UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549


SCHEDULE 14A
 
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934

 

Filed by the Registrant
   
Filed by a Party other than the Registrant
   

Check the appropriate box:

  Preliminary Proxy Statement
  Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
  Definitive Proxy Statement
  Definitive Additional Materials
  Soliciting Material under Rule 14a-12

 

THE JOINT CORP.

(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 the appropriate box):

 

  No fee required.

 

  Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

 

    (1) Title of each class of securities to which transaction applies:
    (2) Aggregate number of securities to which transaction applies:
    (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
    (4) Proposed maximum aggregate value of transaction:
    (5)

Total fee paid:

 

  Fee paid previously with preliminary materials.

 

  Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

 

    (1) Amount Previously Paid:
    (2) Form, Schedule or Registration Statement No.:
    (3) Filing Party:
    (4) Date Filed:

 

 

 

 

 

 

 

 

 

Dear Fellow Stockholders:

Our mission is to improve quality of life through

routine and affordable chiropractic care.

 

Our mission at The Joint Corp. is to improve quality of life for the patients we serve through routine and affordable chiropractic care. We are leaders of a movement to revolutionize access to chiropractic care. We deliver services through our network of retail outlets in 33 states, which approached 600 clinics at December 31, 2020, and were supported by more than 1,650 licensed doctors who performed over eight million chiropractic adjustments in 2020. Our doctors provide patient care focused on pain relief and ongoing wellness to promote healthy, active lifestyles. We are building a consumer brand, positioned on providing accessible, credible and empathetic chiropractic treatment.

 

Our Resilience

 

As I reflect upon the state of the company in a year like no other, I am pleased to report to you our success in managing the impact of the pandemic on our business. We began by issuing our essential healthcare services statement in March 2020, by modifying our system’s sanitation and social distancing procedures, and by supporting our franchisees. Throughout this unpredictable environment, our heroic clinic staff treated our patients. All of this resulted in our strong financial and operating performance in 2020:

 

 

Peter D. Holt

President and

Chief Executive Officer

 

18% year-over-year increase annual system-wide sales1 to $260.0 million for 2020
21% increase in revenue from $48.5 million to $58.7 million in 2020
$2.1 million improvement in operating income from $3.4 million in 2019 to $5.5 million in 2020
$2.9 million improvement in Adjusted EBITDA from $6.2 million in 2019 to $9.1 million in 2020, which was the highest in the company’s history
9% system-wide comp sales2 for 2020
121 franchise licenses sold in 2020, nearly equal to the 126 licenses sold in 2019
70 franchised clinics opened, nearly equal to the 71 opened in 2019
Four company-owned or managed clinics added to our corporate portfolio, including three greenfields and one buyback from a franchisee
579 clinics in operation at December 31, 2020, a net increase of 66 clinics from December 31, 2019

 

The resilience of our business model further validates the opportunity before us for our continued accelerated growth, with the ultimate result of increasing shareholder value. Our mission stated above, along with our vision and values, continue to guide our organization:

 

Our Vision: Be the First Choice in Chiropractic Care

 

Educate consumers on the efficacy of chiropractic care.
Make chiropractic care accessible to everyone.
Offer doctors the most attractive career paths in the profession.
Build a culture committed to improving society through chiropractic care.

 

Our Core Values

 

Trust: We believe in the reliability, truth, and ability of others.
Integrity: We adhere to moral and ethical principles.
Excellence: We continually pursue optimal levels of performance.
Respect: We appreciate the intrinsic value of each individual.
Accountability: We hold ourselves and others responsible.

 

1 System-wide sales include sales at all clinics, whether operated by the company or by franchisees. While franchised sales are not recorded as revenues by the company, management believes the information is important in understanding the company’s financial performance, because these sales are the basis on which the company calculates and records royalty fees and are indicative of the financial health of the franchisee base.

 

2 Comp Sales refers to the amount of sales a clinic generates in the most recent accounting period, compared to sales in the comparable period of the prior year, and (i) includes sales only from clinics that have been open at least 13 full months and (ii) excludes any clinics that have closed.

 

 

 

 

Our 2020 Operational Highlights

 

Asserting the position that chiropractic care is an essential healthcare service was a critical point of differentiation versus other retail service concepts. This message served as a rallying cry for our doctors and staff that helped guide our approach to the pandemic – that, now more than ever, we need to be open to treat our patients.

 

Providing an essential healthcare service is also reflected in our marketing communications. Through video and blogs, emails and texts, as well as clinic signage and public relations, we increased the frequency of our communication – to reassure our patients that we remained open and were taking the necessary precautions to ensure their safety. With so many consumers facing anxiety related to their health and finances, we recognized that accessible, affordable chiropractic care was more important than ever. So, in March and April 2020, we made it easier for members to freeze their accounts. And, in May and June, we conducted two important promotions to provide patients with more opportunities to obtain the care they need.

 

Our May direct marketing promotion encouraged members to unfreeze their accounts in exchange for an incentive on their first month back. We moved more than 20% of our frozen members to active status during this month-long promotion. In June, our national marketing promotion offered every new patient the opportunity to get moving with chiropractic care at no charge for their initial visit. During the month, we gave away over $1.7 million of chiropractic care supporting our communities and driving new patient acquisition. We converted those patients to packages and memberships at record levels, which underscores the considerable demand for chiropractic care. As a result, by the end of the promotion, our average number of members per clinic – which is one of the most important clinic performance metrics – surpassed our all-time record, including anything pre-COVID.

 

In the fourth quarter of 2020, we held our two annual holiday promotions: our “Black Friday” package sale and our “Year-End” membership promotion. As our clinic teams were highly engaged, both events greatly exceeded our previous records: “Black Friday” sales per clinic were up 98% and “Year-End” sales per clinic grew 42%, compared to 2019. Continued sales growth and clinic expansion also have increased the contributions to our national marketing fund. We are investing these resources into new strategic partnerships to fuel long-term growth. In 2020, we amplified our public relations efforts to build our national profile and grow awareness of chiropractic care. In 2021, we plan to leverage additional media and creative experts to elevate our brand advertising.

 

Our regional developer (RD) program, a key component of our clinic expansion strategy, continues to flourish. In 2020, our RDs were responsible for 83% of the 121 franchise licenses sold. During the year, we entered into or expanded RD agreements for Iowa, Nebraska, South Dakota, Illinois and Wisconsin, increasing our ability to open clinics and serve these communities more quickly. Also, based on unique circumstances, we repurchased the RD rights of two mature territories: North Carolina on December 31, 2020 and Georgia on January 1, 2021. By shifting management of these clinics from RDs to corporate, we will reduce aggregate costs of operation in these established regions. As such, these transactions were immediately accretive and expanded our margin contribution.

 

Regarding our company-owned or managed clinics, we refined our leadership team and implemented a new field structure. As a result, in 2020, we significantly improved our corporate portfolio performance and increased our flexibility as conditions changed over time. As we managed the immediate impact of the pandemic and focused on helping our franchise community, we paused our clinic expansion and efforts to replace our homegrown IT system.

 

During the year, we resumed corporate clinic expansion, opening three greenfields and acquiring one previously franchised clinic. In total, our corporate portfolio reached 64 clinics at December 31, 2020. Although new greenfield clinics initially suppress the total company earnings, in the long run they are expected to be accretive. In 2021, we plan to accelerate opening corporate greenfield clinics strategically located within our clusters and new markets and continue to opportunistically repurchase franchised clinics.

 

Regarding IT, in 2021, we expect to rollout our new platform, named Axis. When fully implemented, Axis will provide improved point of sale service, financial systems, business intelligence, marketing automation and patient feedback capabilities among its many other features. It is imperative that the new platform be fully tested and that every franchisee is prepared and trained for acceptance of the new system. As we complete this crucial project, we will not jeopardize it by rushing or short-cutting the process to meet an artificial timeline. As of this writing, we are in QA and testing and expect the rollout to occur in early summer of 2021.

 

 

 

 

Our Long-term Growth

 

Our remarkable team, coupled with our resilient business model, delivered our most profitable year in our history. Our confidence in the long-term prospects of our business is strengthened. We will continue to work toward our goal of opening 1,000 clinics in operation by the end of 2023. Upon reaching this tipping point for franchise systems, we expect to see even greater growth momentum. To achieve this, we will

 

Continue our focus on franchise sales and clinic expansion;
Further leverage our regional developer strategy; and
Accelerate the expansion of our corporate clinic portfolio.

 

Our Commitment to Sound Corporate Governance

 

Speaking for management and our Board of Directors, I reiterate that we are committed to expert, objective, proactive administration on behalf of our stockholders to drive long-term value. We continue to closely examine the strategic needs of our organization and actively manage the evolution of our Board leadership to meet our emerging requirements. Heeding our core value of excellence, we strive for continuous improvement in all we do. We are resolute in advancing our governance structure as our company, our industry and our stockholder base grow. You can rely on our dedication to accountability and clear communication with stockholders as a key element of our governance processes.

 

Our Exciting Future and Your Support

 

With the Board’s guidance, we are more committed than ever before to our mission and vision. We are more focused on our patients. We are more aligned with franchisees and company employees. And, we are better positioned to deliver operational excellence at great clinics that satisfy patients today and over the years to come. The confidence that you have placed in us is humbling and gratifying as we continue to build The Joint brand and revolutionize access to chiropractic care across this nation.

 

The health and safety of our shareholders and employees is of utmost importance to us. Due to the ongoing pandemic, we ask again that you seriously consider not attending our annual meeting in person. In lieu of in-person attendance, we request that you promptly return your proxy as described in the proxy materials provided to you. Your voice matters, and we encourage you to vote at your earliest convenience. We appreciate your cooperation and support during these unusual and challenging times. We look forward to seeing you in person at next year's annual meeting.

 

 

Peter D. Holt

President and Chief Executive Officer

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2020 Financial Highlights

 

The Joint, overcoming the impact of the pandemic, reported strong results in 2020 and the most profitable year in its history. For 2020, The Joint reached another record level for system-wide sales, delivered steady annual same-store sales growth and generated $11.2 million of cash from operations. These achievements reflect the company business model’s resiliency and the validation of future opportunities and growth.

