposal 4 to the “committee” mean the Compensation Committee or any other committee of the Board to which the Board has delegated full or partial power to act. The committee has the full power and authority to establish terms and conditions of any award consistent with the 2024 Plan and waive any such terms and conditions at any time; provided, however, the committee is not permitted to accelerate or waive any vesting conditions applicable to an award, except in the event of a participant’s death, disability, retirement or upon a Change of Control (as defined below).
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Eligibility
All directors and employees are eligible to participate in the 2024 Plan. Additionally, consultants and other service providers to the Company may be eligible for the issuance of awards under the 2024 Plan, if deemed appropriate by the committee.
No Repricing without Shareholder Approval
Under the 2024 Plan, the committee may not, without the approval of the Company’s shareholders, cancel outstanding options or SARs and grant in substitution, new options or SARs having a lower exercise price, amend any outstanding options or SARs to reduce the exercise price or purchase any outstanding unexercised options or SARs.
Minimum Vesting Requirements
No portion of any options, SARs, shares of restricted stock, restricted stock units or performance stock units will have a vesting period of less than one year from the date of grant.
Clawback
Any award granted pursuant to the 2024 Plan shall be subject to mandatory repayment by the participant to the Company (i) to the extent set forth in any award agreement, (ii) to the extent that such participant is, or in the future becomes, subject to (a) any “clawback” or recoupment policy adopted by the Company or any of its affiliates to comply with the requirements of any applicable laws, rules or regulations, including pursuant to final rules adopted by the SEC pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act, or otherwise, or (b) any applicable laws which impose mandatory recoupment, under circumstances set forth in such applicable laws, including the Sarbanes-Oxley Act of 2002.
Exercise Price
The exercise price per share of any option granted under the 2024 Plan is set in each case by the committee that administers the 2024 Plan or by the entire Board, but shall not be less than 100% of the fair market value of common stock on the date of grant (110% for 10% shareholders if the option is an incentive stock option).
Terms of Options
The terms of individual option grants and SARs are determined by the particular committee granting the option or SAR, as discussed in “Administration” above. If the committee continues current practices, options granted pursuant to the 2024 Plan generally will expire on the sixth anniversary of the grant date and will become exercisable in equal portions over a five-year period. A SAR granted in connection with an option (i) may be granted at the time the related option is granted or at any time prior to the exercise or cancellation of the related option, (ii) shall cover the same number of shares covered by the option (or such lesser number of shares as the committee may determine), and (iii) shall be subject to the same terms and conditions as such option, except for certain additional limitations permitted under the 2024 Plan.
Exercise of Options
Options granted pursuant to the 2024 Plan are exercisable according to the terms of the 2024 Plan, at such times and under such conditions as determined by the committee that administers the options and as set forth in the option grant agreement relating to the options being exercised. The option grant agreement may specify whether the option price may be paid by the participant (i) in cash or its equivalent (e.g., by personal check) at the time the option is exercised, (ii) in shares having a fair market value equal to the aggregate option price for the shares being purchased and satisfying such other requirements as may be imposed by the committee, if such shares have been held by the participant for no less than six months, (iii) partly in cash and partly in shares, (iv) if there is a public market for the shares at such time, through the delivery of irrevocable instructions to a broker to sell shares obtained upon the exercise of the option, or (v) to the extent approved by the committee, through “net settlement” in shares. The option agreement may provide for deferred payment from the proceeds of sale through a bank or broker of some of all of the shares to which such exercise relates.
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Exercise of SARs
Each SAR granted independent of an option shall entitle a participant upon exercise to an amount equal to the product of (i) the excess of (A) the fair market value on the exercise date of one share over (B) the exercise price per Share, multiplied by (ii) the number of shares covered by the SAR. Each SAR granted in conjunction with an option, or a portion thereof, shall entitle a participant to surrender to the Company the unexercised option, or any portion thereof, and to receive from the Company in exchange therefor an amount equal to the product of (i) the excess of (A) the fair market value on the exercise date of one share over (B) the greater of the exercise price per share or the option price per share, multiplied by (ii) the number of shares covered by the option, or portion thereof, which is surrendered. The date on which a notice of exercise is received by the Company shall be the exercise date. Payment shall be made in cash as set forth in the award agreement. SARs may be exercised from time to time upon actual receipt by the Company of written notice of exercise stating the number of shares with respect to which the SAR is being exercised.
