Blueprint
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant ☑
Filed by a Party other than the Registrant
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Check the appropriate box:
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Preliminary Proxy Statement
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Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material under Rule 14a-12
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NOBLE ROMAN’S, INC.
(Name
of Registrant as Specified in Its Charter)
Payment of Filing Fee (Check the appropriate box):
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No fee required.
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
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(1)
Title of each class of securities to which the
transaction applies:
(2)
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transaction applies:
(3)
Per
unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was
determined):
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maximum aggregate value of transaction:
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Fee paid previously with preliminary materials.
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Check the box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which the
offsetting fee was paid previously. Identify the previous filing by
registration statement number, or the Form or Schedule and the date
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ONE VIRGINIA AVENUE, SUITE 300
INDIANAPOLIS, INDIANA 46204
(317) 634-3377
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JULY 7, 2017
To the
Shareholders of Noble Roman’s, Inc.:
We are
notifying you that the 2017 annual meeting of shareholders of Noble
Roman’s, Inc., an Indiana corporation (“Noble
Roman’s” or the “Company”), will be held at
10:30 a.m. local time on Wednesday, July 7, 2017, at the Noble
Roman’s Craft Pizza & Pub, 17409 Wheeler Road, Westfield,
Indiana 46074, for the following purposes:
1.
To elect two Class
I directors, to serve until the 2020 annual meeting of shareholders
or until their successors are elected and qualified;
2.
To ratify the
selection of Somerset CPAs, P.C. as the Company’s independent
registered public accounting firm for the year ending December 31,
2017; and
3.
To transact any
other business that is properly brought before the annual meeting
or any adjournment thereof.
Noble
Roman’s board of directors has fixed the close of business on
April 28, 2017 as the record date to determine the shareholders who
are entitled to notice of, and to vote at, the annual meeting. Only
holders of record of Noble Roman’s common stock at the close
of business on that date will be entitled to notice of, and to vote
at, the annual meeting or any adjournments or postponements
thereof.
Please
read carefully the accompanying proxy statement. The proxy
statement is deemed incorporated by reference in and forms a part
of this Notice.
Important Notice Regarding the Availability of Proxy Materials for
the Shareholder Meeting to be held on July 7, 2017 – the
Proxy Statement and the Annual Report on Form 10-K are available at
www.nobleromans.com under the heading “Investor
Relations.”
Whether
or not you plan to attend the annual meeting in person, please
promptly complete, sign, date and return the enclosed proxy card in
the enclosed envelope, which requires no postage if mailed in the
United States. You may revoke your proxy in the manner described in
the proxy statement at any time before the proxy has been voted at
the annual meeting. If you sign and send in your proxy card and do
not indicate how you want to vote, your proxy will be counted as a
vote “FOR” the matters considered at the annual
meeting.
By
Order of the Board of Directors of Noble Roman’s,
Inc.
Paul W.
Mobley
Executive Chairman
and Chief Financial Officer
May 16,
2017
NOBLE ROMAN’S, INC.
ONE VIRGINIA AVENUE, SUITE 300
INDIANAPOLIS, INDIANA 46204
(317) 634-3377
PROXY STATEMENT
Annual
Meeting of Shareholders
July 7,
2017
This
proxy statement is furnished in connection with the solicitation of
proxies by the board of directors of Noble Roman’s, Inc., an
Indiana corporation (“Noble Roman’s”,
“we” or the “Company”), for use at the
annual meeting of shareholders to be held on Wednesday, July 7,
2017 at 10:30 a.m., local time, at the Noble Roman’s Craft
Pizza & Pub, 17409 Wheeler Road, Westfield, Indiana 46074, and
any adjournment or postponement thereof, for the purposes set forth
in the accompanying notice of the annual meeting of
shareholders.
Unless
otherwise directed by the giver of the proxy, the persons named in
the enclosed form of proxy, or the one of them who acts, will vote
all shares subject to the proxy as follows:
1.
FOR the election of
Mr. Coape-Arnold and Mr. Herbst as Class I directors of the
Company, to serve until the 2020 annual meeting of shareholders or
until their successors are elected and qualified;
2.
FOR the
ratification of the engagement of Somerset CPAs, P.C. as the
Company’s
independent
registered public accounting firm for the year ending December 31,
2017; and
3.
In their discretion
on the transaction of such other business as may properly come
before the annual meeting.
This
proxy statement, the notice of annual meeting and the accompanying
proxy form were first mailed to the holders of our common stock on
or about May 16, 2017. We will bear the entire expense of
soliciting proxies. Proxies will be solicited by mail initially.
Our directors, officers and employees also may solicit proxies
personally or by telephone or other means, but they will not be
specially compensated for such services. Certain holders of record,
such as brokers, custodians and nominees, may be requested to
distribute proxy materials to beneficial owners and will be
reimbursed by us for their reasonable expenses incurred in sending
proxy materials to beneficial owners.
