Blueprint
SCHEDULE 14A INFORMATION
Proxy
Statement Pursuant to Section 14(a) of the Securities Exchange Act
of 1934
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Inuvo, Inc.
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NOTICE OF 2018 ANNUAL MEETING OF STOCKHOLDERS
____________________
TO BE HELD ON JUNE 28, 2018
We will
hold the 2018 annual meeting of stockholders of Inuvo, Inc. at the
Company’s office located at 500 President Clinton Avenue,
Suite 300, Little Rock, Arkansas 72201 on June 28, 2018 at 9:00
a.m. local time. At the annual meeting you will be asked to vote on
the following matters:
●
the election of two
Class I directors;
●
the ratification of
the appointment of Mayer Hoffman McCann P.C. as our independent
registered public accounting firm; and
●
any other business
as may properly come before the meeting.
The
board of directors has fixed the close of business on May 2, 2018
as the record date for determining the stockholders that are
entitled to notice of and to vote at the 2018 annual meeting and
any adjournments thereof.
All
stockholders are invited to attend the annual meeting in person.
Your vote is important regardless of the number of shares you own.
Please vote your shares by proxy over the Internet by following the
instructions provided in the Notice of Internet Availability of
Proxy Materials, or, if you request printed copies of the proxy
materials by mail, you can also vote by mail, by telephone or by
facsimile.
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By
Order of the Board of Directors
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/s/ Richard K. Howe
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Little
Rock, Arkansas
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Richard
K. Howe
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May
4, 2018
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Chairman
and Chief Executive Officer
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Important Notice Regarding the
Availability of Proxy Materials for the Annual Meeting to be Held
on June 28, 2018. This proxy statement, along with our
Annual Report on Form 10-K for the year ended December 31, 2017,
are available free of charge on our website www.inuvo.com.
INUVO, INC.
PROXY STATEMENT
2018 ANNUAL MEETING OF STOCKHOLDERS
TABLE OF CONTENTS
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Page No.
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General
Information
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1
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Proposal
1 - Election of Class I Directors
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3
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Proposal
2 - Ratification of appointment of Mayer Hoffman McCann
P.C.
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5
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Other
Matters
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6
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Dissenter’s
Rights
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6
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Corporate
Governance
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6
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Executive
Compensation
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13
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Principal
Stockholders
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19
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Certain
Relationships and Related Transactions
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21
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Stockholder
Proposals to be Presented at the Next Annual Meeting
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21
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Availability
of Annual Report on Form 10-K
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21
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Stockholders
Sharing the Same Last Name and Address
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22
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Where
You Can Find More Information
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22
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FORWARD-LOOKING STATEMENTS
This proxy statement contains
“forward-looking statements” within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. These
statements are based on our current expectations and involve risks
and uncertainties which may cause results to differ materially from
those set forth in the statements. The forward-looking statements
may include statements regarding actions to be taken in the future.
We undertake no obligation to publicly update any forward-looking
statement, whether as a result of new information, future events or
otherwise. Forward-looking statements should be evaluated together
with the many uncertainties that affect our business, particularly
those set forth in the section on forward-looking statements and in
the risk factors in Item 1.A of our Annual Report on Form 10-K for
the fiscal year ended December 31, 2017 as filed with the
Securities and Exchange Commission on February 8, 2018 (the
“2017
10-K”).
Stockholders Should Read the Entire Proxy Statement
Carefully Prior to Returning Their Proxies
PROXY STATEMENT
FOR
2018 ANNUAL MEETING OF STOCKHOLDERS
General Information
The
accompanying proxy is solicited by the board of directors of Inuvo,
Inc. for use at our 2018 annual meeting of stockholders to be held
on June 28, 2018, or any adjournment or postponement thereof, for
the purposes set forth in the accompanying Notice of 2018 Annual
Meeting of Stockholders. The date of this proxy statement is May
4, 2018, the approximate date on which this proxy
statement and the enclosed proxy were first sent or made available
to our stockholders.
This
proxy statement and the accompanying proxy card are being mailed to
owners of our common shares in connection with the solicitation of
proxies by the board of directors for the 2018 annual meeting of
stockholders. This proxy procedure is necessary to permit all
common stockholders, many of whom live throughout the United States
and are unable to attend the 2018 annual meeting in person, to
vote. We will pay the entire cost of preparing, assembling,
printing, mailing and distributing these proxy materials and
soliciting votes.
Electronic
access. To access
our proxy statement and 2017 10-K electronically, please visit our
corporate website at www.inuvo.com. The information
which appears on our website is not part of this proxy
statement.
Voting
securities. Only our
stockholders of record as of the close of business on May 2, 2018,
the record date for the 2018 annual meeting, will be entitled to
vote at the meeting and any adjournment thereof. As of that date,
there were 28,797,198 shares of our common stock
issued and outstanding, all of which are entitled to vote with
respect to all matters to be acted upon at the 2018 annual meeting.
Each holder of record as of that date is entitled to one vote for
each share held. In accordance with our by-laws, the presence of at
least 33 1/3% of the voting power, regardless of whether the proxy
has authority to vote on all matters, constitutes a quorum which is
required in order to hold the 2018 annual meeting and conduct
business. Presence may be in person or by proxy. You will be
considered part of the quorum if you voted on the Internet, by
telephone, by facsimile or by properly submitting a proxy card or
voting instruction form by mail, or if you are present and vote at
the 2018 annual meeting. Votes for and against, abstentions and
“broker non-votes” will each be counted as present for
purposes of determining the presence of a quorum.
Broker
non-votes. If you
are a beneficial owner whose shares are held of record by a broker,
bank or other nominee, you must instruct the broker, bank or other
nominee how to vote your shares. If you do not provide voting
instructions, your shares will not be voted on any proposal on
which the broker, bank or other nominee does not have discretionary
authority to vote. This is called a “broker non-vote.”
In these cases, the broker, bank or other nominee can register your
shares as being present at the 2018 annual meeting for purposes of
determining the presence of a quorum, but will not be able to vote
on those matters for which specific authorization is required. Your
broker, bank or other nominee does not have discretionary authority
to vote on the election of the Class I directors, without
instructions from you, in which case a broker non-vote will occur
and your shares will not be voted on these matters. Your broker,
bank or other nominee does have discretionary voting authority to
vote your shares on the ratification of the independent registered
public accounting firm, even if the broker, bank or other nominee
does not receive voting instructions from you. In any event, it is particularly important that
you instruct your broker as to how you wish to vote your
shares.
Voting of
proxies. All valid
proxies received prior to the meeting will be exercised. All shares
represented by a proxy will be voted, and where a proxy specifies a
stockholder’s choice with respect to any matter to be acted
upon, the shares will be voted in accordance with that
specification. If no choice is indicated on the proxy, the shares
will be voted by the individuals named on the proxy card as
recommended by the board of directors. A stockholder giving a proxy
has the power to revoke his or her proxy, at any time prior to the
time it is exercised, by delivering to our corporate secretary a
written instrument revoking the proxy or a duly executed proxy with
a later date, or by attending the meeting and voting in person. A
stockholder wanting to vote in person at the 2018 annual meeting
and holding shares of our common stock in street name must obtain a
proxy card from his or her broker and bring that proxy card to the
2018 annual meeting, together with a copy of a brokerage statement
reflecting such share ownership as of the record date.
Vote required. The
two nominees receiving the greatest numbers of votes at the
meeting, assuming a quorum is present, will be elected as Class I
directors to serve until their terms expire or until their
successors have been duly elected and qualified. Because directors
are elected by plurality, abstentions from voting and broker
non-votes will be entirely excluded from the vote and will have no
effect on its outcome. Assuming a quorum is present, proposal 2
must be approved by the affirmative vote of a majority of the
shares of common stock present in person or by proxy at the annual
meeting and entitled to vote. Abstentions will be counted in
tabulations of the votes cast on each such proposal and will have
the same effect as a vote against the proposal, whereas broker
non-votes will be excluded from the vote and will have no effect on
the outcome.
Board of directors
recommendations. The
board of directors recommends a vote FOR proposals 1 and
2.
Attendance at the
meeting. You are invited to attend the annual meeting only
if you were an Inuvo stockholder or joint holder as of the close of
business on May 2, 2018, the record date, or if you hold a valid
proxy for the 2018 annual meeting. In addition, if you are a
stockholder of record (owning shares in your own name), your name
will be verified against the list of registered stockholders on the
record date prior to your being admitted to the annual meeting. If
you are not a stockholder of record but hold shares through a
broker or nominee (in street name), you should provide proof of
beneficial ownership on the record date, such as a recent account
statement or a copy of the voting instruction card provided by your
broker or nominee. The meeting will begin at 9:00 a.m. local time.
Check-in will begin at 8:45 a.m. local time.
Communications with our
board of directors. You may contact any of our directors by
writing to them c/o Inuvo, Inc., 500 President Clinton Avenue,
Suite 300, Little Rock, Arkansas 72201. Each communication should
specify the applicable director or directors to be contacted as
well as the general topic of the communication. We may initially
receive and process communications before forwarding them to the
applicable director. We generally will not forward to the directors
a stockholder communication that is determined to be primarily
commercial in nature, that relates to an improper or irrelevant
topic, or that requests general information about Inuvo. Concerns
about accounting or auditing matters or communications intended for
non-management directors should be sent to the attention of the
Chairman of the Audit Committee at the address above. Our directors
may at any time review a log of all correspondence received by
Inuvo that is addressed to the independent members of the board and
request copies of any such correspondence.
