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Sincerely, | ||
J. Stanley Fredrick Chairman of the Board of Directors |
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· | Proposal 1 - To |
· | Proposal 2 - To ratify the appointment of BDO USA, LLP as our independent registered public accounting firm, for the year ending December 31, 2014. |
· | Proposal 3 – To hold an advisory vote on executive compensation (“Say-on-Pay”). |
· | Proposal 4 – To approve an amendment to the 2008 Stock Incentive Plan to increase the number of shares of common stock subject to the plan by 130,000. |
· | To act upon such other matters as may properly come before |
By order of our Board of Directors, | |
J. Stanley Fredrick | |
Chairman of the Board of Directors |
IMPORTANT Whether or not you expect to attend the In accordance with rules promulgated by the SEC, we are providing |
Name | Number of Outstanding Shares | Number of Shares Underlying Options (1) | Total Number of Outstanding Shares and Shares Underlying Options (1) (2) | % of Class Outstanding(1) | |||||
Beneficial Owners of 5% or More | |||||||||
Samuel L. Caster(3)(4) | 5,463,116 | (5) | 2,861 | 5,465,977 | 20.6 | % | |||
Directors and Named Executive Officers | |||||||||
J. Stanley Fredrick(3) | 3,154,066 | (6) | 57,819 | 3,211,885 | 12.1 | % | |||
Marlin Ray Robbins | 590,000 | 71,150 | 661,150 | 2.5 | % | ||||
Alan D. Kennedy | 34,100 | (7) | 77,999 | 112,099 | 0.4 | % | |||
Larry A. Jobe | 45,000 | 64,700 | 109,700 | 0.4 | % | ||||
Gerald E. Gilbert | 25,000 | 67,719 | 92,719 | 0.4 | % | ||||
Robert A. Sinnott, Ph.D | 13,250 | (8) | 70,957 | 84,207 | 0.3 | % | |||
Patricia A. Wier | 20,000 | (9) | 56,388 | 76,388 | 0.3 | % | |||
Stephen D. Fenstermacher | 2,000 | 63,938 | 65,938 | 0.2 | % | ||||
Robert A. Toth | ─ | 51,896 | 51,896 | 0.2 | % | ||||
B. Keith Clark | ─ | 20,978 | 20,978 | 0.1 | % | ||||
All executive officers and directors as a group | 3,893,966 | 638,658 | 4,532,624 | 17.1 | % |
· | Alan D. Kennedy has served as a Class III director since June 2002 and he is the Chairman of the Science Committee. His current term as director expires in 2014. Mr. Kennedy has over 30 years experience with various direct selling companies. From 1998 until his retirement in December 2001, he served as President Worldwide for Tupperware Corporation, a publicly traded company that distributes and sells various products in over 100 countries, primarily through direct selling channels. Since retiring, Mr. Kennedy continues to serve as a consultant to Tupperware Corporation. From 1989 to 1996, he served as President and Chief Executive Officer of Nature’s Sunshine Products, Inc., a publicly traded, network marketing company that manufactures and markets nutritional and personal care products worldwide. From 1986 to 1989, Mr. Kennedy provided various consulting services to several direct selling companies. From 1982 to 1986, he served as Vice President of Sales Development for Avon Products, Inc., a publicly traded, multinational manufacturer and distributor of cosmetics, toiletries, jewelry, chemicals and clothing. He received a B.A. degree, with honors, in Economics from Colgate University, in Hamilton, New York. His professional affiliations include serving as Chairman of the Direct Selling Association from 1995 to 1996 and serving as Chairman of the Direct Selling Education Foundation from 1996 to 1997. In 2004, Mr. Kennedy was inducted into the Direct Selling Association’s highest honor, the “Hall of Fame.” He serves on the Board of Directors of the Direct Selling Education Foundation and serves on the Board of Regents for Mercersburg Academy, a private secondary school in Mercersburg, Pennsylvania. |
· | Robert A. Toth has served as a Class III director since March 2008 and he is the Chairman of the Compensation and Stock Option Plan Committee. His current term as director expires in 2014. Mr. Toth is Co-founder and Chairman of Tatra Spring LLC, a supply chain services company based in Poland. He is a director of the Knowtions Company, a performance support systems software firm based in Ringoes, New Jersey. Since 2006, he has worked in venture capital as a private investor focused on new business startups in the technology sector. Mr. Toth has over 27 years of direct selling experience, most recently as President of Avon International from 2004 to 2005. In that capacity, his operations included over 120 countries with annual revenues in excess of $5.5 billion. Mr. Toth began his Avon career in customer