SAFEGUARD SCIENTIFICS INC 10-K

Item 9A. Controls and Procedures (a) Evaluation of Disclosure Controls and Procedures We maintain disclosure controls and procedures, as such term is defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934 (the “Exchange Act”), that are designed to provide reasonable assurance that the information required to be disclosed by us in reports filed under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (ii) accumulated and communicated to our management, including the Principal Executive Officer and Principal Financial Officer, as appropriate to allow timely decisions regarding disclosure. A controls system cannot provide absolute assurance that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected. Our management, with the participation of our Principal Executive Officer and Principal Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of December 31, 2023. Based on that evaluation, the Principal Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures as of December 31, 2023 were effective. (b) Management’s Report on Internal Control Over Financial Reporting Management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Our internal control over financial reporting includes those policies and procedures that pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2023. In making this assessment, management used the framework established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). As a result of this assessment and based on the criteria in the COSO framework, management has concluded that, as of December 31, 2023, the Company’s internal control over financial reporting was effective. (c) Change in Internal Control over Financial Reporting No change in our internal control over financial reporting occurred during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. Item 9B. Other Information None. Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections. None. 41 Table of Contents PART III Item 10. Directors, Executive Officers and Corporate Governance Names of Directors and other Information Ross D. DeMont , age 51 Director since : 2022 Safeguard Board Committees: Audit, Compensation (Chair), Nominating & Corporate Governance  Other public directorships: None. Former public directorships within past five years: Sierra Monitor Corporation   Career Highlights: — Chief Investment Officer of Rainin Group, LLC (2020 – present) — Board Observer of FREDsense Technologies (2017 – present) — Board Member of Desalitech, Inc. (2017 – 2020) — Director of Research – Public and Private Investments of Rainin Group, LLC (2016 – 2019) — Board Member of Sierra Monitor Corp. (2018 – 2019) — Portfolio Manager, Founder and Managing Member of Midwood Capital Partners, LLC (2002 – 2016) — Senior Associate – Public/Private Investment Fund at Igoe Capital Partners, LLC (2001 – 2002) — Associate – Mergers and Acquisitions at Presidio Strategies, LLC (1998 – 1999) — Financial Analyst – Investment Banking at J.P. Morgan, Inc. (1996 – 1998) — Received Bachelor of Arts in Economics, Government (both with Honors) from Connecticut College — Received Master of Business Administration (Tuck Scholar) from the Tuck School of Business at Dartmouth Experience and Qualifications : Mr. DeMont is currently Chief Investment Officer at the Rainin Group, Inc., which manages the assets of both a family office and the investments of the Kenneth Rainin Foundation. Previously, Mr. DeMont was a Managing Member and Portfolio Manager of Midwood Capital Management, a private investment partnership making concentrated investments in public companies. Before this role, Mr. DeMont was an Associate at Igoe Capital Partners, a hybrid public/private equity investment firm with a primary focus on the small- and micro-cap sectors. Mr. DeMont also worked at Presidio strategies in Mergers and Acquisitions and JP Morgan with a focus on Corporate Finance and Mergers and Acquisitions. He previously served on multiple Boards of Directors, including Desalitech, a private, venture backed company selling into the industrial water treatment industry and Sierra Monitor Corp. (Ticker: SRMC), focused on device connectivity and environmental instrumentation. Mr. DeMont graduated from Connecticut College with a BA in both Economics and Government and earned an MBA from the Tuck School of Business at Dartmouth. 42 Table of Contents Russell D. Glass , age 61 Director since: 2018 Safeguard Board Committees: Audit, Compensation, Nominating & Corporate Governance (Chair) Other public directorships: None. Former public directorships within past five years: None.   Career Highlights: — Managing Member of RDG Capital LLC, a private investment company (2005 – present) — Managing Member of RDG Capital Fund Management, a private investment company (2014 – present) — Vice Chairman of Clarim Acquisition Corp., a special purpose acquisition company (2020 – 2023) — Director of A.G. Spanos Corporation, a national real estate development company (1993 – present) — Managing Member of Princeford Capital Management, an investment advisory firm (2009 – 2014) — Chief Executive Officer of Cadus Pharmaceutical Corporation (n/k/a Cadus Corporation), a biotechnology holding company (2000 – 2003), and director (1998 – 2011) — Co-Chairman and Chief Investment Officer of Ranger Partners, an investment fund company (2002 – 2003) — President and Chief Investment Officer of Icahn Associates Corporation, a diversified investment firm and principal investment vehicle for Carl Icahn (1998 – 2002) — Partner at Relational Investors LLC, an investment fund management company (1996 – 1998) — Partner at Premier Partners Inc., an investment banking and research firm (1988 – 1996) — Analyst with Kidder, Peabody & Co., an investment banking firm (1984 – 1986) — Former Director of the Council for Economic Education, Automated Travel Systems, Inc., Axiom Biotechnologies, Blue Bite, Global Discount Travel Services/Lowestfare.com, National Energy Group and Next Generation Technology Holdings, Inc. — Received A.B. in Economics from Princeton University — Received M.B.A. from Stanford Graduate School of Business Experience and Qualifications: Mr. Glass has experience relating to private equity, investment banking and serving as chief executive officer of a public company. Mr. Glass has experience serving on the boards of several public and private companies in a wide range of industries. 43 Table of Contents Joseph M. Manko, Jr. , age 58 (Chairman of the Board) Director since: March 2019 Safeguard Board Committees: Audit, Compensation, Nominating & Corporate Governance  Other public directorships: Koru Medical Systems, Inc. Former public directorships within past five years: Creative Realties, Inc. and Wireless Telecom Group, Inc.   Career Highlights: —  Managing Member and Senior Principal of Horton Capital Management, LLC, an investment fund (2013 – present)  —  Minority owner and a Managing Director at Mufson Howe Hunter & Co., LLC, a boutique investment bank focusing on middle-market companies (2011 – present)  —  Partner and Chief Executive Officer of Switzerland-based BZ Fund Management Limited, where he was responsible for corporate finance, private equity investments, three public equity funds and the firm’s Special Situations and Event-Driven strategies (2005 – 2010)  —  Managing Director, Deutsche Bank AG (NYSE:DB), an investment bank in London (1997 – 2004)  —  Vice President, Merrill Lynch & Co, Inc. (n/k/a BofA Securities (NYSE: BAC)), an investment bank (1995 – 1997)  —  Corporate Finance Attorney at Skadden, Arps, Slate, Meagher & Flom LLP, a law firm (1991 – 1995)  Experience and Qualifications: Mr. Manko has experience serving on the boards of several companies and has participated in numerous shareholder value creation strategies and monetizations. Beth S. Michelson , age 54 Director since: 2022 Safeguard Board Committees: Audit, Compensation, Nominating & Corporate Governance   Other public directorships: Cartesian Growth Corporation II Former public directorships within past five years: None.   Career Highlights: —  Chief Financial Officer and Board Member of Cartesian Growth Corporation II (2021 – present) —  Management Team of Cartesian Growth Corporation I (Nasdaq: GLBL) (2021 – January 2023) —   Partner of Cartesian Capital Group (2022 – present) — Senior Managing Director of Cartesian Capital Group (2006 – 2022) —  Vice President at PH Capital/ AIG Capital Partners (1999 – 2006) —  Associate at Wasserstein Perella Emerging Markets (1996 – 1999) —  Current Board Member of: Global Advisory Board, Columbia Business School Chazen Institute for Global Business; NorthStar Air & Space Inc; Thermal Management Solutions, Ltd.; Brilia, S.A.; Tiendamia (Xipron, Inc); and Replications —  Prior Board Member of: redIT; Network Management Services; Public Mobile; BTS Torres BV; and AdSpace Networks —  Received Bachelor of Arts with distinction from the University of Michigan —  Received Master of Business Administration from Columbia Business School; Master of International Affairs from Columbia School of International and Public Affairs Experience and Qualifications: Ms. Michelson is a private equity investor with more than two decades of building businesses globally. In addition to having served on audit and compensation committees, Ms. Michelson is also a Chartered Financial Analyst and has structured and deployed over $500 million of investment capital. 44 Table of Contents Skills and Qualifications of Director Nominees The following table includes the skills and qualifications of each director nominee that led our Board to conclude that the director nominee is qualified to serve on our Board.     Ross D. DeMont Russell D. Glass Joseph M. Manko, Jr. Beth S. Michelson Operational / Direct Management Experience ✓ ✓ ✓ ✓ Capital Markets Experience ✓ ✓ ✓ ✓ Private Equity / Venture Capital Experience ✓ ✓ ✓ ✓ Financial Expertise / Literacy ✓ ✓ ✓ ✓ C-level Experience ✓ ✓ ✓ ✓ Other Public / Private Director Experience ✓ ✓ ✓ ✓ Audit Committee . The Audit Committee held four meetings during 2023. The Audit Committee’s responsibilities, which are described in detail in its charter, include, among other duties, the responsibility to:   ☐ Assist the Board in fulfilling its responsibilities regarding general oversight of the integrity of Safeguard’s financial statements, Safeguard’s compliance with legal and regulatory requirements and the performance of Safeguard’s internal audit function;   ☐ Interact with and evaluate the performance, qualifications and independence of Safeguard’s independent registered public accounting firm; ☐ Review and approve related party transactions; and   ☐ Prepare the report required by SEC regulations to be included in the proxy statement.   