· | the ability to make independent analytical inquiries; a willingness and ability to devote adequate time and resources to diligently perform Board and committee duties; and the appropriate and relevant business experience and acumen. The Governance and Nominating Committee will consider nominees recommended by stockholders if such recommendations are made in writing to the committee. The Governance and Nominating Committee does not plan to change the manner in which the committee evaluates nominees for election as a director based on whether the nominee has been recommended by a stockholder or otherwise.
The Governance and Nominating Committee does not have a formal policy relating to diversity among directors. In considering new nominees and whether to re-nominate existing members of the Board, the committee seeks to achieve a Board with strengths in its collective knowledge and a broad diversity of perspectives, skills and business and professional experience. Among other items, the committee looks for a range of experience in strategic planning, sales, finance, executive leadership, industry and similar attributes.
At least a majority of the directors on the Board must be independent directorsIndependent Directors as this term is defined in the rules of the NYSE MKT LLC.
Board Leadership Structure and Role in Risk Oversight The Company has separated the positions of Chair of the Board of Directors and Chief Executive Officer. Given the demanding nature of these positions, the Board believes it is appropriate to separate the positions of Chair and Chief Executive Officer. Our Chair presides over all meetings of the Board of Directors, including executive sessions of the independent directors, which are held at each Board meeting. She briefs the Chief Executive Officer on issues arising in executive sessions and communicates frequently with him on matters of importance. She has responsibility for shaping the Board’s agendasagenda and consults with all directors to ensure that the board agendas and board materials provide the Board with the information needed to fulfill its responsibilities. From time to time she may also represent the Company in interactions with external stakeholders, at the discretion of the Board.
The Board of Directors has determined that each of our current directors, except for Mr. Sculley, is an “independent director” as that term is defined in the listing standards of the NYSE MKT LLC. The Board of Directors has also determined that each member of the Audit Committee, Compensation Committee and Governance and Nominating Committee meets the independence standards applicable to those committees prescribed by the NYSE MKT LLC and the SEC. In making this decision, the Board considered all relationships between the Company and the directors, including Dr. Wittels' role as (and compensation related to) a consultant to the Company from April through July of 2011.directors. The Board determined each such relationship, and the aggregate of such relationships, to be immaterial to the applicable director’s ability to exercise independent judgment.
Our Board has overall responsibility for risk oversight. The oversight is conducted primarily through committees of the Board of Directors, as disclosed in each of the descriptions of each of the committees above and in the charters of each of the committees, but the full Board of Directors has retained responsibility for general oversight of risks. Stockholder Communications
Stockholders requesting communication with directors can do so by writing to eMagin Corporation, c/o Corporate Secretary, 3006 Northup Way, Suite 103, Bellevue, WA 98004,Chief Financial Officer, 2070 Route 52, Hopewell Junction, NY 12533 or emailing to gmatus@emagin.com.jlucas@emagin.com. At this time we do not screen communications received and would forward any requests directly to the named director. If no director was named in a general inquiry, the SecretaryChief Financial Officer would contact either the Chair of the Board of Directors or the chairmanchairperson of a particular committee, as appropriate. We do not provide the physical address, email address, or phone numbers of directors to outside parties without a Director’s permission.
Code of Ethics and Business Conduct We have adopted a Code of Ethics and Business Conduct that applies to all of our directors, officers and employees, including our Chief Executive Officer and Chief Financial Officer and principal accounting officer. The Code of Ethics and Business Conduct is posted on our website athttp://www.emagin.com. COMPENSATION OF DIRECTORS
The following table sets forth with respect to the named director, compensation information inclusive of equity awards and payments made in the year ended December 31, 2013. | Name | | Fees earned or paid in cash($) | | | Option awards($) (1) | | Total($) | | Claude Charles | | | 40,000 | | | | 65,000 | | 105,000 | | Paul Cronson | | | 40,000 | | | | 65,000 | | 105,000 | | Irwin Engelman | | | 45,000 | | | | 65,000 | | 110,000 | | Leslie Polgar | | | 40,000 | | | | 65,000 | | 105,000 | | Stephen Seay | | | 40,000 | | | | 65,000 | | 105,000 | | Jill J. Wittels | | | 70,000 | | | | 113,750 | | 183,750 | | Christopher Brody | | | 40,000 | | | | 65,000 | | 105,000 | | | | | | | | | | | |
2015.| Name | | Fees earned or paid in cash($) | | | Option awards($) (1) | | Total($) | | Christopher Brody | | | 40,000 | | | | 50,000 | | 90,000 | | Paul Cronson | | | 40,000 | | | | 50,000 | | 90,000 | | Leslie G. Polgar | | | 40,000 | | | | 50,000 | | 90,000 | | Ellen Richstone | | | 45,000 | | | | 50,000 | | 95,000 | | Stephen M. Seay | | | 40,000 | | | | 50,000 | | 90,000 | | Jill J. Wittels | | | 70,000 | | | | 98,750 | | 168,750 |
(1) Please see Note 10 to our financial statements for the year ended December 31, 2013,2015, included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2013.
2015.
Fees Earned or Paid in Cash
Board Retainer. Each Non-Employee Director, except the Chair, received an annual cash retainer of $40,000 for his or her service as a member of the Board of Directors. The Audit Committee chairChair received an additional annual retainer of $5,000.
Each Non-Employee Director, except the Chair, received equity compensation in the form of stock option grants valued at $65,000.
$50,000.Chair of the Board
The Chair received an annual cash retainer of $70,000 and equity compensation in the form of stock option grants valued at $113,750.
2014$98,750.
2016 Non-Employee Director Compensation
On January 15, 2014,March 8, 2016, the Compensation Committee approved the following 20142016 compensation for Non-Employee Directors, excluding the Chair:
| - | Annual Cash Retainer of $40,000 |
| - | Stock Option grant valued at $50,000 |
The Chair will receive an annual cash retainer of $70,000 and stock option grant valued at $98,750. The ChairmanChair of the Audit Committee will receive an annual cash retainer of $5,000. REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS The Audit Committee, on behalf of our Board of Directors, serves as an independent and objective party to monitor and provide general oversight of the integrity of our financial statements, our independent registered public accounting firm’s qualifications and independence, the performance of our independent registered public accounting firm and our standards of business conduct. The Audit Committee performs these oversight responsibilities in accordance with its Audit Committee Charter.
Our management is responsible for preparing our financial statements and managing our financial reporting process. Our independent registered public accounting firm is responsible for expressing an opinion on the conformity of our audited financial statements to generally accepted accounting principles in the United States of America. The Audit Committee met with our independent registered public accounting firm, with and without management present, to discuss the results of their examinations and the overall quality of our financial reporting.
In this context, the Audit Committee reviewed and discussed our audited financial statements for the year ended December 31, 20132015 with management and with our independent registered public accounting firm. The Audit Committee has discussed with our independent registered public accounting firm the matters required to be discussed by the statement on Public Company Accounting Oversight Board Auditing Standard No.PCAOB AS 16 (Communications with Audit Committees), as adopted by the Public Company Accounting Oversight Board in Rule 3200T, which includes, among other items, matters related to the conduct of the audit of our annual financial statements. The Audit Committee has received the written disclosures and the letter from the independent registered public accounting firm required by applicable requirements of the Public Company Accounting Oversight Board regarding such independent registered public accounting firm's communications with the Audit Committee concerning independence, and has discussed with the independent registered public accounting firm its independence from us and our management.
Based on its review of the audited financial statements and the various discussions noted above, the Audit Committee recommended to our Board of Directors that our audited financial statements be included in our Annual Report on Form 10-K for the year ended December 31, 2013.
2015.Respectfully submitted by the Audit Committee, Irwin Engelman, Chairman
Claude Charles
Brig. Gen. Ellen Richstone, Chair Paul Cronson Leslie G. Polgar Stephen M. Seay (U.S. Army, Ret.) The foregoing Audit Committee Report does not constitute soliciting material and shall not be deemed filed or incorporated by reference into any other filing of our companyCompany under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, except to the extent we specifically incorporate this Audit Committee Report by reference therein. INFORMATION ABOUT THE EXECUTIVE OFFICERS The executive officers are electedappointed annually by our Board of Directors and hold office until their successors are elected and duly qualified.qualified unless otherwise specified in an individual’s employment agreement. There are no family relationships between any of our directors or executive officers. The current executive officers of the Company are as follows:
| Name | | Age | | Position | | Andrew G. Sculley | | 6365 | | Chief Executive Officer and President | Paul CampbellJeffrey P. Lucas (1) | | 5856 | | Chief Financial Officer and Treasurer | Jerome Carollo | | 62 | | Senior Vice President, Business Development | | Amalkumar Ghosh | | 5961 | | Senior Vice President, Research and Development | Olivier PracheMargaret Kohin (2) | | 54 | | Senior Vice President, ProductBusiness Development | Gabriel G. MatusOlivier Prache | | 4056 | | Senior Vice President, General Counsel and Board Secretary; Chief Ethics OfficerProduct Development |
(1) Mr. Lucas was appointed to the CFO position in September of 2015. (2) Dr. Kohin was appointed to her present position in September of 2014. On April 9, 2015, the Board determined that she should be deemed an Executive Officer and made the corresponding appointment. The following includes the principal occupations for the past five years (and, in some instances, for prior years) of each of our executive officers:
Andrew G. Sculley became the Company’s Chief Executive Officer and President on June 1, 2008 and was appointed to the Board of Directors on November 2, 2009. Mr. Sculley served as the General Manager of Kodak’s OLED systems Business Unit and Vice President of Kodak’s Display Business from 2004 to 2008. From 2003 to 2006, he served on the Board of Directors of SK Display, a joint venture between Sanyo and Kodak. From 1996 to 2001, Mr. Sculley served as the Manager of Operations, CFO and member of the Board of Directors of Kodak Japan Ltd., where he managed Distribution, Information Technologies, Legal, Purchasing and Finance.led the effort to improve performance. Previously, he held positions in strategic planning and finance in Eastman Kodak Company. Mr. Sculley holds an MBAM.B.A. from Carnegie-Mellon University, and an M.S. in physics from Cornell University.University and a B.S. in physics from Stevens Institute of Technology. He attended Harvard University’s Advanced Management Program/International Senior Management Program while an executive at Kodak.