A
shareholder who executes a proxy may revoke it at any time before
it is exercised by delivering to us another proxy bearing a later
date, by submitting written notice of the revocation to our
corporate secretary, or by personally appearing at the annual
meeting and casting a contrary vote.
VOTING RIGHTS AND SOLICITATION OF PROXIES
Only
common shareholders of record at the close of business on April 28,
2017 are entitled to notice of, and to vote at, the annual meeting.
On such date, there were 20,783,032 shares of our common stock
outstanding. There are approximately 262 holders of record of our
common stock. Holders of common stock are entitled to one vote for
each share held on each matter to be voted upon at the annual
meeting.
The
Company’s Amended and Restated By-Laws (the
“By-Laws”) provide that the holders of a majority of
the Company’s outstanding shares of stock entitled to vote at
the meeting, present in person or represented by proxy, shall
constitute a quorum for the transaction of business at the meeting.
Abstentions and “broker non-votes” will be counted as
present for the purpose of determining the presence of a
quorum.
A
“broker non-vote” occurs when a broker lacks
discretionary voting power to vote on a “non-routine”
proposal and a beneficial owner fails to give the broker voting
instructions on that matter. The election of directors is not
considered a “routine” matter. Beneficial owners who
hold their shares through stock brokerage accounts will have to
give voting instructions to their brokers in order for the brokers
to vote on the election of directors. If you are a beneficial
owner, failure to provide instructions to your broker will result
in your shares not being voted in connection with the election of
directors. The ratification of the selection of Somerset CPAs, P.C.
as the Company’s independent registered public accounting
firm for 2017 is considered a “routine” matter and a
broker has the discretionary voting power to vote on this matter
without any instructions from the beneficial owner. Broker
non-votes are counted for purposes of determining a quorum, but
will have no effect on the election of directors, or the
ratification of the selection of Somerset CPAs, P.C. An abstention
will not count as a vote against the ratification of the selection
of Somerset CPAs, P.C.
The
affirmative vote of the holders of a plurality of the shares
present in person or represented by proxy at the meeting and
eligible to vote is required for the election of the director
nominees. At this year’s meeting there are two duly nominated
individuals for election as a Class I director. Therefore, those
nominees will be elected if they receive any votes
“FOR” their election, regardless of how many votes to
“WITHHOLD AUTHORITY” those nominees
receive.
The
affirmative vote of holders of a majority of the shares present in
person or represented by proxy at the meeting and voting on such
matter will be required for:
(1)
ratification of Somerset CPAs, P.C. as the Company’s
independent registered public accounting firm for the year ending
December 31, 2017; and (2) for the approval of any other matter
that might be properly raised and submitted to a vote at the
meeting. However, consistent with our By-Laws, the agenda for this
year’s meeting is set and no additional matters, other than
the proposals described in this proxy statement, may be submitted
for consideration by our shareholders at the meeting, other than
procedural issues such as adjournment, postponement or
continuation. On procedural issues, all shares represented by proxy
may be voted at the discretion of the attorneys-in-fact named in
the proxies, to the extent permitted by law.
ELECTION OF DIRECTORS
At the
2017 annual meeting of shareholders, in accordance with the
Company’s By-Laws, the shareholders will elect two Class I
directors to serve until the 2020 annual meeting of shareholders or
until their successors are duly elected and qualified. The board of
directors has nominated Mr. Coape-Arnold and Mr. Herbst as Class I
directors. Mr. Coape-Arnold and Mr. Herbst are currently directors
of the Company, have consented to being named in this proxy
statement, and have agreed to continue to serve as a director, if
elected.
Should
either of the nominees become unavailable or decline to serve for
any reason, the Company expects that each person named in the proxy
will vote for the election of another person as may be designated
by the board of directors. The board of directors is not aware of
any circumstances likely to cause either nominee to be unavailable
for election or to decline to serve.
The
board of directors recommends a vote “FOR” the election
of the director nominees.
Set
forth below is certain information regarding the director nominees,
the executive officers and the directors of the
Company:
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Name
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Age
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Positions with
the Company
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Paul W.
Mobley
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76
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Executive
Chairman of the Board, Chief Financial Officer and Class II
Director
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A.
Scott Mobley
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53
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Chief
Executive Officer, President, Secretary and Class III
Director
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Douglas
H. Coape-Arnold
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71
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Class I
Director
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Marcel
Herbst
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46
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Class I
Director
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Troy
Branson
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53
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Executive
Vice President of Franchising
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James
D. Bales
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47
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Vice
President of Franchise Services
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The
officers of the Company serve at the discretion of the board of
directors and are elected at the annual meeting of the board of
directors. The board of directors has a classified structure in
which the directors are divided into three classes with
approximately one-third of the directors standing for election each
year. Under this structure, directors serve staggered three-year
terms or until their successors are duly elected and qualified. At
this year’s meeting, two Class I directors are standing for
re-election.