The Audit Committee has the sole authority to retain, set compensation and retention terms for, terminate and oversee the relationship with Safeguard’s independent registered public accounting firm (which reports directly to the Audit Committee). The Audit Committee also oversees the activities of the internal auditor, reviews the effectiveness of the internal audit function and approves the appointment of the internal auditor. The Audit Committee has the authority to obtain advice, counsel and assistance from internal and external legal, accounting or other advisors as the Audit Committee deems necessary to carry out its duties and to receive appropriate funding from Safeguard for such advice and assistance. Although the Audit Committee has the powers and responsibilities set forth in its charter, its role is oversight, and management has primary responsibility for the financial reporting process of Safeguard.   The Board has determined that each member of the Audit Committee meets the independence requirements established by SEC regulations, Nasdaq listing standards and our Corporate Governance Guidelines. The Board has also determined that Mr. DeMont, Mr. Glass, Mr. Manko and Ms. Michelson are “audit committee financial experts” within the meaning of the SEC regulations, and the Board has determined that each member of the Audit Committee has accounting and related financial management expertise within the meaning of the Nasdaq listing standards. Code of Business Conduct and other Charters. Safeguard’s Corporate Governance Guidelines, Code of Business Conduct and Ethics, Audit Committee Charter, Compensation Committee Charter and Nominating & Corporate Governance Committee Charter are available at https://ir.safeguard.com/corporate-governance/documents-charters/. The Code of Business Conduct and Ethics is applicable to all employees of Safeguard, including each of our executive and financial officers, and the members of our Board. Safeguard has posted any applicable information regarding amendments to or waivers from our Code of Business Conduct and Ethics (to the extent applicable to Safeguard’s directors or executive officers) in the Corporate Governance section of our website. Our website is not part of this report. All references to our website address are intended to be inactive textual references only. Section 16(a) Beneficial Ownership Reporting Compliance. Section 16(a) of the Securities Exchange Act of 1934 requires our directors, executive officers and greater than 10% holders of our common stock to file with the SEC reports of ownership of our securities and changes in ownership of our securities. Based solely on our review of the copies of reports we have received and upon written representations from the reporting persons that no Form 5 reports were required to be filed by those persons, Safeguard believes there were no late filings by our directors and executive officers during 2023. Except as disclosed in SEC reports, there were no known holders of greater than 10% of our common stock during 2023 who failed to file the required reports. 45 Table of Contents Item 11. Executive Compensation Compensation Discussion and Analysis Executive Summary   Our Compensation Committee (for purposes of this discussion, the “Committee”) is responsible for establishing our company-wide compensation philosophy and practices, for determining the compensation for our “named executive officers” and for approving the compensation for our other senior executives, based on the recommendations of our Chief Executive Officer. This Compensation Discussion and Analysis describes our executive compensation program and the compensation decisions made for 2023 for our named executive officers. In January 2018, Safeguard ceased deploying capital into new opportunities in order to focus on supporting its existing ownership interests (such companies are referred to throughout this Compensation Discussion and Analysis (“CD&A”) as our “companies” or Safeguard’s or its “companies”) and maximizing monetization and other strategic opportunities to enable Safeguard to return value to its shareholders. This strategy is sometimes referred to in this CD&A as the “Strategy.” At December 31, 2023, there were two individuals serving as named executive officers of Safeguard:   Eric Salzman Chief Executive Officer Mark A. Herndon Senior Vice President and Chief Financial Officer   Following such time, Mr. Salzman and Mr. Herndon ceased serving in such positions and, effective January 1, 2024, Mark Dow of Rock Creek (as defined below) was named as Safeguard’s Chief Executive Officer, Chief Financial Officer and Secretary. Key 2023 Compensation and Management Changes ● On December 15, 2023, the Board approved, and the Company entered into, a letter agreement (the “Services Agreement”) with Rock Creek Advisors, LLC (“Rock Creek”) and two letter agreements with each of Mr. Salzman and Mr. Herndon related to Messrs. Salzman’s and Herndon’s: (i) termination as full-time employees of the Company (“Termination Letter Agreements”) and (ii) temporary employment arrangements (“Employment Letter Agreements”). The Termination Letter Agreements were effective as of December 31, 2023. The Services Agreement and Employment Letter Agreements were effective as of January 1, 2024. ● Pursuant to the Services Agreement, Rock Creek will perform certain consulting and advisory services related to the Company’s financial and operational functions and the Company will pay Rock Creek a monthly fee of $25,000 for the first twelve months of the engagement. The fee will be reduced to $20,000 per month thereafter. In addition, the Company will reimburse Rock Creek for all reasonable out of pocket expenses and costs incurred in connection with the performance of the Services. Either the Company or Rock Creek may terminate the Services Agreement upon 30 days’ advance written notice. Mr. Dow is not paid any additional amounts by the Company. ● Under the Termination Letter Agreement with Mr. Salzman, 125,000 performance based restricted stock units previously granted to Mr. Salzman vested in full effective as of December 15, 2023, and pursuant to the Termination Letter Agreement with Mr. Herndon, he received a cash payment of: (i) $142,500, which is equal to six months of his base annual salary and (ii) $171,000 as his 2023 incentive plan compensation under the Company’s Management Incentive Plan. ● Under the terms of the Employment Letter Agreements, effective January 1, 2024, each of Messrs. Salzman and Herndon is a temporary at-will employee of the Company providing services to the Company from time to time on as-needed basis, at a rate of $400 per hour. In addition, in 2024, Mr. Salzman will be serving as a director or observer, as applicable, of certain of the Company’s portfolio companies, and the Company will pay Mr. Salzman up to $200,000 for such board related services, subject to adjustment if the number of boards, for which the Company has the right to nominate a director or observer, is three or less as of June 30, 2024. Effective Corporate Governance Principles   Below is a summary of what we did and what we did not do relating to executive compensation during 2023:   WHAT WE DID:   ✓ Emphasized variable pay for performance by providing significant equity-based compensation or by linking our named executive officers’ target incentive compensation to Safeguard’s performance   ✓ Maintained a compensation recovery policy that will permit us to seek reimbursement of cash and incentive compensation and/or equity grants in certain instances of financial statement restatement ✓ Maintained meaningful stock ownership guidelines for our senior executives and Board members   46 Table of Contents WHAT WE DIDN’T DO:   Provide golden parachute excise tax or other tax gross-ups upon a change in control   Provide any material perquisites   Grant stock option awards or stock appreciation rights (“SARs”) below 100% of fair market value   Permit hedging or short-sales transactions in our stock by our senior executives, or permit the use of Safeguard stock as collateral for indebtedness by our senior executives   Provide a pension plan or special retirement program other than our 401(k) plan, which is available to all employees   The Committee reviews our compensation philosophy each year to ensure that its principles and objectives are aligned with our overall business strategy and aligned with the interests of our shareholders. We seek to apply a consistent philosophy across our executive group, not just among our named executive officers. Compensation Philosophy and Objectives   Our overall goals in compensating our executives in 2023 were as follows: ● Encourage alignment of executive and shareholder interests as an incentive to increase shareholder value, including by way of continuing to provide equity-based compensation for our Chief Executive Officer;   ● Retain and motivate executives whose experience and skills could be leveraged to facilitate (i) Safeguard’s companies’ growth, success and ultimate monetization and (ii) other strategic opportunities to enable Safeguard to return value to its shareholders, including by way of implementing a “go-dark” transaction;   ● Provide a mix of fixed and variable at-risk cash and equity compensation; and   ● Link variable compensation to metrics that demonstrate value creation for Safeguard.   