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Item 9A. Controls and Procedures

2019-03-01 compared with 2018-03-07 · 46 added, 43 removed, 144 unchanged (38% of the section changed)

5 unchanged sentences

Based on that evaluation, the Principal Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures as of December 31, 2018 are functioning effectively.

Our business strategy involves the acquisition of new businesses on an ongoing basis, most of which are young, growing companies.

Typically, these companies historically have not had all of the controls and procedures they would need to comply with the requirements of the Exchange Act and the rules promulgated thereunder.

These companies also frequently develop new products and services.

Following an acquisition, or the launch of a new product or service, we work with the company’s management to implement necessary controls and procedures.

(b) Management’s Report on Internal Control Over Financial Reporting

18 unchanged sentences

Incorporated by reference to the portions of our Definitive Proxy Statement entitled “Compensation Discussion and Analysis,” “Compensation Committee Report” and “Executive Compensation.”

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters - to be updated

Security ownership of certain beneficial owners is incorporated by reference to the portion of our Definitive Proxy Statement entitled “Stock Ownership of Certain Beneficial Owners, Directors and Officers.”

2 unchanged sentences

Employees at all levels participate in our equity compensation plans.

In addition, members of our Board and members of our Advisory Board receive equity grants for their service on our Board and Advisory Board, respectively.

Members of our Board also receive deferred stock unit ("DSU") awards and are eligible to defer directors’ fees and receive DSUs with a value equal to the directors’ fees deferred and matching DSUs equal to 25% of the directors’ fees deferred.

In addition, members of our Board receive equity grants for their service on our Board.

Our 2001 Associates Equity Compensation Plan (“2001 Plan”) provided for the grant of nonqualified stock options, stock appreciation rights, restricted stock, performance units, and other stock-based awards to employees, consultants or advisors of Safeguard and its subsidiaries, provided that no grants could be made under this plan to executive officers or directors of Safeguard.

6 unchanged sentences

Any portions of outstanding equity grants under the 2001 Plan that expire or become unexercisable for any reason shall be canceled and shall be unavailable for future issuance.

During 2011, 2013 and 2016, the Compensation Committee granted “employee inducement” awards to four then newly hired executives.

During 2013 and 2016, the Compensation Committee granted “employee inducement” awards to three then newly hired executives.

The awards were granted outside of Safeguard’s existing equity compensation plans in accordance with NYSE rules.

4 unchanged sentences

The 23,083 performance stock units were granted with a 10-year term.

During 2017, there were no shares underlying inducement stock options that were exercised, 6,508 shares of restricted stock underlying certain inducement awards vested and 22,230 of the shares of underlying certain inducement stock options expired.

Of the shares underlying the “employee inducement” awards that were outstanding at December 31, 2017, 40,583 shares (which include both stock options and shares of restricted stock) were subject to time-based vesting, with an aggregate of:

(i) 2,188 shares vesting on the first anniversary of the grant date and 6,562 shares vesting in 36 equal monthly installments thereafter, and (ii) 2,188 shares vesting on the second anniversary of the grant date and 6,562 shares vesting in 36 equal monthly installments thereafter, and (iii) 5,771 shares vesting on the first anniversary of the fifteenth day of the first month following the quarter in which the employee began his or her employment and 17,312 shares vesting in 12 quarterly

installments thereafter.

Of the remaining shares underlying the “employee inducement” awards that were outstanding at December 31, 2017, 75,583 vest based on the aggregate cash produced as a result of monetizations involving certain of our partner companies relative to the amount of cash deployed in connection with such partner companies.

With the exception of the market-based vesting or capital-return based vesting provisions, the terms and provisions of the employee inducement awards are substantially the same as equity grants previously awarded to other executives under Safeguard’s equity compensation plans.

During 2018, there were no shares underlying inducement stock options that were exercised, 7,260 shares of restricted stock underlying inducement awards vested and 70,000 of the shares of underlying inducement stock options expired.

Of the shares underlying the “employee inducement” awards that were outstanding at December 31, 2018, (i) 5,900 shares of restricted stock were subject to time-based vesting in eight equal quarterly installments commencing on January 15, 2019, and (ii) 11,799 performance stock units vest based on the aggregate cash produced as a result of monetizations involving certain of our partner companies relative to the amount of cash deployed in connection with such partner companies.

With the exception of the capital-return based vesting provisions, the terms and provisions of the employee inducement awards are substantially the same as equity grants previously awarded to other executives under Safeguard’s equity compensation plans.

The following table provides information as of December 31, 2018 about the securities authorized for issuance under our equity compensation plans.

32 unchanged sentences

Third Amended and Restated By-laws of Safeguard Scientifics, Inc.

Indenture, dated as of November 19, 2012, between Safeguard Scientifics, Inc.

Bank National Association, as trustee

Placeholder for Tax Benefit Plan

Section 382 Tax Benefits Preservation Plan, dated as of February 19, 2018, by and among Safeguard Scientifics, Inc.

Computershare Inc.

and Computershare Trust Company, N.A.

Safeguard Scientifics, Inc.

7 unchanged sentences

Management Incentive Plan

Amended and Restated Safeguard Scientifics, Inc.

Transaction bonus plan

Compensation Summary — Non-employee Directors

6 unchanged sentences

Zarrilli dated December 28, 2012