Item 5.02. Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
As described in Item 5.07 below, on June 14, 2022, GSE Systems, Inc. (the
"Company") held its annual meeting of stockholders (the "Meeting"). Kathryn
O'Connor Gardner did not receive a majority of the votes cast at the Meeting for
her election to the Company's Board of Directors (the "Board"). In accordance
with Sections 2.8(b) and 2.8(c) of the Company's by-laws, upon only receiving
42.71% of the total votes cast for and the total votes affirmatively withheld,
Ms. Gardner tendered her resignation as a member of the Board (the "Tendered
Resignation") to the Company's Nominating & Governance Committee (the
"Committee").
On June 15, 2022, the Committee convened a meeting to consider the Tendered
Resignation from Ms. Gardner. Following deliberations, the Committee took into
account such factors and other information that the Committee considered
appropriate and relevant including, but not limited to, Ms. Gardner's exemplary
performance as a member of the Board, Ms. Gardner's recent election as Chairman
of the Board, Ms. Gardner's strong credentials and business acumen and the fact
that it appears that a "withhold" recommendation from Institutional Shareholder
Services ("ISS") related to certain ongoing material weaknesses reported in the
Company's Form 10-K for the year ended December 31, 2021, and Form 10-Q for the
quarter ended March 31, 2022, significantly contributed to the number of votes
affirmatively withheld as to Ms. Gardner's election. In light of the foregoing
and other factors deemed relevant by the Committee, the Committee recommended to
the Board that the Board not accept Ms. Gardner's resignation. At a meeting of
the Board on June 15, 2022, in accordance with Section 2.8(c) of the Company's
by-laws, the Board considered the recommendation of the Committee and
independently considered the Tendered Resignation. The Board resolved to not
accept the Tendered Resignation from Ms. Gardner because (i) Ms. Gardner has
exhibited exemplary performance as a member of the Board; (ii) Ms. Gardner
possesses strong credentials and business acumen such that the Board does not
believe that it could easily and without significant effort replace Ms. Gardner
as its Chairman of the Board; and (iii) the Board believes that ISS had not
taken into account relevant facts and circumstances in rendering its
recommendation of a withhold as to Ms. Gardner based solely on her membership on
the Company's Audit Committee, and the ISS recommendation significantly impacted
the outcome of the stockholder vote with regard to Ms. Gardner.
The Board considers Ms. Gardner a highly effective member of the Board, values
her leadership as Chairman of the Board, and believes that she brings to the
Board strong business acumen and financial experience. The Board also notes
that Ms. Gardner's leadership as one of the very few female chairs of public
company boards of directors has been praised by peer members of the Board,
Company management, employees, outside services providers, and stockholders of
the Company. Finally, Ms. Gardner is consistently well-prepared, engaged and a
meaningful contributor to Board meetings and discussions.
Accordingly, the Board has reached the determination that accepting Ms.
Gardner's Tendered Resignation is not in the best interests of the Company or
its stockholders. In accordance with Section 2.8(c) of the Company's by-laws,
Ms. Gardner shall continue to serve as a member of the Board until the next
annual meeting of the stockholders and until her successor is duly elected and
qualifies.
Ms. Gardner did not attend or participate in the deliberations by the Committee
or the Board regarding whether to accept the Tendered Resignation or vote on any
of the resolutions.
Item 5.07. Submission of Matters to a Vote of Security Holders.
Present at the Meeting in person or by proxy were holders of 16,052,957 shares
of common stock of the Company, representing 76.53% of the voting power of the
common stock of the Company issued and outstanding and entitled to vote as of
the close of business on April 18, 2022, the record date for the Meeting, and
constituting a quorum for the transaction of business.
At the Meeting, the following matters were voted upon and the following reflects
the final voting results:
Against / Broker
Proposal For Withheld Non-Votes
1) Election of Directors for a 3-year term
expiring 2025
Kathryn O'Connor Gardner 6,163,222 8,264,107 1,625,606
Kyle J. Loudermilk 9,349,852 5,077,499 1,625,606
Abstain / Broker
Proposal For Against Withheld Non-Votes
2) Non-binding resolution to approve
Company's named executive officer 9,263,149 2,513,902 2,650,300 1,625,606
compensation
3) Ratify the appointment of FORVIS,
LLP, as the Company's independent
registered public accounting firm 15,696,410 157,830 198,717 --
for the year ending December 31,
2022
4) Approve the Company's 1995
Long-Term Incentive Plan (as amended 8,720,231 5,672,831 34,289 1,625,606
and restated effective April 5,
2022)
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