Who can help answer your
questions? If you have additional questions after reading
this proxy statement, you may seek answers to your questions by
writing, calling or emailing:
John B.
Pisaris, Esq.
General
Counsel
Inuvo,
Inc.
500
President Clinton Avenue
Suite
300
Little
Rock, Arkansas 72201
Telephone:
(501) 205-8508
Telecopier:
(877) 311-5050
email:
john.pisaris@inuvo.com
PROPOSAL 1
ELECTION OF CLASS I DIRECTORS
The
board, upon recommendation by the Nominating, Corporate Governance
and Compensation Committee, has nominated Messrs. Richard K. Howe
and Gordon J. Cameron for re-election as Class I directors, each to
hold office until the 2021 annual meeting of stockholders or until
his successor has been duly elected and qualified. In the event
either Mr. Howe or Mr. Cameron is unable or unwilling to serve as a
director, the individual named as proxy on the proxy card will vote
the shares that he represents for election of such other person as
the board of directors may recommend. The board has no reason to
believe that either Mr. Howe or Mr. Cameron will be unable or
unwilling to serve.
The
following is biographical information on the current members of our
board of directors:
Directors Standing for Election as Class I directors
Name
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Age
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Positions
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Director
Since
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Richard
K. Howe
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56
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Executive
Chairman of the Board and Chief Executive Officer; Class I
Director
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2008
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Gordon
J. Cameron
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53
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Class I
Director
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2016
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Richard K. Howe. Mr.
Howe has been a member of our board of directors since November
2008, and has served as Executive Chairman of the board since March
2012 and as our Chief Executive Officer since December 2012.
Previously, he served as our President and Chief Executive Officer
from November 2008 until March 2012. Prior to joining Inuvo, Mr.
Howe served as Chief Marketing, Strategy and M&A Officer at the
billion dollar multi-channel marketing services leader Acxiom
Corporation (NasdaqGS: ACXM) where, since 2004, he led the
company's transition to online marketing services, the expansion
into China and the development of the big data consulting services
group. From 2001 to 2004, he served as general manager of Global
Marketing Services (GMS) at Fair Isaac & Company (NYSE: FICO),
a leading provider of analytics products and services where he
drove the company's online initiatives. Between 1999 and 2001, Mr.
Howe started, grew and sold private Internet search innovator,
ieWild. Mr. Howe has over his career led the acquisition, merger or
divestiture of a dozen companies on three continents worth many
hundreds of millions of dollars to shareholders. Mr. Howe earned a
bachelor’s degree with distinction in engineering from
Concordia University, Canada, and he earned his master’s
degree in engineering from McGill University, Canada.
Gordon J. Cameron.
Mr. Cameron has been a member of our board of directors since
November 2016. He is a business transformation executive with three
decades of success in growing businesses while managing risk. Mr.
Cameron is currently an Executive Vice President in Retail Lending
at PNC Financial Services, one of the largest diversified financial
services institutions in the United States, where he serves as a
credit risk executive, a position he has held since 2008. Prior to
PNC Financial Services, Mr. Cameron was the Chief Credit Officer,
Retail and Small Business Lending, at Canadian Imperial Bank of
Commerce from 2005 to 2008. Mr. Cameron was the Chief Scientist
Transaction Analytics, Global Account Management Solutions at Fair
Isaac Corporation FICO from 2001 to 2005. Prior to his tenure with
Fair Isaac Corporation, Mr. Cameron held executive positions at
IeWild Inc., HNC Software Inc., Advanta National Bank/Fleet, The
Cambell Group LTD and Fidelity Bank N.A. Mr. Cameron received a MBA
from Widener University School of Management and a B.S. in Finance
from Pennsylvania State University.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR"
ELECTION
OF THE CLASS I DIRECTOR NOMINEES.
Directors Not Standing For Election
Name
|
Age
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Positions
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Director
Since
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Charles
L. Pope
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66
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Class
II Director
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2008
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G. Kent
Burnett
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73
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Class
II Director
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2016
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Charles
D. Morgan
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75
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Class
III director
|
2009
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Patrick
Terrell
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63
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Class
III director
|
2013
|
Class II Directors
Terms Expire at the 2019 Annual Meeting
Charles L. Pope. Mr.
Pope has been a member of our board of directors since September
2008. He served as Chief Operating Officer and Chief Financial
Officer of The Palm Bank, a community bank in Tampa, Florida, from
June 2009 to April 2012. From 2007 through 2009, Mr. Pope served as
Chief Financial Officer of and a consultant to Aerosonic
Corporation, a manufacturer of aircraft instruments and displays.
From February 2005 through April 2007, Mr. Pope served as Chief
Financial Officer for Reptron Manufacturing, a manufacturer of
electronic services and engineering services. From April 2002 until
February 2005, Mr. Pope served as Chief Financial Officer for
SRI/Surgical, a provider to hospitals of reusable and disposable
products used in surgical procedures. Previously, Mr. Pope served
as Chief Financial Officer for UTEK Corporation, a business
development company that acquires and funds the development of new
university technologies. Mr. Pope was a member of the Board of
Directors of Innovaro Inc. (OTCQB: INNI) from February 2010 to
August 2012 and was Chairman of its Audit Committee. Since June
2010, he has been a member of the Board of Directors of Oragenics,
Inc. (OTCBB: OGEN) and is Chairman of its Audit Committee. Mr. Pope
was with PricewaterhouseCoopers LLP and left as a partner. Mr. Pope
holds a B.S. in economics and accounting from Auburn University,
and he is a Certified Public Accountant in Florida.
G. Kent
Burnett. Mr. Burnett
has been a member of our board of directors since November 2016. He
is a retired technology and ecommerce executive. Mr. Burnett joined
Dillard’s, Inc., one of the nation’s largest fashion
retailers, in 1979. Mr. Burnett held various executive level
technology positions at Dillard’s, including Chief
Information Officer, Western Division Chairman and from 2009 to
2016 was Vice President of Technology and Ecommerce. Prior to
joining Dillard’s Mr. Burnett held various marketing,
technology and engineering positions with IBM. Since 2012 he has
been a member of the Board of Directors of First Orion Corp., a
phone call protection and data provider, and from February 2012 to
April 2013 he served as a member of the Board of Directors of
Acumen Brands, an ecommerce retailer. Mr. Burnett received his
undergraduate degree from the University of Arkansas.
Class III Directors
Terms Expire at the 2020 Annual Meeting
Charles D. Morgan.
Mr. Morgan has been a member of our board of directors since June
2009. Since 2008, he has been the Chief Executive Officer of First
Orion Corp., a private company that developed and markets
PrivacyStar, an application that helps protect the mobile phone
users' privacy. He also serves as a member and is the past Chairman
of the Board of Trustees of Hendrix College. Mr. Morgan has
extensive experience managing and investing in both private and
public companies including Acxiom Corporation (NasdaqGS: ACXM), an
information services company he helped grow from an early stage
company to $1.4 billion in revenues during his tenure as Chief
Executive Officer from 1975 to 2008. Mr. Morgan has served on the
board and in various leadership roles with the Direct Marketing
Association (DMA) throughout his career, serving in 2001 as
chairman of the DMA board. Mr. Morgan was employed by IBM as a
systems engineer for six years prior to joining Acxiom, and he
holds a mechanical engineering degree from the University of
Arkansas.
Patrick Terrell. Mr.
Terrell has been a member of our board of directors since January
2013. Since 2002 and 2004, respectively, Mr. Terrell has been the
managing member of both PatRick Investments, LLC and Terrell Group
Management, private equity and real estate investment companies. He
also serves on the board of directors of Routeware Inc. Mr. Terrell
served as founder and CEO of Leading Technology, a $300 million per
year manufacturer of personal computers. Additionally, he founded
Byte Shops Northwest, which serviced personal computers, and grew
to $50 million in annual revenues. Mr. Terrell attended Oregon
State University.
There
are no family relationships between any of the
directors.
PROPOSAL 2
RATIFICATION OF THE APPOINTMENT OF MAYER HOFFMAN MCCANN
P.C.
The
Audit Committee has appointed Mayer Hoffman McCann P.C. as our
independent registered public accounting firm to audit our
consolidated financial statements for the fiscal year ending
December 31, 2018. Representatives of Mayer Hoffman McCann P.C.
will be present at the 2018 annual meeting and will have an
opportunity to make a statement or to respond to appropriate
questions from stockholders. Although stockholder ratification of
the appointment of our independent auditor is not required by our
bylaws or otherwise, we are submitting the selection of Mayer
Hoffman McCann P.C. to our stockholders for ratification to permit
stockholders to participate in this important corporate decision.
If not ratified, the Audit Committee will reconsider the selection,
although the Audit Committee will not be required to select a
different independent auditor for our company. Even if the
appointment is ratified, the Audit Committee, in its discretion,
may direct the appointment of a different independent registered
public accounting firm at any time during the year if the Audit
Committee determines that such a change would be in our best
interests.