Role of the Compensation Committee in Compensation Decisions   The Committee is responsible for the design of our executive compensation program and for making decisions regarding our named executive officers’ compensation. The Committee also makes, or has final approval authority regarding, all compensation decisions for our other senior executives. Annually, the Committee reviews executive compensation practices, including the methodology for setting total named executive officers’ compensation, the goals of the program and the overall compensation philosophy for Safeguard. The Committee believes that the overall objectives of its compensation philosophy are better achieved through flexibility. The Committee ultimately makes decisions regarding executive compensation based on its assessment of Safeguard’s performance and the achievement of its companies’ and corporate goals. The Committee is also responsible for approving and granting equity awards to our directors, executives, employees and, from time to time, other independent advisors and consultants. The Committee’s responsibilities are more fully described in its charter, which is available at https://ir.safeguard.com/corporate-governance/documents-charters/. Role of Executive Officers in Compensation Decisions Within the parameters approved by the Committee each year and any applicable existing employment agreements, our Chief Executive Officer is responsible for evaluating and recommending compensation for our other employees, including annually assessing the performance of each other employee. In determining the compensation of our executives, the Committee considers our Chief Executive Officer’s assessment and recommendations. However, other than for compensation that has been established contractually or under quantitative formulas established by the Committee each year under our management incentive program, the Committee exercises its own discretion in determining whether to accept or modify our Chief Executive Officer’s recommendations. These individuals are not present when the Committee and our Chief Executive Officer review their performance or when the Committee makes its determinations concerning their compensation. Setting Executive Compensation   The Committee believes that a significant portion of each executive’s total compensation should be variable or “at-risk.” The Committee also believes that a significant portion of our Chief Executive Officer’s total compensation should be paid in the form of equity. It is the view of the Committee that the greater the ability of an executive (based on role and responsibilities at Safeguard) to impact Safeguard’s achievement of its short- and long-term objectives, the greater the percentage of such executive’s overall compensation that should be “at-risk” or paid in the form of equity. In 2023, the Committee principally utilized variable/at-risk equity-based compensation to pursue its objectives in this regard. For further discussion of setting executive compensation, see “The Strategy - Changes in Compensation Policies and Practices” below.   47 Table of Contents Outcome of the 2023 Say-on-Pay Vote and Shareholder Outreach At our 2023 annual meeting of shareholders, our shareholders approved the compensation of our named executive officers, with approximately 82% of shareholder votes being cast in favor of our say-on-pay proposal on executive compensation. 2023 Compensation Program   During 2023, the Committee used the following principal elements of executive compensation to meet its overall goals:   Compensation Element   Objective   Key Features   Performance / At Risk? Base Pay   Rewards an executive’s core competencies relative to skills, experience, responsibilities and anticipated contributions to us and our companies.   Unless contractually determined, subject to adjustment annually based on individual performance, experience, leadership and market factors.   No. Annual Incentives   Rewards an executive’s contributions towards the achievement of annual corporate objectives.   The Committee establishes annual performance objectives that align our compensation practices with our shareholders’ interests.   Yes; payout occurs only upon achievement of established measurable goals. May not pay out if annual performance goals are not met. Transaction Bonus Plan Rewards an executive’s contributions towards the achievement of the monetization of ownership interests. The bonus pool is principally based on cash consideration received by Safeguard. Yes; payout occurs only upon the achievement of thresholds related to cash received by Safeguard or specified events. Restricted Stock (subject to time-based vesting)   Encourages executive ownership of our stock and promotes continued employment with us through the use of vesting based on extended tenure with Safeguard.   Value is realized based on future stock price, with a direct correlation to changes in shareholder value.   Yes; value increases or decreases in correlation to share price. Restricted Stock Units (subject to performance-based vesting)   Correlates realized pay with increases in shareholder value. Aligns the incentive award with the factors critical to the creation of shareholder value. Yes; executives may realize little or no value if pre-determined performance metrics are not achieved. Health and Welfare Benefits   Provides benefits that are part of our broad-based employee benefits programs, including medical, dental, life insurance, disability plans and our 401(k) plan matching contributions.   Ensures competitive market practices and promotes continued employment.   No. Severance and Change-in-Control Arrangements   Helps us retain certain of our executive officers, providing us with continuity of executive management.     Payments are forfeited if the executive resigns without good reason or is terminated for cause.   No.   48 Table of Contents Base Pay. Base pay is established initially on the basis of several factors, including market competitiveness; past practice; individual performance and experience; the level of responsibility assumed; the level of skills and experience that can be leveraged across our companies to facilitate their growth and success; and individual employment negotiations with executives. Each of our executive officers in 2023 had an agreement with us that sets a minimum base salary.   Base salaries typically are reviewed annually (at the end of one year and the beginning of the upcoming calendar year) by the Committee, as well as in connection with a promotion or other changes in job responsibilities. Neither Mr. Salzman nor Mr. Herndon received increases in their base salaries for the 2023 calendar year. The Committee does not typically make adjustments to the base salary levels for our executives based on cost-of-living types of factors. Incentives. Incentive Opportunity for Chief Executive Officer. Effective April 1, 2020, Safeguard appointed Mr. Salzman to the position of Chief Restructuring Officer to succeed Brian Sisko, Safeguard’s then President and Chief Executive Officer. Later, on December 21, 2020, Safeguard appointed Mr. Salzman to the position of Chief Executive Officer. Mr. Salzman did not participate in Safeguard’s Management Incentive Program (“MIP”). Instead, Mr. Salzman received significant equity-based compensation. On January 1, 2022, Mr. Salzman received a restricted stock award of 60,000 shares of Safeguard’s common stock, which vested and was paid ratably on a monthly basis through December 31, 2022, and a performance stock unit grant representing a right to receive 80,000 shares of Safeguard’s common stock, which would vest based on the Committee’s discretion and if certain performance criteria were achieved by December 31, 2022, subject to Mr. Salzman’s continued employment. After reviewing Safeguard’s performance against such criteria, in January 2023 the Committee approved the vesting of 64,000 of such performance stock units. On January 17, 2023, Mr. Salzman received an restricted stock award of 125,000 shares of Safeguard’s common stock, which vested and was paid ratably on a monthly basis through December 31, 2023. Effective March 15, 2023, Mr. Salzman received a performance stock unit grant representing a right to receive 125,000 shares of Safeguard’s common stock, which would vest based on the Committee’s discretion and if certain performance criteria were achieved by December 31, 2023, subject to Mr. Salzman’s continued employment. After reviewing Safeguard’s performance against such criteria, in December 2023 the Committee approved the vesting of all 125,000 of such performance stock units. Incentive Opportunity for other Officers. The Committee annually awards bonuses to our other executives under the MIP. The MIP is designed to provide a variable short-term incentive to our named executive officers and our other executives and employees principally based on Safeguard’s annual performance and/or individual achievement. These awards are determined annually following the end of each calendar year based on the Committee’s assessment of the achievement of objectives established at the beginning of the year. Payments may be made in cash and/or equity, in the Committee’s discretion. The awards for the 2023 calendar year were paid in cash. Neither the actual awards to be made under the MIP nor the minimum long-term value of any equity grants made is guaranteed. 49 Table of Contents For 2023, the Committee determined that our named executive officers and other senior executives participating in the MIP would be eligible to receive an award under the MIP based on the achievement by Safeguard of corporate objectives. Other employees also participated in our 2023 MIP based on the achievement by Safeguard of corporate objectives. 2023 MIP Performance Measures. The Committee established specific performance criteria under the 2023 MIP, which included management’s execution of a strategic transaction or development of an actionable plan to implement a “go dark” transaction (i.e., the Company's voluntarily delisting of its common stock from trading on Nasdaq and the deregistering of the Company’s common stock under Section 12(b) of the Exchange Act). Within the specific parameters of the 2023 MIP, the Committee also reserved a significant level of discretion generally and in reaching final determinations of achievement levels attained. The determination to reserve such discretion and flexibility arose from the Committee’s belief that, given Safeguard’s business activities, as circumstances change throughout a given fiscal year, on a macro and/or a micro level, specific/rigid formulas or guidelines for measuring achievement set in the beginning of a year, if strictly applied, may well incent activity that does not result in, or compensation grants that do not match, actual shareholder value creation and that the execution of the Strategy would likely entail the arising of unforeseen circumstances. The award criteria finally adopted was designed to provide management with a meaningful guideline for meeting the Committee’s criteria for a target award, but not guarantee achievement or make achievement somewhat inevitable or impossible. This approach is also intended to provide the possibility of some economic recognition, albeit reduced, for near achievement of the target. Consistent with their respective employment agreements and Safeguard’s overall compensation philosophy, and based upon multiple factors reviewed by the Committee, including an assessment of competitive compensation data in the market in which Safeguard competes for executive talent and to better align the interests of Safeguard management and our shareholders, the following target MIP awards for 2023 were set for our named executive officers: Name 2022 MIP Target Variable Incentive (1) 2023 MIP Target Variable Incentive Eric Salzman n/a n/a Mark A. Herndon $ 171,000 $ 171,000   (1) The 2022 MIP target variable incentive amount has been included for comparison purposes. There were no mandatory minimum awards payable under the 2023 MIP, and awards were paid based upon the Committee’s determination of the level of achievement of the applicable corporate objectives.   