UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the
Securities
Exchange Act of 1934
Date of
Report (Date of earliest event reported): February 7, 2011
_________________
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MITEK
SYSTEMS, INC.
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||
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(Exact
name of registrant as specified in its charter)
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Delaware
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0-15235
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87-0418827
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(State
or Other Jurisdiction of Incorporation)
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(Commission
File Number)
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(I.R.S.
Employer Identification No.)
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8911
Balboa Avenue, Suite B, San Diego, California
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92123
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(Address
of principal executive offices)
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(Zip
Code)
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Registrant's
telephone number, including area code: (858)
503-7810
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
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o
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Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
|
|
o
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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o
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
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|
o
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
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-1-
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Departure
of Directors or Certain Officers; Election of Directors; Appointment of
Certain Officers; Compensatory Arrangements of Certain
Officers.
|
On
January 14, 2011, James DeBello, president, chief executive officer and a
director of the of the Company, and John Thornton, the chairman of the board of
directors, informed Michael Bealmear, a member of the board of directors of
the Company, that the board had determined that he would not be one of the
board's nominees at the upcoming annual meeting of stockholders. The board
instead nominated a candidate with extensive banking and payments industry
expertise, based on his wealth of business and strategic experience in the very
sectors of the markets which are the focus of the Company and its marketing
efforts. The nominee is an experienced and well regarded independent
director, currently serving in such capacities for five public companies,
current Chairman of a prominent bank, and former CEO of a prominent credit card
payments company.
On
January 21, 2011 Mr. DeBello corresponded with Mr. Bealmear, regarding the board
of director's determination to nominate a new director, and thanking Mr.
Bealmear for his service.
On
January 26, 2011, Mr. Bealmear, through his personal counsel, corresponded with
the Company's counsel enclosing a draft of a letter that Mr. Bealmear was
considering sending to Messrs. DeBello and Thornton. Mr. Bealmear's
counsel requested that the Company contact him by February 2, 2011, if the
Company wanted to discuss the letter. The Company's board of directors
determined not to reconsider their decision regarding Mr. Bealmear's nomination,
and determined not to negotiate any separation agreement with Mr.
Bealmear.
In a
letter dated February 7, 2011, Mr. Bealmear notified Mr. DeBello and Mr.
Thornton, of his resignation as a director effective as of the close of business
on February 18, 2011. In addition to his position as a director of the
Company, Mr. Bealmear is currently a member of the Company's audit committee and
compensation committee of the board of directors.
In his
letter, Mr. Bealmear states that he is resigning as a director because he
disagrees with the Company's decision not to nominate him as a candidate for
director at the annual meeting of Company shareholders which is set for
9:00 a.m. on February 23, 2011. Mr. Bealmear asserts that (i) the
Company's decision not to nominate him as a candidate for director was an act of
retaliation for his opposition to a stock option award that was approved by the
other members of the Compensation Committee and issued to Mr. DeBello in
November 2010, (ii) that he did not receive notice of the meeting at which the
compensation committee approved the option grant, and (iii) the board lacks
sufficient independence.
The
Company strongly disagrees with each of Mr. Bealmear’s assertions.
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Item
9.01.
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Financial
Statements and Exhibits.
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(d)
Exhibits
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Exhibit
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Description
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99.1
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Letter
from the registrant to Michael Bealmear dated January 21,
2011.
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99.2
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Email
from counsel to Michael Bealmear to the registrant's counsel dated January
26, 2011
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99.3
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Letter
from Michael Bealmear to James DeBello and John Thornton dated February 7,
2011.
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-2-
SIGNATURE
Pursuant
to the requirement of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned there unto
duly authorized.
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Dated:
February 11, 2011
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MITEK
SYSTEMS, INC.
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||
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By:
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/s/ James B. DeBello
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James
B. DeBello
President
and Chief Executive Officer
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-3-
EXHIBIT
99.1
Mitek
systems
January
21, 2011
VIA
EMAIL
Dear
Michael:
I want to
express my appreciation for your service to Mitek as a member of our Board of
Directors.
When we
spoke last Friday, John Thornton and I informed you that the decision had been
made not to renominate you as a candidate for the board and instead to nominate
a new candidate in your place. To properly reflect matters for the
record we amended our proxy filing on January 19 to reflect the fact that
you were not being nominated for re-election as a director.