Paul CampbellJeffrey P. Lucas became the Company’s Chief Financial Officer and Treasurer as of May 8, 2009. Prior to this date, he had served ason September 14, 2015. Mr. Lucas was the Company’s Interim Chief Financial Officer since April 15, 2008. He served as Interim Corporate Secretaryand a member of the Board of Directors of Transfreight companies from September,2013 to 2015. From 2010 to February, 2011.2013, Mr. Campbell isLucas was the Managing Director of Neptune Advisors, LLC, a partner with Tatum, LLC (“Tatum”), an executive services firm, since November 2007. Mr. Campbell served asstrategy consulting firm. From 2006 to 2010, he was the Chief Financial Officer of four public companies, including Checkers Drive-In Restaurants, Inc, which until 2006 was traded on the NasdaqGPX International Tire Corporation. Mr. Lucas is a Certified Public Accountant and Famous Dave’s of America, Inc., which is currently trading on the Nasdaq. Mr. Campbell also served as Chiefa Chartered Financial Officer of Sonus Corporation,Analyst. He earned an M.B.A. from Harvard Business School and a medical device retailer, and from May 2007 through October 2007 he served as Chief Financial Officer of Organic To Go, Inc., an emerging publicly-held food company. From 2001 through April 2007, Mr. Campbell owned and operated Campbell Capital, LLC, a consulting and investment firmB.A. in Seattle, Washington providing strategic planning and financing services to small businesses. Mr. Campbell received his MBA from Pepperdine University and his B.A. degree in Business Economics from the University of California at Santa Barbara.
Jerome T. Carollo has served as the Senior Vice President of Business Development since March 15, 2011. He joined eMagin from Intevac Vision Systems where he held the positions of Vice President/General Manager and Vice President of Strategic Planning and Business Development since 2007. He was responsible for developing the domestic and international business strategy for Intevac’s digital night vision systems, sensors, and helmet mounted and eyewear displays. From 2006 to 2007, he was the President and CEO of Creative Display Systems, a company he co-founded to provide innovative microdisplay and optical systems for both commercial and military markets, which he then sold to Intevac. Prior to this, Mr. Carollo held positions of increasing responsibility in the optical and display business including positions with Rockwell Collins Optronics and Kaiser Electro-Optics. Mr. Carollo holds a B.S. degree in Physics from the State University of New York and an M.S. in Optics from the University of Rochester's Institute of Optics.
Tufts University.Dr. Amalkumar Ghosh was appointed Senior Vice President of Research and Development in April 2009, after serving as Vice President of OLED Research and Development at the Company since 2005. He is responsible for new microdisplay technology development, government programs, intellectual property and manufacturing process engineering. Dr. Ghosh has more than twenty five years of leading industrial research and development experience. From 2002 to 2005, he was employed byat Eastman Kodak Company where he focused onplayed a key role towards OLED display technology.technology development. From 1995 to 2002, he was employed by the Company. His work during this period laid the foundations for OLED microdisplay technology. From 1985 to 1995, he was employed bywith IBM Corporation where he was involved witha leader in various aspects of semiconductor and LCD display technologies. He has numerousmany publications and patents to his credit and has received numerous awards and recognitions from the Society for Information Display, including being nominated a Fellow of the Society. Currently, Dr. Ghosh is the President of the Society for Information Display. He earned a Ph.D. degree in Physics from Massachusetts Institute of Technology in 1985. Dr. Margaret Kohin was appointed Senior Vice President of Business Development in September 2014, after having served as Vice President of Strategic Initiatives at eMagin since 2013. She is responsible for Business Development, Sales, and Marketing for all eMagin products and contracts. Dr. Kohin has more than two decades of experience developing, commercializing, and selling high technology electro-optical products. Prior to joining eMagin, Dr. Kohin was at BAE Systems where she held executive positions in Business Development, Product Line and Program Management, and Engineering. At BAE Systems, she held many positions including leading new product and technology development for the Infrared Imaging Systems business unit, leading the Bold Stroke Initiative for next generation Aircraft Survivability, and managing business development for Intelligence, Surveillance and Reconnaissance (ISR) technology programs. Dr. Kohin obtained a B.S in Optics from the University of Rochester and M.S. and Ph.D. degrees in Electro-Optics from Tufts University. She also completed the General Management Program at the Harvard Business School. Olivier Prache was appointed Senior Vice President, Product Development in September 2012. He served as Senior Vice President of Display Operations and Development from 2005 to 2012, after overseeing microdisplay product development by the Company since 1995, when he joined the Company's predecessor, FED Corporation. He was employed by Philips-LCOS from 2002 until 2004, when he rejoined the Company. His current responsibilities encompass managing OLED product development and product engineering. Prior to joining the Company's predecessor in 1995, he worked for Pixtech in France and OIS Optical Imaging Systems in Troy, Michigan. He received his Diplôme d'Ingénieur from E.N.S.E.R.G., in Grenoble, France in 1983. Mr. Prache has published numerous papers and holds several patents related to the design of OLED-on-silicon microdisplays.
Gabriel Matus joined the Company in May 2013 as Senior Vice President, General Counsel and Board Secretary. In addition, he was appointed by the Board to serve as Chief Ethics Officer of the Company on September 4, 2013. Prior to joining the Company, Mr. Matus was an attorney at the international law firm of Sheppard Mullin Richter & Hampton, LLP from 2007 to 2013 where he was a member of the Corporate and Securities Practice Group, and an attorney at the international law firm of Weil Gotshal & Manges, LLP from 2000 to 2007, where he served as a member of the Mergers & Acquisitions team in the firm’s Corporate Practice Group. Mr. Matus received his J.D., cum laude, from New York Law School in 2000, and a B.S. in Criminology & Criminal Justice from the University of Maryland at College Park.
Involvement in Certain Legal Proceedings To our knowledge, during the last ten years, none of our executives has: Had a bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the following events has occurred that are material to an evaluationtime of the abilitybankruptcy or integritywithin two years prior to that time. Been convicted in a criminal proceeding or been subject to a pending criminal proceeding, excluding traffic violations and other minor offenses. Been subject to any order, judgment or decree, not subsequently reversed, suspended or vacated, of any executive officercourt of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his or her involvement in any type of business, securities or banking activities. Been found by a court of competent jurisdiction (in a civil action), the Company:SEC, or the Commodities Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended or vacated.
Been the subject to, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization, any registered entity, or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.
· | A bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time. |
· | Conviction in a criminal proceeding or been the subject of a pending criminal proceeding, excluding traffic violations and other minor offenses. |
· | Been the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities. |
· | Been found by a court of competent jurisdiction (in a civil action), the SEC, or the Commodities Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended or vacated. | | | ·
| Been the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization, any registered entity, or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member. |
There are no material proceedings to which any executive officer of the Company is a party adverse to the Company or has a material interest adverse to the Company.
Compensation Discussion and Analysis
In 2013, we continued2015, the Company introduced several new products to advancethe military and commercial markets and was awarded three significant government research & development contracts. Also during the year the Company signed a number of strategic initiatives while navigating through a challenging environment with increased competition whilenon-exclusive intellectual property licensing agreement for its virtual reality headset technology. In addition, the Company completed its first equity raise since 2008, strengthening the balance sheet and providing capital for production equipment and general working to improve the functionality of our new OLED deposition machine.capital purposes. Total revenues and operating income for 20132015 were down as compared to 2012, due in part to a significant decrease in contract revenuemodestly and the operating loss was reduced from the prior year due to general reductions in funding for researchhigher contract R&D revenues, more efficient production and development projects including those for the U.S. Government. However, we secured a newlower R&D contract and won new programs and new customers on the display side and continued to develop key new displays and technologies, including making great progress on our direct patterning technique. The work on the new OLED deposition machine, which will help to significantly increase capacity, was challenging in 2013 as repair and optimization efforts continued after it was put into production.administrative expenses. As a result of not achieving all of our goals and the continuing loss from operations, no cash bonuses and no option grants were awarded to executive officers in 20132015 (other than option grants awarded to new hires)hires, new positions and promotions). In 2013,2015, we continued in effectmaintained the previously implemented reduction of the percentage of executives’ salary bonus potential, the clawback policy and the cap on stock option grants at 4.5% of outstanding shares annually. The Compensation Committee continues to review the Company’s incentive plans and employment arrangements to ensure that pay is aligned with performance. Executive Compensation Objectives
The objectives of our compensation program are as follows:
· | | | | • | Attract, hire and retain well-qualified executives. |
Reward performance that drives substantial increases in shareholder value, as evidenced through both future operating profits and increased market price of our common shares.
· | Reward performance that drives substantial increases in shareholder value, as evidenced through both future operating profits and increased market price of our common shares. |
Compensation Setting Process
Role of Compensation Committee. The role of the Compensation Committee is to oversee the Company’s executive compensation strategy, oversee the administration of its executive compensation and its equity based compensation plans, review and approve the compensation of the Company’s CEO, and oversee the Company’s compensation plan for the Board of Directors. The Compensation Committee is comprised exclusively of independent outside directors and includes members with executive level experience in other companies who bring a perspective of reasonableness to compensation matters with our Company. In addition, the Compensation Committee compares executive compensation practices of similar companies at similar stages of development. Role of Compensation Consultant. The Compensation Committee has the authority to engage its own advisors to assist in carrying out its responsibilities. Towers Watson, a global professional services company with strong compensation and awards expertise, was previously engaged by Compensation Committee to assist in the identification and selection of peer companies for purposes of comparing compensation practices, to provide guidance regarding the amount and types of compensation that we provide to our executives and board of directors, and other compensation-related matters. In March 2012, Towers Watson provided its analysis of board and executive compensation to the Compensation Committee. In 2013,2015, the Compensation Committee did not engage or receive services from Tower Watson or any other compensation consultant. The Compensation Committee anticipates continuing to improve our compensation program through implementation of agreed upon policies going forward.
Role of Management. In setting compensation for 2013,2015, our CEO worked closely with the Compensation Committee and attended its meetings of the Compensation Committee. Our CEO made recommendations to the Compensation Committee regarding compensation of our executive officers other than him. No executive officer participated directly in the final deliberations regarding his own compensation package.