 

Opened 66 net new clinics, net Improved operating income by Expanded corporate clinic
bringing total to 579 $2.1 million to $5.5 million portfolio by four
     
Increased system-wide sales by Sold 121 franchise licenses in 2020, Improved cash flow from
18% to $260.0 million nearly equal to 126 in 2019 operations by $3.7 million to $11.2 million

 

 

 

 

1 Comp sales refers to the amount of sales a clinic generates in the most recent accounting period, compared to sales in the comparable period of the prior year, and (i) includes sales only from clinics that have been open at least 13 full months and (ii) excludes any clinics that have closed.

 

2 IBIS US Industry Report, Chiropractors in the US, April 2020 -CAGR projected 2020-2025.

 

 

 

 

 

 

16767 N. Perimeter Drive, Suite 110

Scottsdale, AZ 85260

 

NOTICE OF 2021 ANNUAL MEETING OF STOCKHOLDERS

TO BE HELD ON MAY 28, 2021

 

Dear Stockholder:

 

We are writing today concerning the upcoming 2021 Annual Meeting of Stockholders (the “Annual Meeting”), which will be held on Friday, May 28, 2021, at 10:00 a.m. Mountain Standard Time.

 

At the Annual Meeting, you will be asked to consider and vote on the following items:

 

·the election to the Board of the seven nominees for director named in this proxy statement;
·approval, on an advisory basis, of the compensation of our named executive officers;
·ratification of the appointment of BDO USA, LLP as our independent registered public accounting firm for the year ending December 31, 2021; and
·any other matter that properly comes before the meeting.

 

Only stockholders of record at the close of business on the record date of April 14, 2021 are entitled to vote at the Annual Meeting.

 

If you need directions to the meeting, please call Investor Relations at (480) 245-5960.

 

Due to the continued ongoing pandemic, we ask that you seriously consider not attending the annual meeting in person again this year. Therefore, we ask that you promptly return your proxy as described in the proxy materials provided to you. For the convenience of our stockholders of record who do not plan to attend the Annual Meeting in person, but who want their shares voted, we have enclosed a proxy card. If you do not plan to attend the Annual Meeting, please complete and return the proxy card in the envelope provided. If you return your proxy card and later decide to attend the Annual Meeting in person, or if for any other reason you want to revoke your proxy, you may do so at any time before your proxy is voted. If you hold your shares through a broker, bank, or other nominee, please see the instructions in the General Information section on how to vote your shares, either by written instruction or in person at the meeting. Please read carefully the enclosed information and our 2020 Annual Report, which includes our Form 10-K for the year ended December 31, 2020, before voting your proxy. This proxy statement and annual report are also available for your review at www.cstproxy.com/thejoint/2021.

 

This proxy statement and accompanying materials are first being made available to stockholders on or about April 23, 2021.

 

By Order of the Board of Directors,

 

 

Craig Colmar

Secretary

Scottsdale, Arizona

April 23, 2021

 

 

 

 

 

 

Table of Contents   Page
PROXY SUMMARY INFORMATION   1 
PROXY STATEMENT   2 
EXPLANATORY NOTE   2 
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT   2 
PROPOSAL 1 - ELECTION OF DIRECTORS   4 
Nominees for Director   4 
Director Qualifications   12 
Committees of the Board   14 
Compensation Committee   14 
Audit Committee   14 
Nominating and Governance Committee   15 
Committee Charters   16 
Committee Members and Meetings   17 
Director Compensation   18 
Corporate Governance   19 
Executive Sessions of the Board   19 
Board Evaluation   19 
Related Party Transactions   19 
Communications with the Board   20 
Risk Oversight   20 
Leadership Structure of the Board of Directors   20 
Stock Ownership Guidelines   21 
AUDIT COMMITTEE REPORT   22 
Executive Officers   23 
EXECUTIVE COMPENSATION   24 
Summary Compensation Table   24 
Employment Agreements and Change in Control Arrangements   24 
Outstanding Equity Awards at 2020 Year-End   26 
Equity Compensation Plan Information   27 
PROPOSAL 2 – ADVISORY VOTE ON EXECUTIVE COMPENSATION   28 
PROPOSAL 3 – RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTING FIRM    28 
Audit Fees   29 
Audit-Related Fees   29 
Tax Fees   29 
All Other Fees   29 
GENERAL INFORMATION   31 
ANNUAL REPORT   34 
HOUSEHOLDING OF PROXY MATERIALS   34 
OTHER MATTERS   34 
STOCKHOLDER PROPOSALS AND NOMINATIONS FOR THE 2022 ANNUAL MEETING   34 
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE   35 

 

 

 

 

 

 

SUMMARY INFORMATION

 

This summary highlights information contained elsewhere in this proxy statement. It does not contain all information that you should consider, and you should read the entire proxy statement carefully before voting.

 

Annual Meeting of Stockholders

 

Time and Date: Friday, May 28, 2021, at 10:00 a.m. Mountain Standard Time
Place: 16767 N. Perimeter Drive, Suite 110, Scottsdale, Arizona 85260
Record Date: April 14, 2021
Voting: Stockholders as of the record date are entitled to vote.

 

Items of Business and Voting Recommendations

 

  Agenda Item  

Board Recommendation

  Page
           
1. Election of seven directors   FOR EACH NOMINEE   4
           
2. Approval, on an advisory basis, of the compensation of our named executive officers  

FOR

 

28

           
3. Ratification of the appointment of BDO USA, LLP as our independent registered public accounting firm for 2021   FOR   28

 

Board Nominees

 

The following table provides summary information about the nominees for director. Each director is elected by a majority of votes cast.

 

Nominee

 

Age

 

Director

Since

 

 

Principal Occupation

  Committees
Matthew E. Rubel   63   2017   Chair of The Executive Board MidOcean Partners Private Equity Consumer Group; Chair, CEO Empower SPAC; current director of TreeHouse Foods, Inc.; former director of Hudson’s Bay Company and HSNi; former President and CEO of Varsity Brands, Inc.; former Chair and CEO of Collective Brands, Inc. and Cole Haan, Inc.; former Senior Advisor with Roark Capital Group & TPG Capital, L.P.  

● Compensation

● Nominating and Governance

James H. Amos, Jr.   75   2015   Current director of ASP UPF Holdings LP and subsidiaries, owns and operates 170 Planet Fitness Gyms under franchise agreements with Pla-Fit Franchise LLC; current Chair of the advisory board of APFI, Procter and Gamble’s franchising initiative; former Chair and Chief Executive Officer of Mail Boxes, Etc.; former Chair of the International Franchise Association  

● Nominating and Governance(Chair) ·

● Audit

Ronald V. DaVella   63   2014   Chief Financial and Operating Officer, AURA Ventures; current director of Delta Dental of Arizona; current director of Mobile Holding Properties, LLC; current director of NorthStar Security Holdings; former Audit Partner, Deloitte & Touche LLP; former Executive Vice President of Finance, The Alkaline Water Company; former Chief Financial Officer of Nanoflex Power Corporation; former Chief Financial Officer of Amazing Lash Studio LLC  

● Audit (Chair)

● Nominating and Governance

Suzanne M. Decker   59   2017   Current Executive Project Sponsor and former Chief Human Resources Officer for Aspen Dental Management, Inc.; current director of Refresh Mental Health   ● Compensation (Chair)
Peter D. Holt   62   2016   President and Chief Executive Officer, The Joint Corp.    
Abe Hong   49   2018   Chief Operations Officer, Technologent; former Executive Vice President & Chief Information Officer at Discount Tire Company    ● Compensation
Glenn J. Krevlin   61   2019   Founder, Managing Partner, Principal and Portfolio Manager of Glenhill Capital Advisors LLC; current director of Centric Brands, Inc. and Design Within Reach, Inc., and former director of Restoration Hardware, Inc.   ●  Audit

 

 1 

Table of Contents 

 

 

16767 N. Perimeter Drive, Suite 110

Scottsdale, AZ 85260

 

PROXY STATEMENT

 

2021 Annual Meeting of Stockholders

To Be Held on May 28, 2021

 

EXPLANATORY NOTE

 

We are a “smaller reporting company” under Item 10 of Regulation S-K promulgated under the Securities Exchange Act of 1934 and have elected to comply with certain of the requirements applicable to smaller reporting companies in connection with this proxy statement. As a smaller reporting company, we provide in this proxy statement the scaled disclosure permitted under Regulation S-K. We may choose to take advantage of some but not all of these reduced disclosure requirements until we are no longer a smaller reporting company. We will remain a smaller reporting company as long as (a) our public float is below $250 million or (b) our annual revenues are below $100 million for the last completed fiscal year and our public float is below $700 million as of the last business day of the second fiscal quarter of the most recently completed fiscal year.

 

In this proxy statement, “we,” “us,” “our” and the “Company” all refer to The Joint Corp.

 

SECURITY OWNERSHIP OF CERTAIN

BENEFICIAL OWNERS AND MANAGEMENT

 

The following table sets forth information regarding beneficial ownership of our common stock outstanding as of April 14, 2021, by:

 

·each person, or group of affiliated persons, known by us to beneficially own more than 5% of our common stock;
·each of our directors;
·each of our named executive officers; and
·all of our directors and executive officers as a group.

 

The percentage ownership information shown in the table is based upon 14,257,486 shares of common stock outstanding as of April 14, 2021. Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission (SEC). To calculate a stockholder's percentage of beneficial ownership, we include in the numerator and denominator those shares underlying options that are vested or that will vest within 60 days of April 14, 2021. Options held by other stockholders, however, are disregarded in the calculation of beneficial ownership. Therefore, the denominator used in calculating beneficial ownership among our stockholders may differ.

 

Unless otherwise indicated, the persons or entities identified in this table have sole beneficial ownership with respect to all shares shown as beneficially owned by them, subject to applicable community property laws.

 

Except as otherwise noted below, the address for each person or entity listed in the table is c/o The Joint Corp., 16767 N. Perimeter Drive, Suite 110, Scottsdale, AZ, 85260.