Determination of 2023 Payouts . In late 2023, the Committee reviewed Safeguard’s corporate performance against the corporate objectives described above. The Committee approved an achievement level of 100% (against targeted amounts) for the senior executives participating in the MIP.   Based on its assessment of the achievement of the 2023 MIP corporate objectives, the Committee authorized the following individual awards to Safeguard’s named executive officers. The Committee determined to pay the 2023 MIP payments to our executives in cash. Name Payout Level (1) Total Variable Incentive Payment Eric Salzman n/a n/a Mark A. Herndon 100 % $ 171,000 Named Executive Officers, as a group (1 named executive officer) 100 % $ 171,000   (1) Percentage of 2023 MIP Target. Pursuant to the terms of the Termination Letter Agreement with Mr. Herndon, he received 100% of his incentive plan compensation under the MIP. Mr. Salzman did not participate in the MIP. The Committee annually reviews the equity awards held by our executives and other employees and also may consider awards periodically during a year in an effort to retain and motivate employees and to ensure continuing alignment of executive and shareholder interests. Grants may be made at regularly scheduled meetings or at special meetings convened to approve compensation arrangements for newly hired executives or for executives who have been promoted or are otherwise subject to changes in responsibilities. Any stock options granted are granted with an exercise price equal to the average of the high and low trading prices of our common stock on the date of grant. 50 Table of Contents Perquisites (fringe benefits). During 2023, we provided life insurance coverage ranging from $750,000 to $1,000,000 to each of our named executive officers at a total cost of $3,388. Our named executive officers also are eligible to participate in the fringe benefits that Safeguard may offer, from time to time, on a non-discriminatory basis to all of our employees. Severance and Change-in-Control Arrangements During 2023, each of our current named executive officers, respectively, was a party to an employment agreement with Safeguard.  As of December 31, 2023, Mr. Salzman and Mr. Herndon ceased serving as the Company’s Chief Executive Officer and Chief Financial Officer, respectively. See “Executive Compensation—Potential Payments upon Termination or Change in Control” below for a summary of the specific benefits that each named executive officer received in connection with such occurrence.   Compensation Recovery Policy In November 2023, the Board approved a Compensation Recovery Policy (the “Recovery Policy”), which is filed herewith. As set forth in the Recovery Policy, in the event of an accounting restatement, the Company must recover erroneously awarded compensation reasonably promptly, in amounts determined pursuant to the Recovery Policy. The Recovery Policy applies to all incentive-based compensation received by a person (a) after beginning service as an executive officer; (b) who served as an executive officer at any time during the performance period for such incentive-based compensation; (c) while the Company has a listed class of securities on a national securities exchange; and (d) during the clawback period. See the Recovery Policy for its complete terms and conditions.    Deductibility of Executive Compensation   Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”) generally disallows a tax deduction to public companies for compensation in excess of $1 million paid to any of the companies’ chief executive officer and certain other named executive officers. Prior to the effectiveness of the Tax Cuts and Jobs Act, performance-based compensation satisfying certain requirements was not subject to this deduction limitation. Effective January 1, 2018, the performance-based compensation exception is not available to public companies, except for certain limited grandfathered arrangements.  We periodically reviewed potential consequences of Section 162(m) and, prior to January 1, 2018, the stock options and PSUs awarded under our equity compensation plan were intended to comply with the provisions of Section 162(m). Stock Ownership Guidelines Our Board has established stock ownership guidelines that are designed to closely align the long-term interests of our named executive officers and other senior executives with the long-term interests of our shareholders. During 2023 our ownership guidelines were as follows:   Executive   Ownership Requirement Chief Executive Officer   4X Base Salary Executive Vice President / Chief Financial Officer   3X Base Salary Senior Vice President   2X Base Salary   The Nominating & Corporate Governance Committee monitors compliance with the ownership requirements as of the end of each calendar year. Shares counted toward these guidelines include:   ● Shares beneficially owned by the executive officer; ● Vested portion of restricted stock units and restricted stock awards; and ● Net value of shares underlying vested, in-the-money options (“Net Option Value”).   For purposes of calculating the value to be used in monitoring compliance with the ownership guidelines, we utilize (a) the greater of the current value or the cost basis of purchased shares or vested restricted stock units/restricted stock awards as to which the executive has declared income and paid taxes; and (b) our trailing six-month average share price in determining Net Option Value.   The stock ownership guidelines in effect in 2023 provided that each executive generally must meet the stock ownership requirement by December 31st of the year of the fifth anniversary of the event triggering the stock ownership requirement (or any increase in the stock ownership requirement). Due to the Strategy, in March 2019, the Nominating & Corporate Governance Committee eliminated the specific timeframe by which our named executive officers and other senior executives must satisfy the stock ownership requirements; provided that no sales of Safeguard stock by our named executive officers and other senior executives are permitted until the stock ownership requirement is met (except for (i) limited stock sales to meet tax obligations and (ii) sales of shares awarded under the management incentive program) without the approval of the Board or our Nominating & Corporate Governance Committee. As of the date of this proxy statement, our named executive officers have not yet achieved the required stock ownership level. 51 Table of Contents Prohibition on Speculation in Safeguard Stock Safeguard’s policy on securities trading prohibits our executive officers, directors, and other employees from engaging in activities with regard to our stock that can be considered as speculative, including but not limited to, short selling (profiting if the market price of our securities decreases); buying or selling publicly traded options (e.g., a put option, which is an option or right to sell stock at a specific price prior to a specified date, or a call option, which is an option or right to buy stock at a specific price prior to a specified date); and hedging or any other type of derivative arrangement that has a similar economic effect. Our executive officers and directors also are prohibited from pledging, directly or indirectly, our common stock or the stock of any of our companies, as collateral for indebtedness.   The Strategy - Changes in Compensation Policies and Practices   In January 2018, Safeguard ceased deploying capital into new opportunities in order to focus on supporting its existing ownership interests and maximizing monetization and other strategic opportunities to enable returning value to shareholders. Initiatives considered to do so include, among others: the sale of our ownership interests, the sale of certain or all of our ownership interests in secondary market transactions, or a combination thereof, as well as other strategic opportunities to maximize shareholder value (the “Strategy”).   In connection with the Strategy, on April 6, 2018, the Committee approved, and the Board adopted, the Safeguard Scientifics, Inc. Transaction Bonus Plan, which was amended and restated as the Safeguard Scientifics, Inc. Amended and Restated Transaction Bonus Plan (the “LTIP”), which was approved and adopted on February 18, 2019 and further amended effective May 29, 2020. The purpose of the LTIP is to better promote the interests of Safeguard and its shareholders by providing a definitive incentive to employees to maximize the value of Safeguard in connection with the execution of the Strategy. Under the LTIP, participants, which include certain current and former employees, may receive a contingent right to receive a payment under the LTIP from a cash bonus pool. The bonus pool becomes available only after cash consideration is received by Safeguard in connection with the sale or other liquidation of its assets, including the sale of interests in its companies. (“Sale Transaction(s)”). Following a Sale Transaction, the bonus pool will be equal to, and participants will receive an aggregate of, 0.2% to 1.3% of the transaction consideration (as defined in the LTIP and set forth below) received by Safeguard in connection with the Sale Transaction, provided that (i) the cash bonus pool shall not be available until Safeguard has received a specified minimum amount of transaction consideration and (ii) each additional payment from the bonus pool will first require that Safeguard has received a further specified minimum amount of transaction consideration. In addition, the cash bonus pool will be equal to, and participants will receive, a specified minimum dollar amount upon the occurrence of a single transaction or a series of related transactions pursuant to which either (i) Safeguard sells, transfers or otherwise disposes of multiple assets representing, in the aggregate, a material portion of Safeguard’s assets (as determined in good faith by Safeguard’s Board of Directors) or (ii) Safeguard is sold, merged or consolidated with or into another company. For purposes of the LTIP, “transaction consideration” means, in connection with a Sale Transaction(s), (i) the cash consideration received directly or indirectly by Safeguard, minus (ii) the sum of the commissions, fees and expenses payable to the Safeguard’s investment bankers and the amount of fees and expenses payable to Safeguard’s professional advisors in connection with the Sale Transaction. For purposes of Transaction Consideration, cash shall not be considered paid to Safeguard unless and until the cash has been received by Safeguard and shall include any cash received by Safeguard upon the sale of securities or other consideration received in connection with any Sale Transaction.   