Use of Comparative Market Data. The Compensation Committee approved a benchmark peer group of companies based on the analysis and advice of Towers Watson in January of 2012. The companies were selected as peers based on their being in a similar industry, primarily manufacturers of electronic components or electronic equipment and instruments, and of a generally similar size, based mainly on revenue. Our peer group consists of the following 17 companies:
| Advanced Photonix Inc. | Microvision Inc. | | Clearfield, Inc. | NVE Corporation | | Digital Ally Inc. | Photonic Products Group Inc. | Intricon Corp.Corporation | RF Monolitics Inc. | Kopin Corp.Corporation | Solar Power, Inc. | | LightPath Technologies Inc. | Supertex Inc. | | LRAD Corporation | The LGL Group, Inc. | | Micronetics Inc. | Universal Display Corp.Corporation | | Micropac Industries Inc. | |
The Compensation Committee compared the total direct compensation of the Company’s executive officers with the total direct compensation paid to the top executive officers at the companies in the peer group, as well as to compensation levels revealed in survey data provided by Towers Watson, for purposes of establishing 20132014 salaries for executives other than Mr. Sculley.Sculley, our CEO. The Compensation Committee set Mr. Sculley’s base salary under his new employment contract at $410,000, which represents approximately a 6-7% increase over the salary of $384,000 that he had previously been earning since June 2011. The Compensation Committee evaluated Mr. Sculley’s performance prior to the Company entering into the new employment contract and recognized his achievements since joining the Company as CEO in 2008 and the progress made. These achievements were documented in the 2013 proxy statement. Mr. Campbell and the Company entered into a new employment contract in December 2013. The Compensation Committee set Mr. Campbell’s base salary under his new employment contract at $335,000, which represents approximately a 5-6% increase over the salary of $318,000 that he had been previously earning since 2012. The Compensation Committee evaluated Mr. Campbell’s performance prior to the Company entering into the new employment contract and recognized his achievements since joining the Company as CFO in 2008 and the progress made. During his four year tenure from 2008 to 2013, the Company’s stock price had increased from a low of $0.37 to a high of $9.50. Mr. Campbell had arranged gravely needed financing in August, 2008 allowing the Company to continue operations. In December 2008, he was instrumental in completing a financing to pay off the Company’s $6 million of toxic debt. The remaining revolving debt was paid off in 2009. Mr. Campbell helped manage the Company’s results and qualified the Company to improve its listing from the OTC market to list its stock on a major exchange, the NYSE Market. The Compensation Committee reviewed CFO salaries of companies that they identified as comparable, based on their being competitive firms or in similar industries and of generally the same size, measured both in revenue and market capitalization as of early 2011. In setting Mr. Campbell’s compensation the Committee considered compensation levels for CFOs of the following companies: QuikLogic Corporation, RAE Systems, Lime Energy, Co., Microvision, RadiSys Corporation, Spectrum Control, Herley Industries, Kopin Corporation and Planar Systems, Inc. Additional information on Mr. Campbell’s employment agreement is described below in the “Employments Agreement” section.
Elements of Executive Compensation
The compensation level of our executives generally reflects their level of experience and is designed to provide an incentive to positively affect our future operating performance and shareholder value.
Salary. Base salary is the primary fixed element in the Company’s compensation program and is intended to provide an element of certainty and security to the Company’s executive officers on an ongoing basis. FourOne of the Company’s executive officers havehad an employment agreementsagreement with the Company as of December 31, 2015 and theirhis initial salaries aresalary is set by contract. Messrs. Ghosh, Lucas, and Prache and Ghosh, the two executive officers who have been employed the longest,Ms. Kohin do not have contracts. The Compensation Committee is currently assessing the desirability of continuing to enter into employment contracts with executives. Salaries are based on the executive’s level of experience, specialty and responsibility. Executive salaries are reviewed on an annual basis by the Compensation Committee. Any increases in salary are based on an evaluation of the individual’s performance, level of responsibility and, when such information is available, the level of pay compared to the salaries paid to persons in similar positions in the Company’s peer group or as shown in survey data.
In 2013,2015, the base salaries of our executive officers were not increased over the prior year.
Equity.Part of the compensation paid to our executives is in the form of equity, which to date has been exclusively through stock option grants. The stock option exercise price is generally the fair market value of the stock on the date of grant. Therefore, a gain is only recognized if the value of the stock increases, which promotes a long term alignment between the interests of the Company’s executives and its stockholders. In 2013,2015, the Compensation Committee determined that no stock option grants would be awarded to executive officers (other than new hires)hires and employment contract renewals) and the aforementioned 4.5% cap on stock options would continue indefinitely. The Company has not awarded, and does not intend to award, any employees annual stock option grants in respect of performance in 2013.2015. The Compensation Committee approves all option grants with input and recommendations from the Chief Executive Officer, with the exception that the Chief Executive Officer and Chief Financial Officer have been delegated authority to approve initial grants made to newly hired employees. New employees typicallymay receive a stock option grant when hired in order to immediately align their interests with the new companyus and aremay be eligible for additional option grants going forward.
No option grants were made toIn 2015, no named executive officers in 2013.
officer received option grants.Bonus.The executive officers’ cash incentive awards are tied to achieving performance metrics established by the Compensation Committee at the beginning of each year, with input from the Chief Executive Officer, which are not re-set during the year, regardless of Company performance or economic conditions. The program creates incentive for the executive officers to direct their efforts toward achieving specified company goals and individual goals. To measure our 20132015 performance, the Compensation Committee established goals related to the Company’s financial performance and attainment of strategic milestones and approved individual goals for executives. In 2013,2015, we again fell short of reaching the Company’s financial performance goals. Other strategic milestones related to the development of certain technologies and attaining certain production milestones and certain individual milestones were achieved. The program is funded by establishing a pool based on a percentage of annual EBITDA, which is then adjusted by an overall company performance modifier based on company performance to reach the final bonus pool. The individual goal attainment resulted in a score for each executive and a percentage of their potential bonus was derived. Potential bonus is based on a certain percentage of salary for each level within the Company. No cash bonus was paid to any employee in respect of 2013; provided, however, that the Compensation Committee authorized the Chief Executive Officer to award cash bonuses on discretionary, case-by-case basis for outstanding individual performance in 2013, provided that such bonuses do not exceed $100,000 in the aggregate.2015.
Our insider trading policy prohibits directors and employees from engaging in short-term or speculative transactions such as trading in eMagin stock on a short-term basis, purchasing eMagin stock on the margin or engaging in short sales.
Our Clawback Policy provides that the Company will seek to recover, under the direction of the Compensation Committee, any compensation paid to an executive officer of the Company which is subject to recovery under any law, government regulation or stock exchange listing requirement, through such deductions or clawback as may be required to be made pursuant to such law, government regulation or stock exchange listing requirement.
Compensation Committee Interlocks and Insider Participation
None of the members of our Compensation Committee has been an officer or employee of eMagin during years ending December 31, 2011, 2012 and 2013.2013, 2014 or 2015. In addition, during the most recent fiscal year, no eMagin executive officer served on the Compensation Committee (or equivalent), or the Board, of another entity whose executive officer(s) served on our Compensation Committee or Board.
Compensation Committee Report of Executive Compensation The Committee has reviewed the Compensation Discussion and Analysis and discussed that analysis with management. Based on its review and discussions with management, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in eMagin’s 10-K for the fiscal year ending December 31, 2013.2015. This report is provided by the following independent directors, who comprise the membership of the Compensation Committee: Christopher Brody (Chair) Leslie G. Polgar Stephen M. Seay (Chairman) Leslie Polgar
Claude Charles
Christopher Brody
Summary Compensation Table The following table sets forth information regarding compensation paid to our principal executive officer and our other two highest paid executive officers for the applicable fiscal year (for each such year, the “Named Executive Officers”) in addition to two individuals who served as our principal financial officer and our other three highest paid executive officers.