 

 2 

Table of Contents 

 

    Number of Shares Beneficially Owned   Percentage of Shares
Named Executive Officers and Directors        
Matthew E. Rubel   14,599   *
James H. Amos, Jr.   96,944   *
Ronald V. DaVella   27,182   *
Suzanne M. Decker   20,599   *
Peter D. Holt   281,010   1.9%
Abe Hong   10,649   *
Glenn J. Krevlin   129,314   *
Jake Singleton   89,626   *
Named executive officers and directors as a group (8 persons)   669,923   4.6%
Beneficial holders of 5% or more of our outstanding common stock        
Bandera Partners LLC (1)   1,682,312   11.8%
BlackRock Fund Advisors (2)   1,002,072   7.0%
SW Investment Management, LLC (3)   865,000   6.1%

 

*       Less than 1% of our shares

(1)Based on Schedule 13G/A filed by Bandera Partners LLC, Gregory Bylinsky, and Jefferson Gramm with the SEC on February 12, 2021. The Schedule 13G/A was filed with respect to 1,682,312 shares (the “Master Fund’s Shares”) directly held by Bandera Master Fund L.P., a Cayman Islands exempted limited partnership (“Bandera Master Fund”). Bandera Partners is the investment manager of Bandera Master Fund and may be deemed to have beneficial ownership over the Master Fund’s Shares by virtue of the sole and exclusive authority granted to Bandera Partners by Bandera Master Fund to vote and dispose of the Master Fund’s Shares. Mr. Bylinsky and Mr. Gramm are Managing Partners, Managing Directors and Portfolio Managers of Bandera Partners. The address reported in the Schedule G/A is 50 Broad Street, Suite 1820, New York, New York 10004.

 

(2)Based on Schedule 13G/A filed by BlackRock Inc. with the SEC on January 29, 2021. This beneficial holder has the sole power to vote or to direct the vote of 977,209 shares and sole power to dispose or to direct the disposition of 1,002,072 shares. The address reported in the Schedule 13 G/A is 55 East 52nd Street, New York, NY 10055.

 

(3)Based on Schedule 13G/A filed by SW Investment Management LLC. with the SEC on February 12, 2021. This beneficial holder has the sole power to vote or to direct the vote of 865,000 shares and sole power to dispose or to direct the disposition of 865,000 shares. The address reported in the Schedule 13 G/A is 737 N. Michigan Ave., Suite 2250 Chicago, Illinois 60611.

 

 

 

 

 

 

 

 3 

Table of Contents 

 

PROPOSAL 1

 

ELECTION OF DIRECTORS

 

Our Board of Directors is currently composed of seven directors. With the exception of Peter D. Holt, our President and Chief Executive Officer, all of our directors are outside directors (i.e., directors who are neither officers nor employees of ours).

 

Our common stock is listed on The NASDAQ Capital Market, and accordingly, we have used the definition of “independence” of the NASDAQ Stock Market to determine whether our directors are deemed to be independent. Based on that definition, we have determined that, with the exception of Peter D. Holt, our President and Chief Executive Officer, all of our directors are independent.

 

Each director elected at the Annual Meeting will hold office until our annual meeting of stockholders in 2022 or until his or her successor is elected and qualified.

 

The election of directors is uncontested.

 

Voting in Uncontested Director Election

 

Under our bylaws, each director shall be elected by the vote of a majority of the votes cast in an uncontested election (an election in which the number of nominees for election is the same as the number of directors to be elected). In other words, the nominee must receive more “for” votes than “against” votes, with abstentions and broker non-votes not having any effect on the voting.

 

If a nominee for election as a director is an incumbent director and the nominee is not re-elected, Delaware law provides that the director continues to serve as a “holdover” director until his successor is elected and qualified or until he or she resigns. Under our bylaws, if an incumbent director is not re-elected, the director shall tender his or her resignation to the board of directors. The Nominating and Governance Committee shall make a recommendation to the Board whether to accept or reject the director’s resignation or whether other action should be taken. The Board shall act on the Committee's recommendation and publicly disclose its decision and the rationale behind it within 90 days from the date of certification of the election results. The director who tendered his or her resignation shall not participate in the Committee’s deliberations (if he or she is a member of the Committee) or in the Board’s decision.

 

Nominees for Director

 

The following table provides information about the nominees for election as directors.

 

Nominee

Position with the Company

Age

Matthew E. Rubel Lead Director 63
James H. Amos, Jr. Director 75
Ronald V. DaVella Director 63
Suzanne M. Decker Director 59
Peter D. Holt President, Chief Executive Officer and Director 62
Abe Hong Director 49
Glenn J. Krevlin Director 61

 

 

 4 

Table of Contents 

 

 

 5 

Table of Contents 

 

 

 6 

Table of Contents 

 

 

 7 

Table of Contents 

 

 

 8 

Table of Contents 

 

 

 9 

Table of Contents 

 

 

 10 

Table of Contents 

 

 

 11 

Table of Contents 

 

Director Qualifications

 

We believe that our seven director nominees possess the experience, qualifications and skills that warrant their election as directors. Our directors have in common, among other qualities, a breadth of business experience, seasoned judgment and an insistence on looking beyond the next quarter or the next year in directing and supporting our management. From their service in management, on the boards of other public and private companies, and in counseling other companies and their directors, our directors also bring to us the insights that they gain from the operating policies, governance structures and growth dynamics of these other companies. One of our director nominees self-identifies as female, one as Asian and four as Caucasian. Two of our director nominees declined to self-identify as to their ethnicity, gender or LGBTQ+ status.

 

The Board regularly reviews the skills, experience and background that it believes are desirable to be represented on the Board.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 12 

Table of Contents 

 

 

 13 

Table of Contents 

 

The Board of Directors recommends that stockholders vote “FOR” each of the seven nominees to the Board.

 

Committees of the Board

 

Our Board of Directors has standing Compensation, Audit, and Nominating and Governance Committees. All of the members of each committee are outside directors who are independent under the applicable listing standards of the NASDAQ Capital Market.

 

Compensation Committee

 

The Compensation Committee is responsible for, among other things, determining the cash compensation and equity compensation of our executive officers, subject to the review of our full Board of Directors and approval by the Board in the case of cash compensation only. On an annual basis, the Committee reviews the respective salaries of our executive officers in light of the goals and objectives relevant to each officer, including, as the Committee deems appropriate, consideration of (i) the individual officer’s position, scope of responsibilities and level of experience, (ii) the rate of inflation, (iii) the range of salary increases for our employees generally, and (iv) the salaries paid to comparable officers in comparable companies. On an annual basis, the Committee also determines appropriate cash bonuses, if any, for the Company’s executive officers (based upon an applicable percentage of base salary as determined by the Committee), after consideration of specific individual and Company performance goals and criteria. Furthermore, the Committee grants stock awards under the stock plan to our executive officers and other employees and determines the terms, conditions, restrictions and limitations of the awards granted. In this regard, the number of shares of stock for which awards are granted are based on, as the Committee deems appropriate, each individual’s position and our financial performance, the Committee’s assessment of the individual’s performance, initiative, contribution to our success and total compensation package. The Compensation Committee has the sole authority, at our expense, to select, retain, compensate and oversee any compensation consultant to be used to assist in its evaluation of the compensation of our directors and executive officers. The Committee also has the authority to obtain legal counsel, accountants, and other advisers of its choice to further assist the Compensation Committee in connection with its functions and to set the compensation and oversee the work of such advisers.

 

In 2021, the Compensation Committee engaged the consulting firm of Korn Ferry to evaluate the compensation packages for our leadership team, including our executive officers. In its report, Korn Ferry compared pay levels for our executive officers against data from Korn Ferry’s survey database of executive compensation and from proxies of peer group companies. The comparison data consisted of base salary, targets for short-term incentives, targets for total cash compensation, long-term incentives and target total direct compensation. The report then determined for each category the percentile into which our executive officers’ compensation fell relative to the executive officers of comparable companies. The Compensation Committee used these data, along with the Board of Director’s assessments of the performance of our executive officers, to determine our executive officers’ compensation packages. Additionally, the Compensation Committee considered recommendations made by Mr. Holt regarding Mr. Singleton’s compensation package.

 

Our directors determine the compensation that they receive for their services as directors of the Company. In doing so, they consider the compensation directors receive for their service at companies that are comparable to the Company. The Board of Directors kept their 2020 compensation at 2019 levels, primarily because of issues presented by the COVID-19 pandemic.

 

Audit Committee

 

The Audit Committee has been established in accordance with Section 3(a)(58)A of the Securities Exchange Act of 1934. The Audit Committee oversees our accounting and financial reporting processes and the integrity of our financial statements. The Audit Committee’s responsibilities also include oversight of our internal accounting and financial controls, the qualifications and independence of our independent accountants, and our compliance with legal and regulatory requirements. In addition, the Audit Committee is responsible for reviewing, setting policy regarding and evaluating the effectiveness of our processes for assessing significant risk exposures and the measures that management has taken to minimize such risks. In carrying out these responsibilities, the Audit Committee is charged with, among other things: appointing, replacing, compensating, retaining, evaluating, terminating and overseeing our independent registered public accounting firm; discussing with our independent registered public accounting firm their independence from management; reviewing with our independent registered public accounting firm the scope and results of their audit; approving all audit and permissible non-audit services to be performed by our independent registered public accounting firm; discussing with management and our independent registered public accounting firm the interim and annual consolidated financial statements that we file with the SEC; reviewing periodically with our counsel and/or principal regulatory compliance officer any legal and regulatory matters that may have a material adverse effect on our financial statements, operations, compliance policies and programs; reviewing and approving procedures for the confidential anonymous submission of concerns regarding questionable accounting, internal controls or auditing matters; reviewing and approving related person transactions; annually reviewing the Audit Committee charter and the Audit Committee’s performance; and handling such other matters that are specifically delegated to the Audit Committee by our Board of Directors from time to time.

 

 14 

Table of Contents 

 

Nominating and Governance Committee

 

The Nominating and Governance Committee is responsible for overseeing our corporate governance guidelines and reporting and making recommendations to the Board of Directors concerning corporate governance matters and the structure, composition and function of the Board of Directors and its committees.

 

The Nominating and Governance Committee is also responsible for developing and recommending to the Board of Directors criteria for identifying and evaluating candidates for directorships and making recommendations to the full Board regarding candidates for election or reelection to the Board of Directors at each annual stockholders’ meeting.