Restricted Shares
The award agreement for restricted shares will set forth the number of shares subject to the award, the period during which and the conditions under which the restricted shares may be forfeited to the Company, and the other terms and conditions of the award. Restricted shares may not be sold, transferred, or otherwise encumbered or disposed of until the expiration of the restricted period and the fulfillment of any other conditions to the award. The award agreement will set forth a period of time during which the participant must remain in the continuous employment (or other service-providing capacity) for the forfeiture and transfer restrictions to lapse. Unless otherwise provided in the award agreement, the participant receiving restricted shares will have the right to receive dividends and to vote such shares, provided, however, that any cash or stock dividends with respect to the restricted stock will be withheld by the Company for the participant’s account. Such dividends will be distributed to the participant upon the release of restrictions on the shares. At the end of the restricted period and provided that any other restrictive conditions of the award are met, a stock certificate will be delivered to the participant free of the restricted stock legend (or restrictions on book-entry shares will be removed).
Restricted Stock Units
Each restricted stock unit will have a value equal to the fair market value of a share on the date such restricted stock units are granted under the Plan. Restricted stock units may be settled in cash, shares, other securities or property (as determined by the Compensation Committee) upon the lapse of restrictions applicable to the award and otherwise in accordance with the award agreement. Unless otherwise provided in the applicable aware agreement, restricted stock units will be subject to transfer restrictions similar to those of restricted stock, except that no shares are awarded to a participant who is granted restricted stock units on the date of grant, and such participant will have no rights of a shareholder with respect to the restricted stock units until the restrictions set forth in the award agreement lapse and the underlying shares have been delivered to the participant. The award agreement for restricted stock units will set forth the number of shares subject to the award, the period during which, and the conditions under which, the restricted stocks units may be forfeited to us, and the other terms and conditions of the award. The award agreement will set forth a period of time (which will be not less than one year) during which the participant must remain in the continuous employment (or other service-providing capacity) for the forfeiture and transfer restrictions to lapse. The award agreement may also set forth performance or other conditions (including, but not limited to, performance goals based on the criteria listed in the Plan) that will subject the shares to forfeiture and transfer restrictions. The award agreement will specify whether restricted stock units entitle the participant to dividend equivalent rights at the time of payment of dividends to our shareholders. Unless otherwise determined by the Compensation Committee or as provided in the award agreement, all of the restricted stock units will terminate unless the participant remains in continuous employment for the entire restricted period and unless the other restrictive conditions of the award are met.
Performance Share Units
The committee will specify the terms of a performance share unit in the award agreement. The committee will establish an initial value for a performance share unit at the time of grant. In addition to any non-performance terms applicable to the performance share unit, the committee will set one or more performance goals that, depending on the extent to which they are met, will determine the number or value of the performance share unit that the Company
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will pay out to the participant. The committee may provide for payment of earned performance share units in cash or shares. The committee will also specify any restrictions applicable to the performance share unit such as continued service, the length of the restriction period, and whether any circumstances, such as death, disability or other events, shorten or terminate the restriction period.
Performance share units will not possess voting rights and will accrue dividend equivalents only to the extent provided in the award agreement evidencing the award. However, rights to dividend equivalents are permitted only to the extent they comply with, or are exempt from, Section 409A. Any rights to dividends or dividend equivalents on performance share units or any other award subject to performance conditions will be subject to the same restrictions on vesting and payment as the underlying award.
Performance Measures
A performance objective may be described in terms of company-wide objectives or objectives that are related to a specific division, subsidiary, employer, department, region, or function in which the participant is employed or otherwise supports or that is specific to the participant or as some combination of those (as alternatives or otherwise). The Company may measure a performance objective on an absolute basis or relative to a pre-established target, results for a previous year, the performance of other corporations, or a stock market or other index. The committee will specify the period over which the Company will measure the performance objectives for a particular award and will determine whether the applicable performance objectives have been met with respect to a particular award following the end of the applicable performance period.
