After losing 99% of its value, MoviePass' parent company is getting ready to ask shareholders to support its CEO and approve his pay (HMNY)

ted farnsworth mitch lowe

  • Helios and Matheson, the parent company of MoviePass, has
    scheduled another shareholder meeting.
  • Unlike a meeting it canceled last month, this is its standard
    annual gathering of shareholders, where investors will get to vote
    on its director nominees and what it pays executives.
  • Even those proposals could prove controversial, considering how
    much the company’s stock has declined this year — as much as 99%
    from the start of the year.

MoviePass’ parent company has once again scheduled a shareholder

But this time it won’t be asking for investors to give it
permission to reverse split its stock. 

Helios and Matheson Analytics, which bought MoviePass in
mid-2017, on Monday notified shareholders that it will be holding
its annual meeting on December 27. The company is asking investors
to vote on its directors, approve its chosen auditor, and weigh in
on its executives’ compensation. 

“Your vote is important. Whether or not you plan to attend the
annual meeting, please cast your vote as promptly as possible,”
Stuart Benson, Helios and Matheson’s chief financial officer, said
in a letter to shareholders. 

The meeting announcement follows a tumultuous year for the
company and an abortive attempt by it to hold a separate meeting
this fall to approve what would have been its second reverse stock
split this year. The company originally scheduled that meeting to
be held in mid-October before
delaying it

ultimately canceling it
in the face of widespread shareholder
opposition to the plan. 

Read more:
Investors seem to be balking at MoviePass’ parents’ plans to
reverse split its stock again — and for good reason

It had hoped to use the reverse split to boost its share price,
which has been mired at about $0.02 for months now. The company
faces imminent delisting from the Nasdaq for failing to meet its
listing standards. That could make it harder for investors to buy
and sell shares and for the company to raise more funds.

It will be a standard meeting, but it still could draw sparks

The upcoming meeting, by contrast, has a much more standard
agenda, although it could prove every bit as controversial, given
the company’s stock performance over the last year. Helios and
Matheson’s stock price has fallen more than 99% this year. 

The first thing shareholders will vote on is Helios and
Matheson’s five director candidates. Four of those candidates —
company CEO Ted Farnsworth; Muralikrishna Gadiyaram, who founded
the company’s former Indian parent entity, Helios and Matheson
Information Technology; management consultant Prathap Singh; and
Gavriel Ralbag, the managing director of Gold Edge Capital — have
served on its board since 2016. Joseph J. Fried, an attorney who
runs his own law firm, is the only new director nominee. 

Farnsworth and Gadiyaram in particular could draw opposition.
Farnsworth has served as Helios and Matheson’s CEO since January
2017 and spearheaded both its acquisition of MoviePass and its
decision to slash the price of MoviePass’ subscription service to
$10 a month. That moved caused Helios and Matheson to burn through
$321 million in just the first nine months of this year, an amount
it replenished largely through
issuing and selling billions of new shares of its stock

The company
has revised its offering multiple times
this year to try to
reduce its cash burn.

Gadiyaram, meanwhile, was arrested in India on suspicion of
stiffing a creditor and has been accused of fraud there, as

Business Insider reported

Helios and Matheson encouraged shareholders to vote for all five
of its nominees.

“Mr. Farnsworth’s extensive business experience … led us to
conclude that he should serve as a director,” it said in a
regulatory filing detailing the upcoming meeting and proposals on
which investors will vote.

“Mr. Gadiyaram’s deep experience in the information technology
and data analytics sector,” it continued, “gives him an exceptional
understanding of our businesses and led us to believe that he
should serve as a director.

The company nominally paid its CEO $8.9 million last year

Shareholders will also get their “say on pay” — an advisory
up-or-down vote on executives’ compensation. There too, they could
express their ire, particularly in regard to Farnsworth’s pay.

Helios and Matheson gave its CEO a total pay package of $8.9
million last year. That included $225,000 in salary, $1.35 million
in cash bonuses, stock awards worth $7.25 million at the time they
were granted, and $76,050 in housing expenses.

The company hasn’t yet awarded the shares underlying the stock
award to Farnsworth, because they have to be approved by
shareholders first. But those shares are now worth just $49.50,
thanks to the dramatic decline in the company’s stock price. 

Helios and Matheson paid Benson, its CFO, $235,500, including
$200,000 in base salary and a $35,500 bonus. It gave Parthasarathy
Krishnan, its former chief innovation officer, $2.9 million in
total pay last year, $2.7 million of which came in the form of a
share award.

The date of the company’s annual meeting is unusually late.
Public companies typically hold them soon after releasing their
annual reports, which Helios and Matheson published in April. And
last year, the company held its annual meeting on October 27.

However, the company has held a series of special shareholder
meetings this year to authorize the issuance of new shares and to
reverse split its stock. 

SEE ALSO: MoviePass’
parent company has boosted its share count by an unbelievable
80,000% since July — but it’s run out of room to issue new

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After losing 99% of its value, MoviePass' parent company is getting ready to ask shareholders to support its CEO and approve his pay (HMNY)