Public
companies often make adjustments in board compositions to take advantage of new
opportunities and to gain expertise. As Mitek continues to grow into
a mobile payments leader, it will benefit our shareholders and management to
have a director on the board with extensive payments and banking industry
expertise. Our new nominee has this experience and sits on the boards
of several public companies.
Your
tenure on the Mitek board has benefitted the company in many ways. I
think you will agree that you and the other directors have not only insisted on
high standards of corporate governance, but have experienced and observed those
standards playing out in the day to day operations of the company and in the
deliberations of the board. Your being a director has helped set and
maintain those standards.
I
understand that you are disappointed by not being renominated and for that we
are sorry, but I hope that you will continue to have a positive interest in the
company and in what we do. The value of the options you received from
Mitek during your tenure as a director have a value exceeding $400,000 at
today's market price. My job is to increase Mitek shareholder value
and I believe the direction we are taking is the right one.
I wish
you well, Michael, and appreciate your ongoing support as we move on.
Sincerely,
James B.
DeBello
President,
CEO
cc: John
M. Thornton, Chairman
EXHIBIT
99.2
From: Schenker, Marty
[mailto:mschenker@cooley.com]
Sent: Wednesday, January 26,
2011 5:02 PM
To: Robert
Copeland
Subject: RE:
Bob,
Attached
is a copy of a draft letter that Michael Bealmear is considering sending to your
client’s CEO and Chairman. If you wish to discuss the draft, please call
me by next Wednesday, February 2.
Best
regards,
Marty
Schenker
-1-
|
January
[ ], 2011
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DRAFT
|
Via
Email
|
James
B. DeBello
President,
CEO
Mitek
Systems, Inc.
8911
Balboa Avenue, Suite B
San
Diego, CA 92123
|
John
M. Thornton
Chairman
c/o
Mitek Systems, Inc.
8911
Balboa Avenue, Suite B
San
Diego, CA 92123
|
Dear Jim
and John:
I am
writing to resign as a member of Mitek Systems Inc.’s Board of Directors,
effective at the close of business on February [ ], 2011. As I explain below, I
am doing so because I disagree with a practice of taking retribution against a
director for exercising his fiduciary duties when such exercise results in an
action opposed by the company’s CEO, which Mitek’s Board of Directors has done
to me for expressing my opposition to what I considered an excessive grant of
stock options to Jim. Director independence is the hallmark of a well
functioning board. Instead of embracing my independent views, however, you
responded to it by refusing to re-nominate me to Mitek’s board of directors. I
am unwilling to serve on a board where personal relationships with the CEO
infect the decision-making process and where the board seeks to retaliate
against a board member for exercising his independent judgment.
It is
beyond dispute that I have long been a loyal, dedicated and valuable member of
Mitek’s board. Until recently, both of you looked to me as a key member of
Mitek’s core strategic team. Last Fall, Jim acknowledged the value I bring by
selecting me as one of only two outside directors (in addition to John) to serve
on a special committee to explore potential strategic opportunities. And Jim’s
January 21 letter confirms that my service on Mitek’s board has benefitted the
company in many ways. It is equally clear, however, that your decision not to
re-nominate me to Mitek’s board is attributable to the events of November 2010,
which I describe below.
As you
know, in early November 2010, Jim recommended that the board grant additional
stock options to employees. Initially, Jim recommended an additional grant of
10% of the then-current stock options held by most Mitek employees, including
himself. I was not opposed to this initial proposal. In short order, however,
Jim came back to the board twice, seeking an increase in his personal grant,
first to 15% of his current stock options, and, then, to 17%, for a total of
356,830 additional options. When I learned of Jim’s first proposed increase, I
expressed some surprise at the increase in Jim’s share to 15%, which I noted was
not consistent with the “10% Model” that we had previously discussed. On
Thursday evening, November 11, Jim sent me an e-mail asking whether I would be
available for a meeting of the Compensation Committee, of which I am a member. I
responded by e-mail, stating that I was tied up in morning meetings on Friday
and then a return flight from the East Coast, but would make myself available
for a weekend call of the committee if necessary. In my response, I noted that I
still had questions and did not “see any purpose in rushing to judgment on
this.” Jim later explained that his urgency resulted from his desire to have the
board grant the additional stock options before Mitek issued a highly favorable
earnings announcement on November 16. Jim’s assessment of the market’s response
to the earning announcement was correct. Mitek’s stock price more than doubled
in the weeks following the earnings release, resulting in Jim’s additional
options being over $1 million in the money.