The
following is a brief description of the previous business
background of the director nominees and our executive officers and
directors:
Paul W.
Mobley has been Executive Chairman of the Board and Chief
Financial Officer since November 2014. Prior to November 2014, Mr.
Mobley was Chairman of the Board, Chief Executive Officer and Chief
Financial Officer since December 1991, and a director since 1974.
Mr. Mobley was President of the Company from 1981 to 1997. From
1975 to 1987, Mr. Mobley was a significant shareholder and
president of a company which owned and operated 17 Arby’s
franchise restaurants. From 1974 to 1978, he also served as Vice
President and Chief Operating Officer of the Company and from l978
to 1981 as its Senior Vice President. Mr. Mobley has a B.S. in
Business Administration from Indiana University and is a CPA. He is
the father of A. Scott Mobley.
A. Scott
Mobley has been President and Chief Executive Officer since
November 2014. Prior to November 2014, Mr. Mobley was President and
Chief Operating Officer since 1997. He has served as a director
since 1992, and Secretary since 1993. Mr. Mobley was Vice President
from 1988 to 1997, and from 1987 until 1988 he also served as
Director of Marketing for the Company. Prior to joining the Company
Mr. Mobley was a strategic planning analyst with a division of
Lithonia Lighting Company. Mr. Mobley has a B.S. in Business
Administration from Georgetown University, and an MBA from Indiana
University. He is the son of Paul W. Mobley.
Douglas H.
Coape-Arnold has been a director of the Company since 1999.
Mr. Coape-Arnold has been Managing General Partner of Geovest
Capital Partners, L.P. since 1997, and was Managing Director of
TradeCo Global Securities, Inc. from 1994 to 2002. Mr. Coape-Arnold
is a Chartered Financial Analyst.
Marcel
Herbst has been a director of the Company since July 2016.
Mr. Herbst is the co-founder and portfolio manager of Herbst
Capital Management, LLC and has over 15 years of investment
experience in equities, fixed income and commodities. Mr. Herbst
started his professional career in 1991 in Germany with a
commercial diploma in banking. Prior to founding Herbst Capital
Management, LLC, Mr. Herbst had more than 10 years’
experience in the management of hospitality services for large,
upscale, branded properties in the US and Europe. Most recently he
served as the Director of Food and Beverage at the 1544 room Hilton
Chicago, overseeing $40M in annual food and beverage revenue. Mr.
Herbst has a Bachelor degree of Business Administration from
Schiller International University in Heidelberg, Germany and a
Master’s degree of Management in Hospitality concentrating in
food and beverage from Cornell University.
Troy Branson
has been Executive Vice President of Franchising for the Company
since 1997, and from 1992 to 1997, he was Director of Business
Development. Before joining the Company, Mr. Branson was an owner
of Branson-Yoder Marketing Group from 1987 to 1992. Mr. Branson
received a B.S. in Business from Indiana University.
James D.
Bales has been Vice President of Franchise Services since
2015. Before assuming that position, Mr. Bales held various other
positions with the Company beginning in 2004. Before joining the
Company, Mr. Bales had 15 years of management experience in
operations and marketing in various positions with TCBY Yogurt
starting in 1989. Mr. Bales obtained his B.S. in Business from the
University of Phoenix.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
As of
April 28, 2017, there were 20,783,032 shares of the Company’s
common stock outstanding. The following table sets forth the amount
and percentage of the Company’s common stock beneficially
owned on April 28, 2017, including shares that may be acquired by
the exercise of options, by: (A) each director and named executive
officer individually; (B) each beneficial owner of more than 5% of
the Company’s outstanding common stock known to the Company;
and (C) all executive officers and directors as a
group.
|
Name
of
Beneficial Owner
|
Number of
Shares
Beneficially
Owned (1)
|
Percent
of
Common
Stock(2)
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Paul W.
Mobley
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3,679,368(3)
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16.4%
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A. Scott
Mobley
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1,601,245(4)
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7.5
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Douglas H.
Coape-Arnold
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424,239(5)
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2.0
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Marcel
Herbst
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976,000(6)
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4.6
|
|
James
Bales
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125,000(7)
|
*
|
|
Troy
Branson
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450,000(8)
|
2.2
|
|
All executive
officers and directors as a
group (6 persons)
|
7,255,852
|
29.7%
|
_____________________________________
*Less
than one percent
(1)
All shares owned
directly with sole investment and voting power, unless otherwise
noted.