| | Year | Salary | Option awards (1) | Non-equity incentive plan compensation | Total | | Name and principal position | | ($) | ($) | ($) | ($) | | Andrew G. Sculley, President and Chief Executive Officer | 2013 | 384,000 | | | 384,000 | | 2012 | 384,000 | 43,054 | 54,000 | 481,054 | | | | | | | | Paul Campbell, Chief Financial Officer and Treasurer | 2013 | 318,000 | | | 318,000 | | 2012 | 313,038 | 239,268 | 26,000 | 578,306 | | | | | | | | Olivier Prache, SVP, Product Development (2) | 2013 | 280,199 | | | 280,199 | | 2012 | 280,199 | 31,312 | 15,000 | 326,511 | | | | | | | | Amalkumar Ghosh, SVP, Research and Development (2) | 2013 | 280,000 | | | 280,000 | | 2012 | 279,622 | 29,355 | 17,000 | 325,977 | | | | | | | | Jerome Carollo, SVP, Business Development | 2013 | 270,000 | | | 270,000 | | 2012 | 270,000 | 23,484 | 19,000 | 312,484 | | | | | | |
during the period covered by this table.| | Year | Salary | Bonus | Stock Awards | Option awards (1) | Non-equity incentive plan compensation | Non-qualified Deferred Compensation Earnings | All Other Compensation | Total | | Name and principal position | | ($) | ($) | (S) | ($) | ($) | ($) | ($) | ($) | | Andrew G. Sculley, President and Chief Executive Officer | 2015 | 410,000 | | | | | | | 410,000 | | 2014 | 410,000 | | | | | | | 410,000 | | | | | | | | | | | | Paul Campbell, Chief Financial Officer and Treasurer (2) | 2015 | 302,788 | | | | | | 270,577 | 573,365 | | 2014 | 335,000 | | | | | | | 335,000 | | | | | | | | | | | | Olivier Prache, SVP, Product Development | 2015 | 295,000 | | | | | | | 295,000 | | | | | | | | | | | | | | | | | | | | | | Amalkumar Ghosh, SVP, Research and Development | 2015 | 295,000 | | | | | | | 295,000 | | | | | | | | | | | | | | | | | | | | | | Jerome Carollo, SVP, Business Development (3) | | | | | | | | | | | 2014 | 292,000 | | | 50,000 | | | | 342,000 | | | | | | | | | | | | Jeffrey P. Lucas, Chief Financial Officer (4) | 2015 | 92,855 | | | 71,108 | | | 13,000 | 176,963 |
| (1) | | The amounts in this column represent the fair value of option awards to the named executive officerNamed Executive Officer as computed on the date of the option grants using the Black-Scholes option-pricing model. Please see Note 10 to our financial statements for the year ended December 31, 2013,2015, included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2013.2015. |
| (2) | | Mr. Campbell resigned as Chief Financial Officer and Treasurer as of September 14, 2015 and under the Separation Agreement and General Release, Mr. Campbell received $103 thousand, the remaining compensation due under his employment agreement, and $168 thousand, an additional six months of salary payable on June 30, 2016. |
| (3) | | Mr. Carollo resigned as SVP, Business Development as of January 16, 2015. |
| (4) | | Effective September 14, 2015, we appointed Mr. Lucas to serve as our Chief Financial Officer. The salary he was paid represents a pro-rated amount of his annual salary of $345 thousand. |
(2) | On May 11, 2011, the Board of Directors determined that Mr. Prache and Mr. Ghosh were executive officers under Section 16 of the Exchange Act. The compensation shown represents compensation earned for the entire year. |
Grants of Plan-Based Awards Grants of Plan-Based Awards
There were no
The following table sets forth information regarding stock option awards granted to our named executive officersNamed Executive Officers under our stock option plans for the year ended December 31, 2013.2015 as follows: | Name | | Grant Date | | All Other Option Awards: Number of Securities Underlying Options (#) | | Exercise or Base Price of Options Awards ($/Share) | | Total Grant Date Fair Value ($) | | Jeffrey P. Lucas | | September 14, 2015 | | | 75,000 | | | | 2.50 | | | | 71,108 | | | | | | | | | | | | | | | | | |
Outstanding Equity Awards at Fiscal Year-End
The following table sets forth information with respect to the outstanding equity awards of our principal executive officer and principal financial officer during 2013, and each person who served as an executive officer of eMagin Corporation as of December 31, 2013.Named Executive officers. | | | | Option Awards | | | Stock Awards | | Name | | | Number of securities underlying unexercised options (#) Exercisable | | | | Number of securities underlying unexercised options (#) Unexercisable | | | | Equity incentive plan awards: Number of securities underlying unexercised options (#) | | | | Options exercise price ($) | | | Option expiration Date | | | Number of Shares or Units of Stock That Have Not Vested (#) | | | | Market Value of Shares or Units of Stock That Have Not Vested ($) | | | | Equity Incentive Plan Awards: Number of Unearned shares, Units or Other Rights That Have Not Vested (#) | | | | Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) | | | Andrew G. Sculley | | | 25,796 | | | | | | | | 25,796 | | | | 1.94 | | | March 3, 2017 | | | - | | | | - | | | | - | | | | - | | | | | | 28,800 | | | | | | | | 28,800 | | | | 7.79 | | | March 15, 2016 | | | - | | | | - | | | | - | | | | - | | | | | | 188,333 | | | | | | | | 188,333 | | | | 4.03 | | | November 3, 2018 | | | - | | | | - | | | | - | | | | - | | | | | | 22,000 | | | | | | | | 22,000 | | | | 3.59 | | | March 13, 2017 | | | - | | | | - | | | | - | | | | - | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Olivier Prache | | | 100,000 | | | | | | | | 100,000 | | | | 7.79 | | | March 15, 2016 | | | - | | | | - | | | | - | | | | - | | | | | | 25,218 | | | | | | | | 25,218 | | | | 7.79 | | | March 15, 2016 | | | - | | | | - | | | | - | | | | - | | | | | | 16,000 | | | | | | | | 16,000 | | | | 3.59 | | | March 13, 2017 | | | - | | | | - | | | | - | | | | - | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Amalkumar Ghosh | | | 18,974 | | | | | | | | 18,974 | | | | 1.94 | | | March 3, 2017 | | | - | | | | - | | | | - | | | | - | | | | | | 100,000 | | | | | | | | 100,000 | | | | 7.79 | | | March 15, 2016 | | | | | | | | | | | | | | | | | | | | | 23,900 | | | | | | | | 23,900 | | | | 7.79 | | | March 15, 2016 | | | - | | | | - | | | | - | | | | - | | | | | | 15,000 | | | | | | | | 15,000 | | | | 3.59 | | | March 13, 2017 | | | - | | | | - | | | | - | | | | - | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Jeffrey P. Lucas | | | | | | | 75,000 | | | | 75,000 | | | | 2.50 | | | September 14. 2020 | | | - | | | | - | | | | - | | | | - | |
| | | Option Awards | | Name | | Number of securities underlying unexercised options (#) Exercisable | | Number of securities underlying unexercised options (#) Unexercisable | | Equity incentive plan awards: Number of securities underlying unexercised options (#) | | Options exercise price ($) | | Option expiration Date | | | Andrew G. Sculley | | | 309,800 | | | | | | 309,800 | | | 0.81 | | June 2, 2015 | | | | | | 25,796 | | | | | | 25,796 | | | 1.94 | | March 3, 2017 | | | | | | 19,200 | | | 9,600 | | | 28,800 | | | 7.79 | | March 15, 2016 | | | | | | 188,333 | | | | | | 188,333 | | | 4.03 | | November 3, 2018 | | | | | | 7,333 | | | 14,667 | | | 22,000 | | | 3.59 | | March 13, 2017 | | | | | | | | | | | | | | | | | | | | Paul Campbell | | | 41,418 | | | | | | 41,418 | | | 1.09 | | May 8, 2014 | | | | | | 22,733 | | | | | | 22,733 | | | 1.94 | | March 3, 2017 | | | | | | 18,273 | | | 9,137 | | | 27,410 | | | 7.79 | | March 15, 2016 | | | | | | 5,667 | | | 11,333 | | | 17,000 | | | 3.59 | | March 13, 2017 | | | | | | 56,853 | | | | | | 56,853 | | | 3.02 | | May 8, 2017 | | | | | | 70,172 | | | | | | 70,172 | | | 3.57 | | December 31, 2017 | | | | | | | | | | | | | | | | | | | | Gabriel Matus | | | | | | 28,802 | | | 28,802 | | | 3.50 | | May 13, 2018 | | | | | | | | | | | | | | | | | | | | Olivier Prache | | | 66,667 | | | 33,333 | | | 100,000 | | | 7.79 | | March 15, 2016 | | | | | | 16,812 | | | 8,406 | | | 25,218 | | | 7.79 | | March 15, 2016 | | | | | | 5,333 | | | 10,667 | | | 16,000 | | | 3.59 | | March 13, 2017 | | | | | | | | | | | | | | | | | | | | Amalkumar Ghosh | | | 136 | | | | | | 136 | | | 0.98 | | May 5, 2014 | | | | | | 66,667 | | | 33,333 | | | 100,000 | | | 7.79 | | March 15, 2016 | | | | | | 15,933 | | | 7,967 | | | 23,900 | | | 7.79 | | March 15, 2016 | | | | | | 18,974 | | | | | | 18,974 | | | 1.94 | | March 3, 2017 | | | | | | 5,000 | | | 10,000 | | | 15,000 | | | 3.59 | | March 13, 2017 | | | | | | | | | | | | | | | | | | | | Jerome Carollo | | | 66,667 | | | 33,333 | | | 100,000 | | | 6.89 | | March 21, 2016 | | | | | | 4,000 | | | 8,000 | | | 12,000 | | | 3.59 | | March 13, 2017 | |
Option Exercises and Stock Vested
The following table sets forth information regarding stock option exercises by our named executive officersNamed Executive Officers for the year ended December 31, 2013 as follows:
| | | Option Awards | | | Stock Awards | | Name (a) | | Number of Shares Acquired on Exercise (#) | | | Value Realized on Exercise ($) | | | Number of Shares Acquired on Vesting (#) | | Value Realized on Vesting ($) | | Andrew G. Sculley | | | - | | | | - | | | | - | | - | | Paul Campbell | | | 66,186 | | | | 127,493 | | | | - | | - | | Olivier Prache | | | - | | | | - | | | | - | | - | | |
2015:| | | Option Awards | | | Stock Awards | | Name (a) | | Number of Shares Acquired on Exercise (#) | | | Value Realized on Exercise ($) | | | Number of Shares Acquired on Vesting (#) | | | Value Realized on Vesting ($) | | Andrew G. Sculley | | | 154,900 | | | | 374,858 | | | | - | | | | - | | Olivier Prache | | | - | | | | - | | | | - | | | | - | | Amalkumar Ghosh | | | - | | | | - | | | | - | | | | - | | Jeffrey P. Lucas | | | - | | | | - | | | | - | | | | - |
Pension Benefits eMagin does not have any plan which provides for payments or other benefits at, following, or in connection with retirement.
Non-qualified Deferred Compensation
eMagin does not have any defined contribution or other plan which provides for the deferral of compensation on a basis that is not tax-qualified.
On September 14, 2015, Jeffrey P. Lucas was elected to serve as eMagin’s Chief Financial Officer by the Company’s Board of Directors. Pursuant to his offer letter, Mr. Lucas (i) is paid a base salary of $345,000; (ii) is eligible for a bonus of up to 20% of his base salary based on the Company’s performance; (iii) was granted options to purchase 75,000 shares at a strike price of $2.50 with a term of five years and vesting over three years; (iv) has a relocation allowance of $13 thousand; and (v) in the event of termination, will receive severance equal to six months of Mr. Lucas’s salary at the time of termination. Employment Agreement with Andrew G. Sculley On December 31, 2013 and effective as of January 1, 2014, the Company and Andrew G. Sculley, Jr. entered into an Amended and Restated Employment Agreement (the “Sculley Employment Agreement”), which amends and restates in its entirety the Executive Employment Agreement, dated as of June 1, 2011, by and between Company and Mr. Sculley. Pursuant to the Sculley Employment Agreement, Mr. Sculley will continue serving as the Company’s President and Chief Executive Officer. The Sculley Employment Agreement will continue until June 30, 2016 unless it is terminated sooner pursuant to its terms. Under the Sculley Employment Agreement, Mr. Sculley will be paid an annual salary of $410,000. Mr. Sculley may receive equity-related instruments on an annual basis in amounts and subject to vesting and other terms and conditions as the Board of Directors or Compensation Committee of the Board of Directors may determine. All other terms and conditions of such awards shall be governed by the terms and conditions of the applicable equity plan and the applicable award agreements, and as determined by the Company’s Compensation Committee. The annual awards of equity-related instruments shall be made in accordance with the Company’s performance-based compensation plan as approved by the Compensation Committee from time to time. Mr. Sculley shall be eligible to participate in the Company’s equity and stock purchase plans, as determined in the sole discretion of the Compensation Committee. The Board or Compensation Committee may provide additional awards of equity-related instruments from time to time or on an incentive plan as they deem appropriate.