-2-
James B.
DeBello
|
January
[ ], 2011
|
DRAFT
|
The
following week, I was appalled to learn that, without having given me notice of
the meeting or obtaining from me a waiver of notice, the Compensation Committee
met without me on Monday, November 15, and approved Jim’s request for a 17%
increase to his personal option grant. Upon learning of this action, I
immediately sent an e-mail to Jim and the other two members of the Compensation
Committee, stating, simply, that “I have a major problem with this.” I followed
this up with an e-mail to the members of the committee, along with John as
Chairman, expressing my view that the 17% grant to Jim was
“excessive:”
“While
I’m sure it’s too late to do anything about it, I also have a problem with the
17% stock grant that was given to Jim. I believe Jim certainly deserves a
top-off grant along with everyone else, but I’m of the opinion that 17% is
excessive --- this brings Jim’s total holdings to 10% of the fully diluted
shares of the company which is too large for a non-founding CEO, in my
experience. I doubt we’ll get any shareholder challenges on this --- nonetheless
I’d like for the record to show that I was not present and I did not vote at the
Comp Committee meeting where this was approved.”
I was not
surprised that my views were not well received, either by Jim, who of course had
a vested financial interest in the grant, or by the other members of the board,
who are extremely close with Jim. Nonetheless, I was stunned when the two of you
called me on Friday, January 14, to inform me that I would not be nominated to
serve another term.
In our
conversation, and in Jim’s January 21 letter, you assert that you wanted to
replace me to make way for Alex Hart, whom you state has experience in the
mobile payments business. But bringing in Mr. Hart is no reason to remove me
from the board. It would have been a simple and straightforward matter to have
added an additional director. And even if you wanted for some reason to keep the
current board size intact, there are other board members who would have been
more sensible candidates than me to replace.
In the
end, the conclusion is inescapable that you, with the Mitek board, retaliated
against me for having exercised my fiduciary duties and gone on record with my
objection to an overly generous stock grant to the company’s CEO, especially in
light of the fact that it was granted immediately prior to an earnings
announcement that was expected to, and did, result in a stock price increase
(which resulted in Jim’s stock option grant being over $1 million in the money
within weeks). I am proud of my service as a member of Mitek’s board. But I
disagree with a practice of taking retribution against a director for exercising
his fiduciary duties when such exercise results in an action opposed by the
company’s CEO, and have concluded, regrettably, that the board has lost sight of
its mission and the principles of good corporate governance. Because I disagree
with this practice, and have reached that conclusion, I must
resign.
Sincerely,
Michael
Bealmear
-3-
EXHIBIT
99.3
February
7, 2011
Via
Email
|
James
B. DeBello
President,
CEO
Mitek
Systems, Inc.
8911
Balboa Avenue, Suite B
San
Diego, CA 92123
|
John
M. Thornton
Chairman
c/o
Mitek Systems, Inc.
8911
Balboa Avenue, Suite B
San
Diego, CA 92123
|
Dear Jim
and John:
I am
writing to resign as a member of Mitek Sytems Inc.’s Board of Directors,
effective at the close of business on February 18, 2011. As I explain below, I
am doing so because I disagree with a practice of taking retribution against a
director for exercising his fiduciary duties when such exercise results in an
action opposed by the company’s CEO, which Mitek’s Board of Directors has done
to me for expressing my opposition to what I considered an excessive grant of
stock options to Jim. Director independence is the hallmark of a well
functioning board. Instead of embracing my independent views, however, you
responded to it by refusing to renominate me to Mitek’s board of directors. I am
unwilling to serve on a board where personal relationships with the CEO infect
the decision-making process and where the board seeks to retaliate against a
board member for exercising his independent judgment.