service in 1978, then moved to U.S. sales and operations and was promoted to U.S. Director of Sales in 1989. He transitioned to Avon International in 1991 as Director of New Business Development, where he played a lead role in Avon’s market entry plan for Russia. He was based in Warsaw from 1993 to 1997 as Avon’s President of Central and Eastern Europe, where he established and led Avon Poland. From 1997 to 2004, Mr. Toth was based in London where he held a number of senior management positions including Group Vice President, Eastern Europe, Middle East and Africa (1997-1999), Senior Vice President, Europe, Middle East and Africa (1999-2002) and Executive Vice President for Asia-Pacific, Europe, Middle East and Africa (2002-2003). Mr. Toth graduated from LaSalle University in 1974 with a B.A. in Business Administration and was an officer in the U.S. Marine Corps from 1975 to 1978. |
· | the aggregate amount of such non-audit services provided constitutes not more than 5% of the total fees paid to our independent registered public accounting firm in the calendar year that such non-audit services are provided; |
· | such services were recognized as non-audit services at the time they were provided; and |
· | such services are promptly brought to the attention of our Audit Committee. |
Type of Service | 2013 | 2012 | ||||||
(in thousands) | ||||||||
Audit Fees, including the audit of our consolidated financial statements and annual report on Form 10-K, review of our quarterly financial statements and quarterly reports filed on Form 10-Q, and international statutory audits | $ | 714 | $ | 747 | ||||
Audit-Related Fees, including fees related to the annual audit of employee 401(k) benefit plan | 24 | 16 | ||||||
Tax Fees, including fees for tax services, tax advice, transfer pricing, state, and international tax consultation | 150 | 125 | ||||||
All Other Fees, related to all other services including expatriation issues and miscellaneous consulting and advisory services | — | — | ||||||
Total Fees | $ | 888 | $ | 888 |
§ | the aggregate number of shares of common stock or class of shares which may be purchased pursuant to Awards; |
§ | the number and/or class of shares of common stock covered by outstanding Awards; |
§ | the maximum number of shares of common stock with respect to which option awards may be granted to any single optionholder during any calendar year; and |
§ | the exercise price of any stock option in effect prior to such change. |
Plan Category | Number of securities to be issued upon exercise of outstanding options, warrants and rights | Weighted-average exercise price of outstanding options, warrants and rights | Number of securities remaining available for future issuance under equity compensation plan (excluding securities reflected in the first column ) | |||||||||
Equity compensation plans approved by security holders | 232,660 | $ | 16.54 | 20,599 | ||||||||
Equity compensation plans not approved by security holders | 0 | $ | 0.00 | 0 | ||||||||
Total | 232,660 | $ | 16.54 | 20,599 |
Name | Age | Position |
Robert A. Sinnott, M.N.S., Ph.D. | 49 | CEO and Chief Science Officer |
S. Mark Nicholls | 47 | Chief Financial Officer |
Ronald D. Norman | 55 | Treasurer |
Alfredo Bala | 53 | President International, Executive Vice President, Chief Sales & Marketing Officer |
J. Stanley Fredrick | 75 | Chairman of the Board of Directors |
Gerald E. Gilbert | 80 | Independent Board Member |
Larry A. Jobe | 74 | Independent Board Member |
Alan D. Kennedy | 83 | Independent Board Member |
Marlin Ray Robbins | 68 | Non-employee Board Member |
Robert A. Toth | 61 | Independent Board Member |
· | the experience level, mix of skills and other business qualities a potential nominee may possess; |
· | the general experience and skill levels of current Board members; |
· | the potential nominee’s experience with accounting rules and practices; |
· | the verification of background, work, and education of a potential nominee; and |
· | other factors as the Nominating/Governance and Compliance Committee may deem in the best interests of our shareholders. |
· | a majority of the Board of Directors are “independent” as defined by NASDAQ and SEC rules; |
· | each of the Audit, Compensation and Stock Option Plan, and Nominating/Governance and Compliance Committees are comprised entirely of independent directors; and |
· | at least one member of the Audit Committee has the experience, education and qualifications necessary to qualify as an “audit committee financial expert” as defined by the SEC. |