All current officers and employees of Safeguard are eligible to participate in the LTIP. The Board, in its sole discretion, determines the participants to whom awards are granted under the LTIP, and the amounts of the awards relating to the bonus pool, provided that any award made to an officer or employee may not be rescinded unless the officer or employee has been terminated for cause or the employee has resigned without good reason.   At the time of the adoption of the initial Transaction Bonus Plan on April 6, 2018, the Committee also awarded, to all holders of performance unit and stock unit awards previously granted under Safeguard’s 2014 Equity Compensation Plan (the “Plan”), dividend equivalents relating to such awards. The Committee awarded such dividend equivalents, meaning amounts determined by multiplying (i) the number of shares of Company stock or stock units subject to an award under the Plan by (ii) the per-share extraordinary dividend or distribution paid by Safeguard on its stock as described in Section 5(c) of the Plan (“Dividend Equivalents”), to grantees to the extent the grantees held any of the following awards under the Plan: (1) stock units that have not yet been vested and distributed, and (2) performance units that have not yet been vested and distributed. The Dividend Equivalents are subject to the same vesting terms and other conditions of the existing awards and will be governed by the terms of the existing award and the Plan. On February 18, 2019, the Board approved an award under the LTIP to Mark A. Herndon, the Company’s Senior Vice President and Chief Financial Officer, with a bonus pool percentage equal to 7%. Mr. Salzman, the Company’s current Chief Executive Officer, has not received a fixed award under the LTIP, but he, like all LTIP participants, is eligible to receive any portion of a bonus pool that was not previously awarded to an LTIP participant. Payments under the LTIP became due and payable for the first time during 2021. The total amount of these payments was $2,500,000. The LTIP payments made to Mr. Salzman and Mr. Herndon in 2021 were equal to $135,000 and $473,333, respectively (which is equal to 5.4% and 18.9%, respectively, of the total LTIP payments). No LTIP payments were made in 2023. 52 Table of Contents EXECUTIVE COMPENSATION   Summary Compensation Table — Fiscal Years Ended December 31, 2023 and 2022   The table below is a summary of total compensation paid to or earned by our named executive officers for the fiscal years ended December 31, 2023 and 2022. At December 31, 2023, there were two individuals serving as named executive officers of Safeguard. Name and Principal Position Year Salary ($) Bonus ($) Stock Awards ($)(1)(2) Option Awards ($) Non-Equity Incentive Plan Compensation ($)(3) Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) All Other Compensation ($)(4) Total ($) Eric C. Salzman 2023 500,000 — 390,625 — — — 19,532 910,157 Chief Executive Officer 2022 500,000 — 426,000 — — — 19,572 945,572 Mark A. Herndon 2023 285,000 — — — 171,000 — 18,695 474,695 Senior Vice President and Chief Financial Officer 2022 285,000 — — — 162,450 — 17,951 465,401 (1) Consistent with SEC rules, stock awards are required to be valued using the aggregate grant date fair value computed in accordance with stock-based compensation accounting rules (FASB ASC Topic 718). Even though awards may be forfeited, the amounts reported do not reflect this contingency. Amounts reported for these awards do not reflect our accounting expense for these awards during the year and may not represent the amounts that our named executive officers will actually realize from the awards. Whether, and to what extent, Mr. Salzman realizes value will depend on (i) continued employment, (ii) whether certain performance criteria are achieved and (iii) the Committee’s discretion. Vesting of awards held by Mr. Salzman may be accelerated in certain circumstances as detailed below under “Potential Payments upon Termination or Change in Control.” (2) For 2023, the Committee awarded Mr. Salzman a combination of: (i) time-based vesting restricted stock and (ii) and performance-based vesting restricted stock units (the “PSUs”). During 2023, all 125,000 shares of such time-based vesting restricted stock held by Mr. Salzman vested. The fair value of each share of such restricted stock was equal to the average of the high and low trading prices of a share of our common stock on the grant date, which was $3.13 per share. The PSUs were subject to performance-based vesting based on the delivery of a strategic transaction or a “go-dark” plan that would enable Safeguard to return value to its shareholders and the Committee’s discretion. Each PSU entitled Mr. Salzman to receive one share of Safeguard common stock on or about the date upon which the PSU vests. The grant date fair value for the 125,000 PSUs included in this column for 2023, which was $0, was computed based upon the probable outcome of the performance conditions as of the grant date. Assuming the highest level of performance conditions will be achieved (that is, the full number of shares underlying the PSUs will vest upon 100% achievement of the target), the full grant date fair value for the PSUs granted to Mr. Salzman during 2023 would be $233,125. Ultimately, all 125,000 of such PSUs vested and the underlying shares were issued in December, 2023, which is equal to the grant date fair value of $233,125 for the vested PSUs granted to Mr. Salzman in 2023. (3) For Mr. Herndon, the amounts reported in this column for 2023 represent payments for awards earned under our 2023 Management Incentive Program paid in January 2024 in the amount of $171,000. The payments under the 2023 Management Incentive Program are described in more detail under “Compensation Discussion and Analysis—2023 Compensation Program.” Payments under the 2023 management incentive program were paid to employees in cash. (4) For 2023, All Other Compensation includes the following amounts: Name 401(k) Matching Contribution ($) Life Insurance Premiums ($) Group Life Insurance Imputed Income ($) Severance Benefits ($) Eric C. Salzman 16,500 1,842 1,190 — Mark A. Herndon 16,500 1,546 649 — Our named executive officers also were eligible to receive matching charitable contributions under our program, which is available to all employees, subject to a maximum of $1,500 in matching contributions for each individual for each calendar year. The components of compensation reported in the Summary Compensation Table, including an explanation of the amount of salary and cash incentive compensation in proportion to total compensation, are described in detail under “Compensation Discussion and Analysis.” 53 Table of Contents Grants of Plan-Based Awards — 2023   The following table shows awards granted during 2023 to our named executive officers.   Date of Estimated Possible Payouts Under Non-Equity Incentive Plan Awards (1) Estimated Future Payouts Under Equity Incentive Plan Awards (2)(3) All Other Stock Awards: Number of Shares of Stock or Units All Other Option Awards: Number of Securities Underlying Exercise or Base Price of Option Closing Market Price on Date of Grant Date Fair Value of Stock and Option Name Grant Date Committee Action Threshold ($) Target ($) Maximum ($) Threshold (#) Target (#) Maximum (#) (#) (2)(3) Options (#) Awards ($/Sh) Grant ($/Sh) Awards ($)(5) Eric C. Salzman 1/17/23 12/27/22 — — — — — — 125,000 — — — 390,625 3/15/23 3/7/23 — — — — 125,000(4) — --- — — — 233,125 Mark C. Herndon 3/21/23 3/7/23 — 171,000 — — — — — — — — —    (1) This award was made to Mr. Herndon under our 2023 MIP. There was no mandatory minimum award payable under our 2023 MIP other than in connection with a termination of employment as specified in a named executive officer’s employment agreement. The amount in the table payable to Mr. Herndon represents a payout that might have been achieved based on performance at target performance levels. The actual payment under his award, which has already been determined and was paid in January 2024, is included for 2023 in the Non-Equity Incentive Plan Compensation column of the Summary Compensation Table. Payments under the 2023 MIP were paid in cash. (2) The vesting of equity awards may be accelerated, as applicable, upon death, permanent disability, termination of employment for good reason or without cause, or termination of employment in connection with a change in control.  Further information regarding the equity awards that are subject to acceleration of vesting in each circumstance can be found below under “Potential Payments upon Termination or Change in Control.” (3) The 125,000 shares of restricted stock vested in 12 equal installments commencing on the grant date and on the 15th day of each month thereafter, ending on December 15, 2023. The equity grants reported in this table were granted under our 2014 Equity Compensation Plan. (4) On March 15, 2023, Mr. Salzman received a performance stock unit grant representing a right to receive 125,000 shares of Safeguard’s common stock. The vesting terms of such grant were based on the Committee’s discretion and if certain performance criteria were achieved by December 31, 2023. After reviewing Safeguard’s performance against such criteria, the Committee approved the vesting of all 125,000 of performance stock units and the underlying shares of Safeguard’s common stock were issued in December 2023. The grant date fair value for the PSUs was computed assuming the highest level of performance conditions will be achieved. (5) The amounts in this column represent the grant date fair value of the awards computed in accordance with FASB ASC Topic 718.  