 

The Nominating and Governance Committee endeavors to select nominees that possess certain basic personal and professional qualities that are necessary in order to properly discharge their fiduciary duties to stockholders, provide effective oversight of management, and monitor adherence to principles of sound corporate governance. With limited exceptions, the Committee believes that all persons nominated to serve as director should possess certain minimum qualifications consisting of:

 

·integrity and ethical character and an appreciation of these qualities in others,
·an absence of conflicts of interest,
·the ability to provide fair and equal representation of all stockholders,
·demonstrated achievement in one or more fields of business, professional, governmental, communal, scientific or educational endeavor,
·sound judgment, resulting from management or policy-making experience, that demonstrates an ability to function effectively in an oversight role,
·business understanding, with a general appreciation of major issues facing public companies of a size and operational scope similar to ours,
·available time to devote to the business of the Board of Directors and its committees,
·competencies and skills which are complementary to those of the existing members of the Board, which skills should include experience in one or more of the following areas: franchising, small box retail, company governance, management, financial matters, marketing and branding, real estate, technology, strategy, risk management and legal affairs, and
·professional background, experience, expertise, perspective, age, gender, ethnicity and country of citizenship which will promote diversity on the Board of Directors.

 

We are of the view that the continuing service of qualified incumbents promotes stability and continuity in the board room, contributing to the Board of Director's ability to work as a collective body, while giving us the benefit of the familiarity and insight into our affairs that our directors have accumulated during their tenure. Accordingly, the process of the Nominating and Governance Committee for identifying nominees reflects the practice of re-nominating incumbent directors who continue to satisfy the Committee's criteria for membership on the Board and whom the Committee believes continue to make important contributions to the Board. Consistent with this policy, in considering candidates for election at annual meetings of stockholders, the Committee will first determine the incumbent directors whose terms expire at the upcoming meeting and who wish to continue their service on the Board. The Committee will then evaluate their qualifications and performance, and if the Committee determines that an incumbent director continues to be qualified and has satisfactorily performed his or her duties during the preceding term, the Committee will propose the incumbent director for re-election, absent special circumstances.

 

The Committee will identify and evaluate new candidates for election to the Board in order to fill vacancies on the Board when there is no qualified and available incumbent. In evaluating new candidates, the Committee will consider whether the candidates meet the minimum qualifications discussed above. These qualifications include consideration as to whether and how the candidate would contribute to the Board’s diversity, defined broadly to include gender and ethnicity as well as background and experience. The Committee will solicit recommendations for nominees from persons that the Committee believes are likely to be familiar with qualified candidates, which may include current Board members and management, and the Committee has the authority to retain a professional search firm for assistance if appropriate. The Committee will consider candidates proposed by stockholders and will evaluate any candidate proposed by a stockholder using the same criteria used to evaluate any other candidate, except that the Committee may consider, as one of the factors in its evaluation of stockholder-recommended nominees, the size and duration of the interest of the recommending stockholder in our equity. The Committee may also consider the extent to which the recommending stockholder intends to continue holding its interest, including, in the case of nominees recommended for election at an annual meeting, whether it intends to continue holding its interest at least through the time of such annual meeting.

 

 15 

Table of Contents 

 

Procedures for Submitting Stockholder-Recommended Nominees. Any stockholder who wants to propose a candidate should submit a written recommendation to the Nominating and Governance Committee indicating the candidate’s qualifications and other relevant biographical information and providing preliminary confirmation that the candidate would be willing to serve as a director. Any such recommendation should be addressed to the Board of Directors, The Joint Corp., 16767 N. Perimeter Drive, Suite 110, Scottsdale, Arizona 85260.

 

In addition to recommending director candidates to the Nominating and Governance Committee, stockholders may also, pursuant to procedures established in our bylaws, directly nominate one or more director candidates to stand for election at an annual meeting of stockholders. A stockholder wishing to make such a nomination must deliver written notice of the nomination to the secretary of the Company not less than 90 days nor more than 120 days prior to the first anniversary of the preceding year’s annual meeting of stockholders. If, however, the date of the annual meeting is more than 30 days before or after the first anniversary, the stockholder’s notice must be received no later than the close of business on the 90th day, and no earlier than the 120th day, prior to the annual meeting.

 

Stockholders may also submit director nominees to the Board to be included in our annual proxy statement, known as “proxy access.” Stockholders who intend to submit director nominees for inclusion in our proxy materials for the 2022 Annual Meeting of Stockholders must comply with the requirements of proxy access as set forth in our bylaws. The stockholder or group of stockholders who wish to submit director nominees pursuant to proxy access must deliver the required materials to the Company not less than 120 days nor more than 150 days prior to the anniversary of the date that the Company first mailed its proxy materials for the annual meeting of the previous year.

 

Committee Charters

 

The charters of the Audit, Compensation, and Nominating and Governance Committees are available on our website https://ir.thejoint.com/governance-docs.

 

 

 

 

 

 

 

 

 

 

 

 

 

 16 

Table of Contents 

 

Committee Members and Meetings

 

The following tables provide information about the membership of the committees of the Board of Directors during 2020:

 

 

 

(1)The Board of Directors has determined that all members of the Audit Committee are audit committee financial experts as described in the applicable rules of the U.S. Securities and Exchange Commission and are independent under the applicable listing standards of the NASDAQ Capital Market.

 

Our Board of Directors held twelve meetings by teleconference or in person during 2020 and acted without a formal meeting on a number of occasions by the unanimous written consent of the directors. The Audit Committee held four meetings during the year, the Compensation Committee held four meetings during the year, and the Nominating and Governance Committee held four meetings during the year.

 

All of our directors participated by teleconference or in person in all of the meetings of the Board of Directors during 2020, with the exception of one director missing three meetings. All of the members of the Audit, Compensation, and Nominating and Governance Committees participated by teleconference or in person in all of the meetings of those committees during the year, with the exception of one director missing one Compensation Committee meeting.

 

One board member attended our 2020 annual meeting of stockholders.

 

 17 

Table of Contents 

 

Director Compensation

 

The following table sets forth compensation paid to our non-employee directors for the year ended December 31, 2020:

 

Name

Fees Earned or Paid

in Cash

Stock(1)(2)

Awards

 

 

Option Awards

 

Non-Equity Incentive Plan

Compensation

Nonqualified Deferred Compensation

Earnings

All Other

Compensation

Total
Matthew E. Rubel $50,000 $40,000 $  -   $  -   $  -   $  -   $90,000
James H. Amos, Jr.  45,000  40,000     -       -       -       -    85,000
Ronald V. DaVella  52,500  40,000     -       -       -       -    92,500
Suzanne M. Decker  45,000  40,000     -       -       -       -    85,000
Abe Hong  45,000  40,000     -       -       -       -    85,000
Glenn J. Krevlin  40,000  40,000     -       -       -       -    80,000

 

(1)The amounts in this column represent the aggregate grant date fair value of stock awards granted to the director in the applicable fiscal year, computed in accordance with FASB ASC Topic 718. For a discussion of the assumptions used in reaching this valuation, see “Restricted Stock” in Note 8 to our audited financial statements included in our annual report on Form 10-K for the year ended December 31, 2020.
(2)The aggregate number of unvested stock awards outstanding at December 31, 2020, held by each non-employee director was as follows: Mr. Rubel – 2,647; Mr. Amos – 2,647; Mr. DaVella – 2,647; Ms. Decker – 2,647; Mr. Hong – 2,647; and Mr. Krevlin – 2,647.

 

In 2020, each director who was not also one of our employees, upon election or re-election to the Board of Directors, received a fee of $40,000 per year. Each non-employee director, upon his or her election or re-election as a director, also received that number of restricted shares equal to $40,000, divided by the closing price of our stock on the election date. This restricted stock was granted under The Joint Corp. 2014 Stock Plan and will vest on the earlier of (i) one year from the grant date and (ii) the date of the next annual meeting of the shareholders of the Company occurring after the date of grant. In addition to the compensation described above, each committee chair received an annual committee chair stipend in the following amount:

 

·Audit Committee chair: $7,500
·Compensation Committee chair: $5,000
·Nomination and Governance Committee chair: $5,000

 

Our lead director received an annual stipend in the amount of $10,000. The Board of Directors formed a special Information Technology Committee to oversee the selection, development and implementation of our new IT platform. The members of this committee received a stipend in the amount of $5,000. All fees payable to directors are payable quarterly.

 

All of our non-employee directors are reimbursed for reasonable out-of-pocket expenses incurred in attending meetings of the Board of Directors or the committees thereof and for other expenses reasonably incurred in their capacity as directors.

 

 

 

 

 

 

 

 18 

Table of Contents 

 

CORPORATE GOVERNANCE

 

Executive Sessions of the Board

 

Our Board of Directors excuses Mr. Holt, our President and Chief Executive Officer, as well as any of our other executive officers who may be present by invitation, from a portion of each meeting of the Board in order to allow the Board to review Mr. Holt’s performance as President and Chief Executive Officer and to enable each director to raise any matter of interest or concern without the presence of management.

 

Board Evaluation

 

Our directors annually review the performance of the Board of Directors and its committees and the performance of their fellow directors. Typically, this is done through the completion by the directors of confidential evaluation forms, the results of which are provided to the Chair of the Nominating and Governance Committee. At a subsequent meeting of the Board, the Chair of the Nominating and Governance Committee leads a discussion with the full Board of any issues and suggestions for improvement identified in these evaluation forms.

 

Required Resignation on Change of Job Responsibilities

 

The Board of Directors has adopted a written policy that a director must tender his or her resignation if the director (i) changes his or her employer or otherwise has a significant change in job responsibilities, (ii) accepts or intends to accept a directorship with another company (or with any other organization that would require a significant time commitment) or (iii) in the case of a director who is an employee of the Company, retires or otherwise terminates active employment with the Company. The Nominating and Governance Committee will then evaluate the circumstances of the director’s new position and recommend to the full Board whether to accept or reject the director’s resignation in light of whether the director continues to satisfy the Board’s membership criteria and whether continued service on the Board is appropriate.

 

Related Party Transactions

 

The Board of Directors has adopted a written policy requiring certain transactions with related parties to be approved by the Audit Committee. A related party includes any director or executive officer, 5% or greater stockholders, or the immediate family members of the foregoing for purposes of this policy. The transactions subject to review include any transaction, arrangement or relationship (or any series of similar transactions, arrangements and relationships) in which (i) we or one of our subsidiaries will be a participant, (ii) the aggregate amount involved exceeds $100,000 (or for so long as we are a smaller reporting company, if 0.8% of the average of our total assets at the end of the last two fiscal years is less than $100,000, such lesser amount) and (iii) a related party will have a direct or indirect interest. The Audit Committee will consider the benefits to us of the proposed transaction, the potential effect of the proposed transaction on the director’s independence (if the related party is a director), and the terms of the proposed transaction and whether those terms are comparable to the terms available to an unrelated third-party or to employees generally in reviewing the proposed transaction with related parties.