(2)
The percentage
calculations are based upon 20,783,032 shares of the
Company’s common stock issued and outstanding as of the most
recent practicable date and, for each officer or director of the
group, the number of shares subject to options, warrants or
conversion rights exercisable within 60 days of April 28,
2017.
(3)
The total includes
1,273,333 shares of common stock subject to options granted under a
stock option plan, 300,000 shares issuable upon conversion of
convertible notes and 150,000 shares issuable upon exercise of
warrants. Mr. Mobley’s address is One Virginia Avenue, Suite
300, Indianapolis, IN 46204.
(4)
The total includes
608,334 shares of common stock subject to options granted under a
stock option plan. Mr. Mobley’s address is One Virginia
Avenue, Suite 300, Indianapolis, IN 46204.
(5)
The total includes
410,000 shares of common stock subject to options granted under a
stock option plan.
(6)
The total includes
35,000 shares of common stock subject to options granted under a
stock option plan, 400,000 shares issuable upon conversion of
convertible notes and 200,000 shares issuable upon exercise of
warrants.
(7)
The total includes
105,000 shares of common stock subject to options granted under a
stock option plan.
(8)
The total includes
155,000 shares of common stock subject to options granted under a
stock option plan.
CORPORATE GOVERNANCE
For a
number of years until November 2014, the Company operated using a
common U.S. board leadership structure under which the Chief
Executive Officer also served as Chairman of the board of
directors. In November 2014, the Company determined to separate
these roles and appointed Paul W. Mobley to serve as the Executive
Chairman of the board of directors and A. Scott Mobley to serve as
Chief Executive Officer. The Company may elect to combine these
positions in the future if it determines it is best for the Company
and its shareholders.
Our
whole board of directors has responsibility for the oversight of
risk management. Our whole board of directors from time to time
discusses with management areas of material risk exposures, their
potential impact on the Company, the steps we take to monitor risk
exposure, and controls to mitigate such exposures.
The
Company has adopted a code of ethics for its senior executive and
financial officers. The code of ethics can be obtained without
charge by contacting the Company’s executive office at One
Virginia Ave., Suite 300, Indianapolis, IN 46204, and requesting a
copy of the code of ethics.
In
2016, the board of directors met four times, and each of the
directors of the Company attended all four meetings of the board of
directors. All directors are encouraged to attend our annual
meeting of shareholders. The Company held an annual meeting of
shareholders on
July 7,
2016, at which all directors were in attendance. The Company also
held a special meeting of shareholders on January 19, 2017. The
Company does not have standing audit, compensation, or nominating
and corporate governance committees.
Certain Relationships and Transactions
The
Company has reviewed all transactions to which the Company and
officers and directors of the Company are a party or have a
financial interest. The board of directors of the Company has
adopted a policy that all transactions between the Company and its
officers, directors, principal shareholders and other affiliates
must be approved by a majority of the Company’s disinterested
directors, and be conducted on terms no less favorable to the
Company than could be obtained from unaffiliated third
parties.
In
2016, the Company borrowed $250,000 from Paul W. Mobley and $60,000
from A. Scott Mobley, evidenced by promissory notes which mature in
June 2018. Interest on the notes is payable at the rate of 10% per
annum payable quarterly in arrears and these notes are unsecured
and subordinated to the loan to the Company from Super G Funding,
Inc. In January 2017, Paul Mobley loaned the Company $600,000,
evidenced by a promissory note, which matures in March 2018.
Interest on the note is payable at a rate of 7% per annum payable
quarterly in arrears. Proceeds from the loan were used by the
Company to repay the loan from Kingsway America for $600,000 at an
interest rate of 8% per annum, which was due in July
2017.
The
Company sold 48 units in a private placement which began in October
2016 and completed in January 2017. Three of those units were
purchased by Paul W. Mobley, and four units were purchased by Mr.
Herbst. Each unit consists of a note in the principal amount of
$50,000 with interest at the rate of 10% per annum and convertible
to the Company’s common stock at the rate of $.50 per share
and a warrant to purchase 50,000 shares of the Company’s
common stock at $1.00 per share. The units purchased by Mr. Mobley
and Mr. Herbst were on the same terms and conditions as the other
41 units that were purchased by independent investors.
During
2012, the Company executed a franchise agreement with TNB, Inc. for
three locations to operate the Company's former stand-alone
take-n-bake format. The principal shareholder of TNB, Inc. was a
long-time operator of Noble Romanís locations in a different
format. The officers of the Company invested their personal funds
in TNB, Inc. as minority shareholders, without operational
responsibilities. The Company officers invested with a view to
providing TNB, Inc. financial resources to drive the development of
the Company's overall take-and-bake format by operating units in
the Indianapolis area which Company management could closely
observe and which provided the opportunity to test ideas to improve
the take-and-bake format, initially without having to invest the
Company's funds. In addition, the Company's Executive Chairman
loaned TNB, Inc. approximately $500,000 to cover working capital
requirements of operating the business. Given the value of being
able to utilize TNB, Inc.ís locations in testing and
development to refine the take-and-bake format for the benefit of
the entire system, during 2015 the Company advanced approximately
$600,000 and during the first six months of 2016, the Company
advanced approximately an additional $250,000 when it became
apparent that TNB, Inc.ís initial funding would be
insufficient to maintain operations for development purposes.