Fees
and services
The
following table shows the fees that were billed for the audit and
other services provided for the years indicated.
|
|
|
Audit
Fees
|
$331,711
|
$254,088
|
Audit-Related
Fees
|
-
|
-
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Tax
Fees
|
-
|
2,280
|
All Other
Fees
|
-
|
-
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Total
|
$331,711
|
$256,368
|
Audit Fees — This category
includes the audit of our annual financial statements, review of
financial statements included in our quarterly reports on Form 10-Q
and services that are normally provided by the independent
registered public accounting firm in connection with engagements
for those fiscal years. This category also includes advice on audit
and accounting matters that arose during, or as a result of, the
audit or the review of interim financial statements.
Audit-Related Fees — This
category consists of assurance and related services by the
independent registered public accounting firm that are reasonably
related to the performance of the audit or review of our financial
statements and are not reported above under “Audit
Fees.” The services for the fees disclosed under this
category include consultation regarding our correspondence with the
Securities and Exchange Commission and other accounting
consulting.
Tax Fees — This category consists
of professional services rendered by CBIZ MHM, an affiliate of our
independent registered public accounting firm, for tax compliance
and tax advice. The services for the fees disclosed under this
category include tax return preparation and technical tax
advice.
All Other Fees — This category
consists of fees for other miscellaneous items.
Mayer
Hoffman McCann P.C. leases substantially all of its personnel, who
work under the control of Mayer Hoffman McCann P.C. shareholders,
from wholly-owned subsidiaries of CBIZ, Inc., in an alternative
practice structure.
Our
board of directors has adopted a procedure for pre-approval of all
fees charged by our independent registered public accounting firm.
Under the procedure, the Audit Committee of the board approves the
engagement letter with respect to audit, tax and review services.
Other fees are subject to pre-approval by the Audit Committee of
the board. The audit fees paid to the auditors with respect to 2017
were pre-approved by the Audit Committee of the board of
directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE
RATIFICATION
OF THE APPOINTMENT OF MAYER HOFFMAN MCCANN P.C.
OTHER MATTERS
As of
the date hereof, there are no other matters that we intend to
present, or have reason to believe others will present, at the 2018
annual meeting. If, however, other matters properly come before the
2018 annual meeting, the accompanying proxy authorizes the person
named as proxy or his substitute to vote on such matters as he
determines appropriate.
DISSENTER'S RIGHTS
Under
Nevada law there are no dissenter's rights available to our
stockholders in connection with any matter submitted to a vote of
our stockholders at the 2018 annual meeting.
CORPORATE GOVERNANCE
We are
committed to maintaining the highest standards of honest and
ethical conduct in running our business efficiently, serving our
stockholders interests and maintaining our integrity in the
marketplace. To further this commitment, we have adopted our Code
of Conduct and Business Code of Ethics, which applies to all our
directors, officers and employees. To assist in its governance, our
board has formed two standing committees composed entirely of
independent directors, Audit and Nominating, Corporate Governance
and Compensation. A discussion of each committee’s function
is set forth below. Additionally, we have adopted and published to
all employees our Whistleblower Notice establishing procedures by
which any employee may bring to the attention of our Audit
Committee any disclosure regarding accounting, internal control or
other auditing issues affecting our company or any improper
activities of any officer or employee. Disclosure may be made
anonymously.
Our
bylaws, the charters of each board committee, the independent
status of a majority of our board of directors, our Code of Conduct
and Business Code of Ethics and our Whistleblower Notice provide
the framework for our corporate governance. Copies of our bylaws,
committee charters, Code of Conduct and Business Code of Ethics and
Whistleblower Notice may be found on our website at www.inuvo.com. Copies of these
materials also are available without charge upon written request to
our corporate secretary.
Board of directors
The
board of directors oversees our business affairs and monitors the
performance of management. In accordance with our corporate
governance principles, the board of directors does not involve
itself in day-to-day operations. The directors keep themselves
informed through discussions with the Executive Chairman and Chief
Executive Officer and our Chief Financial Officer and by reading
the reports and other materials that we send them and by
participating in board of directors and committee meetings.
Commencing with our 2008 annual meeting, our directors were divided
into three classes and designated Class I, Class II and Class III.
Directors may be assigned to each class in accordance with a
resolution or resolutions adopted by the board of directors.
Directors are elected for a full term of three years. Our directors
hold office until their successors have been elected and duly
qualified unless the director resigns or by reason of death or
other cause is unable to serve in the capacity of director. If any
director resigns, dies or is otherwise unable to serve out his or
her term, or if the board increases the number of directors, the
board may fill any vacancy by a vote of a majority of the directors
then in office, although less than a quorum exists. A director
elected to fill a vacancy shall serve for the unexpired term of his
or her predecessor. Vacancies occurring by reason of the removal of
directors without cause may only be filled by vote of the
stockholders.
Board leadership structure and board’s role in risk
oversight
Mr.
Richard K. Howe serves as both the Executive Chairman of our board
of directors and our Chief Executive Officer. Mr. Charles D.
Morgan, an independent director, serves as our Lead Independent
Director. Our board believes our current structure provides
independence and oversight, and facilitates the communication
between senior management and the full board of directors regarding
risk oversight, which the board believes strengthens its risk
oversight activities. Moreover, the structure allows the Executive
Chairman and Chief Executive Officer to better focus on his
responsibilities of running the company, enhancing stockholder
value and expanding and strengthening our business, while allowing
the Lead Independent Director to lead the board in its fundamental
role of providing independent oversight of management.
Risk is
inherent with every business, and how well a business manages risk
can ultimately determine its success. We face a number of risks,
including credit risk, interest rate risk, liquidity risk,
operational risk, strategic risk and reputation risk. Management is
responsible for the day-to-day management of the risks we face,
while the board, as a whole and through its committees, has
responsibility for the oversight of risk management. In its risk
oversight role, the board of directors has the responsibility to
satisfy itself that the risk management processes designed and
implemented by management are adequate and functioning as designed.
To do this, the board of directors meets regularly with management,
as well as independently, to review Inuvo's risks. Both our General
Counsel and our Chief Financial Officer attend many of the board
meetings and are available to address any questions or concerns
raised by any member of the board on risk management and any other
matter. The independent members of the board work together to
provide strong, independent oversight of our management and affairs
through the board's standing committees and, when necessary,
special meetings of independent directors. Our independent
directors may meet at any time in their sole discretion without any
other directors or representatives of management present. Each
independent director has access to the members of our management
team or other employees as well as full access to our books and
records. We have no policy limiting, and exert no control over,
meetings of our independent directors.
Board committees
The
board of directors has standing Audit and Nominating, Corporate
Governance and Compensation Committees. Each committee has a
written charter. The charters are available on our website at
www.inuvo.com.
Except as set forth below, all committee members are independent
directors. Information concerning the current membership and
function of each committee is as follows:
Director
|
Audit
Committee Member
|
|
Nominating,
Corporate Governance and Compensation Committee
Member
|
|
Charles
D. Morgan
|
|
|
✓
|
|
Charles
L. Pope
|
✓(1)
|
|
|
|
Patrick
Terrell
|
✓
|
|
✓
|
|
Gordon
J. Cameron
|
✓
|
|
|
|
G. Kent
Burnett
|
|
|
✓ (1)
|
|
(1)
Denotes Chairperson.
Audit
Committee. The Audit
Committee assists the board in fulfilling its oversight
responsibility relating to:
●
the integrity of
our financial statements;
●
our compliance with
legal and regulatory requirements; and
●
the qualifications
and independence of our independent registered public
accountants.
The
Audit Committee is composed of three directors, all of whom have
been determined by the board of directors to be independent as
defined by the NYSE American Company Guide. The board has
determined that each member of the Audit Committee, qualifies as an
“audit committee financial expert” as defined by the
SEC. During 2017, the Audit Committee held three meetings and took
action by unanimous written consent one time.
Nominating, Corporate
Governance and Compensation Committee. The Nominating,
Corporate Governance and Compensation Committee is responsible
for:
●
overseeing our
compensation programs and practices, including our executive
compensation plans and incentive compensation plans;
●
recommending the
slate of director nominees for election to our board of
directors;
●
identifying and
recommending candidates to fill vacancies occurring between annual
stockholder meetings;
●
reviewing the
composition of board committees; and
●
monitoring
compliance with, reviews, and recommends changes to our various
corporate governance policies and guidelines.
The
Chief Executive Officer provides input to the committee with
respect to the individual performance and compensation
recommendations for the other executive officers. The
committee’s charter authorizes the committee to retain an
independent consultant, and from time to time. The committee did
not retain a consultant in 2017. The committee also prepares and
supervises the board’s annual review of director independence
and the board’s annual self-evaluation.
A
majority of the persons serving on our board of directors must be
independent. Thus, the committee has considered transactions and
relationships between each director or any member of his immediate
family and us or our affiliates, including those reported under
“Certain Relationships and Related Transactions” below.
The committee also reviewed transactions and relationships between
directors or their affiliates and members of our senior management
or their affiliates. As a result of this review, the committee
affirmatively determined that each of Messrs. Pope, Morgan,
Terrell, Cameron and Burnett are independent as defined by the NYSE
American Company Guide.
The
committee considers all qualified candidates for our board of
directors identified by members of the committee, by other members
of the board of directors, by senior management and by our
stockholders. The committee reviews each candidate including each
candidate’s independence, skills and expertise based on a
variety of factors, including the person’s experience or
background in management, finance, regulatory matters and corporate
governance. Further, when identifying nominees to serve as
director, while we do not have a policy regarding the consideration
of diversity in selecting directors, the committee seeks to create
a board that is strong in its collective knowledge and has a
diversity of skills and experience with respect to accounting and
finance, management and leadership, vision and strategy, business
operations, business judgment, industry knowledge and corporate
governance. In addition, prior to nominating an existing director
for re-election to the board of directors, the committee will
consider and review an existing director’s board and
committee attendance and performance, length of board service,
experience, skills and contributions that the existing director
brings to the board, equity ownership in Inuvo and
independence.