In determining whether any performance objective has been met, the committee may include or exclude any or all items that are unusual or infrequent, including but not limited to (i) charges, costs, benefits, gains, or income associated with reorganizations or restructurings of the Company and its subsidiaries, discontinued operations, goodwill, other intangible assets, long-lived assets (non-cash), litigation or the resolution of litigation (e.g., attorneys’ fees, settlements or judgments), or currency or commodity fluctuations, and (ii) the effects of changes in applicable laws, regulations, or accounting principles. In addition, the committee may adjust any performance objective for a performance period as it deems equitable to recognize unusual or infrequent events affecting the Company and its subsidiaries, changes in laws, regulations, or accounting principles, mergers, acquisitions, and divestitures, or any other factors the committee determines.
Non-Transferability of Awards
Awards granted under the 2024 Plan are not transferable other than by will or the applicable laws of descent and distribution. During the lifetime of a participant, awards may be exercised only by such participant or his or her guardian or legal representative.
Change of Control
In the event of a Change of Control (as defined below), the committee may, but shall not be obligated to, (i) accelerate, vest or cause the restrictions to lapse with respect to all or any portion of an award not already vested, (ii) cancel such awards for fair value (as determined in the sole discretion of the committee) which, in the case of options, SARs, restricted stock units and performance stock units, may equal the excess, if any, of the value of the consideration to be paid in the Change of Control transaction to holders of the same number of shares subject to such options, SARs, restricted stock units or performance stock units (or, if no consideration is paid in any such transaction, the fair market value of the shares subject to such options, SARs, restricted stock units or performance stock units) over the aggregate exercise price of such options, SARs, restricted stock units or performance stock units, (iii) provide for the issuance of substitute awards that will substantially preserve the otherwise applicable terms of any affected awards previously granted, as determined by the committee in its sole discretion, (iv) cancel and exchange any performance share units for which the performance period has not expired and exchange such performance share units for a cash payment equal to the product of the value of the performance share unit determined at “Target Performance Level” (100%) and a fraction, the numerator of which is the number of whole months that have elapsed from the beginning of the performance period to which the award is subject to the date of the Change of Control and the denominator of which is the number of whole months in the performance period, or (v) provide that for a period of at least 10 days prior to the Change of Control, such options shall be exercisable as to all shares subject thereto and that upon the occurrence of the Change of Control, such options shall terminate and be of no further force or effect. The committee may, in its discretion and without the consent of any participant, determine that upon the occurrence of a Change of Control, each or any award or a portion thereof outstanding immediately prior to the Change of Control and not previously exercised or settled will be canceled in exchange for
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a payment with respect to each vested share subject to such award in cash, shares, shares of a corporation or other business entity that is a party to the Change of Control, or other property which, in any such case, will be in an amount having a fair market value equal to the fair market value of the consideration to be paid per share in the Change of Control, reduced by the exercise or purchase price per share, if any, under such award.
For purposes of the 2024 Plan, “Change of Control” means a transaction or a series of transactions occurring within any single 12-month period in which: (i) any one Person (as that term is used for purposes of Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended), or more than one Person acting as a group, acquires ownership of stock of Company that, together with stock held by such Person or group, constitutes majority shareholder voting power, taking into account all such stock acquired during the 12-month period ending on the date of the most recent acquisition; (ii) a majority of the members of the Board is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of the Board prior to the date of the appointment or election; or (iii) any one Person, or more than one Person acting as a group, other than a Person or group of persons that is related to the Company, acquires assets from the Company that have a total gross fair market value equal to or more than 75% of the total gross fair market value of all of the assets of the Company immediately prior to such acquisition or acquisitions, taking into account all such assets acquired during the 12-month period ending on the date of the most recent acquisition.
Governing Law
The 2024 Plan will be governed by and construed in accordance with the federal laws of the United States and the laws of the State of Georgia.
No Right to Employment or Awards
The granting of an award under the 2024 Plan imposes no obligation on the Company or any of its subsidiaries to continue the employment of a participant and does not lessen or affect their right to terminate the employment of such participant. No participant or other person will have any claim to be granted any award. The terms and conditions of awards and the committee’s determinations and interpretations need not be the same with respect to each participant.
Termination of Employment
If a Plan participant’s employment is terminated for any reason other than death, Good Reason or Disability (as such terms are defined in the Plan), then all unpaid Awards (whether vested or unvested) will be cancelled or forfeited, as the case may be, unless the Participant’s award agreement provides otherwise.