However, in the third quarter of 2016, the Company made the
decision to discontinue the take-and-bake format, resulting in a
charge of $505,000 after-tax benefit related to TNB, Inc. and the
Company's officers realized a complete loss of their respective
investments and loan. The Company has no exposure to loss related
to this entity in the future. Neither the Company, nor any officers
of the Company, has guaranteed any obligations of the
franchisee.
The
Company’s board of directors is currently comprised of: Paul
W. Mobley, our Executive Chairman and Chief Financial Officer; A.
Scott Mobley, our President and Chief Executive Officer; Douglas H.
Coape-Arnold; and Marcel Herbst. For the purpose of determining
director independence, the Company has adopted the New York Stock
Exchange definition of independence. The board of directors has
determined that Mr. Coape-Arnold and Mr. Herbst are independent
directors under that definition.
Board Role in Audit Process
The
board of directors does not have a separately established audit
committee. Because no separate audit committee has been
established, the board of directors, as a whole, performs certain
functions ordinarily delegated to an audit committee. The board of
directors has determined that each of Mr. Coape-Arnold and Mr.
Herbst qualify as an “Audit Committee Financial
Expert.”
The
board of directors has reviewed, and communicated with management
and with Somerset CPAs, P.C., the Company’s independent
auditor, with respect to, the Company’s audited consolidated
financial statements as of December 31, 2016 and for the year then
ended. The board of directors also has communicated with Somerset
CPAs, P.C. with respect to the matters required to be discussed by
Statement on Auditing Standard No. 1301, “Communication with
Audit Committees.” The board of directors has received the
written disclosures and the letter from Somerset CPAs, P.C.
required by applicable requirements of the Public Company
Accounting Oversight Board regarding the independent
accountant’s communications with the board of directors
concerning independence, and has communicated with the independent
accountant with respect to the independent accountant’s
independence. Based upon the board of directors’ review and
communications noted above, the board of directors authorized the
audited consolidated financial statements of the Company to be
included in the Company’s Annual Report on Form 10-K for the
year ended December 31, 2016, as filed with the Securities and
Exchange Commission.
Board
of Directors of Noble Roman’s, Inc.
Paul W.
Mobley, A. Scott Mobley, Douglas Coape-Arnold
and
Marcel Herbst
Board Role in Nominations
The
Company does not have a standing nominating committee. The board of
directors does not believe that a nominating committee is necessary
due to the Company’s relatively small size, the relatively
small size of its board of directors, and its historically limited
need to add new directors. When the Company has had a vacancy on
the board of directors, the entire board has participated in the
nomination process. The board expects all of the directors to
participate in the nomination process and in the review of
potential nominees. The board of directors does not have a formal
policy regarding the consideration of shareholder nominees;
however, the board will consider candidates on a case-by-case
basis. There are no specific qualifications that a candidate must
have in order to be considered. When a vacancy exists, the board
generally relies on the personal knowledge and references of the
directors and publicly available data to identify potential
nominees.
The
Company’s By-Laws contain the procedures by which
shareholders may nominate directors. Among other items, these
provisions set forth the procedures that shareholders must follow
in order for a shareholder nominee to be considered at a meeting,
the information that a shareholder must provide to the Company with
respect to itself and the nominee, and the deadlines by which a
shareholder nomination must be received in order to be considered
at a meeting.
Board Role in Compensation Determinations
The
Company does not have a standing compensation committee. The
compensation program is supervised by the entire board of
directors. The board of directors does not believe that a
compensation committee is necessary due to the Company’s
relatively small size and the relatively small size of its board of
directors. All directors participate in compensation discussions. A
director that is also an officer does not vote on his own
compensation. The compensation of the Executive Chairman/Chief
Financial Officer and the President/Chief Executive Officer of the
Company has been set by long-term contracts with those individuals.
The compensation of other executive officers of the Company is
recommended by the Executive Chairman/Chief Financial Officer and
President/Chief Executive Officer and reviewed by the
Company’s board of directors as it deems appropriate. Other
than the Executive Chairman/Chief Financial Officer and
President/Chief Executive Officer, no other executive officer
participates in the compensation process.