The
committee follows the same process and uses the same criteria for
evaluating candidates proposed by stockholders, members of the
board of directors and members of senior management. Based on its
assessment of each candidate, the committee recommends candidates
to the board. However, there is no assurance that there will be any
vacancy on the board at the time of any submission or that the
committee will recommend any candidate for the board.
During
2017 the Nominating, Corporate Governance and Compensation
Committee was composed of three directors, all of whom have been
determined by the board of directors to be independent as defined
by the NYSE American Company Guide. Mr. Burnett serves as Chairman
of the Nominating, Corporate Governance and Compensation Committee.
During 2017, the Nominating, Corporate Governance and Compensation
Committee held one meeting and took action by unanimous written
consent five times.
Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010
(“Dodd-Frank”)
Dodd-Frank requires
public companies to provide stockholders with an advisory vote on
compensation of the most highly compensated executives, which are
sometimes referred to as “say on pay” as well as an
advisory vote on how often the company will present say on pay
votes to its stockholders. At our 2017 annual meeting of
stockholders held on June 19, 2017, our stockholders approved a
non-binding proposal that the frequency of an advisory vote on our
executive compensation would be held every three years together
with a non-binding resolution approving our executive compensation
as described in that proxy statement. As such, this proxy statement
does not contain a non-binding say on pay proposal for the approval
of our current executive compensation structure.
The
Securities and Exchange Commission has also approved NYSE listing
standards relating to compensation committees of listed companies,
including companies on the NYSE American. The listing requirements
were added pursuant to Dodd-Frank and address:
●
enhanced
independence requirement for compensation committee
members,
●
compensation
committee authority relating to compensation consultants, counsel
and other advisers, and
●
the responsibility
of the compensation committee to consider potential conflicts of
interests when choosing consultants, counsel and other
advisers.
Listed
companies had until the earlier of the first annual meeting after
January 15, 2014, or October 31, 2014 to comply with the new
compensation committee independence and were required to comply
with other new standards, including those relating to the authority
of the compensation committee, beginning on July 1, 2013. A smaller
reporting company such as Inuvo is not subject to the requirements
of these recent compensation committee rules, except that a smaller
reporting company must have, and certify that it has and will
continue to have, a compensation committee of at least two members,
each of whom must be an independent director as defined under the
current NYSE American independence rules. Our Nominating, Corporate
Governance and Compensation Committee meets this
requirements.
Stockholder nominations
Stockholders who
would like to propose a candidate may do so by submitting the
candidate’s name, resume and biographical information to the
attention of our corporate secretary. All proposals for nomination
received by the corporate secretary will be presented to the
committee for appropriate consideration. It is the policy of the
Nominating, Corporate Governance and Compensation Committee to
consider director candidates recommended by stockholders who appear
to be qualified to serve on our board of directors. The Nominating,
Corporate Governance and Compensation Committee may choose not to
consider an unsolicited recommendation if no vacancy exists on the
board of directors and the Nominating, Corporate Governance and
Compensation Committee does not perceive a need to increase the
size of the board of directors. In order to avoid the unnecessary
use of the Nominating, Corporate Governance and Compensation
Committee’s resources, the Nominating, Corporate Governance
and Compensation Committee will consider only those director
candidates recommended in accordance with the procedures set forth
below. To submit a recommendation of a director candidate to the
Nominating, Corporate Governance and Compensation Committee, a
stockholder should submit the following information in writing,
addressed to the corporate secretary of Inuvo at our main
office:
●
the name and
address of the person recommended as a director
candidate;
●
all information
relating to such person that is required to be disclosed in
solicitations of proxies for election of directors pursuant to
Regulation 14A under the Securities Exchange Act of 1934, as
amended;
●
the written consent
of the person being recommended as a director candidate to be named
in the proxy statement as a nominee and to serve as a director if
elected;
●
as to the person
making the recommendation, the name and address, as they appear on
our books, of such person, and number of shares of our common stock
owned by such person; provided,
however, that if the person is not a registered holder of
our common stock, the person should submit his or her name and
address along with a current written statement from the record
holder of the shares that reflects the recommending person’s
beneficial ownership of our common stock; and
●
a statement
disclosing whether the person making the recommendation is acting
with or on behalf of any other person and, if applicable, the
identity of such person.
Director qualification
The
following is a discussion for each director of the specific
experience, qualifications, attributes or skills that led the
Nominating, Corporate Governance and Compensation Committee to
recommend to the board, and for the board to conclude that the
individual should be serving as a director of Inuvo.
Class I Directors
Richard K. Howe
– Mr. Howe’s track record as a successful
high-technology operating and marketing executive in data,
analytics, and marketing services as a result of building and/or
running over a dozen businesses in five countries were factors
considered by the Nominating, Corporate Governance and Compensation
Committee and the board. Specifically, the Nominating, Corporate
Governance and Compensation Committee and the board viewed
favorably his position at companies that include Inuvo as president
and CEO, Acxiom Corporation as chief marketing, business strategy
and M&A officer, Fair Isaac & Company where he served as
general manager, and ieWild, Inc. as co-founder and chairman and
CEO; his service as a board member for the non-profit organization
Business for Diplomatic Action; and his academic achievements at
Concordia University and McGill University in making their
recommendation.
Gordon J. Cameron
– Mr. Cameron's track record as a senior executive in a
variety of business segments and his in excess three decades of
experience in building successful businesses were factors
considered by the Nominating, Corporate Governance and Compensation
Committee and the board. Specifically, the Nominating, Corporate
Governance and Compensation Committee and the board viewed
favorably his position as Executive Vice President in Retail
Lending at PNC Financial Services, one of the largest diversified
financial services institutions in the United States, as well as
his positions with companies such as Canadian Imperial Bank of
Commerce, Fair Isaac Corporation FICO, IeWild Inc., HNC Software
Inc., Advanta National Bank/Fleet, The Cambell Group LTD and
Fidelity Bank N.A and his academic achievements at Widener
University School of Management and Pennsylvania State University
in making their recommendation.
Class II Directors
Charles L. Pope
– Mr. Pope’s track record as a successful
Tampa-based Chief Financial Officer and board member with decades
of experience in public company accounting and finance were factors
considered by the Nominating, Corporate Governance and Compensation
Committee and the board. Specifically, the Nominating, Corporate
Governance and Compensation Committee and the board viewed
favorably his positions as CFO at companies that include The Palm
Bank, Aerosonic Corporation, Reptron Manufacturing and UTEK
Corporation; his experience in serving on boards and board
committees of other publicly-traded companies, his experience at
PricewaterhouseCoopers where he served as partner during his 20
years with the firm; his certification as a Certified Public
Accountant; and his academic achievements from Auburn University in
making their recommendation.
G. Kent Burnett
– Mr. Burnett's track
record as a successful technology and ecommerce executive holding
executive level technology positions were factors considered by the
Nominating, Corporate Governance and Compensation Committee of the
board. Specifically, the Nominating, Corporate Governance and
Compensation Committee and the board viewed favorably his
experience at Dillard’s including as Chief Information
Officer, Western Division Chairman and Vice President of Technology
and Ecommerce, as well as his experience in various marketing,
technology and engineering positions with IBM and his membership on
the boards of directors of First Orion Corp. and Acumen Brands in
making their recommendation.
Class III directors
Charles D. Morgan
– Mr. Morgan’s successful track record as a
high-technology executive in data, analytics, outsourcing and
marketing services with a network of relationships worldwide as a
result of building a billion dollar annual revenue enterprise as
chairman and chief executive officer were factors considered by the
Nominating, Corporate Governance and Compensation Committee and the
board. Specifically, the Nominating, Corporate Governance and
Compensation Committee and the board viewed favorably his
experience at companies such as Acxiom Corporation as Chairman and
CEO and IBM as a systems engineer; his role as an equity owner of
Bridgehampton Capital Management LLC and a significant investor in
its funds; his service as Chairman of the Advisory Board and
co-manager of investments for Bridgehampton Capital Management LLC;
his leadership on the board and in various leadership roles with
the Direct Marketing Association (DMA) including his service as
chairman of the DMA in 2001; his service as a member and past
chairman of the board of trustees of Hendrix College; and his
academic achievements at the University of Arkansas in making their
recommendation.
Patrick Terrell
– Mr. Terrell’s track record as a successful operating
executive and investor were factors considered by the Nominating,
Corporate Governance and Compensation Committee and the board.
Specifically, the Nominating, Corporate Governance and Compensation
Committee and the board viewed favorably Mr. Terrell’s
services as founder and CEO of Leading Technology, a manufacturer
of personal computers, his founding of Byte Shops Northwest, and
his services as managing member of Terrell Group Management and
PatRick Investments, LLC in making their
recommendation.
In
addition to the each of the individual skills and background
described above, the Nominating, Corporate Governance and
Compensation Committee and our board also concluded that each of
these individuals will continue to provide knowledgeable advice to
our other directors and to senior management on numerous issues
facing our company and on the development and execution of our
strategy.