Pursuant to the Sculley Employment Agreement, Mr. Sculley’s employment may be terminated by the Company with or without Cause (as defined in the Sculley Employment Agreement) and he may terminate his employment for Good Reason (as defined in the Sculley Employment Agreement) and such other reasons set forth in the Sculley Employment Agreement.
If Mr. Sculley’s employment agreement is terminated without Cause or if he terminates it for Good Reason, then Mr. Sculley shall, at the Company’s sole discretion, be entitled to the lesser of (i) the total amount of his base salary that remains unpaid under the Sculley Employment Agreement, which shall be paid monthly or (ii) monthly salary payments for twelve (12) months, based on Mr. Sculley’s monthly rate of base salary at the date of such termination, provided, however in lieu of the aforementioned monthly payments, the Company may in its sole discretion pay such payments in a lump-sum. Payment by the Company of the foregoing severance amounts is contingent upon Mr. Sculley’s executing a release agreement substantially in the form attached as an exhibit to the Sculley Employment Agreement, and such release becoming effective, and only so long as Mr. Sculley does not revoke or breach the provisions of the such release or the restrictive covenants set forth in Sections 4 and 5 of the Sculley Employment Agreement. Mr. Sculley shall also be entitled to: (i) payment for accrued and unused vacation; (ii) the immediate vesting of any non-vested equity-related instruments granted pursuant to Section 2.6 of the Sculley Employment Agreement; and (iii) any bonuses which have accrued prior to the date of Mr. Sculley’s termination. Shares of any of the Mr. Sculley’s stock subject to any lockups will be immediately released from such restrictions and registered by the Company within 30 days of his termination. If the Employment Agreement is terminated with Cause or if Mr. Sculley terminates it without Good Reason then Mr. Sculley shall cease to accrue salary, personal time off, benefits and other compensation on the date of such termination. Employment Agreement with Paul Campbell
On December 31, 2013 and effective as of January 1, 2014, the Company and Paul C. Campbell entered into an Amended and Restated Employment Agreement (the “Campbell Employment Agreement”), which amendsamended and restatesrestated in its entirety the Executive Employment Agreement, dated as of May 8, 2012, by and between Company and Mr. Campbell. Pursuant to the Campbell Employment Agreement, Mr. Campbell willwas to continue servingto serve as the Company’s Chief Financial Officer and Treasurer. The Campbell Employment Agreement will continuewas remain in effect until December 31, 2015 unless it is terminated soonerearlier pursuant to its terms. Under the Campbell Employment Agreement, Mr. Campbell willwas to be paid an annual salary of $335,000. Mr. Campbell maywas eligible to receive equity-related instruments on an annual basis in amounts and subject to vesting periods and other terms and conditions as the Board of Directors or the Compensation Committee of the Board of Directors may determine. All other terms and conditions of such awards shall bewere to have been governed by the terms and conditions of the applicable equity plan and the applicable award agreements, and as determined by the Compensation Committee. The annual awards of equity-related instruments shall bewere to have been made in accordance with the Company’s performance-based compensation plan as approved by the Company’s Compensation Committee from time to time. Mr. Campbell shall bewas eligible to participate in the Company’s equity and stock purchase plans, as determined in the sole discretion of the Compensation Committee. The Board or Compensation Committee may provide additional awards of equity-related instruments from time to time or on an incentive plan as they deem appropriate.
Pursuant to the Campbell Employment Agreement, Mr. Campbell’s employment may be terminated by the Company with or without Cause (as defined in the Campbell Employment Agreement) and he may terminate his employment for Good Reason (as defined in the Employment Agreement) and such other reasons set forth in the Campbell Employment Agreement. IfEffective September 14, 2015, Paul Campbell resigned as Chief Financial Officer. Mr. Campbell’s employment agreement is terminated without Cause or if he terminates it for Good Reason, then Mr. Campbell shall, at the Company’s sole discretion, be entitled to the lesser of (i) the total amount of his base salary that remains unpaid under the Campbell Employment Agreement, which shall be paid monthly or (ii) monthly salary payments for twelve (12) months, based on Mr. Campbell’s monthly rate of base salary at the date of such termination, provided, however in lieu of the aforementioned monthly payments, the Company may in its sole discretion pay such payments in a lump-sum. Payment by the Company of the foregoing severance amounts is contingent upon Mr. Campbell’s executing a release agreement substantially in the form attached as an exhibit to the Campbell Employment Agreement, and such release becoming effective, and only so long as Mr. Campbell does not revoke or breach the provisions of the such release or the restrictive covenants set forth in Sections 4 and 5 of the Campbell Employment Agreement. Mr. Campbell shall also be entitled to: (i) payment for accrued and unused vacation; (ii) the immediate vesting of any non-vested equity-related instruments granted pursuant to Section 2.6 of the Campbell Employment Agreement; and (iii) any bonuses which have accrued prior to the date of Mr. Campbell’s termination. Furthermore, shares of any of the Mr. Campbell’s stock subject to any lockups will be immediately released from such restrictions and registered by the Company within 30 days of his termination.
If the Campbell Employment Agreement is terminated with Cause or if Mr. Campbell terminates it without Good Reason then Mr. Campbell shall cease to accrue salary, personal time off, benefits and other compensation on the date of such termination.
Employment Agreement with Gabriel Matus
On April 30, 2013, the Company and Gabriel G. Matus entered into an employment agreement (the “Matus Employment Agreement”), pursuant to which Mr. Matus will serve as the Company’s Senior Vice President, General Counsel and Secretary. Mr. Matus’ employment with the Company commenced on May 13, 2013 (the “Commencement Date”) and shall continue until May 13, 2015, unless terminated sooner pursuant to the Employment Agreement. Pursuant to the Matus Employment Agreement, Mr. Matus will be paid a base salary of $234,000 per annum. Promptly following the Commencement Date, Mr. Matus and the Company entered into a stock option agreement (the “Option Agreement”) pursuantSeparation Agreement and General Release in which the Company agreed to which Mr. Matus received an option to purchase such number of shares (the “Shares”)pay the remainder of the Company’s common stock equalcompensation, $103 thousand, due to $50,000 (usingMr. Campbell under his employment agreement and an additional six months of Mr. Campbell’s base salary, $168 thousand, payable on June 30, 2016.Employment Agreement with Jerome Carollo On May 13, 2014, the Black Sholes method of valuing such option based on the closing price of the Company’s common stock on the date of the grant)Company and Jerome T. Carollo executed an Amended and Restated Employment Agreement (the “Carollo Employment Agreement”), which option shall terminate onamended and restated in its entirety the earlier to occur of five years from its grant or upon the other applicable termination provisions contained in the Option Agreement. The Option Agreement entitles Mr. Matus to purchase the Shares at $3.50 per Share, the closing price of the Company’s common stock on the date of grant. Subject to the terms and conditions of the MatusExecutive Employment Agreement, and the Option Agreement, the option to purchase the Shares shall vesteffective as follows: 1/3 shall vest one year from the date of the Employment Agreement, 1/3 shall vest two years from the date of the Employment Agreement, and the remaining 1/3 shall vest three years from the date of the Employment Agreement, provided that if Mr. Matus does not continue his employment with the Company any unvested options shall be void. If Mr. Matus voluntarily terminates his employment with the Company, other than for Good Reason (as such term is defined in the Employment Agreement), he shall cease to accrue salary, personal time off, benefits and other compensation on the date of voluntary termination and all unvested stock options granted to Mr. Matus will be void. The Company may terminate Mr. Matus’ employment with or without cause. If the Company terminates Mr. Matus’ employment without Cause (as such term is defined in the Matus Employment Agreement) after 120 days from the date of the Matus Employment Agreement, Mr. Matus will be entitled to monthly salary payments for twelve (12) months, based on his monthly rate of base salary at the date of such termination, provided, however, in lieu of the aforementioned monthly payments the Company may in its sole discretion pay such amounts in a single lump-sum payment. In addition, any non-vested options pursuantMarch 21, 2011. Pursuant to the Employment Agreement, shall vest immediately. Mr. Matus shall also be entitledCarollo was to receive (i) payment for accrued and unpaid vacation pay, and (ii) all bonuses that have accrued during the term of the Matus Employment Agreement but have not been paid.
Employment Agreement with Jerome Carollo
On March 15, 2011, the Company signed an executive employment agreement (the “Carollo Employment Agreement”) with Jerry Carollocontinue to serve as the Company’s Senior Vice President, Business Development effective March 21, 2011. Pursuant to the Employment Agreement,until May 13, 2016. Mr. Carollo iswas paid a base salary of $270,000$292,000 and was granted 100,000received stock options which are exercisablevalued at $6.89 per share, the market price on the date$50,000. Effective January 16, 2015, Jerome T. Carollo resigned as Senior Vice President of the grant, of which one third will vest annually on the subsequent three anniversary dates. If Mr. Carollo voluntarily terminatesBusiness Development and his employment with the Company, other than for Good Reason as defined in the Carollo Employment Agreement he shall ceasewas terminated. No severance payments were made to accrue salary, personal time off, benefits and other compensation on the date of voluntary termination. The Company may terminate Mr. Carollo’s employment with or without cause. If the Company terminates without cause, Mr. Carollo will be entitled to the lesser of (i) the total amount of base salary that remains unpaid under the Employment Agreement which shall be paid monthly or (ii) monthly salary payments for twelve (12) months, based on his monthly rate of base salary at the date of such termination, or in lieu of the aforementioned monthly payments, the Company may in its sole discretion pay such payments in a lump-sum. Mr. Carollo shall also be entitled to receive (i) payment for accrued and unpaid vacation pay and (ii) all bonuses that have accrued during the term of the Employment Agreement, but not been paid. All non-vested options shall vest immediately.
Carollo.Transactions with Related Persons
At no time during the last two fiscal years has any executive officer, director or any member of these individuals’ immediate families, any corporation or organization with whom any of these individuals is an affiliate or any trust or estate in which any of these individuals serves as a trustee or in a similar capacity or has a substantial beneficial interest been indebted to the Company or been involved in any transaction in which the amount exceeded $120,000 and such person had a direct or indirect material interest.