 

In December 2020, the Company sold two franchise licenses to Marshall Gramm, who is a family member of the Managing Partner of Bandera Partners LLC. Bandera Partners LLC is a beneficial holder of more than 5% of our outstanding common stock as of December 31, 2020 (approximately 12% as of December 31, 2020). The transaction involved terms no less favorable to the Company than those that would have been obtained in the absence of such affiliation. Amounts received from Mr. Gramm were $71,800 of which $71,494 was recorded as deferred revenue as of December 31, 2020. Although the Company has no way of estimating the aggregate amount of franchise fees, royalties, advertising fund fees, IT related income and computer software fees that Mr. Gramm will pay over the life of the franchise licenses, Mr. Gramm will be subject to such fees under the same terms and conditions as all other franchisees.

 

Anti-Hedging Policy

 

Our directors and executive officers are prohibited from (i) short selling our securities, including short sales “against the box”; (ii) hedging transactions or monetizing transactions that are designed to hedge or offset decreases in the price of our securities; (iii) publicly traded option transactions, including puts and calls, and other derivative securities related to Company securities; or (iv) holding our securities in a margin account or otherwise pledging our securities in any manner.

 

 19 

Table of Contents 

 

Communications with the Board

 

Stockholders who would like to communicate with the Board may do so by writing to the Board of Directors, The Joint Corp. 16767 N. Perimeter Drive, Suite 110, Scottsdale, Arizona 85260. Our Investor Relations department will process all communications received. Communications relating to matters within the scope of the Board’s responsibilities will be forwarded to the Lead Director and at his direction to the other directors, and communications relating to ordinary day-to-day business matters that are not within the scope of the Board’s responsibilities will be forwarded to the appropriate officer or executive. Communications addressed to a particular committee of the Board will be forwarded to the chair of that committee and at his or her direction to the other members of the committee.

 

Risk Oversight

 

Our Audit Committee is responsible for overseeing our risk management process. The Audit Committee focuses on our general risk management strategy and the most significant risks facing us and ensures that appropriate risk mitigation strategies are implemented by management. The Audit Committee reports any significant issues to the Board of Directors as part of the Board’s general oversight responsibility.

 

Our management is responsible for day-to-day risk management. This oversight includes identifying, evaluating and addressing potential risks that may exist at the enterprise, strategic, financial, operational, compliance and reporting levels. The Board is responsible for overseeing management’s development and execution of appropriate business strategies to mitigate the risk that such strategies will fail to generate long-term value for the Company and its stockholders or that such strategies will motivate management to take excessive risks. As part of its responsibilities, the Board and its standing committees also regularly review, and discuss with management, material strategic, operational, cybersecurity, financial, legal, compensation and compliance risks, as well as emerging or evolving risks as they arise, such as risks related to the COVID-19 pandemic. Each of the three committees of the Board is responsible for overseeing the management of risks that fall within the committee’s areas of responsibility, including identifying, quantifying and assisting management in mitigating risks. In performing this function, each committee has full access to management, as well as the ability to engage advisors.

 

Leadership Structure of the Board of Directors

 

Chair of the Board

 

We presently do not have a director serving in the office of Chair of the Board. While our bylaws and corporate governance guidelines do not require the positions of Chair and Chief Executive Officer to be separate, our Board of Directors believes that having separate positions is the appropriate leadership structure for us and demonstrates our commitment to good corporate governance. In the event we do elect a Chair, we intend to adhere to the principle that the position of Chair of the Board should be separate from the position of Chief Executive Officer.

 

 

 

 

 

 

 

 

 20 

Table of Contents 

 

Lead Director

 

In August 2017, our Board appointed Matthew E. Rubel as our Lead Director. The Lead Director is responsible for coordinating the scheduling and agenda of Board meetings and the preparation and distribution of agenda materials. The Lead Director presides at Board meetings and oversees the scope, quality and timeliness of the flow of information from our management to the Board and serves as an independent point of contact for stockholders wishing to communicate with the Board.

 

Stock Ownership Guidelines

 

We have established stock ownership guidelines for certain of our senior officers (currently, our President and Chief Executive Officer and Chief Financial Officer) and our directors to more closely align their interests with those of our stockholders. Under these guidelines, they are required to own shares of Company stock having a value equal to or greater than the following targets within five years of becoming subject to the targets:

 

Category  Stock Ownership Target
CEO  3 times annual total cash compensation
Other §16 Officers  2 times annual total cash compensation
Board of Directors  2 times annual cash retainer

 

 

 

 

 

 

 

 

 

 

 

 

 21 

Table of Contents 

 

AUDIT COMMITTEE REPORT

 

Under the Audit Committee’s charter, the Audit Committee of the Board of Directors assists the Board in fulfilling its oversight responsibilities relating to the integrity of the Company’s financial statements, the qualifications and experience of the Company’s independent registered public accounting firm, the performance of the Company’s internal audit function and independent registered public accounting firm, and the Company’s compliance with applicable legal and regulatory requirements. The Audit Committee’s charter is available on the Company’s website, https://ir.thejoint.com/governance-docs. The members of the Audit Committee who served during 2020 were Ronald V. DaVella (Chair), Glenn J. Krevlin and James H. Amos, Jr., all of whom are independent under the applicable listing standards of the NASDAQ Capital Market.

 

The Company’s management is responsible for preparing financial statements in accordance with accounting principles generally accepted in the United States, and the Company’s independent registered public accounting firm is responsible for auditing those financial statements. The Audit Committee’s responsibility is one of oversight, and we do not provide expert or other special assurance regarding the Company’s financial statements or the quality of the audits performed by the Company’s independent public accountants.

 

In carrying out our oversight responsibility, we have reviewed and discussed with both management and Plante & Moran, PLLC, the Company’s independent registered public accounting firm for 2020, all quarterly and annual financial statements prior to their issuance. Our reviews and discussions with Plante & Moran, PLLC included executive sessions without the presence of the Company’s management. They also included discussions of the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board (PCAOB) and the SEC. We also discussed with Plante & Moran, PLLC matters relating to their independence, including a review of their audit and non-audit fees and the letter and written disclosures that the Audit Committee received from Plante & Moran, PLLC pursuant to Rule 3526 of the Public Company Accounting Oversight Board, Communications with Audit Committees Concerning Independence.

 

In addition, we continued to monitor the scope and adequacy of the Company’s internal controls, including the review of measures designed to remediate control deficiencies that contributed to the material weakness in 2019 and to ensure the continued effective operation of these controls, programs and initiatives to strengthen the effectiveness of the Company’s internal controls and steps taken to implement recommended improvements.

 

On the basis of these reviews and discussions, we recommended to the Board of Directors that the Board approve the inclusion of the Company’s audited financial statements in the Company’s annual report on Form 10-K for the year ended December 31, 2020, for filing with the U.S. Securities and Exchange Commission.

 

Audit Committee

 

Ronald V. DaVella, Chair

James H. Amos, Jr.

Glenn J. Krevlin

 

 

 

 

 

 

 

 

 22 

Table of Contents 

 

Executive Officers

 

The following table provides information about our executive officers.

 

Executive Officer

Position with the Company

Age

Peter D. Holt President and Chief Executive Officer 62
Jake Singleton Chief Financial Officer 39

 

Peter D. Holt, our President and Chief Executive Officer, is listed as a nominee for director. Please see “Nominees for Director” on page 4.

 

 

 

Our executive officers are appointed by our Board of Directors.

 

 

 

 23 

Table of Contents 

 

EXECUTIVE COMPENSATION

 

Summary Compensation Table

 

The following table shows the total compensation paid or accrued during our fiscal years ended December 31, 2020, and 2019 to our President and Chief Executive Officer and Chief Financial Officer:

 

Name Year Salary Bonus Stock Awards(3) Option Awards(3) Non-Equity Incentive Plan Compensation Nonqualified Deferred Compensation Earnings All Other Compensation(4) Total
Perter D. Holt(1) 2020 $410,000 $ - $43,093 $140,189 $233,998 $    - $1,577 $828,856
President and Chief Executive Officer 2019  410,000 -  17,395  121,592 256,250       -   315    805,552
                   
Jake Singleton(2) 2020  225,000 - 29,864 55,949 102,731       - 5,665    419,029
Chief Financial Officer 2019  200,000 -  28,021  46,656 100,000       - 3,408    378,086

 

(1)Mr. Holt has served as our President and Chief Executive Officer since January 2017. Prior to January 2017, Mr. Holt served as Chief Executive Officer from August 2016, acting Chief Executive Officer from June 2016, and Chief Operating Officer from April 2016.
(2)Mr. Singleton has served as our Chief Financial Officer since November 2018. Prior to November 2018, Mr. Singleton served as the Company’s Corporate Controller.
(3)The amounts in this column represent the share-based compensation expense recorded in our audited financial statements for the years ended December 31, 2020, and 2020. For a discussion of the assumptions used in reaching this valuation, see “Stock-Based Compensation” in Note 8 to our audited financial statements included in our annual report on Form 10-K for the year ended December 31, 2020.
(4)The amounts in this column represent company contributions (including matching contributions), whether or not vested, on a nondiscriminatory basis to a defined contribution plan (e.g., 401(k) plan).

 

Employment Agreements and Change in Control Arrangements

 

Current Executive Officers

 

On December 4, 2018, Mr. Holt entered into a new employment letter agreement (replacing an earlier employment letter agreement) with the Company for a term of one year, effective on January 1, 2019, and automatically renewable for successive one-year terms unless terminated by either party. Under the employment letter, Mr. Holt currently receives a base annual salary of $410,000 and a yearly bonus under the Company’s Executive Short-Term Incentive Plan (the “Executive STIP”), as described below. Mr. Holt is also eligible to participate in the Company’s incentive stock plan and any other future long-term incentive plans, subject to the terms and eligibility requirements of any such plans and at the discretion of the Company’s Board of Directors or Compensation Committee in making awards under such plans. Mr. Holt is entitled to an annual award under the stock plan equal to 60% of his base salary, which vests in four equal annual installments on each of the first four anniversaries of the grant date. The award is granted at the same time that other employees receive their long-term incentive grants. Equity awards outstanding at December 31, 2020, that have been granted to Mr. Holt in connection with his employment are shown in the table below.

