Arthur Sams
Polar PowerAbout Arthur Sams
Arthur D. Sams (age 74) is Chairman of the Board, President, Chief Executive Officer, and Secretary of Polar Power, Inc., roles he has held since August 1991. He studied at California State Polytechnic University Pomona and the University of California, Irvine with a dual major in biology and engineering, and previously worked as a machinist, engineer, project manager, chief technical officer, and consultant for various Fortune 500 companies and U.S. Departments of Defense and Energy . Company performance used for 2024 incentive assessment: revenue $13.9 million, gross margin 9.4%, and EBITDA margin -26.6% (all below plan thresholds), and the auditor flagged substantial doubt about going concern given 2024 net loss and operating cash use; the company executed a 1-for-7 reverse stock split in Nov-2024 to regain Nasdaq bid-price compliance .
Past Roles
| Organization | Role | Years | Strategic impact |
|---|---|---|---|
| Polar Power, Inc. | Chairman, President, CEO, Secretary | 1991–present | Led development and commercialization of DC power systems; long-tenured founder-operator |
| Various (Fortune 500; U.S. DoD/DOE) | Machinist; engineer; project manager; CTO; consultant | Pre-1991 (not disclosed) | Built technical depth in thermodynamics and power generation systems |
External Roles
- None disclosed for Arthur D. Sams in company filings .
Fixed Compensation
| Year | Base salary ($) | Target bonus opportunity (% of base) | Max bonus opportunity (% of base) | Actual bonus paid ($) |
|---|---|---|---|---|
| 2024 | 275,000 | 75% (plan target across metrics) | 100% | 0 (no bonus shown in SCT) |
| 2023 | 275,000 | 75% (plan target across metrics) | 100% | 0 (no bonus shown in SCT) |
Notes: The 2024 and 2023 annual cash incentive plan allowed up to 100% of base salary, with minimum/target/maximum payout bands across five company metrics summing to 50%/75%/100%; Summary Compensation Tables show salary only for Mr. Sams in 2024 and 2023, implying no bonus payout .
Performance Compensation
Plan design: five company metrics with minimum/target/maximum payout bands; must achieve at least two elements at a level to earn that level; total payout cap 100% of base salary .
| Metric (payout band as % of base) | Minimum | Target | Maximum | 2024 Actual (Company) | Payout result |
|---|---|---|---|---|---|
| Revenue ($ millions) | 20% at $30 | 25% at $36 | 30% at $42 | $13.9 | Below minimum; no credit |
| Gross Margin (% of revenue) | 5% at 31% | 10% at 32% | 15% at 33% | 9.4% | Below minimum; no credit |
| EBITDA (% of revenue) | 5% at 5% | 10% at 7% | 15% at 9% | -26.6% | Below minimum; no credit |
| Customer Concentration (% of total sales; lower is better) | 8% at 55% | 15% at 45% | 23% at 35% | 48% | Between min and target; one element met |
| International Sales (% of total sales) | 7% at 15% | 12% at 20% | 17% at 25% | 13% | Below minimum; no credit |
- Outcome: With only one element at/above minimum and the plan requiring at least two elements to qualify at a level, the plan generated no payout for 2024; Summary Compensation Table corroborates no bonus for Mr. Sams .
Equity incentives:
- No options/stock granted to NEOs in 2024 or 2023 .
- Equity plan terms: 2016 Plan prohibits option/SAR repricing without stockholder approval; NEO unvested equity accelerates upon any change in control per compensation governance practices . 2026 Equity Incentive Plan (subject to stockholder approval) reserves 750,000 shares and provides CIC discretion to accelerate, cash-out, assume, or terminate awards .
Equity Ownership & Alignment
| Item | Detail |
|---|---|
| Total beneficial ownership | 806,229 common shares (includes 7,143 options); 30.2% of outstanding (2,658,676 shares outstanding as of record date) |
| Vested vs. unvested | Options exercisable: 7,143; no unexercisable awards disclosed |
| Options in-the-money | Exercise price $5.60; intrinsic value not disclosed here (market price not provided) |
| Pledging / hedging | Prohibited by Insider Trading Policy; also prohibits holding company securities in margin accounts |
| 10b5-1 plans | Permitted with Board approval; pre-clearance and trading windows in place |
| Ownership guidelines | Not disclosed in filings reviewed |
Outstanding equity awards (12/31/2024):
- Stock option: 7,143 shares; exercise price $5.60; expires 4/2/2028; vested 4/2/2019 .
Employment Terms
| Provision | Terms |
|---|---|
| Employment agreement | Amended and Restated Executive Employment Agreement dated July 8, 2016; at-will; base salary raised to $275,000 effective 4/1/2018 |
| Annual bonus eligibility | Discretionary; based on Compensation Committee criteria (see plan above) |
| Severance (without cause or for good reason) | Lump sum: 200% of then-current base salary + 200% of average incentive bonus paid over prior two calendar years; plus 18 months health coverage |
| Change-in-control (double trigger; applies if termination occurs within 3 months before or 12 months after a CIC) | Same as severance above: 200% salary + 200% average bonus; plus 18 months health coverage |
| Disability | Lump sum 100% of base salary; 12 months health coverage |
| Definitions | Good reason includes material diminution, material pay cut (not across-the-board), relocation >50 miles, or material breach; Cause includes felony/dishonesty, fraud, willful misconduct, refusal of directives, material breach, gross unfitness; with cure period if curable |
Change-in-control definition includes majority voting power acquisition, certain mergers, or sale of substantially all assets .