Procedures for Approval of Related Party Transactions
Our Board of Directors is charged with reviewing and approving all potential related party transactions. All such related party transactions must then be reported to the extent required under applicable SEC rules. We have not adopted other procedures for review, or standards for approval, of such transactions, but instead review them on a case-by-case basis.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires our directors and executive officers and persons who own more than 10% of the issued and outstanding shares of eMagin common stock to file reports of initial ownership of common stock and other equity securities and subsequent changes in that ownership with the SEC. Officers, directors and greater than ten percent stockholders are required by SEC regulation to furnish us with copies of all Section 16(a) forms they file. To our knowledge, based solely on a review of the copies of such reports furnished to us and written representations that no other reports were required, during the fiscal year ended December 31, 20132015, all Section 16(a) filing requirements applicable to our officers, directors and greater than 10% beneficial owners were complied with except as noted below:with. Two Form 4’s were filed late for Dr. Wittels with respect to two transactions (which were each option grants made in connection with as director compensation), Messrs. Charles, Brody, Cronson, Seay, Engelman, Polgar each filed one late Form 4 with respect to one transaction each (each transaction was in connection with one option granted as director compensation), Mr. Matus filed one Form 4 late with respect to one transaction which was in connection with his initial option grant when he joined the Company and Mr. Campbell filed one Form 4 late reporting two transactions of which one transaction was in connection with one option exercise and the second transaction was in connection with the corresponding sale of the option shares. The Company has implemented policies and procedures with its Section 16(a) reporting persons to ensure that future filings are made on a timely basis.
ACTIONS TO BE TAKEN AT THE MEETING
PROPOSAL FOR ELECTION OF SEVEN DIRECTORS
At this year’s Annual Meeting, the Board of Directors proposes that the nominees listed below be elected to hold office until the next annual meeting of stockholders and until their successors are duly elected and qualified. All of the nominees are currently serving as directors. All nominees have consented to being named in this Proxy Statement and to serve if elected.
Assuming a quorum is present, the seven nominees receiving the highest number of affirmative votes of shares entitled to be voted for such persons will be elected as directors of the Company to hold office until the next annual meeting of stockholders and until their successors are duly elected and qualified. Unless marked otherwise, proxies received will be voted "FOR" the election of the nominees named below. In the event that additional persons are nominated for election as directors, the proxy holders intend to vote all proxies received by them in such a manner as will ensure the election of the nominees listed below, and, in such event, the specific nominees to be voted for will be determined by the proxy holders.
Information With Respect to Director Nominees Listed below are the nominees for election to our Board with information showing the principal occupation or employment of the nominees for director, the principal business of the corporation or other organization in which such occupation or employment is carried on, and such nominees’ business experience during the past five years. Such information has been furnished to the Company by the director nominees. | | Age | | Position | | Christopher Brody | | 4547 | | Director | | Paul Cronson | | 57 | | Director | Irwin Engelman | | 7959 | | Director | | Leslie G. Polgar | | 7072 | | Director | | Ellen Richstone | | 64 | | Director | | Andrew G. Sculley | | 6365 | | Director | | Stephen M. Seay | | 6769 | | Director | | Jill J. Wittels | | 6466 | | Director |
Since February of 2012, Mr. Brody has served as the President and Managing Director of Stillwater LLC and as the Vice President of Stillwater Trust LLC. Both Stillwater LLC and Stillwater Trust LLC are affiliates of Stillwater Holdings LLC, our largest stockholder, which originally nominated him in 2012. From 2008 to 2011, Mr. Brody was the Chief Investment Officer of BAWAG P.S.K. Bank Fur Arbeit und Wirtschaft Und Osterreichische Sparkasse Aktiengesellschaft, a large Austrian commercial bank, and as a member of the management committee of its stockholder, BAWAG Holdings GmbH. He continues to serveserved on the boards of both companies. From 2001 to 2008, he served as Managing Director of Cerberus Capital Management L.P., an alternate asset hedge fund. He previously served on the boards of Scottish Re Group LTD (NYSE traded), and numerous other boards of private companies in the portfolio of Cerberus Capital Management L.P. Mr. Brody holds a B.A. from Brandeis University. Mr. Brody’s U.S. and international business and financial knowledge and experience led the Governance and Nominating Committee to the conclusion that he should serve on the Board of Directors, given the Company’s business and structure.
Paul Cronson has served as a director since July of 2003. Mr. Cronson is Managing Director of Larkspur Capital Corporation, which he co-founded in 1992. Larkspur is a broker dealer that is a member of FINRA and advises companies seeking private equity or debt. Mr. Cronson's career in finance began in 1979 at Laidlaw, Adams, & Peck where he worked in asset management and corporate finance. From 1983 to 1985, Mr. Cronson worked with Samuel Montagu Co., Inc. in London, where he marketed eurobondEurobond issuers and structured transactions. Subsequently from 1985 to 1987, he was employed by Chase Investment Bank Ltd., where he structured international debt securities and he developed synthetic asset products using derivatives. Returning to the U.S., he joined Peter Sharp Co., where he managed a real estate portfolio, structured financings and assisted with capital market investments until 1992. Mr. Cronson received his BAB.A. from Columbia College in 1979, and his MBAM.B.A. from Columbia College in 1982. He is on the board of the Evelyn Sharp Foundation in New York, a private foundation supporting various not for profit endeavors. Mr. Cronson’s business management and financial experience and knowledge led the Governance and Nominating Committee to the conclusion that he should serve on the Board of Directors, given the Company’s business and structure.
Irwin Engelman
| Director since 2005
19 | |
Irwin Engelman has served as a director since May of 2005 and served as Non-Executive Interim Chairman from November 2010 to August 2011. He is currently a consultant to various industrial companies. Mr. Engelman became a member of the Board of Directors and Chairman of the Audit Committee of Oaktree Finance Corp. in 2011 and served until 2012. He served as a director of WellGenCorp., a neutrogenic products and technology company, from 2001 to 2013. Mr. Engelman was a director of Sanford C. Bernstein Mutual Funds, a publicly-traded company, and chairman of its audit committee, from 2000 to 2010. From November 1999 until April 2002, he served as Executive Vice President and Chief Financial Officer of YouthStream Media Networks, Inc., a media and retailing company serving high school and college markets. From 1992 until April 1999, he served as Executive Vice President and Chief Financial Officer of MacAndrews and Forbes Holdings, Inc., a privately-held financial holding company. From November 1998 until April 1999, he also served as Vice Chairman, Chief Administrative Officer and a director of Revlon, Inc., a publicly-traded consumer products company. From 1978 until 1992, he served as an executive officer of various public companies including International Specialty Products, Inc. (a subsidiary of GAF Holdings Inc.), CitiTrust Bancorporation, General Foods Corporation and The Singer Company. Mr. Engelman received a BBA in Accounting from Baruch College in 1955 and a Juris Doctorate from Brooklyn Law School in 1961. He was admitted to practice law in the State of New York in 1962. In addition, he was licensed as a CPA in the State of New Jersey in 1966. Mr. Engelman’s experience as a director of public companies, as well as his accounting and financial experience and knowledge, led the Governance and Nominating Committee to the conclusion that Mr. Engelman should serve on the Board of Directors, given the Company’s business and structure.
Dr. Leslie G. Polgar has served as a director since November of 2010. Mr.Dr. Polgar has been founder and executive officeris an Adjunct Professor at St. Mary’s College of Talpra Consulting, since 1994,California (2008 – present), where he serves as a consultant to investorsteaches Entrepreneurship in the Professional M.B.A. Program and technology companies.Management of Innovation and Technology in the Executive M.B.A. Program. From 2005 to 2007, Dr. Polgar was chief executive officer and a member of the board of directors of Forth Dimension Displays Ltd. in Dalgety Bay, Scotland. From 2000 to 2003, Dr. Polgar was the founder andfounding president of Eastman Kodak’s Display Products Business Unit, where he led the successful commercialization of the world’s first full color, direct-view organic light emitting diode display (OLED). Since 2008, Dr. Polgar has taught the capstone Entrepreneurship and Business Development course in the MBA program at St. Mary’s College of California. Dr. Polgar has been active as judge or mentor for the UC Berkeley’s Haas School of Business since 1999. Dr. Polgar’s board experience includes: Shotgun Players Theater Company (non-profit, US) and for-profits Interschola (US), Forth Dimension Displays (UK), SK Display (Japan), Bertram Labs/Chemetall GmbH (US-Germany), and Chemical Suppliers Inc. (US). Dr. Polgar earned an MBAM.B.A. (U. of Connecticut), a PhDPh.D. and MSM.S. in physics (Carnegie Mellon University) and a BSB.S. in physics/math (U. of Michigan). Dr. Polgar’s scientific and technical knowledge and his experience in the industry led the Governance and Nominating Committee to the conclusion that he should serve on the Board of Directors, given the Company’s business and structure. | Ellen Richstone | Director since 2014 |
Ellen Richstone began service as a director in July 2014. Ms. Richstone served as the Chief Financial Officer of several public and private companies between 1989 and 2012, including Rohr Aerospace, a Fortune 500 company. From 2002 to 2004, Ms. Richstone was the President and Chief Executive Officer of the Entrepreneurial Resources Group. From 2004 until its sale in 2007, Ms. Richstone served as the financial expert on the board of directors of American Power Conversion, an S&P 500 company. Ms. Richstone currently serves on, and was designated a financial expert by, the board of directors of BioAmber Inc., a publicly traded industrial biotechnology company producing sustainable chemicals, and the board of directors of Parnell, a publicly traded pharmaceutical company. She also sits on the board of the National Association of Corporate Directors (NACD) in New England, as well as other non-profit organizations. In April 2013, Ms. Richstone was given the first annual Distinguished Director Award from the Corporate Directors Group. Ms. Richstone graduated from Scripps College in Claremont California and holds graduate degrees from the Fletcher School of Law and Diplomacy at Tufts University. Ms. Richstone also completed the Advanced Professional Certificate in Finance at New York University’s Graduate School of Business Administration and attended the Executive Development program at Cornell University’s Business School. Ms. Richstone holds an Executive Master’s Certification in Director Governance from the American College of Corporate Directors. Ms. Richstone’s broad industry experience in technology and corporate governance expertise led to the conclusion that she should serve on the Board of Directors, given the Company’s business and structure. Andrew G. Sculley became the Company’s Chief Executive Officer and President on June 1, 2008 and was appointed to the Board of Directors on November 2, 2009. Mr. Sculley served as the General Manager of Kodak’s OLED systems Business Unit and Vice President of Kodak’s Display Business from 2004 to 2008. From 2003 to 2006, he served on the Board of Directors of SK Display, a joint venture between Sanyo and Kodak. From 1996 to 2001 Mr. Sculley served as the Manager of Operations, CFO and member of the Board of Directors of Kodak Japan Ltd., where he managed Distribution, Information Technologies, Legal, Purchasing and Finance. Previously, he held positions in strategic planning and finance in Eastman Kodak Company. Mr. Sculley holds an MBAM.B.A. from Carnegie-Mellon University and an MSM.S. in physics from Cornell University. He attended Harvard University’s International Senior Management Program while an executive at Kodak. Mr. Sculley’s experience as the Company’s Chief Executive Officer and technical and business management experience at Kodak’s Display Business, SK Display and Kodak Japan Ltd., led the Governance and Nominating Committee to the conclusion that Mr. Sculley should serve on the Board of Directors, given the Company’s business and structure.