Compensation of directors
Each
independent member of our board of directors receives the following
fees:
●
$30,000 annual
retainer payable quarterly; and
●
$30,000 of
restricted stock units, calculated at fair market value on the date
of grant, vesting March 31.
The
following table provides information concerning the compensation
paid to our independent directors for their services as members of
our board of directors for 2017. The information in the following
table excludes any reimbursement of out-of-pocket travel and
lodging expenses which we may have paid.
|
Name
|
Fees earned or
paid in cash ($)
|
|
|
Non-equity incentive plan compensation ($)
|
Nonqualified deferred compensation
earnings ($)
|
All
other
compensation ($)
|
|
Charles D.
Morgan
|
30,000
|
29,940
|
0
|
0
|
0
|
0
|
59,940
|
Charles L.
Pope
|
30,000
|
29,940
|
0
|
0
|
0
|
0
|
59,940
|
Patrick
Terrell
|
30,000
|
29,940
|
0
|
0
|
0
|
0
|
59,940
|
Gordon J.
Cameron
|
30,000
|
29,514
|
0
|
0
|
0
|
0
|
59,514
|
G. Kent
Burnett
|
30,000
|
29,514
|
0
|
0
|
0
|
0
|
59,514
|
Audit Committee Report
Report of the Audit Committee of the Board of
Directors
The primary function of the Audit Committee is to assist the board
of directors in its oversight of our financial reporting processes.
Management is responsible for the preparation, presentation and
integrity of the financial statements, including establishing
accounting and financial reporting principles and designing systems
of internal control over financial reporting. Our independent
auditors are responsible for expressing an opinion as to the
conformity of our consolidated financial statements with generally
accepted accounting principles and auditing management’s
assessment of the effectiveness of internal control over financial
reporting.
With
respect to the year ended December 31, 2017, in addition to its
other work, the Audit Committee:
●
reviewed and
discussed with management and Mayer Hoffman McCann P.C., our
independent registered public accounting firm, our audited
consolidated financial statements as of December 31, 2017 and the
year then ended;
●
discussed with
Mayer Hoffman McCann P.C. the matters required to be discussed by
Statement on Auditing Standards No. 61, “Communication with Audit Committees
,” as amended, with respect to its review of the findings of
the independent registered public accounting firm during its
examination of our consolidated financial statements;
and
●
received from Mayer
Hoffman McCann P.C. written affirmation of its independence as
required by the Independence Standards Board Standard No. 1,
“Independence Discussions
with Audit Committees .” In addition, the Audit
Committee discussed with Mayer Hoffman McCann P.C., its
independence and determined that the provision of non-audit
services was compatible with maintaining auditor
independence.
The
audit committee recommended, based on the review and discussion
summarized above, that the board of Directors include the audited
consolidated financial statements in the 2017 10-K for filing with
the SEC.
Dated
May 2, 2018
|
|
Audit
Committee of the Board of Directors of Inuvo, Inc.
|
|
|
|
|
|
/s/ Charles L. Pope, Chairman
|
|
|
/s/ Gordon J. Cameron
|
|
|
/s/Patrick Terrell
|
Compliance with Section 16(a) of the Exchange Act
Based
solely upon a review of Forms 3 and 4 and amendments thereto
furnished to us under Rule 16a-3(d) of the Securities Exchange Act
of 1934 during the year ended December 31, 2017 and Forms 5 and
amendments thereto furnished to us with respect to the year ended
December 31, 2017, as well as any written representation from a
reporting person that no Form 5 is required, we are not aware that
any officer, director or 10% or greater stockholder failed to file
on a timely basis, as disclosed in the aforementioned Forms,
reports required by Section 16(a) of the Securities Exchange Act of
1934 during the year ended December 31, 2017.
EXECUTIVE COMPENSATION
Executive officers
Name
|
|
Positions
|
Richard
K. Howe
|
|
Chairman
of the Board
|
Wallace
D. Ruiz
|
|
Chief
Financial Officer, Secretary
|
John B.
Pisaris, Esq.
|
|
General
Counsel
|
Don
Walker “Trey” Barrett III
|
|
Chief
Operating Officer
|
Andrea
S. Haldeman
|
|
Chief
Revenue Officer
|
Executive officers
of our company are appointed by the board of directors and serve at
the pleasure of the board.
Richard K. Howe. For
information regarding Mr. Howe, please see “Board of
Directors” which appears earlier in this proxy
statement.
Wallace D. Ruiz. Mr.
Ruiz, 66, has served as our Chief Financial Officer since June
2010. From 2005 until April 2009, Mr. Ruiz was Chief Financial
Officer and Treasurer of SRI Surgical Express, Inc. (Nasdaq: STRC),
a Tampa, Florida provider of outsourced sterilization and supply
chain management services to healthcare providers. From 1995 until
2004 he was Chief Financial Officer of Novadigm, Inc. (Nasdaq:
NVDM), a developer and worldwide marketer of enterprise
infrastructure software that was acquired by Hewlett-Packard
Company in 2004. Since March 2018 he has been a member of the board
of directors of Truli Media Group, Inc. (OTCPink: TRLI). Mr. Ruiz
received a B.S. in Computer Science from St. John’s
University and a M.B.A. in Accounting and Finance from Columbia
University. Mr. Ruiz is a Certified Public Accountant.
John B. Pisaris. Mr.
Pisaris, 52, has served as our General Counsel since March 2012
following our acquisition of Vertro. He served as general counsel
of Vertro from October 2004 until March 2012. From February 2004 to
September 2004, Mr. Pisaris served as vice president of legal of
Vertro, and prior to that was a partner at Porter Wright
Morris& Arthur, LLP, a law firm, from January 2002 to January
2004.
Don Walker
“Trey” Barrett, III. Mr. Barrett, 53, joined Inuvo in
February 2010 as Senior Vice President of Corporate Strategy and
Business Development, and was promoted to Chief Operating Officer
in February 2013. Prior to joining Inuvo, Mr. Barnett served as
Acxiom Corporation's Director of Interactive Media Products
overseeing the innovation and development of the Relevance-X
product line. With over 25 years of data-driven direct marketing
experience, he has been involved in several successful business
start-ups in the direct and interactive marketing industries. Mr.
Barnett earned a bachelor’s degrees in Marketing and
Economics from the University of Arkansas at
Fayetteville.
Andrea
S. Haldeman. Ms. Haldeman, 51, joined
Inuvo in June 2017 as Chief Revenue Officer. Prior to joining
Inuvo, Ms. Haldeman served for four years as Senior Vice President,
Sales at Infogroup. With over 30 years of data-driven marketing
expertise, Ms. Haldeman also served in several sales leadership
roles at Acxiom from 1995 through 2013, including Vice President,
Distribution Solutions Group. Ms. Haldeman earned a
bachelor’s degree from Oberlin College.
Compensation philosophy
The fundamental objectives of our executive compensation program
are to attract and retain highly qualified executive officers,
motivate these executive officers to materially contribute to our
long-term business success, and align the interests of our
executive officers and stockholders by rewarding our executives for
individual and corporate performance based on targets established
by the Nominating, Corporate Governance and Compensation
Committee.
We believe that achievement of these compensation program
objectives enhances long-term stockholder value. When designing
compensation packages to reflect these objectives, the Nominating,
Corporate Governance and Compensation Committee has adopted the
following four principles as a guide:
●
Alignment with stockholder interests:
Compensation should be tied, in part, to our stock performance
through the granting of equity awards to align the interests of
executive officers with those of our stockholders;
●
Recognition for business performance:
Compensation should correlate in large part with our overall
financial performance;
●
Accountability for individual
performance: Compensation should partially depend on the
individual executive’s performance, in order to motivate and
acknowledge the key contributors to our success; and
●
Competition: Compensation should
generally reflect the competitive marketplace and be consistent
with that of other well-managed companies in our peer group. In
implementing this compensation philosophy, the Nominating,
Corporate Governance and Compensation Committee takes into account
the compensation amounts from the previous years for each of the
named executive officers, and internal compensation equity between
the named executive officers and other employees.
2017 compensation determination process
In
2017, the compensation program for our executive officers consisted
of the following components:
●
other fringe
benefits and perquisites.
The
Nominating, Corporate Governance and Compensation Committee
believes that our executive compensation package consists of
elements of compensation that are typically used to incentivize and
reward executive management at other companies of our size, in our
geographic area or in our industry. Each of these components is
designed to meet the program's objectives of providing a
combination of fixed and variable, performance-based compensation
linked to individual and corporate performance. In the course of
setting the initial compensation level for new hires or adjusting
the compensation of existing employees, the Nominating, Corporate
Governance and Compensation Committee considered the advice and
input of our management. Our Chief Executive Officer typically
makes recommendations to the Nominating, Corporate Governance and
Compensation Committee for any proposed changes in salary, as well
as performance-based awards and stock option grants, for the other
named executive officers. The Nominating, Corporate Governance and
Compensation Committee decides any salary change, as well as
performance-based awards and stock option grants, for the Chief
Executive Officer.
Base salary
Base salary is an important component of executive compensation
because it provides executives with an assured-level of income,
assists us in attracting executives and recognizes different levels
of responsibility and authority among executives. The determination
of base salaries is based upon the executive’s qualifications
and experience, scope of responsibility and potential to achieve
the goals and objectives established for the executive.
Additionally, contractual provisions in executive employment
agreements, past performance, internal pay equity and comparison to
competitive salary practices are also considered.