 

Upon the Company’s termination of Mr. Holt’s employment without “cause” (as defined in the employment letter), subject to the Company and Mr. Holt entering into a separation agreement containing customary provisions, the Company will continue to pay Mr. Holt his then current base salary for a period of twelve months after the date of termination and any bonus payments he may have earned prior to the date of termination. The Company has no obligation to pay Mr. Holt any bonus amounts accruing in periods following the date of his termination.

 

In addition, Mr. Holt has the right to continue to participate in the Company’s group health insurance program under COBRA continuation coverage during the statutory continuation period following his termination date, the first six months of which will be paid by the Company and the balance by Mr. Holt. If termination is in connection with a Change of Control (as defined in the employment letter), only the first three months will be paid by the Company.

 

 24 

Table of Contents 

 

On November 6, 2018, Mr. Singleton entered in an employment letter agreement with the Company for a term of one year, automatically renewable for successive one-year terms unless terminated by either party. Under the employment letter, Mr. Singleton received a base annual salary of $200,000, which was increased to $225,000 retroactive to January 1, 2020, pursuant to an amendment to the employment letter dated March 3, 2020. Mr. Singleton is also entitled to a yearly bonus under the Company’s Executive STIP as described below. Mr. Singleton is eligible to participate in the Company’s incentive stock plan and any other future long-term incentive plans, subject to the terms and eligibility requirements of any such plans and at the discretion of the Company’s Board of Directors or Compensation Committee in making awards under such plans. Mr. Singleton was previously entitled to an award of stock options in the amount of 35,000 shares, which under the amended employment letter was replaced with an annual award equal to 50% of his base salary, vesting in four equal annual installments on each of the first four anniversaries of the grant date. The award is granted at the same time that other employees receive their long-term incentive grants. Equity awards outstanding at December 31, 2020, that have been granted to Mr. Singleton in connection with his employment are shown in the table below.

 

Upon the Company’s termination of Mr. Singleton’s employment without “cause” (as defined in the employment letter), subject to the Company and Mr. Singleton entering into a separation agreement containing customary provisions, the Company will continue to pay Mr. Singleton his then current base salary for a period of six months after the date of termination and any bonus payments he may have earned prior to the date of termination. The Company has no obligation to pay Mr. Singleton any bonus amounts accruing in periods following the date of his termination.

 

In addition, Mr. Singleton has the right to continue to participate in the Company’s group health insurance program under COBRA continuation coverage during the statutory continuation period following his termination date, the first six months of which will be paid by the Company and the balance by Mr. Singleton. If termination is in connection with a Change of Control (as defined in the employment letter), only the first three months will be paid by the Company.

 

Both Mr. Holt and Mr. Singleton participate in the Company’s annual Executive STIP. Participants in the Executive STIP receive payment only if the Company achieves its target EBITDA for the year in question, which is established by the Board of Directors. The Executive STIP bonus pool is combined with the bonus pool for the Non-Executive Short-Term Incentive Plan (the “Combined Pool”). The Company will not fund the Combined Pool and no award will be granted unless the amount to be allocated to the Combined Pool would equal at least 85% of the Combined Pool Maximum (the “Award Threshold”), provided that if the amount allocated to the Combined Pool is less than the Award Threshold, the Board of Directors may in its sole discretion approve and create the Combined Pool under such terms and conditions as the Board of Directors may determine. The Compensation Committee establishes the maximum amount that may be allocated to the Combined Pool, and the amount by which the actual EBITDA exceeds the target EBITDA is allocated to the Combined Pool up to the established maximum. The amount allocated to the Combined Pool is then paid to the participants in both the Executive STIP and the Non-Executive Short-Term Incentive Plan on a pro rata basis based on their respective eligibility, and in each case, up to their maximum targeted STIP award. Mr. Holt’s targeted STIP award may not exceed 50% of his base salary. Mr. Singleton’s award may not exceed 40% of his base salary.

 

Notwithstanding the foregoing, in the event that the actual EBITDA for the year in question after the funding of the maximum amount allocated to the Combined Pool as described in the previous paragraph (“Revised EBITDA”) exceeds the target EBITDA, the maximum targeted STIP award for Mr. Holt would increase to 62.5% of his base salary and the maximum targeted STIP award for Mr. Singleton would increase to 50% of his base salary. In that event, 25% of each dollar by which Revised EBITDA exceeds the budgeted EBITDA is added to the Combined Pool and allocated to the participants in both the Executive STIP and the Non-Executive Short-Term Incentive Plan on a pro rata basis based on their respective eligibility, and in each case, up to their maximum targeted STIP award, as adjusted.

 

Both Mr. Holt and Mr. Singleton are also parties to confidentiality, non-solicitation and non-competition agreements with the Company, pursuant to which each of them is subject to certain restrictive covenants, including non-solicitation and non-competition covenants, during the period of employment and for a period of twenty-four months after termination of employment.

 

Please see “Part II, Item 6, Selected Financial Data” on page 29 of our Annual Report on Form 10-K for the year ended December 31, 2020, filed with the SEC on March 5, 2021, for the calculation of EBITDA.

 

 25 

Table of Contents 

 

Outstanding Equity Awards at 2020 Year-End

 

The following table provides a summary of equity awards outstanding at December 31, 2020, for each of our named executive officers.

 

   Option Awards(1)  Stock Awards(2)
Name  Number of securities underlying unexercised options exercisable  Number of securities underlying unexercised options unexercisable  Option exercise price  Option expiration date  Number of shares of stock that have not vested  Market value of shares that have not vested
Peter D. Holt   95,000    (3)  $3.14    5/3/2026           
    50,000    (4)  $2.23    7/11/2026           
    20,003    (5)  $3.88    5/9/2027           
    11,250    3,750(6)  $5.51    11/10/20277           
    10,807    10,807(7)  $8.25    8/7/2028           
    8,679    26,039(8)  $12.02    3/5/2029           
        21,992(9)  $14.68    3/3/2030           
                    11,147(10)  $292,720 
Jake Singleton   10,000    (11)  $4.10    3/14/2026           
    20,000    (12)  $2.24    8/9/2026           
    10,473    (13)  $3.88    5/9/2027           
    7,500    2,500(14)  $5.51    11/10/2027           
    1,621    1,621(15)  $8.25    8/7/2028           
    17,500    17,500(16)  $7.10    11/6/2028           
        10,057(17)  $14.68    3/3/2030           
                    7,527(18)  $197,659 

 

(1)Outstanding stock options at December 31, 2020, become exercisable in accordance with the vesting schedule below. Each option award expires on the ten-year anniversary of the grant date.
(2)Restricted stock awards at December 31, 2020, become exercisable in accordance with the vesting schedule below. Market value at December 31, 2020, and December 31, 2019, was $26.26 and $16.11, respectively.
(3)Options to acquire 95,000 shares were granted on May 3, 2016, and one-quarter (25%) of the option shares vest on each of the first four anniversaries of the grant date.
(4)Options to acquire 50,000 shares were granted on July 11, 2016, and one-quarter (25%) of the option shares vest on each of the first four anniversaries of the grant date.
(5)Options to acquire 20,003 shares were granted on May 9, 2017, and vested in full on March 31, 2018.
(6)Options to acquire 15,000 shares were granted on November 10, 2017, and one-quarter (25%) of the option shares vest on each of the first four anniversaries of the grant date.
(7)Options to acquire 21,614 shares were granted on August 7, 2018, and one-quarter (25%) of the option shares vest on each of the first four anniversaries of the grant date.
(8)Options to acquire 34,718 shares were granted on March 5, 2019, and one-quarter (25%) of the option shares vest on each of the first four anniversaries of the grant date.
(9)Options to acquire 21,992 shares were granted on March 3, 2020, and one-quarter (25%) of the option shares vest on each of the first four anniversaries of the grant date.
(10)Restricted stock awards of 5,027 shares, 6,140 shares, and 2,273 shares were granted on March 3, 2020, March 5, 2019, and August 7, 2018, respectively, and one-quarter (25%) of the restricted shares vest on each of the first four anniversaries of the grant date.
(11)Options to acquire 10,000 shares were granted on March 14, 2016, and one-quarter (25%) of the option shares vest on each of the first four anniversaries of the grant date.
(12)Options to acquire 20,000 shares were granted on August 9, 2016, and one-quarter (25%) of the option shares vest on each of the first four anniversaries of the grant date.
(13)Options to acquire 10,473 shares were granted on May 9, 2017, and vested in full on March 31, 2018.
(14)Options to acquire 10,000 shares were granted on November 10, 2017, and one-quarter (25%) of the option shares vest on each of the first four anniversaries of the grant date.
(15)Options to acquire 3,242 shares were granted on August 7, 2018, and one-quarter (25%) of the option shares vest on each of the first four anniversaries of the grant date.
(16)Options to acquire 35,000 shares were granted on November 6, 2018, and one-quarter (25%) of the option shares vest on each of the first four anniversaries of the grant date.
(17)Options to acquire 10,057 shares were granted on March 3, 2020, and one-quarter (25%) of the option shares vest on each of the first four anniversaries of the grant date.
(18)Restricted stock awards of 2,299 shares and 10,455 shares were granted on March 3, 2020 and August 7, 2018, respectively, and one-quarter (25%) of the restricted shares vest on each of the first four anniversaries of the grant date.

 

 

 

 26 

Table of Contents 

 

Equity Compensation Plan Information

 

We maintain two equity compensation plans, the 2014 Incentive Stock Plan (the “2014 Plan”) and the 2012 Stock Plan (the “2012 Plan”). The 2014 Plan replaced the 2012 Plan, but the 2012 plan remains in effect for the administration of awards made prior to its replacement by the 2014 Plan. The following table summarizes information about our equity compensation plans as of December 31, 2020. All outstanding awards relate to our common stock.