Brigadier General Stephen M. Seay, U.S. Army (Ret.) began service as a director in January 2006. In March 2016, Brig. General Seay became Director, Leadership and Career Development Strategies, in the University of Central Florida, Department of Athletics. His responsibilities include mentor, coach and adviser to students and student-athletes in career development opportunities in academia, government and industry, toward successful employment upon graduation. He founded Seay Business Solutions, LLC, a Florida veteran ownedveteran-owned small business, in 2006, specializing in providing assistance to entrepreneurs and small businesses focused on working in defense. Retired Brig. General Seay provides expertise in high technology operational and integrated modeling, simulation, training and education, mission command, cyber operations, strategic planning, resource management/allocation/analysis, operations research and system life cycle planning, programming, execution, sustainment and life cycle system design. He held a wide variety of command and staff positions during his over thirty-three year Army career, culminating as the Commanding General, Joint Contracting Command-Iraq/Head of Contracting Authority, Operation Iraqi Freedom (2004-2005) and Program Executive Officer, Simulation, Training and Instrumentation (PEO STRI) from 2000-2005. He performs corporate and independent director responsibilities as a member of strategy, audit, compensation, finance, governance and executive committees. Brig. General Seay is the senior mentor/advisor for Talon Simulations, LLC, an entrepreneurial Florida small business, University of Central Florida graduate degree program and National Science Foundation grant awardee, focused on aviation simulation for training, and gaming, simulation focused on smaller aviation schools and instructional facilities. He is an Associate in The Spectrum Group, Alexandria, Virginia and CMA & Associates, Virginia Beach, Virginia. He serves on the Board of Directors and as Secretary, formerly Treasurer, Kid’s House of Seminole County, Florida (children’s advocacy), Orlando Science Center, Orlando, Florida (STEM) Director and on its Finance Committee.Committee, and is Secretary, National Modeling and Simulation Coalition (Industry professional). Brig. General Seay holds a Bachelor of Science degreereceived his B.S. from the University of New Hampshire, where he was a three-sport student-athlete, and a Master of Science degreean M.S. from the North Carolina State University. He taught Chemistry and coached lacrosse at the United States Naval Academy. Brig. General Seay is a recognized expert in operational training systems and programs. Brig. General Seay’sHis Army operational experience and understanding of high technology devices, optics and digital displays, his business knowledge and experience in transitioning emerging technology into practical applications led to the conclusion that he should serve on the Board of Directors, given the Company’s business and structure. | Jill J. Wittels | Director since August, 2011 |
Dr. Wittels has served as a director and Chair of the Board since August, 2011. She served on the Board of Directors previously from 2003 to 2006. Dr. Wittels is currently the principal in Sostenuto Strategic Advisors, in which capacity she consults on business strategy and serves as a strategy advisor. Dr. Wittels is also a Founder as well as Chief Science and Technology Officer of Terra Prima Partners, an entity which plans to invest in early stage private companies which provide product and/or services that support sustainability. She served on the Company’s Board previouslyof the Fermi National Accelerator Laboratory, a laboratory of the U.S. Department of Energy Office of High Energy Physics from 20032013 to 2006.2014 and also from June 1995 through June 2011. From 2001 until July, 2011, Dr. Wittels was Corporate Vice President, Business and Technology Strategy of L-3 Communications. Her responsibilities at L-3 included strategies for growth, oversight of R&D, diligence support for M&A, and cross-company business development coordination. From 1979 to 2001, she held a variety of positions with BAE Systems, including Vice President and General Manager, Acting President and Vice President of Engineering. She served on the board of Innovative Micro Technology, Inc. from 2002 through July 2011 and from June 1995 through June 2011 on the Board of the Fermi National Accelerator Laboratory, a laboratory of the U.S. Department of Energy Office of High Energy Physics. She also served on the board of Millivision, Inc. from 2002 to 2006. Dr. Wittels holds a BSB.S. and a PhDPh.D. in Physics, both from the Massachusetts Institute of Technology. Dr. Wittels’ business management experience, her scientific knowledge, her knowledge of the Company, and her experience in developing strategy and strategic alliances led the Governance and Nominating Committee to the conclusion that she should serve on the boardBoard of directors,Directors, given the Company’s business and structure.
The election of the directors of the Company requires the affirmative vote of a plurality of the votes cast by stockholders, who are entitled to vote,shares of the Company's common stock and Series B Preferred Stock (on an as converted basis with the Common stock) present in person or represented by Proxy at the Annual Meeting, which will be the nominees receiving the largest number of votes, which may or may not constitute less than a majority.
RECOMMENDATION OF THE BOARD FOR PROPOSAL NO. 1:
THE BOARD RECOMMENDS A VOTE FOR THE ELECTION OF ALL THE NOMINEES DESCRIBED ABOVE. PROPOSAL NO. 2
RATIFICATION OF THE APPOINTMENT OF INDEPENDENT AUDITORS
McGladreyRSM US LLP (“McGladrey”RSM”), our independent auditors, audited our financial statements for the 20132015 fiscal year. The Audit Committee selected McGladreyRSM as the independent auditors of the Company for the fiscal year ending December 31, 2014.2016. Representatives of McGladreyRSM are not expected to attend the 20142016 Annual Meeting of Stockholders. McGladreyRSM was first engaged by us on June 15, 2011.
During the years ended December 31, 20132015 and 2012,2014, neither the Company nor anyone acting on its behalf consulted with McGladreyRSM regarding any of the matters or events set forth in Item 304(a)(2) of Regulation S-K, nor did McGladreyRSM receive any fees for any services during that time period. McGladreyRSM served as eMagin’s independent auditors for the years ended December 31, 20132015 and 2012.2014. For the years ended December 31, 20132015 and 2012,2014, the fees for audit services associated with the annual audit and review of the Company’s quarterly reports on Form 10-Q totaled approximately $166,850$171,000 and $155,000,$172,500, respectively.
No fees were billed for the years ended December 31, 20132015 and 20122014 for professional services rendered by McGladreyRSM for tax compliance, tax advice, and tax planning.
For the years ended December 31, 20132015 and 2012,2014, fees related to audit services related to the Company’s statutory and regulatory filings totaled approximately $9,995$71,511 and $9,000,$27,089, respectively, from McGladrey. RSM.Pre-Approval Policies and Procedures
The Audit Committee pre-approves all audit and non-audit services performed by the Company’s auditor and the fees to be paid in connection with such services in order to assure that the provision of such services does not impair the auditor’s independence.
The ratification of the appointment of the Company's independent auditors requires the receipt of the affirmative vote of a majority of the shares of the Company's common stock and Series B Preferred Stock (on an as converted basis with the Common stock) present in person or by proxy and voting at the Annual Meeting.
RECOMMENDATION OF THE BOARD FOR PROPOSAL NO. 2:
THE BOARD RECOMMENDS A VOTE FOR RATIFICATION OF APPOINTMENT OF MCGLADREYRSM US LLP AS OUR INDEPENDENT AUDITORS FOR THE YEAR ENDED DECEMBER 31, 20142016.
ADVISORY VOTE ON EXECUTIVE COMPENSATION
The recently enacted Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) requires the Company’s stockholders to have the opportunity to cast a non-binding advisory vote regarding the approval of the compensation disclosed in this Proxy Statement of the Company’s executive officers who are named above in the Summary Compensation Table (the “named executive officers”). The Company has disclosed the compensation of the named executive officers pursuant to rules adopted by the SEC.
Please read the “Compensation Discussion and Analysis” beginning on page 1312 for additional details about our executive compensation program, including information about the fiscal year 20132015 compensation of our named executive officers. We believe that our compensation policies for the named executive officers are designed to attract, motivate and retain talented executive officers and are aligned with the long-term interests of the Company’s stockholders. This advisory stockholder vote, commonly referred to as a “say-on-pay vote,” gives you as a stockholder the opportunity to approve or not approve the compensation of the named executive officers that is disclosed in this Proxy Statement by voting for or against the following resolution (or by abstaining with respect to the resolution):
“RESOLVED, that that the compensation paid to the Company’s named executive officers, as disclosed in the Company’s 20142016 Proxy Statement pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion, is hereby APPROVED.”
Because your vote is advisory, it will not be binding on either the Board of Directors or the Company. However, the Company’s Compensation Committee willmay take into account the outcome of the stockholder vote on this proposal at the Annual Meeting when considering future executive compensation arrangements. In addition, your non-binding advisory votes described in this Proposal 3 will not be construed: (1) as overruling any decision by the Board of Directors, any Board committee or the Company relating to the compensation of the named executive officers, or (2) as creating or changing any fiduciary duties or other duties on the part of the Board of Directors, any Board committee or the Company.
Adoption of the resolution requires the receipt of the affirmative vote of a majority of the shares of the Company's common stock and Series B Preferred Stock (on an as converted basis with the common stock) present in person or by proxy and voting at the Annual Meeting.
RECOMMENDATION OF THE BOARD FOR PROPOSAL NO. 3: THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE TO APPROVE THE COMPENSATION DISCLOSED IN THIS PROXY STATEMENT OF THE COMPANY’S EXECUTIVE OFFICERS WHO ARE NAMED IN THIS PROXY STATEMENT’S SUMMARY COMPENSATION TABLE. The Board of Directors knows of no other business which will be presented at the Annual Meeting. If any other matters properly come before the meeting, the persons named in the enclosed Proxy, or their substitutes, will vote the shares represented thereby in accordance with their judgment on such matters. ADDITIONAL INFORMATION Annual Reports on Form 10-K Additional copies of eMagin's Annual Report on Form 10-K for the fiscal year ended December 31, 20132015 may be obtained without charge by writing to the Corporate Secretary,Chief Financial Officer, eMagin Corporation, 3006 Northup Way, Suite 103, Bellevue, WA 98004.2070 Route 52, Hopewell Junction, NY 12533. eMagin's Annual Report on Form 10-K can also be found on eMagin's website: www.eMagin.com. Stockholders Proposals for the 20152017 Annual Meeting.