Communication with the Board
Communications by
shareholders or by other parties may be sent to the board of
directors by U.S. mail or overnight delivery and should be
addressed to the board of directors c/o Secretary, Noble
Roman’s, Inc., One Virginia Avenue, Suite 300, Indianapolis,
IN 46204. Communications directed to the entire board of directors,
or one or more directors, will be reviewed by the Secretary and
forwarded to the board of directors as appropriate and may be made
anonymously.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING
COMPLIANCE
Based
solely on a review of the copies of reports of ownership and
changes in ownership of the Company’s common stock, furnished
to the Company, the Company believes that all filing requirements
under Section 16(a) of the Securities Exchange Act of 1934, as
amended, during the year ended December 31, 2016, were complied
with, except that Paul W. Mobley did not timely file two Form 4s in
connection with his purchase of a total of three units (on two
separate dates), each of which consists of a note in the principal
amount of $50,000 with interest at the rate of 10% per annum and
convertible to the Company’s common stock at the rate of $.50
per share and a warrant to purchase 50,000 shares of the
Company’s common stock at $1.00 per share. A total of 450,000
shares of common stock are issuable upon conversion and exercise,
as applicable, of the purchased notes and warrants. Mr. Mobley
filed a Form 4 on April 10, 2017 to report these
transactions.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER
PARTICIPATION
Because
no separate Compensation Committee has been established, the board
of directors, as a whole, performs certain functions ordinarily
delegated to a Compensation Committee. Paul W. Mobley, A. Scott
Mobley, Douglas H. Coape-Arnold and Marcel Herbst all participated
in executive compensation decisions for the year ended December 31,
2016.
EXECUTIVE COMPENSATION
Summary Compensation Table for 2015 and 2016
The
following table sets forth the cash and non-cash compensation
awarded to or earned by the Executive Chairman of the Board and
Chief Financial Officer, the Chief Executive Officer, President and
Secretary and the one other highest paid executive officer of the
Company.
|
Name and
Principal Position(s)
|
|
Year
|
|
|
Non-Equity
Incentive Compensation
|
|
|
|
Paul
Mobley
|
|
2016
|
|
$325,000
|
$-
|
$2,400
|
$327,400
|
|
Executive
Chairman of the Board and Chief Financial
Officer
|
|
2015
|
|
325,000
|
-
|
10,850
|
335,850
|
|
|
|
|
|
|
|
|
|
A. Scott
Mobley
|
|
2016
|
|
$410,881
|
$7,636
|
$2,800
|
$421,317
|
|
Chief Executive
Officer, President and Secretary
|
|
2015
|
|
395,663
|
-
|
10,850
|
406,513
|
|
|
|
|
|
|
|
|
|
Troy
Branson
|
|
2016
|
|
$107,500
|
$91,393
|
$1,400
|
$200,293
|
|
Executive
Vice President
|
|
2015
|
|
100,000
|
88,088
|
6,200
|
194,288
|
|
|
|
|
|
|
|
|
(1)
These amounts represent the grant date fair value of the option
awards. See “—Equity Incentive Awards” for
information regarding valuation of stock option
grants.
Equity Incentive Awards
The
Summary Compensation Table includes the grant date fair value for
stock options granted in 2015 and 2016 to the named executive
officers under the Company’s employee stock option plan. The
Company determines the grant date fair value of stock options
calculated in accordance with FASB ASC Topic 718. See Note 7 to the
Notes to the Company’s Consolidated Financial Statements in
the Company’s Annual Report on Form 10-K for the year ended
December 31, 2016 for a discussion of the Company’s
determination of the grant date fair value of stock
options.
The
Company granted options to purchase 410,000 shares on June 23, 2015
at an exercise price equal to the then-current market price of
$1.00 per share. During 2015, employees exercised stock options for
877,333 shares and stock options for 330,000 shares were forfeited.
The Company granted options to purchase 20,000 shares on February
22, 2016 at an exercise price equal to the then-current market
price of $.95 per share, 340,000 shares on July 7, 2016 at an
exercise price equal to the then-current market price of $.53 per
share and 35,000 shares on September 21, 2016 at an exercise price
equal to the then-current market price of $.50 per share. During
2016, employees exercised stock options for 20,000 shares and stock
options for 75,000 shares were forfeited.
The
Company maintains an employee stock option plan for our employees,
officers and directors that is designed to motivate them to
increase shareholder value. Any employee, officer or director of
the Company is eligible to be awarded options under the plan. The
employee stock option plan provides that any options issued
pursuant to the plan for non-director employees will have a
three-year vesting period and for director employees will vest
one-third each year and both will expire ten years after the date
of grant. The vesting period is intended to provide incentive for
longevity with the Company. Awards under the plan are periodically
made at the recommendation of the Executive Chairman/Chief
Financial Officer and President/Chief Executive Officer, and then
approved by the board of directors. The employee stock option plan
does not have a limit on the number of shares that may be issued
under the plan.