 

 

Plan Category

 

(a) Number of securities to be issued upon exercise of options, warrants

and rights(1)

  (b) Weighted-average exercise price of outstanding options, warrants and rights(2)   (c) Number of securities remaining available for future issuance under equity compensation plans (excluding securities in column (a)) (3)
Equity compensation plans approved by security holders   835,601   $   6.65   321,374
Equity compensation plans not approved by security holders   Nil   Nil   Nil
Total   835,601   $   6.65   321,374

 

  (1) This number includes the following: 3,560 shares subject to outstanding awards granted under the 2012 Plan and 832,041 shares subject to outstanding awards granted under the 2014 Plan.
  (2) The weighted-average exercise price is calculated based solely on the exercise prices of the outstanding stock options.
  (3) This number consists of 321,374 shares available for issuance under the 2014 Plan.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 27 

Table of Contents 

 

PROPOSAL 2

 

ADVISORY VOTE ON EXECUTIVE COMPENSATION

 

We are asking stockholders to approve an advisory resolution on the compensation of our named executive officers as reported in this proxy statement, commonly referred to as the “say-on-pay” vote. Although the say-on-pay vote is advisory and therefore non-binding, our Board and Compensation Committee will review and consider the voting results when making future decisions regarding our executive compensation program. As described above in the “Executive Compensation” section of this proxy statement, our Compensation Committee has structured our executive compensation program to achieve the following key objectives:

 

·Attract and retain highly qualified and productive executives.

 

·Motivate executives to enhance our overall performance and profitability through the successful execution of the Company’s short-term and long-term business strategies, with an emphasis on the long-term.

 

·Align the long-term interests of our executives and stockholders through ownership of the Company’s common stock by executives and by rewarding stockholder value creation.

 

·Ensure that compensation opportunities are competitive.

 

We encourage stockholders to read the “Executive Compensation” section of this proxy statement, which provides an overview of our executive compensation policies and procedures. The Summary Compensation Table and other related compensation tables and narrative provide detailed information on the compensation of our named executive officers. Our Board and Compensation Committee believe that the policies and procedures articulated in the “Executive Compensation” section of this proxy statement are effective in achieving our goals and that the compensation of the named executive officers reported in this proxy statement has contributed to our success.

 

In accordance with Section 14A of the Exchange Act and as a matter of good corporate governance, we are asking stockholders to approve the following advisory resolution at the 2021 Annual Meeting:

 

“RESOLVED, that the Company’s stockholders approve, on a non-binding advisory basis, the compensation of the named executive officers as disclosed pursuant to Item 402 of Regulation S-K in the Company’s proxy statement for the 2021 annual meeting of stockholders.”

 

As an advisory vote, this proposal is not binding on us or our Board or Compensation Committee. The outcome of this advisory vote does not overrule any decision by us or our Board or Compensation Committee, nor will it create or imply any change to our fiduciary duties or those of our Board or Compensation Committee. However, our Board and Compensation Committee value the opinions to be expressed by our stockholders in their vote on this proposal and will consider the outcome of the vote when making future compensation decisions for our named executive officers.

 

The advisory vote to approve executive compensation is held on an annual basis, at least until the next advisory vote to determine the frequency of such vote, which is expected to be in 2026.

 

The Board of Directors recommends that stockholders vote “FOR” the approval of the compensation of our named executive officers for 2021 on an advisory basis.

 

PROPOSAL 3

 

RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTING FIRM

 

The Audit Committee has recommended that BDO USA, LLP (“BDO”) be nominated for appointment at the Meeting as the Company’s independent auditors for the fiscal year ending December 31, 2021. BDO are the current independent auditors for the Company, and were first appointed as such on March 29, 2021. Representatives of BDO are expected to be present at the Annual Meeting to respond to appropriate questions and will have the opportunity to make a statement if they desire to do so. Representatives of Plante Moran are not expected to be present at the Annual Meeting.

 

 28 

Table of Contents 

 

Audit Fees

 

The aggregate fees billed by our former independent registered public accounting firm, Plante & Moran, PLLC (“Plante Moran”) for professional services rendered in connection with the audit of our annual financial statements during the fiscal years ended December 31, 2020, and 2019 were $220,500 and $331,860, respectively.

 

Audit-Related Fees

 

The aggregate fees billed by Plante Moran for professional services rendered in connection with the audit of our 401(k) plan and other audit-related services during the fiscal year ended December 31, 2020, and 2019 were $37,900 and $67,000, respectively.

 

Tax Fees

 

There were no fees billed by Plante Moran for tax compliance, tax advice and tax planning services provided to us during the fiscal years ended December 31, 2020, and 2019, respectively.

 

All Other Fees

 

Plante Moran did not provide any services to us during the fiscal year ended December 31, 2020, and 2019, respectively, other than for professional services rendered in connection with the audit of our annual financial statements and the audit related services noted above.

 

In accordance with policies adopted by the Audit Committee of our Board of Directors, all audit and non-audit related services to be performed for us by our independent public accountants must be approved in advance by the Committee.

 

Change in Principal Accountant

 

On March 29, 2021, the Audit Committee and the Board of Directors (the “Board”) approved the dismissal of Plante Moran as its independent registered public accounting firm.

 

The audit reports of Plante Moran on the Company’s financial statements for the fiscal years ended December 31, 2020 and 2019 did not contain an adverse opinion or a disclaimer of opinion, and were not qualified or modified as to uncertainty, audit scope or accounting principles.

 

During the two most recent fiscal years ended December 31, 2020 and 2019 and through the subsequent interim period preceding Plante Moran’s dismissal, there were no “disagreements” (as defined in Item 304(a)(1)(iv) of Regulation S-K and related instructions) between the Company and Plante Moran on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedures, which disagreements, if not resolved to the satisfaction of Plante Moran, would have caused it to make reference thereto in its reports on the Company’s financial statements for such fiscal years.

 

During the two most recent fiscal years ended December 31, 2020 and 2019 and through the subsequent interim period preceding Plante Moran’s dismissal, there were no “reportable events,” as defined in Item 304(a)(1)(v) of Regulation S-K, except for the material weakness in the Company’s internal control over financial reporting previously reported in Part II, Item 9A “Controls and Procedures” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. The material weakness related to ineffective information technology general controls (ITGCs) in the areas of user access, information security policies, and program change-management over certain information technology (IT) systems that support the Company’s financial reporting processes. The material weakness was discussed with the Audit Committee of the Company, and the Company has authorized Plante Moran to respond fully to inquiries of the successor accountant concerning the material weakness.

 

The Company provided Plante Moran with a copy of the disclosure it is making herein and made in form 8-K filed on March 30, 2021, in response to Item 304(a) of Regulation S-K, and requested that Plante Moran furnish the Company with a copy of its letter addressed to the Securities and Exchange Commission (the “SEC”), pursuant to Item 304(a)(3) of Regulation S-K, stating whether or not Plante Moran agrees with the statements related to them made by the Company in this report. A copy of Plante Moran's letter to the SEC dated March 30, 2021 was attached as Exhibit 16.1 to the Company’s form 8-K filed on March 30, 2021.

 

 29 

Table of Contents 

 

During the fiscal years ended December 31, 2020 and 2019, and during the subsequent interim period through March 29, 2021, neither the Company, nor anyone on its behalf, consulted BDO regarding either (i) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered with respect to the consolidated financial statements of the Company, and no written report or oral advice was provided to the Company by BDO that was an important factor considered by the Company in reaching a decision as to any accounting, auditing or financial reporting issue; or (ii) any matter that was the subject of a "disagreement" (as defined in Item 304(a)(1)(iv) of Regulation S-K and the related instructions) or a “reportable event” (as that term is defined in Item 304(a)(1)(v) of Regulation S-K).

 

Ratification of the appointment of BDO as our independent registered public accounting firm will require the affirmative vote of holders of a majority of the shares present in person or represented by proxy and entitled to vote at the Annual Meeting. If our stockholders do not ratify the appointment of BDO, our Board of Directors may reconsider their appointment.

 

The Board of Directors recommends that stockholders vote “FOR” ratification of the appointment of BDO as our independent registered public accounting firm for the fiscal year ending December 31, 2021.

 

 

 

 

 

 

 

 

 

 

 

 

 

 30 

Table of Contents 

 

GENERAL INFORMATION

 

Why did I receive this proxy statement and other materials?

 

The Board of Directors of The Joint Corp. is soliciting proxies to vote shares of our stock at the 2021 Annual Meeting of Stockholders (the “Annual Meeting”) to be held on Friday, May 28, 2021, at 10:00 a.m. Mountain Standard Time at our executive offices located at 16767 N. Perimeter Drive, Suite 110, Scottsdale, Arizona 85260.

 

This proxy statement and our annual report to stockholders (which includes a copy of our Annual Report on Form 10-K for the year ended December 31, 2020), were first made available to stockholders on or about April 23, 2021. Although both are made available together, our annual report to stockholders is not part of this proxy statement.

 

What will stockholders vote on at the Annual Meeting?

 

Stockholders will vote on the following matters at the Annual Meeting:

 

·the election to the Board of the seven nominees for director named in this proxy statement (Proposal 1),
·approval, on an advisory basis, of the compensation of our named executive officers (Proposal 2),
·ratification of the appointment of BDO as our independent registered public accounting firm for 2021 (Proposal 3), and
·any other matter that properly comes before the meeting.

 

What are the Board’s voting recommendations?

 

The Board recommends that you vote your shares:

 

·FOR each of the seven nominees for election to the Board (Proposal 1),
·FOR the approval of the compensation of our named executive officers for 2021 on an advisory basis (Proposal 2),
·FOR ratification of the appointment of BDO as our independent registered public accounting firm for 2021 (Proposal 3).

 

Who may vote at the Annual Meeting?

 

Only stockholders of record as of the close of business on April 14, 2021 are entitled to vote at the Annual Meeting. Each outstanding share of common stock as of the record date is entitled to one vote on all matters that come before the meeting. There is no cumulative voting.

 

As of the record date of April 14, 2021, there were 14,257,486 shares of our common stock outstanding.

 

What is the difference between a stockholder of record and a beneficial owner of shares held in street name?

 

If your shares are registered directly in your name with our stock registrar and transfer agent, Continental Stock Transfer and Trust Company, you are considered the stockholder of record for those shares and have the right to vote those shares directly. You may vote in person at the Annual Meeting or by proxy.

 

If your shares are held in an account at a brokerage firm, bank or other nominee (for convenient reference, a “broker”), you are considered the beneficial owner of those shares, which are said to be held in “street name,” and the broker is considered the stockholder of record for voting purposes. As the beneficial owner, you cannot vote the shares in your account directly, but you have the right to instruct the broker how to vote them.