Proposals by any stockholderStockholder proposals intended to be presented at the next Annual Meeting of StockholdersCompany’s 2017 annual meeting must be received by the Company for inclusion in material relating to such meeting notno later than November 30, 2014. Any stockholder who wishesDecember 16, 2016 (pursuant to present proposalsRule 14a-8 of the Exchange Act, 120 days before the anniversary of the prior year’s mailing date) to be eligible for inclusion in the Company’s proxy statement and form of proxy for next year’s meeting. Proposals should be addressed to eMagin Corporation, Attn. Chief Financial Officer, 2070 Route 52, Hopewell Junction, NY 12533.For any proposal that is not submitted for inclusion in next year’s proxy statement (as described in the preceding paragraph), but is instead sought to be presented directly at the 2017 annual meeting, the federal securities laws require stockholders to give advance notice of such proposals. The required notice must (pursuant to Rule 14a-4 of the Exchange Act), be given no less than 45 days in advance of the one year anniversary date of the date on which the Company first sent its proxy materials for the 2015 Annual Meetingimmediately preceding annual meeting. Accordingly, with respect to the Company’s 2017 annual meeting of Stockholders may do so by following the procedures prescribed in Rule 14a-8 under the Securities Exchange Act of 1934, as amended. To be eligible, the stockholder proposalsstockholders, notice must be received by our Corporate Secretaryprovided to eMagin Corporation, Attn. Chief Financial Officer, 2070 Route 52, Hopewell Junction, NY 12533 no later than February 27, 2017. If a stockholder fails to provide timely notice of a proposal to be presented at our principal executive office on or before November 30, 2014. Such proposal must also meet the other requirements2017 annual meeting, the chairman of the rulesmeeting will declare it out of the SEC relating to stockholders’ proposals. order and disregard any such matter.Proxy Solicitation Costs The proxies being solicited hereby are being solicited by the Company. The Company will bear the entire cost of solicitation of proxies, including preparation, assembly, printing and mailing of the Notice, the Proxy Statement, the Proxy card and establishment of the Internet site hosting the proxy material. Copies of solicitation materials will be furnished to banks, brokerage houses, fiduciaries and custodians holding in their names shares of common stock beneficially owned by others to forward to such beneficial owners. Officers and regular employees of the Company may, but without compensation other than their regular compensation, solicit proxies by further mailing or personal conversations, or by telephone, telex, facsimile or electronic means. We will, upon request, reimburse brokerage firms and others for their reasonable expenses in forwarding solicitation material to the beneficial owners of stock. | | By Order of the Board of Directors, | | | | | | | | /s/ Jill J. Wittels | | | | Jill J. Wittels | | | | Chair of the Board of Directors | |
PROXY
eMAGIN CORPORATION
PROXY FOR ANNUAL MEETING TO BE HELD ON MAY 22, 2014
PROXY eMAGIN CORPORATION PROXY FORANNUALMEETINGTOBEHELDONMAY 27, 2016 THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS PROXYISSOLICITEDONBEHALFOFTHEBOARDOFDIRECTORSThe undersigned shareholder hereby appoints Andrew Sculleyundersignedshareholderherebyappoints Andrew G.Sculley and Paul Campbell or either of them (each with full powerJeffrey P. Lucasoreitherofthem(eachwithfull power to act alone), as attorneysattorneys and proxies for the undersigned, with the powerpower to appoint his or her substitute, to represent and to votevote all the shares of common stock or Series B ConvertibleConvertible Preferred Stock of eMagin Corporation (the “Company”“Company”), which the undersigned would be entitled to vote, at the Company’s Annual Meeting of Stockholders to be held at the offices of Sichenzia Ross Friedman Ference LLP, 61 Broadway, 32nd Floor, New York, New York 10006 on Thursday, whichtheundersignedwould beentitledtovote,attheCompany’s AnnualMeetingofStockholderstobeheldattheoffices ofSichenziaRossFriedmanFerenceLLP,61Broadway, 32ndFloor,NewYork, NewYork 10006onFriday,May 22, 2014, at 10:00 a.m.27, 2016, at10:00a.m.,Eastern Time, and at any adjournments thereof, subject to the directions indicated on the reverse side hereof. Time,andatany adjournmentsthereof,subjecttothedirectionsindicatedonthereversesidehereof.In their discretion, the Proxy is authorized to votevote upon anyany other matter that may properly come before the meeting or any adjournments thereof. orany adjournmentsthereof.This proxy,proxy, when properly executed,executed, will be votedvoted in the manner directed on the reversereverse side by the undersigned shareholder. shareholder.If no direction is made, this proxy will be votednodirectionismade,thisproxywillbevotedFORtheelectionofthenamednomineesasdirectors, FOR the election of the named nominees as directors, FOR Proposals 2Proposals2 and3. PLEASE MARK,SIGN,D ATE ANDRETURNTHEPROXYCARDPROMPTLY USINGTHEENCLOSED ENVELOPE.(IMPORTANT--This Proxymustbesignedanddatedonthereverse side.) PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
(IMPORTANT--This Proxy must be signed and dated on the reverse side.)
PLEASE DETACH ALONG PERFORATED LINE AND MAIL IN THE ENVELOPE PROVIDED.
DETACH ALONGPERFORATEDLINEANDMAILINTHEENVELOPEPROVIDED.Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders to be held on May 22, 2014
NoticeRegardingtheAvailabilityofProxyMaterialsfor theAnnualMeetingofStockholderstobeheldonMay 27, 2016The proxy statement and our 2013 Annual Report on Form 10-K to Stockholders are available at proxystatementandour2015AnnualReportonForm10-KtoStockholdersareavailableathttp://www.cstproxy.com/emagin/20142016
The Board of Directors recommends a vote FOR the election of the named nominees as directors, FOR Proposals 2, and 3.
1. Election of Directors
Please mark
your votes
like this
| x |
NOMINEES:
The BoardofDirectorsrecommends avoteFORtheelection ofthenamed nomineesasdirectors, FORProposals 2, and3. | Pleasemark
yourvotes
like this ☒ | | | | | | 1.Election ofDirectors | | | |
| NOMINEES: | 01)ChristopherBrody | FOR☐ | WITHHOLD ☐ | | | | | 01)02)Paul Cronson | FOR ☐ | WITHHOLD ☐ | | | 2. Christopher BrodyProposalto | FOR ratifyothe appointment ofRSM US
| WITHHOLD LLPo
| 2. Proposal to ratify McGladrey LLP as the Company’sCompany’s independentauditors forthe fiscalfiscal yearendingDecember 31, 2014.
| 02) Paul Cronson
| FOR 03) LeslieG.Pologar
| WITHHOLD oFOR ☐
| WITHHOLD ☐ | | | o☐FOR ☐AGAINST☐ABSFORT oAINAGAINST oABSTAIN | 03) Irwin Engelman
| FOR o04)Ellen Richstone
| FOR☐ | WITHHOLDo ☐ | | | | | 04)05)Andrew G.Sculley | FOR ☐ | WITHHOLD ☐ | | | 3. Leslie G. PolgarTo recommend, | FOR by non-bindingvote, theapprov
| WITHHOLD al ofo
| 3. To recommend, by non-binding vote, the approval of the compensation disclosed in the Proxy Statement of the
| | 05)06) Andrew G. SculleyStephen M. Seay | FOR ☐ | WITHHOLD ☐ | | | ☐FOR ☐oAGAINST ☐ABST | WITHHOLD oAIN
| Company’s executive officers, who are named in the Summary Compensation Table. | 06) Brig. General Stephen Seay
| FOR o
| WITHHOLD o
| | 07)Jill J. WittelsWittels | FORo ☐ | WITHHOLDo ☐ | | | | | | | | | | | |
| | | I plan on attending the meeting oIplan onattendingthemeeting ☐ | | | | | | Please sign exactly as name appears below. | Pleasesignexactlyasnameappearsbelow. Whensharesareheldbyjointtenants,both shouldsign. When shares are held by joint tenants, both should sign. When signing as attorney, executor, administrator, trustee or guardian,signingas attorney,executor, administrator,trusteeorguardian, please givegive full title as such. If a corporation, please sign in full corporate name by President or other authorized officer. If a partnership, please sign in partnership name by authorizedPresidentorotherauthorizedofficer. Ifapartnership,pleasesigninpartnershipname byauthorized person. | | | | | | Date: | | | | | Date: | | | | | | Signature | | | | | | | | | | Signature (if held jointly) | | | | |
PLEASE DETACHALONGPERFORATEDLINEANDMAILINTHEENVELOPEPROVIDED.
PLEASE DETACH ALONG PERFORATED LINE AND MAIL IN THE ENVELOPE PROVIDED.
As a shareholder of eMagin Corporation, you havehave the option of votingvoting your shares electronically through the Internet or on the telephone, eliminating the need to return the proxy card. Your electronic vote authorizes the named proxies to vote yourthetelephone,eliminatingtheneedtoreturntheproxycard.Yourelectronicvoteauthorizesthenamedproxiestovoteyour shares in the same mannerthesamemanner as if you marked,ifyou marked, signed, dated and returned the proxytheproxy card. VotesVotes submitted electronically over theoverthe Internet or by telephone must be received by 11:59 p.m.orbytelephonemustbereceived by7:00p.m.,Eastern Time, on May 21, 2014.
Time,onMay 26,2016.| | | CONTROL NUMBER | | | | |  |  | | | | | | | | | | | |
PROXY VOTING INSTRUCTIONS
PROXYVOTINGINSTRUCTIONS Please have your 11 digit control number ready when voting by Internethaveyour11digitcontrolnumber readywhenvotingbyInternet or Telephone
Telephone  | |  | | | |  | |  INTERNET
Vote Your Proxy on the Internet: Go to www.cesvote.comwww.cstproxyvote.comHave your proxy card available when you access the above website. Follow the prompts to vote your shares. | | 
TELEPHONE
Vote Your Proxy by Phone: Call 1 (888) 693-8683 (866) 894-0537Use any touch-tone telephone to vote your proxy. Have your proxy card available when you call. Follow the voting instructions to vote your shares. | | 
MAIL
Mark, sign, and date your proxy card, then detach it, and return it in the postage-paid envelope provided. | provided |
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