Employment Agreements
Paul
Mobley has an employment agreement with the Company which: (A)
fixes his base compensation at approximately $650,000 per year for
2016 (although Mr. Mobley voluntarily reduced his base compensation
to $325,000 for 2016); (B) provides for reimbursement of travel and
other expenses incurred in connection with his employment,
including the furnishing of an automobile and health and accident
insurance similar to that provided other employees; and (C)
provides life insurance in an amount related to his base salary.
The initial term of the agreement is seven years and the term
automatically renews each year for a seven-year period unless the
board of directors takes specific action to not renew. The
agreement is terminable by the Company for cause as defined in the
agreement. The agreement does not provide for any benefits payable
as a result of a change of control of the Company.
A.
Scott Mobley has an employment agreement with the Company which:
(A) fixes his base compensation at $467,250 per year for 2016
(although Mr. Mobley voluntarily reduced his base compensation to
$410,881 for 2016); (B) provides for reimbursement of travel and
other expenses incurred in connection with his employment,
including the furnishing of an automobile and health and accident
insurance similar to that provided other employees; and (C)
provides life insurance in an amount related to his base salary.
The initial term of the agreement is five years and the term
automatically renews each year for a five-year period unless the
board of directors takes specific action to not renew. The
agreement is terminable by the Company for cause as defined in the
agreement. The agreement does not provide for any benefits payable
as a result of a change of control of the Company.
Non-Equity Incentive Arrangements
The
Company currently has a non-equity incentive arrangement with our
Executive Vice President under which he may earn additional
compensation. His compensation is based on 2.5% of all royalty and
fee revenue associated with franchising less the direct expenses of
those activities excluding any administrative cost. The net revenue
for this activity under this calculation in 2016 and 2015 was $3.7
million and $3.5 million, respectively. Therefore, our Executive
Vice President earned $91,393 and $88,088 of non-equity incentive
compensation for 2016 and 2015, respectively.
Outstanding Equity Awards at Fiscal Year-End
The
following table sets forth information concerning the number of
outstanding equity awards of the executive officers named in the
Summary Compensation Table as of December 31, 2016.
|
|
Option
Awards
|
|
Name
|
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
|
Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
|
Option Exercise
Price ($)
|
Option
Expiration Date
|
|
Paul W.
Mobley
|
100,000
|
|
0.58
|
4/28/20
|
|
|
900,000
|
|
0.58
|
1/25/21
|
|
|
33,333
|
|
0.58
|
6/27/22
|
|
|
50,000
|
|
1.00
|
7/2/23
|
|
|
40,000
|
20,000
|
1.00
|
7/2/24
|
|
|
23,333
|
46,667
|
1.00
|
6/23/25
|
|
|
|
60,000
|
0.53
|
7/7/26
|
|
A.
Scott Mobley
|
25,000
|
|
0.58
|
8/28/17
|
|
|
300,000
|
|
0.58
|
1/25/21
|
|
|
33,334
|
|
0.58
|
6/27/22
|
|
|
50,000
|
|
1.00
|
7/2/23
|
|
|
40,000
|
20,000
|
1.00
|
7/2/24
|
|
|
23,333
|
46,667
|
1.00
|
6/23/25
|
|
|
|
70,000
|
.53
|
7/7/26
|
|
Troy
Branson
|
10,000
|
|
.58
|
8/28/17
|
|
|
40,000
|
|
1.00
|
7/2/23
|
|
|
|
30,000
|
1.00
|
7/2/24
|
|
|
|
40,000
|
1.00
|
6/23/25
|
|
|
|
35,000
|
.53
|
7/7/26
|
The
employee stock option plan provides that any options issued
pursuant to the plan for non-director employees will have a
three-year vesting period and for director employees will vest
one-third each year, so long as the optionee continues to be
employed by the Company, and both will expire ten years after the
date of grant.
DIRECTOR COMPENSATION
|
Name(1)
|
Fees
Earned
or Paid
in
Cash
($)
|
Option
Awards
($)
|
All
Other
Compensation
($)
|
Total
($)
|
|
Douglas
H. Coape-Arnold
|
18,000
|
1,400
|
-
|
19,400
|
|
Marcel
Herbst (2)
|
6,935
|
1,400
|
-
|
8,335
|
|
Schuster
Tanger (1)
|
11,065
|
-
|
-
|
11,065
|
(1)
Mr. Tanger resigned
from the board of directors effective July 15, 2016.
(2)
Mr. Herbst replaced
Mr. Tanger on the board of directors effective July 15,
2016.