It is
beyond dispute that I have long been a loyal, dedicated and valuable member of
Mitek’s board. Until recently, both of you looked to me as a key member of
Mitek’s core strategic team. Last Fall, Jim acknowledged the value I bring by
selecting me as one of only two outside directors (in addition to John) to serve
on a special committee to explore potential strategic opportunities. And Jim’s
January 21 letter confirms that my service on Mitek’s board has benefitted the
company in many ways. It is equally clear, however, that your decision not to
renominate me to Mitek’s board is attributable to the events of November 2010,
which I describe below.
As you
know, in early November 2010, Jim recommended that the board grant additional
stock options to employees. Initially, Jim recommended an additional grant of
10% of the then-current stock options held by most Mitek employees, including
himself. I was not opposed to this initial proposal. In short order, however,
Jim came back to the board twice, seeking an increase in his personal grant,
first to 15% of his current stock options, and, then, to 17%, for a total of
356,830 additional options. When I learned of Jim’s first proposed increase, I
expressed some surprise at the increase in Jim’s share to 15%, which I noted was
not consistent with the “10% Model” that we had previously discussed. On
Thursday evening, November 11, Jim sent me an e-mail asking whether I would be
available for a meeting of the Compensation Committee, of which I am a member. I
responded by e-mail, stating that I was tied up in morning meetings on Friday
and then a return flight from the East Coast, but would make myself available
for a weekend call of the
committee if necessary. In my response, I noted that I still had questions and
did not “see any purpose in rushing to judgment on this.” Jim later explained
that his urgency resulted from his desire to have the board grant the additional
stock options before Mitek issued a highly favorable earnings announcement on
November 16. Jim’s assessment of the market’s response to the earning
announcement was correct. Mitek’s stock price more than doubled in the weeks
following the earnings release, resulting in Jim’s additional options being over
$1 million in the money.
-1-
James B.
DeBello
John M.
Thornton
February
7, 2011
Page
Two
The
following week, I was appalled to learn that, without having given me notice of
the meeting or obtaining from me a waiver of notice, the Compensation Committee
met without me on Monday, November 15, and approved Jim’s request for a 17%
increase to his personal option grant. Upon learning of this action, I
immediately sent an e-mail to Jim and the other two members of the Compensation
Committee, stating, simply, that “I have a major problem with this.” I followed
this up with an e-mail to the members of the committee, along with John as
Chairman, expressing my view that the 17% grant to Jim was
“excessive:”
“While
I’m sure it’s too late to do anything about it, I also have a problem with the
17% stock grant that was given to Jim. I believe Jim certainly deserves a
top-off grant along with everyone else, but I’m of the opinion that 17% is
excessive---this brings Jim’s total holdings to 10% of the fully diluted shares
of the company which is too large for a non-founding CEO, in my experience. I
doubt we’ll get any shareholder challenges on this---nonetheless I’d like for
the record to show that I was not present and I did not vote at the Comp
Committee meeting where this was approved.”
I was not
surprised that my views were not well received, either by Jim, who of course had
a vested financial interest in the grant, or by the other members of the board,
who are extremely close with Jim. Nonetheless, I was stunned when the two of you
called me on Friday, January 14, to inform me that I would not be nominated to
serve another term.
In our
conversation, and in Jim’s January 21 letter, you assert that you wanted to
replace me to make way for Alex Hart, whom you state has experience in the
mobile payments business. But bringing in Mr. Hart is no reason to remove me
from the board. It would have been a simple and straightforward matter to have
added an additional director. And even if you wanted for some reason to keep the
current board size intact, there are other board members who would have been
more sensible candidates than me to replace.
-2-
James B.
DeBello
John M.
Thornton
February
7, 2011
Page
Three
In the
end, the conclusion is inescapable that you, with the Mitek board, retaliated
against me for having exercised my fiduciary duties and gone on record with my
objection to an overly generous stock grant to the company’s CEO, especially in
light of the fact that it was granted immediately prior to an earnings
announcement that was expected to, and did, result in a stock price
increase (which resulted in Jim’s stock option grant being over $1 million in
the money within weeks). I am proud of my service as a member of Mitek’s board.
But I disagree with a practice of taking retribution against a director for
exercising his fiduciary duties when such exercise results in an action opposed
by the company’s CEO, and have concluded, regrettably, that the board has lost
sight of its mission and the principles of good corporate governance. Because I
disagree with this practice, and have reached that conclusion, I must
resign.
Sincerely,
/s/
Michael Bealmear
Michael
Bealmear
-3-