Clawback and other governance:
- Clawback policy: CEO and CFO may be required to reimburse incentive/equity compensation if a restatement is required due to misconduct; Company intends to comply with Nasdaq/SEC clawback rules .
- Prohibition on option/SAR repricing without stockholder approval (2016 Plan) .
Board Governance
- Roles: Combined Chairman and CEO (Arthur D. Sams); not independent under Nasdaq rules .
- Board composition: Four directors (one vacancy authorized up to five); majority independent (Albrecht, Field, Koster) .
- Committees:
- Audit: Albrecht (Chair), Field, Koster; all independent; Albrecht is financial expert .
- Compensation: Field (Chair), Albrecht; both independent .
- Nominating & Corporate Governance: Field (Chair), Albrecht, Koster; all independent -.
- Meetings/attendance: Board held 4 meetings in 2024; all directors attended 100% of Board and committee meetings held during their service .
- Director compensation: Non-employee directors receive $7,500 quarterly retainer (Field could elect stock in first year); employee director (Sams) receives no additional pay for Board service -.
Dual-role implications:
- Governance risk from combined CEO/Chair role mitigated partly by independent committees and majority independent Board; however, concentration of control remains (see ownership) .
Compensation Committee Analysis
- Composition/independence: Independent directors (Field, Albrecht) oversee executive pay; authority to retain advisors .
- Peer group: 2024 benchmarking cited power manufacturing/design peers; examples included Espey Manufacturing (ESP) and Beam Global (BEEM) in 2024–2025 materials; 2023 list included Espey, Wireless Telecom (WTT), FuelCell Energy (FCEL) .
- Positioning: CEO base set at ~70% of peer average; 2024 CEO average ~$400k vs Sams $275k (69%) .
- Pay practices: No perquisites; long vesting (3-year options); change-in-control vesting acceleration; clawback; prohibition on repricing; prohibition on hedging/pledging .
Director Compensation
- Employee director (Sams): $0 additional for Board service .
- Non-employee director retainers: $7,500 per quarter; 2024 director comp totals shown; Field had pro-rated fees and stock in 2024 .
Related Party Transactions
- Disclosed arrangements limited to employment agreements and indemnification; related person transaction policy administered by Audit Committee -.
Risk Indicators & Red Flags
- Going concern warning: 2024 net loss and operating cash use; auditor included substantial doubt paragraph .
- Customer concentration: Largest customer 48% of 2024 sales; historically concentrated in U.S. telecom .
- Nasdaq compliance: 1:7 reverse split; regained bid-price compliance by 12/23/2024 after initial delisting determination; trading continues on Nasdaq Capital Market .
- Equity overhang/dilution: 2016 Plan remaining availability; 2026 Equity Plan seeks 750,000 shares (subject to stockholder approval) -.
- Hedging/pledging prohibited (alignment positive) .
- Option repricing not permitted (shareholder-friendly) .
Expertise & Qualifications
- Technical specialization in thermodynamics and power generation; extensive engineering/manufacturing experience; dual major studies (biology, engineering) at Cal Poly Pomona and UC Irvine .
- Board nomination rationale: leadership, engineering expertise, international operations perspective .
Equity Plan and Outstanding Awards
| Equity element | Detail |
|---|---|
| Option (granted 4/2/2018) | 7,143 shares; exercise $5.60; vested 4/2/2019; expires 4/2/2028 |
| 2016 Plan status (12/31/2024) | 20,002 options outstanding; 207,576 shares available for future issuance |
| Proposed 2026 Plan | 750,000 shares reserved; broad award types; CIC discretion to cash-out/accelerate/assume/terminate - |
Investment Implications
- Alignment: Very high ownership (~30%) and prohibitions on pledging/hedging align CEO with shareholders; modest cash pay (base well below peer averages) and no 2024 bonus due to underperformance indicate pay-for-performance discipline -.
- Retention/severance: 2x salary and 2x average bonus + 18 months benefits (double-trigger CIC) is moderate for small-cap; minimal unvested equity reduces near-term vesting overhang - .
- Governance risk: Combined CEO/Chair with significant voting control can concentrate power; however, majority-independent Board and independent committees provide some counterbalance .
- Performance and liquidity risk: 2024 results missed plan thresholds (revenue, margins), auditor going-concern emphasis, customer concentration, and recent Nasdaq bid-price issues elevate execution and financing risk; equity plan refresh could be dilutive if used to retain/talent amid turnaround -.
- Trading signals to monitor: Any 10b5-1 plan adoptions, insider Form 4 activity (sales vs. buys), 2026 Plan approval/dilution, customer diversification progress, and margin/revenue trajectory relative to plan thresholds in future proxies and 10-K/10-Qs - -.