The assumptions used by us in calculating these amounts are incorporated by reference to Note 6 to our Consolidated Financial Statements in our Annual Report on Form 10-K. Outstanding Equity Awards at Fiscal Year-End — 2023    There were no equity awards made to our named executive officers that were outstanding at December 31, 2023. Option Exercises and Stock Vested — 2023   The following table shows restricted stock awards that vested during 2023. No stock options were exercised during 2023.   Option Awards Stock Awards Name Number of Shares Acquired on Exercise (#) Value Realized on Exercise ($)(1) Number of Shares Acquired on Vesting (#) Value Realized on Vesting ($)(2) Eric C. Salzman – –  125,000 $ 139,730 – – 189,000 $ 401,577 Mark A. Herndon – – – –   (1) The value realized on exercise is determined by multiplying the number of shares acquired on exercise by the difference between the exercise price and the average of the high and low trading prices of Safeguard’s common stock, as reported on Nasdaq on the exercise date, or, for those shares that were sold upon exercise of the options, the difference between the sales price of the shares underlying the options exercised and the applicable exercise price of those options.   (2) The value realized on vesting is determined by multiplying the number of shares vested by the average of the high and low trading prices of Safeguard’s common stock, as reported on Nasdaq on each vesting date. 54 Table of Contents Potential Payments upon Termination or Change in Control Each of Mr. Salzman and Mr. Herndon entered into a Termination Letter Agreement with us on December 15, 2023. Pursuant to the Termination Letter Agreements, each of Messrs. Salzman and Herndon will receive COBRA coverage under the Company’s medical insurance program for up to six months starting from January 1, 2024. The Termination Letter Agreements also provide for customary confidentiality and mutual non-disparagement obligations, as well as a release of claims, subject to certain exclusions, and other customary provisions. In addition, under the Termination Letter Agreement with Mr. Salzman, 125,000 performance based restricted stock units previously granted to Mr. Salzman will vest in full effective as of December 15, 2023, and pursuant to the Termination Letter Agreement with Mr. Herndon, he received a cash payment of: (i) $142,500, which is equal to six months of his base annual salary, and (ii) $171,000 as his incentive plan compensation under the Company’s Management Incentive Plan. No other payments upon termination or change of control are owed to Messrs. Salzman, Herndon or Dow. Pay vs. Performance. The following table and accompanying disclosures set forth information regarding the compensation actually paid to our named executive officers, as calculated in accordance with SEC rules and regulations, and certain financial performance of Safeguard. See “Compensation Discussion and Analysis” for further information on compensation arrangements for our named executive officers.    Year Summary Compensation Table Total For PEO ($)(1)(2) Compensation Actually Paid to PEO ($)(3) Average Summary Compensation Table Total for Non-PEO Named Executive Officers ($)(1)(2) Average Compensation Actually Paid to Non-PEO Named Executive Officers ($)(4) Value of Initial Fixed $100 Investment Based on: Total Shareholder Return(5) Net Income (Loss) ($) 2023 910,157 1,060,899 474,695 474,695 $ 17.71 (9,828,000 ) 2022 $ 945,572 968,210 465,401 465,401 $ 48.59 (14,263,000 ) 2021 $ 965,448 1,724,037 922,242 922,242 $ 115.20 27,004,000 (1) Eric Salzman, our Chief Executive Officer served as principal executive officer (PEO) for the fiscal years ended December 31, 2023, 2022 and 2021. Mark Herndon, our Chief Financial Officer, served as our non-PEO named executive officer for the fiscal years ended December 31, 2023, 2022 and 2021. (2) Amounts reported in these columns represent the total compensation reported in the Summary Compensation Table for the applicable year for Messrs. Salzman and Herndon, as applicable. (3) To calculate compensation actually paid to the PEO, adjustments were made to the amounts reported in the Summary Compensation Table for the applicable year. We did not distribute any dividends on unvested equity awards during the fiscal years ended December 31, 2023, 2022 and 2021. A reconciliation of the adjustments for Mr. Salzman is set forth below: Year Summary Compensation Table Total ($) (Minus) Grant Date Fair Value of Stock Awards and Option Awards Granted in Fiscal Year ($) Plus Fair Value as of Fiscal Year-End of Outstanding and Unvested Stock Awards and Option Awards Granted in Fiscal Year ($) Plus/(Minus) Change in Fair Value as of Fiscal Year-End of Outstanding and Unvested Stock Awards and Option Awards Granted in Prior Fiscal Years ($) Plus Fair Value as of Vesting Date of Stock Awards and Option Awards Granted in Fiscal Year that Vested During Fiscal Year ($) Plus/ (Minus) Change in Fair Value as of Vesting Date of Stock Awards and Option Awards Granted in Prior Fiscal Years for which Applicable Vesting Conditions Were Satisfied During Fiscal Year ($) (Minus) Fair Value as of Prior Fiscal Year-End of Stock Awards and Option Awards Granted in Prior Fiscal Years that Failed to Meet Applicable Vesting Conditions During Fiscal Year ($) Equals Compensation Actually Paid ($) 2023 910,157 (390,625 ) - - 341,307 1,600 - 862,439 2022 945,572 (426,000 ) 198,400 - 264,688 (14,450 ) - 968,210 2021 965,448 (312,101 ) - 617,950 452,740 - - 1,724,037 (4) Mr. Herndon did not receive any equity awards during the fiscal years ended December 31, 2023, 2022 or 2021. Therefore, no adjustments were required to be made to his total compensation reported in the Summary Compensation Table. 55 Table of Contents (5) Assumes an investment of $100 on December 31, 2020. The closing prices of Safeguard’s common stock as reported on the NYSE composite tape or Nasdaq, as applicable, on the following trading days were: (i) $6.38 on December 31, 2020; (ii) $7.35 on December 31, 2021; (iii) $3.10 on December 30, 2022; and $0.78 on December 29, 2023. In December 2023, we declared and paid a $0.35 per share special dividend.  In January 2018, Safeguard ceased deploying capital into new opportunities in order to focus on supporting the existing ownership interests and maximizing monetization opportunities to enable returning value to shareholders. We have considered and taken action on various initiatives including the sale of individual ownership interests, the sale of certain or all ownership interests in secondary market transactions as well as other opportunities to maximize shareholder value.  In December 2019, we declared and paid a $1.00 per share special dividend.  In 2021, we repurchased 4.5 million shares through a combination of open market purchases and a tender offer for an aggregate of $40.7 million resulting in an average price of $8.95 per share.  In 2022, we repurchased 711,481 shares for $2.9 million at an average price of $4.13 per share through subsequent open market repurchase plans.  In December 2023, we declared and paid a $0.35 per share special dividend.  On December 15, 2023, Safeguard held a Special Meeting of Shareholders (the “Special Meeting”) at which shareholders adopted amendments to the Company's Article of Incorporation to effect a reverse stock split, followed immediately by a forward stock split of the Company's common stock. Upon the adoption of the Amendments to the Articles of Incorporation at the Special Meeting, on December 15, 2023, the Company’s Board of Directors (the “Board”) determined the reverse stock split ratio to be 1-for-100 and the forward stock split ratio to be 100-for-1 (collectively, “Stock Split Ratios”), which were within the ranges approved by the Company’s shareholders at the Special Meeting. The Company subsequently filed the Amendments to the Articles of Incorporation with the Pennsylvania Department of State to effectuate the Stock Splits with such Stock Split Ratios.   The Stock Splits had the effect of reducing the number of record holders of the Company’s common stock to a number below 300 (i.e., the level at or above which the Company is required to file reports with the Securities and Exchange Commission (the “SEC”) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)). The Board also determined to give effect to the Transaction (as defined below). The actions the Company would take to suspend, and events that occur as a result of such actions that would have the effect of suspending, the Company’s reporting obligations under the Exchange Act, including effectuating the Stock Splits, delisting the Company’s common stock from trading on The Nasdaq Stock Market LLC (“Nasdaq”), as described below, terminating the registration of the Company’s common stock under Sections 12(b) and 12(g) of the Exchange Act and suspending the Company’s reporting obligations under Section 15(d) of the Exchange Act, are collectively referred to as the “Transaction.”   On December 15, 2023, the Board also approved the Company voluntarily delisting its common stock from trading on Nasdaq and deregistering its common stock under Section 12(b) of the Exchange Act by filing Form 25 (Notification of Removal From Listing and/or Registration under Section 12(b) of the Exchange Act) with the SEC. The Company filed Form 25 on February 2, 2024 and the Company’s common stock was delisted from trading on Nasdaq effective as of February 9, 2024. On February 20, 2024, the Company filed Form 15 with the SEC certifying that it has less than 300 shareholders of record, which terminated the registration of the Company’s common stock under Section 12(g) of the Exchange Act. Effective February 12, 2024, the Company’s common stock qualified to trade on the OTCQX Best Market (the “OTC”). Any trading in the Company’s common stock now occurs only in privately negotiated sales and on the OTC. There is no guarantee, however, that a broker will continue to make a market in the common stock and that trading of the common stock will continue on the OTC or otherwise.   