In general, the Nominating, Corporate Governance and Compensation
Committee considers two types of potential base salary increases
including “merit increases” based upon the
executives’ individual performance and/or “market
adjustments” based upon the peer group salary range for
similar executives.
Plan awards
The objective of our long-term
incentive program is to provide a long-term retention incentive for
the named executive officers and others and to align their
interests directly with those of our stockholders by way of stock
ownership. Under our 2010 Equity Compensation Plan (the
“2010
Plan”), and
our 2017 Equity Compensation Plan (the “2017
Plan”), the
board of directors or the Nominating, Corporate Governance and
Compensation Committee has the discretion to determine whether
equity awards will be granted to named executive officers and if
so, the number of shares subject to each award. Both plans allow
the board or the Nominating, Corporate Governance and Compensation
Committee to grant options and restricted stock and other
stock-based awards with respect to up to shares of our common
stock, valued in whole or in part by reference to the fair market
value of the stock. In most instances, these long-term grants vest
over a multi-year basis.
The
board or the Nominating, Corporate Governance and Compensation
Committee determines the recipients of long-term incentive awards
based upon such factors as performance, the length of continuous
employment, managerial level, any prior awards, and recruiting and
retention demands, expectations and needs. All our employees are
eligible for awards. The board or the Nominating, Corporate
Governance and Compensation Committee grants such awards by formal
action, which awards are not final until a stock option agreement
is delivered by us and executed by both the company and the
employee. There is no set schedule for the board or the Nominating,
Corporate Governance and Compensation Committee to consider and
grant awards. The board and the Nominating, Corporate Governance
and Compensation Committee have the discretion to make grants
whenever it deems it appropriate in our best interests. The
Nominating, Corporate Governance and Compensation Committee has
discretion to grant equity awards at any time.
We do not have any program, plan or practice in place to time
option or other award grants with the release of material,
non-public information and does not release such information for
the purpose of affecting the value of executive compensation. The
exercise price of stock subject to options awarded under the our
plans is the fair market value of the stock on the date the grant
is approved by the board or the Nominating, Corporate Governance
and Compensation Committee. Under the terms of each plan, the fair
market value of the stock is the closing sales price of the stock
on the date the grant is approved by the board or the Nominating,
Corporate Governance and Compensation Committee as reported by the
NYSE American.
Cash Bonus Plan
For 2017 we approved a 2017 Management Incentive Program. The
program established a variable cash incentive pool which may be
awarded to executive officers and our employees, including our
Chief Executive Officer, based on achieving certain revenue and net
income levels as determined by our 2017 financial results or at the
discretion of the Committee. The program provided that the total
incentive pool which was available for distribution would be
divided between our executive officers (75% in the aggregate) and
other employees (25% in the aggregate), subject to their continued
employment with our company. The percentage of pool participation
by each of our individual executive officers was fixed by the
program and the amount of individual awards to our employees, other
than our executive officers, was determined by our Chief Executive
Officer.
Other compensation and benefits
We have
historically provided perquisites and other types of non-cash
benefits on a very limited basis in an effort to avoid an
entitlement mentality, reinforce a pay-for-performance orientation
and minimize expense. Such benefits, when provided, can include
additional health care benefits and additional life
insurance.
Retirement and other post-termination benefits
Other than our 401(k) plan, employment agreements with our named
executive officers and certain other employment agreements which
provide for severance for termination without cause, we have not
entered into any employment agreements that provide for a
continuation of post-employment benefits. Our benefits plans are
generally the same for all employees, and so as of the date of this
proxy statement, the Nominating, Corporate Governance and
Compensation Committee does not believe that any such plans in
their present forms would continue post-employment, except as
required by law (including with respect to COBRA), or otherwise set
forth in this proxy statement. We do not currently maintain any
other retirement or post-termination benefits plans.
Change in control severance policy
We do
not currently maintain any change in control severance plans or
severance policies, except as provided in the executive employment
agreements and the 2010 Plan and 2017 Plan, both of which are
discussed in this section. Therefore, none of our named executive
officers will receive any cash severance payments in the event we
undergo a change in control, unless their employment agreement
otherwise provides.
Insurance
All
full-time employees, including the named executive officers, are
eligible to participate in our standard medical, dental, long-term
and short-term disability and life insurance plans. The terms of
such benefits for the named executive officers are generally the
same as those for all other company employees, with the exception
of the level of life insurance coverage. We pay approximately 95%
of the annual health insurance premium with employees paying the
balance through payroll deductions. We pay for up to $1,000,000 of
basic life insurance and AD&D insurance for our CEO and CFO.
All other full-time employees can elect basic life insurance and
AD&D insurance coverage equal to their annual salary, up to
$150,000, paid by us.
401(k)
Our
employees can participate in a 401(k) plan, which is a qualified
defined contribution retirement plan, sponsored by Insperity,
professional employer organization that provides services to
us. Participants are provided the opportunity to make salary
reduction contributions to the plan on a pre-tax basis. We have the
ability to make discretionary matching contributions and
discretionary profit sharing contributions to such plan. Our
current practice is to match participant’s contributions up
to the first 4 percent of their annual earnings. The company match
is fully vested when made.
Other benefits
We seek to maintain an open and inclusive culture in our facilities
and operations among executives and other company employees. Thus,
we do not provide executives with separate dining or other
facilities, nor do we have programs for providing personal-benefit
perquisites to executives, such as defraying the cost of personal
entertainment or family travel. Our basic health care and other
insurance programs are generally the same for all eligible
employees, including the named executive officers.
Summary Compensation Table
The
following table summarizes all compensation recorded by us in each
of the last two completed fiscal years for:
●
all individuals
serving as our principal executive officer or acting in a similar
capacity during the year ended December 31, 2017;
●
our two most highly
compensated named executive officers at December 31, 2017 whose
annual compensation exceeded $100,000; and
●
up to two
additional individuals for whom disclosure would have been made in
this table but for the fact that the individual was not serving as
a named executive officer of our company at December 31,
2017.
The
value attributable to any option awards is computed in accordance
with FASB ASC Topic 718. The assumptions made in the valuations of
the option awards are included in Note 10 of the notes to our
consolidated financial statements for the year ended December 31,
2017 appearing in our 2017 10-K.
Name and
principal position
|
|
Year
|
|
|
|
|
Nonequity
incentive plan compensation ($)
|
Non-qualified
deferred compen-sation earnings
($)
|
All
other
compen-sation
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
Richard K.
Howe,
|
|
2017
|
420,000
|
245,000
|
442,175
|
0
|
0
|
0
|
10,800
|
1,117,975
|
Chairman and Chief
Executive Officer
|
|
2016
|
395,000
|
87,500
|
524,482
|
0
|
0
|
0
|
10,600
|
1,017,582
|
|
|
|
|
|
|
|
|
|
|
Wallace D.
Ruiz,
|
|
2017
|
275,000
|
105,000
|
157,919
|
0
|
0
|
0
|
10,800
|
548,719
|
Chief Financial
Officer
|
|
2016
|
275,000
|
37,500
|
169,872
|
0
|
0
|
0
|
8,737
|
491,109
|
|
|
|
|
|
|
|
|
|
|
Don (Trey) Barrett
III
|
|
2017
|
250,000
|
140,000
|
210,560
|
0
|
0
|
0
|
3,000
|
603,560
|
Chief Operating
Officer
|
|
2016
|
250,000
|
50,000
|
208,907
|
0
|
0
|
0
|
3,735
|
512,642
|
On
March 1, 2012, we entered into employment agreements with each of
Messrs. Howe and Ruiz. Mr. Barrett does not have an employment
agreement and his compensation is set by the Nominating, Corporate
Governance and Compensation Committee.
Executive Employment Agreements
The
employment agreements entered into by Messrs. Howe and Ruiz, each
referred to as an executive, have an initial term of one year,
after which each executive’s employment agreement
automatically renews for additional one-year periods on the same
terms and conditions, unless either party to the agreement
exercises the respective termination rights available to such party
in the agreement. The employment agreements currently provide for a
minimum annual base salary of $425,000 for Mr. Howe, and $275,000
for Mr. Ruiz. The employment agreements require our company to
compensate the executives and provide them with certain benefits if
their employment is terminated. The compensation and benefits the
executives are entitled to receive upon termination of employment
vary depending on whether their employment is
terminated:
●
by us for cause (as
defined in the employment agreements);
●
by us without
cause, or by the executive for good reason (as defined in the
employment agreements);
●
due to death or
disability; or
●
by the executive
without good reason.
In the
event of a termination by our company without cause or a
termination by the executive for good reason, the executive would
be entitled to receive the following:
●
his earned but
unpaid basic salary through the termination date, plus a portion of
the executive’s bonus based upon the bonus he would have
earned in the year in which his employment was terminated,
pro-rated for the amount of time employed by us during such year
and paid on the original date such bonus would have been
payable;
●
an amount payable
over the 12-month period following termination equal to one times
the sum of his basic salary at the time of termination, plus a
termination bonus equal to the bonus paid to the executive during
the four fiscal quarters prior to the date of termination (except
that if a target bonus has been established for Mr. Howe, each such
person’s termination bonus is equal to his target bonus for
the fiscal year in which the termination occurs, increased or
decreased pursuant to actual performance versus targeted
performance in the then current plan measured as of the end of the
calendar month preceding the termination date), or in the event of
a change of control (as defined below), the greater of the relevant
calculation above or the bonus paid to the executive during the
four fiscal quarters prior to the change of control;
●
any other amounts
or benefits owing to the executive under our then-applicable
employee benefit, long-term incentive, or equity plans and
programs, within the terms of such plans, payable over the 12-month
period following termination; and
●
benefits (including
health, life, and disability) as if the executive was still an
employee during the 12-month period following
termination.