Code Section 409A
The 2024 Plan expressly provides that no award will be granted, deferred, accelerated, extended, paid out or modified in a manner that would result in the imposition of an additional tax upon a Participant under Section 409A of the Code, and the committee will have the authority to alter the payment or delivery of shares under the 2024 Plan in order to avoid such tax liability.
Plan Benefits
Awards granted under the 2024 Plan are subject to the discretion of the Compensation Committee. See “Executive Compensation - Elements of Compensation - Stock Option Plans” and “Executive Compensation - Stock Options - Fiscal 2024 Grants of Stock Options” for information related to recent grants of stock options. There are no outstanding options granted to participants in the 2024 Plan that are dependent upon the passage of the 2024 Plan.
Termination; Amendment
The 2024 Plan will terminate on May 30, 2029, unless sooner suspended or terminated by the Board. In general, no such suspension or termination will have any effect on outstanding awards without the consent of the participant. The committee may amend, alter, suspend, discontinue or terminate the 2024 Plan at any time; however, no amendment, alteration, suspension, discontinuation or termination may be made without shareholder approval if such change would increase the total number of shares reserved for issuance under the 2024 Plan or change the maximum number of shares for which awards may be granted to any participant. Additionally, the consent of a participant is required if any such change would materially adversely impair any of the rights under any award granted under the 2024 Plan.
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Tax Consequences
The following is a brief summary of the principal federal income tax consequences of the grant and exercise of an option under the 2024 Plan and the subsequent disposition of shares of common stock acquired upon such exercise. Under the 2024 Plan, at the time of grant the committee designates each option as either an incentive stock option or a nonqualified stock option, with differing tax consequences to the participant and to the Company for each type of option.
Nonqualified Options
The grant of a nonqualified option will not result in any immediate tax consequence to the Company or the participant. Upon exercise of a nonqualified option granted under the 2024 Plan, the amount by which the fair market value on the date of exercise of the shares received upon such exercise exceeds the option price will be taxed as ordinary income to the participant, and the Company generally will be entitled to a deduction in an equal amount in the year the option is executed. Such amount will not be an item of tax preference to a participant.
Upon the subsequent disposition of shares acquired upon the exercise of an option (“Option Stock”), a participant may realize short-term or long-term capital gain or loss (assuming such shares of Option Stock constitute capital assets in a participant’s hands), depending upon the holding period of such shares of Option Stock, equal to the difference between the selling price and the tax basis of the shares of Option Stock sold. The tax basis for this purpose will equal the sum of the exercise price and the amount of ordinary income realized by the participant as a result of such exercise.
Incentive Options
Neither the grant nor the exercise of an incentive stock option will have any immediate tax consequences to the Company or the participant. (However, in calculating income for purposes of computing an individual participant’s alternative minimum tax, the favorable tax treatment generally accorded incentive stock options is not applicable.)
When a participant sells Option Stock received upon the exercise of his or her incentive stock options, any amount she or he receives in excess of the option price will be taxed as a long-term capital gain at the maximum applicable tax rate (and any loss will be a long-term capital loss) if she or he has held his or her shares for at least two years from the date of granting the option to her or him and for at least one year after the issuance of such shares to her or him. If the Option Stock is not held for more than two years from the date of granting the option to him or her or are not held for more than one year after the issuance of such Option Stock, (i) ordinary income will be realized in the year of the disposition in an amount equal to the difference between the fair market value of the Option Stock on the date the option was exercised and the option price, and (ii) upon the sale of the applicable Option Stock, either capital gain or loss will be recognized in an amount equal to the difference between the selling price and the fair market value of the Option Stock on the date the option was exercised. If the selling price is less than the fair market value on the date the option is exercised, but more than the exercise price, (a) ordinary income equal to the difference between the exercise price and the fair market value on the date of exercise is recognized, and (b) a capital loss equal to the difference between the fair market value on the date of exercise and the sales price results.
The Company is not permitted to take a deduction for federal income tax purposes because of the granting or exercise of any incentive stock option, except to the extent that ordinary income may be realized by a participant on the exercise or sale of Option Stock.
SARs
The grant of a SAR is not a taxable event to the Company or the participant. When a participant exercises a SAR, the excess of the fair market value of the common stock at the time of exercise over the unit grant price, multiplied by the number of units exercised, will be taxed as ordinary income to the participant. The Company may claim a deduction for federal income tax purposes for compensation paid in an equal amount after the participant has exercised the SAR.