 

As a beneficial owner, you are invited to attend the Annual Meeting, but because you are not a stockholder of record, you may not vote your shares at the Annual Meeting unless you obtain a valid proxy from your broker.

 

 31 

Table of Contents 

 

If I am a stockholder of record, how do I vote?

 

You may vote by proxy by completing and signing the proxy card included in the materials and returning it in the postage-paid envelope provided (which must be received before those voting facilities are closed at 7:00 p.m. Eastern Daylight Time on May 27, 2021) or you may vote in person at the Annual Meeting.

 

If I am a beneficial owner of shares held in street name, how do I instruct my broker how to vote?

 

If you are a beneficial owner of our stock, you may instruct your broker how to vote by following the instructions in the notice provided to you by your broker.

 

What happens if I am a stockholder of record and sign and return the proxy card but do not make any voting choices?

 

The proxy holders (the persons named as proxies) will vote your shares in accordance with the Board’s voting recommendations for Proposals 1, 2, and 3. See “What are the Board’s voting recommendations?” above.

 

We do not expect that any other matters will properly come before the Annual Meeting. If, however, any other matters do come before the meeting, the proxy holders will vote your shares in accordance with their judgment.

 

What happens if I am a beneficial owner of shares held in street name and do not give voting instructions to my broker?

 

Under the stock exchange and other rules governing brokers who are voting shares held in street name, brokers have authority to vote those shares at their discretion on routine matters but may not vote those shares on non-routine matters.

 

A “broker non-vote” occurs when your broker returns a proxy card for your shares held in street name but does not vote on a particular matter because (i) the broker has not received voting instructions from you and (ii) the broker does not have authority to vote on the matter without instructions because the matter is of a non-routine nature.

 

Which items to be voted on at the Annual Meeting are “routine” and which are “non-routine”?

 

The ratification of the appointment of our independent registered public accounting firm (Proposal 3) is considered a routine matter under the relevant rules. The election to the Board of the seven nominees for director (Proposal 1) and the advisory vote on the compensation of our named executive officers (Proposal 2) are considered non-routine matters.

 

What is the quorum required for the Annual Meeting?

 

Holders of a majority of our outstanding shares entitled to vote at the Annual Meeting who are present in person or represented by proxy will constitute a quorum to conduct business at the meeting.

 

If you are a stockholder of record and vote your shares by proxy, your shares will be counted for purposes of determining whether a quorum is present even if your voting choice is to abstain. Similarly, if you are a beneficial owner of shares held in street name and do not give voting instructions to your broker, your shares will be counted for purposes of determining whether a quorum is present if your broker votes your shares on any routine matter.

 

What are my choices in voting on the matters to be voted on at the Annual Meeting?

 

On Proposal 1, you may vote “For” or “Against” each individual nominee or “Abstain” from voting on the nominee’s election.

 

On Proposal 2, you may vote “For” or “Against” approval, on an advisory basis, of the compensation of our named executive officers or “Abstain” from voting.

 

On Proposal 3, you may vote “For” or “Against” the ratification of the appointment of our independent registered public accounting firm, or “Abstain” from voting on the proposal.

 

 32 

Table of Contents 

 

What are the voting requirements to approve the matters to be voted on at the Annual Meeting?

 

·Proposal 1 (election of directors): Each nominee for election as a director must receive more “For” votes than “Against” votes in order to be elected as a director. Abstentions and broker non-votes will not be included in the vote tally and will not have any effect on the voting.
·Proposal 2 (vote, on an advisory basis, of the named executive officer compensation): This proposal requires for approval the affirmative vote of a majority of the shares present in person or represented by proxy and entitled to vote. Abstentions will have the same effect as a vote “Against.” Brokers do not have discretionary authority to vote on this proposal. Broker non-votes, therefore, will have no effect on the proposal as brokers are not entitled to vote on such proposals in the absence of voting instructions from the beneficial owner.
·Proposal 3 (ratification of the appointment of our independent registered public accounting firm): This proposal requires for approval the affirmative vote of a majority of the shares present in person or represented by proxy and entitled to vote. Abstentions will have the same effect as a vote “Against.” Brokers will have discretionary authority to vote Proposal 3, and therefore there will not be any broker non-votes on this matter.

 

Can I change my vote after I have voted?

 

If you are a stockholder of record, you may change your vote by returning a new, properly completed proxy card bearing a later date than the date of your original proxy card (before those voting facilities are closed at 7:00 p.m. Eastern Daylight Time on May 27, 2021).

 

In addition, you may revoke your proxy by attending the Annual Meeting in person and requesting to vote. Attendance at the meeting in person will not, by itself, revoke your proxy. You may also revoke your proxy any time before the final vote at the Annual Meeting by filing a signed notice of revocation with the Secretary of the Company at 16767 N. Perimeter Drive, Suite 110, Scottsdale, AZ 85260.

 

If you are a beneficial owner of shares held in street name, you may submit new voting instructions to your broker as indicated in the notice provided to you by your broker.

 

How can I find out the voting results of the Annual Meeting?

 

The preliminary voting results will be announced at the Annual Meeting. The final voting results will be tallied by the inspector of elections and reported in a current report on Form 8-K, which we will file with the SEC within four business days following the Annual Meeting.

 

Who is paying for the cost of this proxy solicitation?

 

We will bear the cost of this proxy solicitation. Some of our officers and employees may solicit proxies by personal conversations, telephone, regular mail or email, but they will not receive any additional compensation for doing so. We will reimburse brokers and others for their reasonable charges and expenses in forwarding our proxy materials to stockholders who are beneficial owners of shares of our stock.

 

How can I attend the Annual Meeting?

 

The Annual Meeting will be held on Friday, May 28, 2021 at 10:00 a.m. Mountain Standard Time at our corporate offices in Scottsdale, Arizona (16767 N. Perimeter Dr., Suite 110, Scottsdale, AZ 85260). However, in light of the on-going pandemic, we ask that you seriously consider not attending the annual meeting. Therefore, we ask that you promptly return your proxy as described in the proxy materials provided to you.

 

 

 

 33 

Table of Contents 

 

ANNUAL REPORT

 

We will provide a copy of our annual report on Form 10-K for the fiscal year ended December 31, 2020, without charge to each stockholder as of the record date who sends a written request to Investor Relations, The Joint Corp., 16767 N. Perimeter Drive, Suite 110, Scottsdale, Arizona 85260. Copies of this proxy statement and our Form 10-K as filed with the Securities and Exchange Commission are available in pdf format on our website, ir.thejoint.com/sec-filings. Copies of this proxy statement and our Form 10-K also may be accessed directly from the SEC’s website, www.sec.gov.

 

HOUSEHOLDING OF PROXY MATERIALS

 

The SEC has adopted rules that permit companies and intermediaries (e.g., brokers) to satisfy the delivery requirements for proxy statements and annual reports with respect to two or more stockholders sharing the same address by delivering a single proxy statement addressed to those stockholders. This process, which is commonly referred to as “householding,” potentially means extra convenience for stockholders and cost savings for companies.

 

Brokers with account holders who are The Joint Corp. stockholders may be “householding” our proxy materials. A single proxy statement will be delivered to multiple stockholders sharing an address unless contrary instructions have been received from the affected stockholders. Once you have received notice from your broker that they will be “householding” communications to your address, “householding” will continue until you are notified otherwise or until you revoke your consent. If, at any time, you no longer wish to participate in “householding” and would prefer to receive a separate proxy statement and annual report, please notify your broker and direct your written request to The Joint Corp., Attention: Investor Relations, 16767 N. Perimeter Drive, Suite 110, Scottsdale, AZ, 85260, and one will be promptly provided. Stockholders who currently receive multiple copies of the proxy statement at their address and would like to request “householding” of their communications should contact their broker.

 

OTHER MATTERS

 

As of the date of this proxy statement, management is unaware of any matter for action by stockholders at the meeting other than those described in the accompanying notice. The enclosed proxy, however, will confer discretionary authority with respect to any other matter that may properly come before the annual meeting, or any adjournment thereof. It is the intention of the persons named in the enclosed proxy to vote in accordance with their best judgment on any such matter.

 

STOCKHOLDER PROPOSALS AND NOMINATIONS FOR THE 2022

ANNUAL MEETING

 

Any stockholder who wishes to present a proposal for consideration at our 2022 Annual Meeting of Stockholders, and to have the proposal included in our proxy statement for the meeting, must submit the proposal to us on or before December 24, 2021. Stockholder proposals for inclusion in our proxy statement must comply with the rules of the Securities and Exchange Commission in order to be included.

 

In accordance with our bylaws, any stockholder who wishes to present a proposal from the floor for consideration at our 2022 Annual Meeting of Stockholders, without inclusion of such matters in our proxy materials, must submit proper notice to us no earlier than January 28, 2022, and no later than the close of business on February 28, 2022.

 

Stockholders who intend to submit director nominees for inclusion in our proxy materials for the 2022 Annual Meeting of Stockholders must comply with the requirements of proxy access as set forth in our bylaws. The stockholder or group of stockholders who wishes to submit director nominees pursuant to proxy access must deliver the proper notice to the Secretary of the Company no earlier than November 24, 2021, and no later than December 24, 2021.

 

Stockholder proposals and notice of proxy access nominations should be sent to Secretary, The Joint Corp., 16767 N. Perimeter Drive, Suite 110, Scottsdale, Arizona 85260. A copy of our bylaws is available at https://www.sec.gov/Archives/edgar/data/1612630/000117184318005943/exh_3ii1.htm or may be obtained upon request directed to the Secretary at the foregoing address.

 

 34 

Table of Contents 

 

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

DELINQUENT SECTION 16(a) REPORTS

 

Section 16(a) of the Securities Exchange Act requires our directors and executive officers and persons beneficially owning more than 10% of our outstanding common stock to file periodic reports of stock ownership and stock transactions with the Securities and Exchange Commission. On the basis of a review of copies of these reports, we believe that all filing requirements for 2020 and through the first quarter of 2021 were satisfied in a timely manner, with the exception of the following:

 

Name Number of Late Reports

Number of Transactions Not Reported

on a Timely Basis

Failure to File Requested Forms
Peter Holt 1 2 Nil
Jake Singleton 1 2 Nil

 

Mr. Holt and Mr. Singleton inadvertently failed to timely report restricted stocks and stock options awarded on March 2, 2021, which failure was rectified shortly thereafter.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 35