Finally, in the
event of a termination without cause by our company, with good
reason by the executive, or following a change of control (as
defined in the employment agreements), any equity award held by the
executive will immediately and fully vest and become exercisable
throughout the full term of such award as if the executive were
still employed by us. In the event of a termination by us with
cause, Messrs. Ruiz and Howe would be entitled to receive the
earned but unpaid portion of such executive’s base salary
through the date of termination.
In the
event of a termination by us of Mr. Ruiz upon the death or
permanent disability of such executive, the executive would be
entitled to receive the earned but unpaid portion of such
executive’s base salary through the date of termination, the
earned but unpaid portion of any vested incentive compensation
under and consistent with plans adopted by us prior to the date of
termination, and over the 12 months following the date of
termination an amount equal to 20% base salary at the time of
termination for each year of employment with us, capped at 100% of
the base salary.
In the
event of a termination by us of Mr. Howe upon the death or
permanent disability of such executive, the executive would be
entitled to receive the earned but unpaid portion of such
executive’s base salary through the date of termination, any
other amounts or benefits owing to the executive under any of our
then-applicable employee benefit, long-term incentive or equity
plans and programs, and over the 12 months following the date of
termination an amount equal to 20% base salary at the time of
termination for each year of employment with us, capped at 100% of
the base salary.
In the
event of a termination by Mr. Ruiz without good reason, such
executive is entitled to receive the earned but unpaid portion of
such executive’s base salary through the date of termination,
and the earned but unpaid portion of any vested incentive
compensation under and consistent with our plans adopted by us
prior to the date of termination. In the event of a termination by
Mr. Howe without good reason, such executive is entitled to receive
the earned but unpaid portion of his base salary through the
termination date and any other amounts and benefits owing to the
executive under our then applicable employee benefit, long term
incentive or equity plans and programs.
The
executive may terminate employment for any reason (other than good
reason) upon giving 30 days’ advance written notice to us. As
to a termination by Mr. Ruiz for any reason other than a good
reason, we will pay the executive the earned but unpaid portion of
his base salary through the termination date and any earned but
unpaid vested incentive compensation under and consistent with
plans adopted by us prior to the date of termination. As to a
termination by Mr. Howe for any reason other than a good reason, we
will pay the executive the earned but unpaid portion of his base
salary through the termination date and any other amounts and
benefits owing to the executive under our then applicable employee
benefit, long term incentive or equity plans and
programs.
Outstanding equity awards at year end
The
following table provides information concerning unexercised
options, stock that has not vested and equity incentive plan awards
for each named executive officer outstanding as of December 31,
2017.
|
|
Name
|
Number of
securities underlying unexercised options
(#)
exercisable
|
Number of
securities underlying unexercised options
(#)
unexercisable
|
Equity
incentive plan awards: Number of securities underlying unexercised
unearned options
(#)
|
Option
exercise price
($)
|
Option
expiration date
|
Number of
shares or units of stock that have not vested (#)
|
Market value
of shares or units of stock that have not vested ($)
|
Equity
incentive plan awards: Number of unearned shares, units or other
rights that have not vested (#)
|
Equity
incentive plan awards: Market or payout value of unearned shares,
units or other rights that have not vested (#)
|
Richard K.
Howe
|
120,000
|
0
|
0
|
$2.93
|
3/14/2021
|
63,000
|
51,030
|
98,000
|
79,380
|
|
|
|
|
|
|
|
|
|
|
Wallace D.
Ruiz
|
43,000
|
0
|
0
|
$2.93
|
3/14/2021
|
22,500
|
18,225
|
35,000
|
28,350
|
|
|
|
|
|
|
|
|
|
|
Don (Trey) Barrett
III
|
40,000
|
0
|
0
|
$2.93
|
3/14/2021
|
30,000
|
24,300
|
46,667
|
37,800
|
Our equity compensation plans
Information
regarding the material terms of our 2005 Long Term Incentive Plan
(the “2005
Plan”) and our 2010 Plan and 2017 Plan is contained in
the 2017 10-K. The 2005 Plan expired in June 2015.
PRINCIPAL STOCKHOLDERS
At May
2, 2018, we had 28,797,198 shares of common stock
issued and outstanding. The following table sets forth information
known to us as of May 2, 2018 relating to the beneficial ownership
of shares of our common stock by:
|
●
|
each
person who is known by us to be the beneficial owner of more than
5% of our outstanding common stock;
|
|
●
|
each
director and nominee;
|
|
●
|
each
named executive officer; and
|
|
●
|
all
named executive officers and directors as a group.
|
Unless
otherwise indicated, the address of each beneficial owner in the
table set forth below is care of 500 President Clinton Avenue,
Suite 300, Little Rock, Arkansas 72201. We believe that all
persons, unless otherwise noted, named in the table have sole
voting and investment power with respect to all shares of common
stock shown as being owned by them. Under securities laws, a person
is considered to be the beneficial owner of securities owned by him
(or certain persons whose ownership is attributed to him) and that
can be acquired by him within 60 days from May 2, 2018, including
upon the exercise of options, warrants or convertible securities.
We determine a beneficial owner’s percentage ownership by
assuming that options, warrants or convertible securities that are
held by him, but not those held by any other person, and which are
exercisable within 60 days of the that date, have been exercised or
converted.
|
No. of
Shares
Beneficially
Owned
|
|
|
|
|
Charles Morgan
(1)
|
2,013,219
|
6.9%
|
Richard K. Howe
(2)
|
1,089,961
|
3.7%
|
Patrick
Terrell
|
645,733
|
2.2%
|
Wallace D. Ruiz
(3)
|
372,968
|
1.3%
|
John B. Pisaris
(4)
|
320,701
|
1.1%
|
Don Walker
“Trey” Barrett III (5)
|
353,249
|
1.2%
|
Charles L.
Pope
|
176,304
|
0.6%
|
G. Kent
Burnett
|
134,724
|
0.5%
|
Gordon J. Cameron
(6)
|
81,854
|
0.3%
|
Andrea Haldeman
(7)
|
41,664
|
0.1%
|
All named executive
officers, directors and director nominees as a group (ten persons)
(1)(2)(3)(4)(5)(6)(7)
|
5,228,392
|
17.9%
|
Onset V L.P.
(8)
|
2,559,691
|
8.8%
|
Tocqueville Asset
Management L.P. (9)
|
2,308,411
|
7.9%
|
———————
(1)
Includes 1,785,541 shares of
common stock held by Tocqueville Asset Management L.P. on his
behalf. See footnote
9
(2)
Includes 120,000 shares of common stock
issuable pursuant to
the exercise of stock options and 98,000 shares
pursuant to the exercise of restricted stock grants.
(3)
Includes 43,000 shares of common stock
issuable pursuant to the exercise of stock options and 35,000
shares pursuant to the exercise of restricted stock
grants.
(4)
Includes 186 shares and 1,985 shares,
respectively, held by Mr. Pisaris' minor children. Includes 9,392
shares pursuant to the exercise of restricted stock
grants.
(5)
Includes 40,000 shares of common stock
issuable pursuant to the exercise of stock options and 46,667
shares pursuant to the exercise of restricted stock
grants.
(6)
Includes 6,630 shares held by Mrs.
Cameron.
(7)
Includes 41,664 shares pursuant to the
exercise of restricted stock grants.
(8)
Pursuant
to the Schedule 13G filed with the SEC on July 17, 2017, Onset V
Management, LLC is the General Partner of Onset V L.P. Messrs.
Terry L.
Opdendyk and Robert F. Kuhling, Jr. may be deemed to have shared
power to vote or direct the vote of, and to dispose or direct
the disposition of, the securities held by Onset V L.P. but
disclaim beneficial ownership thereof except to the extent of their
pecuniary interest therein. Onset V, L.P.’s principal
business address is 2400 Sand Hill Road, Suite 150, Menlo Park, CA
94025.
(9)
Pursuant to the Schedule 13D filed with the SEC on February 2,
2018, Tocqueville Management Corporation is the general partner of
Tocqueville Asset Management L.P. Mr. Charles D. Morgan, a related
person of Tocqueville Asset Management, L.P., serves as a member of
our board of directors. The principal business address of
Tocqueville Asset Management, L.P. is at 40 West 57th Street, 19th
Floor, New York, New York 10019. See footnote
1.
Securities Authorized for Issuance under Equity Compensation
Plans
The
following table sets forth securities authorized for issuance under
any equity compensation plans approved by our stockholders as well
as any equity compensation plans not approved by our stockholders
as of December 31, 2017.