Restricted Shares
The award of restricted shares will not result in taxable income to the participant, and the Company will not be entitled to take a deduction, at the time of grant unless the participant makes an election under Section 83(b) of the Code to be taxed at such time. If such election is not made, upon the lapse of the restrictions upon restricted shares, the participant will recognize ordinary income in the amount equal to the fair market value of the shares at the
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time the restricted shares vest (less any amount paid for the shares), and the Company will be entitled to a deduction for the same amount. Prior to the lapse of the restrictions on restricted shares, any dividends received on such shares will be treated as ordinary income to the participant (and will not be eligible for reduced rates of taxation applicable to qualified dividend income).
If an election under Section 83(b) of the Code is made within 30 days after receipt of restricted shares, the participant will recognize ordinary income in the year that the restricted shares are awarded in an amount equal to the fair market value of the shares on the date of such award determined as if the restricted shares were not subject to restrictions, and the Company will be entitled to a deduction for the same amount. If the election is made, the participant will not recognize income at the time that the restrictions actually lapse. Any dividends received after the election is made generally will constitute qualified dividend income generally subject to reduced rates of taxation. If the restricted shares subject to the election are subsequently forfeited, the participant will not be entitled to a deduction or tax refund. Any ordinary income of the participant will be subject to tax withholding by the Company. The Company generally will have no tax consequence in connection with the later disposition of shares acquired pursuant to vested restricted shares.
Restricted Stock Units
A participant generally is not taxed on the grant of a restricted stock unit, but rather is taxed on the ordinary income value of the restricted stock unit upon the vesting of such restricted stock unit. If the stock underlying the restricted stock unit is delivered at the time or shortly after the restricted stock unit is no longer subject to a substantial risk of forfeiture, then at the time of delivery the participant will recognize ordinary income equal to the amount of cash and the fair market value of the shares the participant has received. The issuer will be entitled to deduct the same amount. However, if the shares underlying the restricted stock unit are not designed to be paid on or shortly after the restricted stock unit is no longer subject to a substantial risk of forfeiture, the restricted stock unit may be deemed a nonqualified deferred compensation plan subject to Section 409A. In that case, if the restricted stock unit is designed to meet the requirements of Section 409A, then at the later time of delivery the participant will recognize ordinary income equal to the amount of cash and the fair market value of the shares the participant has received. The issuer will be entitled to deduct the same amount at that time.
Performance Share Units
A participant is not taxed on the grant of a performance share unit but will recognize taxable income at the time of settlement of the performance share unit equal to the amount of cash and the fair market value of the shares the participant has received. The income recognized will be taxable as ordinary income. The issuer generally will be entitled to deduct an amount equal to the amount of ordinary income the participant has recognized. Any gain or loss recognized upon the disposition of the shares acquired pursuant to settlement of a performance share unit will qualify as long-term capital gain or loss if the participant has held the shares for at least one year after settlement.
New Plan Benefits
It is not possible to determine the benefits or amounts that will be received by or allocated to participants under the 2024 Plan or would have been received by or allocated to participants for the last completed year because awards under the 2024 Plan will be made at the discretion of the committee.
Board Recommendation
The Board believes it is in the best interest of the Company and its shareholders to approve the adoption of the 2024 Plan so that the Company will be able to continue to provide adequate incentives and to attract and retain the services of competent personnel.
Required Vote
The affirmative vote of a majority of the shares in attendance or represented by proxy and entitled to vote at the Annual Meeting is required for adoption of the 2024 Plan. Votes that are withheld, broker non-votes and votes of abstention will not be counted as a vote for or against the Proposal 4.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE FOREGOING PROPOSAL REGARDING THE APPROVAL AND ADOPTION OF THE 2024 EQUITY COMPENSATION PLAN.
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PROPOSAL 5: APPROVAL OF THE RECLASSIFICATION
On April 10, 2024, the Company entered into the Reclassification Agreement with James C. Edenfield (“Mr. Edenfield”). Mr. Edenfield, the Company’s co-founder and former Executive Chairman and director, beneficially owns and has the sole power to vote or direct the voting of all of the shares of Class B Shares outstanding. See “