With respect to Safeguard’s current ownership interests, the majority of such ownership interests, which primarily consist of technology driven businesses, have a history of operating losses and/or limited operating history. In addition, many have incurred substantial costs to develop and market their products, have incurred net losses and cannot fund their cash needs from operations. As provided in this Annual Report on Form 10-K, such circumstances, taken together with the principles of accounting for such ownership interests, can result in Safeguard’s net income varying considerably from year to year. Given the forgoing strategy implemented in 2018 and the nature of Safeguard’s net income, Safeguard does not include total shareholder return or net income in its compensation policies. Instead, with respect to the PEO, compensation primarily includes: (i) base salary, (ii) restricted stock awards that vest and are paid subject to the PEO’s continued employment and (iii) performance stock unit grants that vest based on the Compensation Committee’s discretion and if certain performance criteria related to the furtherance of the foregoing strategy are achieved. With respect to Safeguard’s other NEO, compensation primarily includes: (i) base salary and (ii) a bonus under Safeguard’s MIP, which is based on the Compensation Committee’s discretion and if certain performance criteria related to the furtherance of the foregoing strategy are achieved. 56 Table of Contents Board Compensation. During 2023, each of our directors was compensated for his or her service as a director through payments as shown in the table below: Amount Compensation Item ($) Annual Board Retainers (payable relative to a full year of Board service): Chairman of the Board 110,000 Other Directors 50,000 Additional Annual Chairperson Retainers (payable relative to a full year of committee service): Audit Committee 15,000 Compensation Committee 10,000 Nominating & Corporate Governance Committee 10,000 The foregoing amounts were not paid in cash and were instead paid in the form of our common stock based upon the average closing price of a share of our common stock on Nasdaq for the 20 consecutive trading days immediately preceding the grant date. Directors’ fees are paid quarterly, in arrears, and retainers are prorated based on actual days of service relative to a full year of Board service or the service period during which the fees were in effect. We also reimburse our directors for expenses they incur, if any, to attend our Board and committee meetings and for attendance at one director continuing education program during each calendar year or the reasonable cost of one year’s membership in an organization that is focused on director education. Each director serving on the Board on June 30, 2023 also received 44,947 shares of restricted stock, which had a value of $75,000 based upon the average closing price of a share of our common stock on Nasdaq for the 20 consecutive trading days immediately preceding June 30, 2023. These annual restricted stock service grants are fully vested at issuance for directors who have reached age 65 and otherwise vest on the first anniversary of the grant date or, if earlier, once a director reaches age 65. Director Compensation – 2023 . The following table provides information on compensation earned for services provided during 2023 by each director who served on our Board at any time during 2023:   Name Fees Earned or Paid in Cash ($) Stock Awards ($)(1) Option Awards ($)(2) All Other Compensation ($)(1) Total ($)(1)(3) Ross D. DeMont -- 132,863 – – 132,863 Russell D. Glass -- 132,863 – – 132,863 Joseph M. Manko, Jr. -- 183,907 – – 183,907 Beth S. Michelson -- 128,004 – – 128,004 Maureen F. Morrison -- 34,507 -- -- 34,507 (1) The stock awards represent the annual service grant of shares of common stock and shares of common stock issued as compensation for service on the Board during 2023, each computed in accordance with stock-based compensation accounting rules (FASB ASC Topic 718). The fair value of the shares of common stock is determined by multiplying the number of shares of common stock by the average of the high and low trading prices of Safeguard’s common stock on the grant date, as reported on NASDAQ. (2) The directors’ aggregate holdings of DSUs, stock options (both vested and unvested), and unvested shares of restricted stock, as of December 31, 2023, were as follows:   Name DSUs (#) Restricted Stock (#) Stock Options (#) Ross D. DeMont - 44,947 - Russell D. Glass - 44,947 - Joseph M. Manko, Jr. - 44,947 - Beth S. Michelson - 44,947 - (3) Directors also are eligible for reimbursement of expenses incurred in connection with attendance at Board and committee meetings. These amounts are not included in the table above. Stock Ownership Guidelines. Each non-employee director is expected to own a number of shares of our stock having a value at least equal to a designated multiple of the annual retainer paid to such director for service on our Board. Such ownership is expected to be achieved within the later of five years after an individual’s election to our Board or the fifth anniversary following any increase in the required multiple of the annual retainer. Since 2012, the equity position threshold in our stock that is required to be held by non-employee directors is three times the annual Board retainer. No sales of stock are permitted during the period in which the ownership requirement has not been met (except for limited stock sales to meet tax obligations), without the approval of the Board. Shares counted toward these guidelines include:   ● Outstanding shares beneficially owned by the director; ● Vested shares of restricted stock; ● Vested DSUs that have been credited to the director; and ● The net value of shares underlying vested, in-the-money options (“Net Option Value”).   57 Table of Contents For purposes of calculating the value to be used in monitoring compliance with the ownership guidelines, we utilize (a) the greater of the current value or the cost basis of the shares; (b) the greater of the current value or fees deferred in connection with vested DSUs; and (c) our trailing six-month average share price in determining Net Option Value.   Based on information they have provided to us, each non-employee director serving on the Board during 2023 has achieved the required ownership levels. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters The material features of our equity compensation plans are described in Note 7 to the Consolidated Financial Statements filed as part of our Annual Report on Form 10-K for the year ended December 31, 2023. The following table shows the number of shares of Safeguard common stock beneficially owned as of March 21, 2024 (unless otherwise indicated), by each person known to us to be the beneficial owner of more than 5% of our outstanding shares of common stock, our directors, persons named in the Summary Compensation Table in this proxy statement and our directors and executive officers as a group. For purposes of reporting total beneficial ownership, shares that may be acquired within 60 days of March 21, 2024 through the exercise of Safeguard stock options are included. On March 21, 2024, there were 16,722,994 shares of common stock outstanding and 8,333 shares underlying stock options held by a former director that were exercisable within 60 days of March 21, 2024. Outstanding Shares Beneficially Options Exercisable Shares Beneficially Owned Assuming Exercise of Percent of Outstanding Name Owned Within 60 Days Options Shares (1) Thomas A. Satterfield, Jr. 15 Colley Cove Drive Gulf Breeze, FL 32561 2,089,726 — 2,089,726 12.5 % Contrarian Capital Management, L.L.C. 411 West Putnam Avenue, Suite 425 Greenwich, CT 06830 1,199,204 — 1,199,204 7.2 % First Manhattan Co. 399 Park Avenue New York, NY 10022 1,194,142 — 1,194,142 7.2 % Exploration Capital, LLC 250 East 200 South, Floor 16 Salt Lake City, UT 84111 852,460 --- 852,460 5.0 % Halis Family Foundation 150 East 58th Street; 14th Floor New York, NY 10155 843,311 --- 843,311 5.0 % Ross D. DeMont 630,978 (2) — 630,978 3.8 % Russell D. Glass 186,400 — 186,400 * Joseph M. Manko, Jr. 409,709 (3) — 409,709 2.4 % Beth S. Michelson 126,352 — 126,352 * Eric Salzman 415,584 — 415,584 2.5 % Mark A. Herndon 57,469 — 57,469 * Executive officers and directors as a group (6 persons) 1,826,492 --- 1,826,492 10.9 % (1) Unless otherwise indicated by footnote, each director and named executive officer has the sole power to vote and to dispose of the shares (other than shares held jointly with an individual’s spouse). An * indicates ownership of less than 1% of the outstanding shares. Shareholding information for Contrarian Capital Management, L.L.C., First Manhattan Co., Exploration Capital LLC and Halis Family Foundation is based on information included in the Schedule 13G or Schedule 13G/A filed with the SEC by each such entity. Shareholding information for Thomas A. Satterfield, Jr. is based on information included in the Form 4 filed with the SEC on March 16, 2023. (2) Mr. DeMont has sole voting and dispositive power over 287,256 shares directly held and may be deemed to be the beneficial owner of 12,000 shares held in a spousal IRA account, 30,000 shares held in a 401(k) account and 301,722 shares owned by Kenneth Rainin Foundation, which assets are managed by Mr. DeMont’s employer, Rainin Group. Mr. DeMont disclaims beneficial ownership of the shares held by Kenneth Rainin Foundation except to the extent of his pecuniary interest therein. (3) Mr. Manko has sole voting and dispositive power over 232,323 shares directly held and may be deemed to be the beneficial owner of 177,386 shares of common stock owned by Horton Capital Partners Fund, L.P. Mr. Manko disclaims beneficial ownership of the shares held by Horton Capital Partners Fund, L.P. except to the extent of his pecuniary interest therein 58 Table of Contents Item 13. Certain Relationships and Related Transactions, and Director Independence Review and Approval of Transactions with Related Persons. The Board has adopted a written policy that charges the Audit Committee with the responsibility of reviewing with management at each regularly scheduled meeting and determining whether to approve any transaction (other than a transaction that is available to all employees generally on a non-discriminatory basis) between us and our directors, director nominees and executive officers or their immediate family members. Between regularly scheduled meetings of the Audit Committee, management may preliminarily approve a related party transaction, subject to ratification of the transaction by the Audit Committee. If the Audit Committee does not ratify the transaction, management will make all reasonable efforts to cancel the transaction. Board Independence. During 2023, Safeguard’s common stock was listed on the Nasdaq Stock Market, LLC (“Nasdaq”). To assist the Board in making independence determinations, the Board has adopted categorical standards that are reflected in our Corporate Governance Guidelines. Generally, under these standards, a director does not qualify as an independent