Kenneth Denos

About Kenneth Denos

Kenneth I. Denos, age 57, serves as Secretary, Chief Compliance Officer (CCO), and a Director of Equus Total Return, Inc. (EQS). He has been Secretary since 2010, CCO since July 2011, and a Director since 2008 . His biography highlights extensive financial, legal, international, and M&A experience, including public company leadership roles; the Board deems him an “interested” (non‑independent) director due to his executive officer roles . The proxy does not disclose TSR, revenue growth, or EBITDA growth metrics linked to his individual performance; Board oversight references performance measurement indices at the fund level rather than individual executive KPIs .

Past Roles

External Roles

Fixed Compensation

Notes:

• Employment agreement effective Nov 1, 2020 sets base compensation at $360,000 per annum, escalating annually by the greater of 5.0% or the U.S. CPI on each anniversary .

Performance Compensation

• Bonus structure: Annual and periodic bonuses tied to specific criteria (e.g., acquisitions made by the Company; a percentage of proceeds from dispositions of existing and future portfolio investments), subject to an annual cap equal to base compensation with carryover of excess into subsequent years .
• Actual payouts: No cash bonus paid to Denos in 2022–2024 per Summary Compensation Table .
• Equity incentives: Agreement entitles restricted stock awards equal to 2.5% of the Company’s issued and outstanding shares as of the agreement date (Nov 1, 2020). Company historically used restricted stock; a March 17, 2017 grant aggregated 844,500 shares across directors/executives, vesting over 3 years and now fully vested. No other equity awards outstanding in 2018–2024; no vesting in 2024 .

Clawback policy: Adopted Dec 1, 2023, permits recovery of “Incentive‑Based Compensation” from executive officers for up to 3 years for misconduct, supervisory failures causing material damage, or material restatements due to noncompliance with SEC reporting requirements .

Equity Ownership & Alignment

Employment Terms

Board Governance

• Board Service History and Independence:
  • Director since 2008; term expires 2025; classified as an “interested director” because he serves as Secretary and CCO; not independent under NYSE/SEC standards .
• Committee Roles:
  • Denos does not serve on Audit, Compensation, Governance & Nominating, or Committee of Independent Directors per committee membership table; independent directors populate committees .
• Board Activity and Attendance:
  • Board met eight times in 2024; each director attended all Board and committee meetings; all directors attended the June 20, 2024 annual meeting .
• Director Compensation:
  • Interested directors may receive per‑meeting fees; in 2024, Denos received $10,000 in director fees .
  • Independent director structure: $40,000 annual fee; $2,000 per in‑person meeting; $1,000 per telephonic meeting; committee chairs receive $50,000 annually; aggregate independent/non‑officer director cash compensation was $296,500 in 2024 .
• Executive Sessions:
  • Committee of Independent Directors met in executive sessions at regular Board meetings without management present .
• Dual‑Role Implications:
  • As both executive officer and director, Denos is not independent; governance and compliance oversight include reporting by the CCO to the Board. The Board maintains independent committees and independent chairmanship (Audit Committee chaired by Fraser Atkinson) to mitigate independence concerns .

Director Compensation (Denos-specific)

Say‑on‑Pay & Shareholder Feedback

• 2023 say‑on‑pay approved at approximately 88.5% support; Compensation Committee views this as confirmation of shareholder support for executive compensation policies .
• 2024 say‑on‑pay placed on ballot consistent with Section 14A; results not in the proxy excerpt .

Compensation Committee Analysis

• Composition and Independence: All Compensation Committee members are independent under SEC and NYSE listing standards .
• Activity: The Compensation Committee did not meet in 2024; the Governance & Nominating Committee met three times; Audit Committee met five times .
• Consultant usage and peer group: Not disclosed in the proxy excerpts; compensation discussion references pay‑for‑performance philosophy broadly .

Risk Indicators & Red Flags

• Change‑of‑Control Economics: Single‑trigger severance (two years’ base plus accrued bonuses) upon change of control or termination without cause; increases retention value but may present alignment concerns under single‑trigger structures .
• Equity Repricing/Underwater Options: No outstanding options or repricings reported; company used restricted stock historically .
• Clawback: Adopted policy consistent with NYSE requirements; 3‑year lookback and misconduct/restatement triggers .
• Pledging/Hedging: No pledging or hedging disclosures identified in proxy excerpts [Search scope: DEF 14A].
• Related Party Transactions: Not disclosed in the provided sections; Board independence review conducted annually .

Equity Ownership & Alignment (Detailed)

Company-wide context:

• Largest holders: John A. Hardy (27.44%), Michael Tokarz (23.35%), Howard Todd Horberg (5.18%) .
• Directors and officers as a group: 4,058,869 shares (29.87%) including other beneficial ownership .

Employment & Contracts: Retention Risk

• Tenure: Secretary since 2010; CCO since 2011; Director since 2008 .
• Economics: Escalating base; no bonuses paid in 2022–2024; single‑trigger severance and CO‑C provisions enhance contract value and retention incentives .
• Non‑compete/Non‑solicit/Garden leave: Not disclosed in proxy excerpts.

External Directorships & Interlocks

• Other public company boards: “None” listed for Denos in the “Other Directorships” table under the proxy’s restrictions; roles noted are executive/legal roles, not current public directorships .

Investment Implications

• Pay‑for‑performance alignment: Denos’s recent compensation is predominantly fixed cash salary with no bonus or equity grants reported in 2022–2024, limiting direct variable pay alignment to performance during this period . Clawback policy covers incentive compensation but is moot if no incentive payouts occur .
• Vesting/selling pressure: No outstanding equity awards and no 2024 vesting reduce near‑term forced selling risk from vest events; insider selling pressure should be monitored via Form 4s, but proxy shows stable ownership at 1.96% of shares .
• Retention and CO‑C: Single‑trigger change‑of‑control severance (2x base plus accrued bonuses) and annual escalators provide strong retention economics; however single‑trigger structures can present alignment concerns versus double‑trigger norms .
• Governance and independence: As an interested director not serving on key committees, with independent committees and robust Board oversight of compliance, valuation, and investment practices, structural checks exist to mitigate dual‑role risks; 2023 say‑on‑pay support was high (88.5%) .