Each
non-employee director is compensated: $14,000 as an annual retainer
fee paid quarterly; a $1,000 fee for each board of directors
meeting attended; a $1,000 annual fee for each committee on which
such director serves; and a $900 fee for each committee meeting
attended. The directors are all eligible for stock option grants
and are reimbursed for out-of-pocket expenses incurred in
connection with their board service. The board of directors
currently does not have any standing committees.
The
Company does not pay any separate compensation for directors that
are also employees of the Company.
RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
The board of directors has appointed the firm of Somerset CPAs, P.C.
(“Somerset”) as the Company’s independent
registered public accounting firm for 2017. Somerset has served as
the Company’s independent registered public accounting firm
since 2006. Although action by the shareholders in this matter is
not required, the board of directors believes that in light of the critical role played
by the independent registered public accounting firm in maintaining
the integrity of the Company’s financial controls and
reporting, it is a matter of good practice.
In the event our shareholders fail to approve the
proposal to appoint Somerset as the Company’s independent
registered public accounting firm, the board of directors
will reconsider retaining another
firm. Even if the selection is ratified, the
board of directors in its discretion
may direct the appointment of a different independent registered
public accounting firm at any time during the year if it determines
that such a change would be in the best interest of the Company and
our shareholders.
The board of directors recommends a vote “FOR” the
proposal to ratify the selection of Somerset CPAs, P.C. as the
Company’s independent registered public accounting firm for
the year ending December 31, 2017.
INDEPENDENT AUDITOR’S FEES
The
following table presents fees for professional audit services
rendered by Somerset for the audit of our annual financial
statements and review of our quarterly financial statements, and
fees billed for other services rendered by Somerset during 2016 and
2015.
|
|
|
|
|
Audit fees and
review fees (1)
|
$138,750
|
$95,500
|
(1)
Audit fees consist
of fees rendered for professional services rendered by Somerset for
the audit of our financial statements included in our annual
reports on Form 10-K for the years ended December 31, 2016 and
2015, and the review of the unaudited financial statements included
in our quarterly reports on Form 10-Q during 2016 and
2015.
The
engagement of Somerset, for conducting the audit of the
Company’s financial statements for the years ended December
31, 2016 and 2015, and for the review of its financial statements
included in its Form 10-Q’s during 2016 and 2015, was
pre-approved by the Company’s board of directors. Somerset
has not been engaged by the Company to perform any services other
than audits of the financial statements included in its Form 10-Ks
and review of the financial statements in its Form 10-Qs. The board
of directors does not have a pre-approval policy with respect to
work performed by the Company’s independent
auditor.
Representatives of
Somerset are not expected to attend the annual
meeting.
SHAREHOLDER PROPOSALS FOR 2018 ANNUAL MEETING
If a
shareholder wishes to have a proposal included in the
Company’s proxy statement for an annual meeting, the
shareholder must satisfy the requirements established under our
By-Laws and the requirements established by the Securities and
Exchange Commission. Rule 14a-8 under the Securities Exchange Act
of 1934, as amended, requires that shareholders requesting to have
a proposal included in the Company’s proxy statement for an
annual meeting of shareholders must submit their proposal in
writing to the Company at least 120 days before the anniversary
date of the date the Company’s proxy statement was released
to shareholders for the prior year’s annual meeting.
Therefore, any shareholder requesting to submit a proposal for
inclusion in the Company’s proxy statement for the 2018
annual shareholders’ meeting must deliver a proposal to the
Secretary of the Company no later December 29, 2017.
Any shareholder of Noble Roman’s eligible to vote in an
election may also make shareholder proposals and nominations for
the 2018 annual meeting outside of the process described above for
proposals subject to Rule 14a-8. In order to be considered at
the 2018 annual meeting, all shareholder proposals, nominations and
notifications submitted outside of the process described above for
proposals subject to Rule 14a-8 must (1) comply with the procedures
set forth in the Company’s By-Laws, and (2) be delivered to
the Secretary of the Company no earlier than March 9, 2018 and no
later than April 8, 2018.
OTHER MATTERS
The
board of directors does not intend to bring any matters before the
meeting other than as stated in this proxy statement, and the
Company is not aware that any other matters will be presented for
action at the meeting. If any other matters properly come before
the meeting, the persons named in the enclosed form of proxy will
vote the proxy with respect thereto in accordance with their best
judgment, pursuant to the discretionary authority granted by the
proxy. However, consistent with the Company’s By-Laws, the
agenda for this year’s meeting is set and no additional
matters may be submitted for consideration by our shareholders at
the meeting, other than procedural issues such as adjournment,
postponement or continuation. Whether or not you plan to attend the
Meeting in person, please complete, sign, date and return the
enclosed proxy form promptly.
/s/ Paul W.
Mobley
Paul W.
Mobley,
Executive Chairman
and Chief Financial Officer
April
28, 2017
Indianapolis,
Indiana
-15-