director if any of the following relationships exist: ● Currently or within the previous three years, the director has been employed by us; someone in the director’s immediate family has been one of our executive officers; or the director or someone in the director’s immediate family has been employed as an executive officer of another company where any of our present executive officers at the same time serves or served on that company’s compensation committee; ● The director is a current partner or employee, or someone in the director’s immediate family is a current partner of, a firm that is our internal or external auditor; someone in the director’s immediate family is a current employee of the firm and personally works on our audit; or the director or someone in the director’s immediate family is a former partner or employee of such a firm and personally worked on our audit within the last three years; ● The director or someone in the director’s immediate family received, during any 12-month period within the last three years, more than $120,000 in direct compensation from us (other than director and committee fees and pension or other forms of deferred compensation for prior service that are not contingent in any way on continued service); ● The director is a current employee or holder of more than 10% of the equity of another company, or someone in the director’s immediate family is a current executive officer or holder of more than 10% of the equity of another company, that has made payments to or received payments from us, in any of the last three fiscal years of the other company, that exceeds the greater of $1 million or 2% of such other company’s consolidated gross revenues; or ● The director is a current executive officer of a charitable organization to which we have made charitable contributions in any of the charitable organization’s last three fiscal years that exceed the greater of $1 million or 2% of that charitable organization’s consolidated gross revenues. The Board has determined that Ross D. DeMont, Russell D. Glass, Joseph M. Manko, Jr. and Beth S. Michelson meet the above independence standards and have no other direct or indirect material relationships with us other than their directorship; therefore, each of such directors is independent within the meaning of Nasdaq listing standards and satisfies the categorical standards contained in our Corporate Governance Guidelines. Item 14. Principal Accountant Fees and Services Independent Registered Public Accounting Firm The following table presents fees for professional services rendered by Grant Thornton for the audit of Safeguard’s consolidated financial statements for fiscal year 2023 and fiscal year 2022 and fees billed for audit-related services, tax services and all other services rendered by Grant Thornton for fiscal year 2023 and fiscal year 2022. This table includes fees billed to Safeguard’s consolidated subsidiaries for services rendered by Grant Thornton. 2023 2022 Audit Fees (1) $ 375,000 $ 357,500 Audit-Related Fees — — Tax Fees (2) 93,340 117,046 All Other Fees 40,979 — Total $ 509,319 $ 474,546 (1) Audit fees include fees for professional services rendered in connection with the audit of the consolidated financial statements included in our Annual Report on Form 10-K, the reviews of the condensed consolidated financial statements included in our Quarterly Reports on Form 10-Q and consents. (2) Tax fees include the aggregate fees billed by our independent registered public accounting firms for tax consultation and tax compliance services. The Audit Committee pre-approves each service to be performed by Safeguard’s independent public accounting firm at its regularly scheduled meetings. For any service that may require pre-approval between regularly scheduled meetings, the Audit Committee has delegated to the Chairperson of the Audit Committee the authority to pre-approve services not prohibited by law to be performed by Safeguard’s independent registered public accounting firm and associated fees up to a maximum of $100,000, and the Chairperson communicates such pre-approvals to the Audit Committee at its next regularly scheduled meeting. 59 Table of Contents PART IV Item 15. Exhibits and Financial Statement Schedules (a) Consolidated Financial Statements and Schedules Incorporated by reference to Item 8 of this Report on Form 10-K. (b) Exhibits The exhibits required to be filed as part of this Report are listed in the exhibit index below. (c) Financial Statement Schedules None. Item 16. Form 10-K Summary. None. Exhibits The following is a list of exhibits required by Item 601 of Regulation S-K filed as part of this Report. For exhibits that previously have been filed, the Registrant incorporates those exhibits herein by reference. The exhibit table below includes the Form Type and Filing Date of the previous filing and the location of the exhibit in the previous filing which is being incorporated by reference herein. Documents which are incorporated by reference to filings by parties other than the Registrant are identified in footnotes to this table. Incorporated Filing Reference Exhibit Number Description Form Type & Filing Date Original Exhibit Number 1.a Description 3.1.1 Seconded Amended and Restated Articles of Incorporation of Safeguard Scientifics, Inc. Form 8-K 10/25/07 3.1 3.1.2 Amendment to Seconded Amended and Restated Articles of Incorporation of Safeguard Scientifics, Inc. Form 8-K 8/27/09 3.1 3.1.3 Statement with Respect to Shares Form 10-Q 4/25/14 3.1 3.1.4 Statement of Designation of Series B Junior Participating Preferred Stock Form 8-K 2/20/18 3.1 3.1.5 Articles of Amendment to Second Amended and Restated Articles of Incorporation, as amended Form 8-K 1/22/24 3.1 3.1.6 Articles of Amendment to Second Amended and Restated Articles of Incorporation, as amended Form 8-K 1/22/24 3.2 3.2 Third Amended and Restated By-laws of Safeguard Scientifics, Inc. Form 8-K 2/13/18 3.1 10.1* Safeguard Scientifics, Inc. 1999 Equity Compensation Plan, as amended and restated on October 21, 2008 Form 10-Q 11/6/08 10.4 10.2 Safeguard Scientifics, Inc. 2001 Associates Equity Compensation Plan, as amended and restated on October 21, 2008 Form 10-Q 11/6/08 10.5 10.3* Safeguard Scientifics, Inc. 2014 Equity Compensation Plan, as amended and restated on March 5, 2014 Form 10-Q 7/25/14 10.1 10.4* Safeguard Scientifics, Inc. Executive Deferred Compensation Plan (amended and restated as of January 1, 2009) Form 10-K 3/19/09 10.4 10.5* Management Incentive Plan Form 8-K 4/25/08 10.1 10.6* Amended and Restated Safeguard Scientifics, Inc. Transaction bonus plan Form 10-Q 8/12/20 10.6 10.7 Compensation Summary — Non-employee Directors Form 10-K 3/11/22 10.7 10.8* Letter Agreement between Safeguard Scientifics, Inc. and Eric Salzman dated January 1, 2023 Form 8-K 1/4/23 10.1 10.9* Termination Letter Agreement between Safeguard Scientifics, Inc. and Eric Salzman dated December 15, 2023 Form 8-K 12/18/23 10.2 10.10* Employment Letter Agreement between Safeguard Scientifics, Inc. and Eric Salzman dated December 15, 2023 Form 8-K 12/18/23 10.3 60 Table of Contents 10.11* Compensation Agreement by and between Safeguard Scientifics, Inc. and Mark Herndon dated September 17, 2018 Form 8-K 9/18/18 99.1 10.12* Termination Letter Agreement between Safeguard Scientifics, Inc. and Mark A. Herndon dated December 15, 2023 Form 8-K 12/18/23 10.4 10.13* Employment Letter Agreement between Safeguard Scientifics, Inc. and Mark A. Herndon dated December 15, 2023 Form 8-K 12/18/23 10.5 10.15 Purchase and Sale Agreement dated as of December 9, 2005 by and among HarbourVest VII Venture Ltd., Dover Street VI L.P. and several subsidiaries and affiliated limited partnerships of Safeguard Scientifics, Inc. Form 10-K 3/13/06 10.36 10.16 Consent Agreement, dated as of May 17, 2011, by and among Shire Pharmaceuticals, Inc. and certain stockholders of Advanced BioHealing, Inc. Form 8-K 5/18/11 10.1 10.17 Lease Agreement, effective February 2, 2015, between Safeguard Scientifics, Inc., a Pennsylvania corporation, and Radnor Properties-SDC, L.P., a Delaware limited partnership Form 10-Q 4/24/15 10.1 10.18 Sublease Agreement, effective March 15, 2019, by and between Safeguard Scientifics, Inc., a Pennsylvania corporation and the subtenant named therein Form 8-K 3/20/19 10.1 10.19 Letter Agreement between Safeguard Scientifics, Inc. and Rock Creek Advisors, LLC dated December 15, 2023 Form 8-K 12/18/23 10.1 14.1 † Code of Business Conduct and Ethics — — 21.1 † List of Subsidiaries — — 31.1 Certification of Mark R. Dow pursuant to Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934 — — 31.2 † Certification of Mark R. Dow pursuant to Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934 — — 32.1 ‡ Certification of Mark R. Dow pursuant to 18 U.S.C. Section 1350, as Adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. — — 32.2 ‡ Certification of Mark R. Dow pursuant to 18 U.S.C. Section 1350, as Adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. — — 97 † Compensation Recovery Policy — — 101 The following materials from Safeguard Scientifics, Inc. Annual Report on Form 10-K for the year ended December 31, 2023, formatted in Inline XBRL (eXtensible Business Reporting Language); (i) Consolidated Balance Sheets; (ii) Consolidated Statements of Operations; (iii) Consolidated Statements of Comprehensive Income (Loss); (iv) Consolidated Statements of Changes in Shareholders' Equity; (v) Consolidated Statements of Cash Flows; and (vi) Notes to Consolidated Financial Statements. — — 104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). — — † Filed herewith ‡ Furnished herewith * These exhibits relate to management contracts or compensatory plans, contracts or arrangements in which directors and/or executive officers of the Registrant may participate. 61 Table of Contents SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. SAFEGUARD SCIENTIFICS, INC. By: /s/ MARK R. DOW Mark R. Dow Chief Executive Officer Dated: March 26, 2024 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. Signature Title Date /s/ MARK R. DOW Chief Executive Officer (Principal Executive Officer) March 26, 2024 Mark R. Dow /s/ MARK R. DOW Chief Financial Officer and Secretary (Principal Financial and Accounting Officer) March 26, 2024 Mark R. Dow /s/ ROSS D. DEMONT Director March 26, 2024 Ross D. DeMont /s/ RUSSELL D. GLASS Director March 26, 2024 Russell D. Glass /s/ BETH S. MICHELSON Director March 26, 2024 Beth S. Michelson /s/ JOSEPH M. MANKO, JR. Chairman of the Board of Directors March 26, 2024 Joseph M. Manko, Jr. 62