Plan
category
|
|
Number of
securities to be issued upon exercise of outstanding options,
warrants and rights(a)
|
Weighted
average exercise price of outstanding options, warrants and
rights
|
Number of
securities remaining available for future issuance under equity
compensation plans (excluding securities reflected in column
(a)
|
|
|
|
|
|
Plans approved by
our stockholders:
|
|
|
|
|
2005 Long-Term
Incentive Plan
|
|
13,748
|
$2.97
|
0
|
2010 Equity
Compensation Plan
|
|
1,197,036
|
$2.15
|
604,242
|
2017 Equity
Compensation Plan
|
|
125,000
|
$0.00
|
1,875,000
|
Plans not approved
by stockholders
|
|
0
|
0
|
0
|
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In
April 2013, we entered into a Services Agreement with First Orion
Corp. whereby we provided each other with office and technical
support services on a cost plus 30% basis. The fees under the
Services Agreement fluctuated depending on usage and in 2017 and
2016, we received a total of $117,385 and $101,884, respectively
from First Orion Corp. for providing services.
On
February 19, 2015, we entered into an Aircraft Time Sharing
Agreement with CD Morg., Inc., an affiliate of Mr. Morgan,
regarding our business use of an aircraft owned by CD Morg., Inc.
The fees under the Aircraft Time Sharing Agreement fluctuate
depending on usage. In 2017 and 2016 these fees were not
material.
Other
than these transactions, there have been no transactions since
January 1, 2016 nor are there any currently proposed transactions
in which we were or are to be participant in which any related
person had or will have a direct or indirect material
interest.
STOCKHOLDER PROPOSALS TO BE PRESENTED AT THE NEXT ANNUAL
MEETING
As of
the date of this proxy statement, we had not received notice of any
stockholder proposals for the 2018 annual meeting described herein
and proposals received subsequent to the date of this proxy
statement will be considered untimely. For a stockholder proposal
to be considered for inclusion in our proxy statement for the 2019
annual meeting, the corporate secretary must receive the written
proposal at our principal executive offices no later than the
deadline stated below. Such proposals must comply with SEC
regulations under Rule 14a-8 regarding the inclusion of stockholder
proposals in company-sponsored proxy materials. Proposals should be
addressed to:
Inuvo,
Inc.
Attention:
Corporate Secretary
500
President Clinton Avenue
Suite
300
Little
Rock, Arkansas 72201
Facsimile:
(877) 311-5050
Under
Rule 14a-8, to be timely, a stockholder’s notice must be
received at our principal executive offices not less than 120
calendar days before the date of our proxy statement release to
stockholders in connection with the previous year’s annual
meeting. However, if we did not hold an annual meeting in the
previous year or if the date of this year’s annual meeting
has been changed by more than 30 days from the date of the previous
year’s annual meeting, then the deadline is a reasonable time
before we begin to print and send our proxy materials. Therefore,
stockholder proposals intended to be presented at the 2019 annual
meeting must be received by us at our principal executive office no
later than December 13, 2018 in order to be eligible for inclusion
in our 2019 proxy statement and proxy relating to that meeting.
Upon receipt of any proposal, we will determine whether to include
such proposal in accordance with regulations governing the
solicitation of proxies.
You may
propose director candidates for consideration by the board’s
Nominating, Corporate Governance and Compensation Committee. Any
such recommendations should include the nominee’s name and
qualifications for board membership, information regarding the
candidate as would be required to be included in a proxy statement
filed pursuant to SEC regulations, and a written indication by the
recommended candidate of her or his willingness to serve, and
should be directed to the Corporate Secretary of Inuvo at our
principal executive offices: Inuvo, Inc., 500 President Clinton
Avenue, Suite 300, Little Rock, Arkansas 72201 within the time
period described above for proposals other than matters brought
under SEC Rule 14a-8.
AVAILABILITY OF ANNUAL REPORT ON FORM 10-K
As
required, we have filed our 2017 10-K with the SEC. Stockholders
may obtain, free of charge, a copy of the 2017 10-K by writing to
us at 500 President Clinton Avenue, Suite 300, Little Rock,
Arkansas 72201, Attention: Corporate Secretary, or from our
website, www.inuvo.com.
STOCKHOLDERS
SHARING THE SAME LAST NAME AND ADDRESS
The SEC
has adopted rules that permit companies and intermediaries such as
brokers to satisfy delivery requirements for proxy statements 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 provides extra convenience
for stockholders and cost savings for companies. We and some
brokers household proxy materials, delivering a single proxy
statement to multiple stockholders sharing an address unless
contrary instructions have been received from the affected
stockholders. Once you have received notice from your broker or us
that they are or we will be householding materials 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, or if you currently receive multiple
proxy statements and would prefer to participate in householding,
please notify your broker if your shares are held in a brokerage
account or us if you hold registered shares. You can notify us by
sending a written request to Inuvo, Inc., Attention: Corporate
Secretary, 500 President Clinton Avenue, Suite 300, Little Rock,
Arkansas 72201 or by faxing a communication to: (877)
311-5050.
WHERE YOU CAN FIND MORE INFORMATION
This
proxy statement refers to certain documents that are not presented
herein or delivered herewith. Such documents are available to any
person, including any beneficial owner of our shares, to whom this
proxy statement is delivered upon oral or written request, without
charge. Requests for such documents should be directed to Corporate
Secretary, Inuvo, Inc., 500 President Clinton Avenue, Suite 300,
Little Rock, Arkansas 72201. Please note that additional
information can be obtained from our website at www.inuvo.com.
We file
annual and special reports and other information with the SEC.
Certain of our SEC filings are available over the Internet at the
SEC's web site at http://www.sec.gov. You may also read and copy
any document we file with the SEC at its public reference
facilities:
Public
Reference Room Office
100 F
Street, N.E.
Room
1580
Washington,
D.C. 20549
You
may also obtain copies of the documents at prescribed rates by
writing to the Public Reference Section of the SEC at 100 F Street,
N.E., Room 1580, Washington, D.C. 20549. Callers in the United
States can also call 1-202-551-8090 for further information on the
operations of the public reference facilities.
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BY
ORDER OF THE BOARD OF DIRECTORS
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By:
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/s/ Richard K. Howe
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Richard
K. Howe,
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Chairman
and Chief Executive Officer
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Little
Rock, Arkansas
May
4, 2018
INUVO, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS
ANNUAL MEETING OF STOCKHOLDERS ON
JUNE 28, 2018 AT 9:00 A.M. LOCAL TIME
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CONTROL ID:
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REQUEST ID:
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The undersigned, a stockholder of Inuvo, Inc. (the
“Company”), hereby revoking any proxy heretofore given,
does hereby appoint John B. Pisaris and Wallace D. Ruiz, and each
of them, proxy, with power of substitution, for and in the name of
the undersigned to attend the 2018 annual meeting of Stockholders
of the Company to be held at the Company's offices located at 500
President Clinton Boulevard, Suite 300, Little Rock, AR 72201 on
June 28, 2018 at 9:00 a.m. local time, or at any adjournment or
postponement thereof, and there to vote, as designated
below:
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(CONTINUED AND TO BE SIGNED ON REVERSE SIDE.)
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VOTING INSTRUCTIONS
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If you vote by phone, fax or internet, please DO NOT mail your
proxy card.
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MAIL:
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Please mark, sign, date, and return this Proxy Card promptly using
the enclosed envelope.
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FAX:
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Complete the reverse portion of this Proxy Card and Fax to
202-521-3464.
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INTERNET:
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https://www.iproxydirect.com/INUV
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PHONE:
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1-866-752-VOTE(8683)
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2018 ANNUAL MEETING OF THE STOCKHOLDERS OF INUVO, INC.
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PLEASE COMPLETE, DATE, SIGN AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN
HERE: ☒
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PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
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Proposal 1
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FOR ALL
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AGAINST
ALL
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FOR ALL
EXCEPT
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Election of two Class I directors:
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☐
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☐
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Richard K. Howe
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☐
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Gordon J. Cameron
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☐
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Proposal 2
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FOR
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AGAINST
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ABSTAIN
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The ratification of the appointment of Mayer Hoffman McCann P.C. as
the Company's independent registered public accounting
firm.
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☐
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☐
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☐
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MARK “X” HERE IF YOU PLAN
TO ATTEND THE MEETING: ☐
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In their discretion, the proxies are authorized to vote upon such
other business as may properly come before the 2018 annual meeting,
and any adjournment or adjournments thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE ‘FOR’ THE
ELECTION OF THE CLASS I DIRECTOR NOMINEES AND ‘FOR’
PROPOSAL 2.
THIS PROXY WILL BE VOTED AS DIRECTED. IF NO CONTRARY INSTRUCTION IS
INDICATED, THE VOTE OF THE UNDERSIGNED WILL BE CAST
“FOR” PROPOSALS 1 AND 2, THIS PROXY WILL BE VOTED BY
THOSE NAMED IN THIS PROXY IN THEIR BEST JUDGMENT. AT THE PRESENT
TIME, THE BOARD OF DIRECTORS KNOWS OF NO OTHER BUSINESS TO BE
PRESENTED AT THE 2018 ANNUAL MEETING.
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MARK HERE FOR ADDRESS CHANGE ☐ New
Address (if applicable):
_______________________________
IMPORTANT: Please sign exactly
as your name or names appear on this Proxy. When shares are held
jointly, each holder should sign. When signing as executor,
administrator, attorney, trustee or guardian, please give full
title as such. If the signer is a corporation, please sign full
corporate name by duly authorized officer, giving full title as
such. If signer is a partnership, please sign in partnership name
by authorized person.
Dated: ________________________, 2018
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(Print Name of Stockholder and/or Joint Tenant)
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(Signature of Stockholder)
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(Second Signature if held jointly)
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