Class | Term Expiration | Directors |
Class I | 2015 | Gerald E. Gilbert*, Larry A. Jobe* , and Marlin Ray Robbins |
Class II | 2016 | J. Stanley Fredrick(1) |
Class III | 2014 | Alan D. Kennedy* and Robert A. Toth* |
* | Independent Board Member |
(1) | Chairman of the Board of Directors |
· | Audit Committee: 9; |
· | Compensation and Stock Option Plan Committee: 5; |
· | Nominating/Governance and Compliance Committee: 6; and |
· | Science Committee: 4. |
Director’s Name | Audit Committee | Compensation and Stock Option Plan Committee | Nominating/ Governance, and Compliance Committee | Science Committee | |||
Non-Employee Independent Directors: | |||||||
Gerald E. Gilbert | X | X | C | X | |||
Larry A. Jobe | C | X | X | X | |||
Alan D. Kennedy | X | X | X | C | |||
Robert A. Toth | X | C | X | X | |||
Non-Employee Directors: | |||||||
J. Stanley Fredrick(1) | |||||||
Marlin Ray Robbins | X |
X | Member |
C | Committee Chairman |
(1) | Chairman of the Board of Directors |
1. | Audit Committee. Our Audit Committee consists of Messrs. Gilbert, Jobe, Kennedy and Toth and is chaired by Mr. Jobe. The Board has determined that each member of our Audit Committee meets the independence and financial literacy requirements for purposes of serving on such committee under applicable NASDAQ and SEC rules and that Mr. Jobe qualifies as an “audit committee financial expert” as defined by the SEC. Our Audit Committee is primarily responsible for approving all services provided by our independent registered public accounting firm, reviewing our annual audit results, and meeting with our independent registered public accounting firm to periodically review our internal controls, internal control over financial reporting, and financial management practices. Our Audit Committee’s responsibilities are stated more fully in its amended and restated charter, which is posted on our corporate website at www.mannatech.com. Our Audit Committee’s report appears in this proxy statement on page 44. |
2. | Compensation and Stock Option Plan Committee. Our Compensation and Stock Option Plan Committee consists of Messrs. Gilbert, Jobe, Kennedy and Toth and is chaired by Mr. Toth. The Board has determined that each member of our Compensation and Stock Option Plan Committee meets the independence requirements for purposes of serving on such committee under applicable NASDAQ and SEC rules. None of our executive officers serves as a member of any board of directors or as a member of any other compensation committee for any other entity that has or has had one or more of their executive officers serving as a member of the Board or on our Compensation and Stock Option Plan Committee. Our Compensation and Stock Option Plan Committee is primarily responsible for establishing all compensation for our executive officers and directors including salaries, bonuses, stock option grants, and stock option plan administration. Our Compensation and Stock Option Plan Committee’s responsibilities are stated more fully in its revised charter, which is posted on our corporate website at www.mannatech.com. |
3. | Nominating/Governance, and Compliance Committee. Our Nominating/Governance, and Compliance Committee consists of Messrs. Gilbert, Jobe, Kennedy and Toth and is chaired by Mr. Gilbert. The Board has determined that each member of the Nominating/Governance, and Compliance Committee meets the independence requirements for purposes of serving on such committee under applicable NASDAQ and SEC rules. Our Nominating/Governance, and Compliance Committee is primarily responsible for reviewing and recommending nominees to the Board, developing plans regarding the size and composition of the Board, developing management succession planning, and establishing and maintaining policies and procedures to handle and investigate complaints, including whistleblower or other confidential complaints. Our Nominating/Governance, and Compliance Committee is also responsible for directing the investigation of complaints including advising the Board about the outcome of any complaints or any other legal matters. For information on criteria for director nominees, see “Consideration of Director Nominees”, beginning on page 22. Our Nominating/Governance and Compliance Committee’s responsibilities are stated more fully in its charter that is posted on our corporate website at www.mannatech.com. For additional information on nominating nominees to the Board see “Shareholder Procedures for Nominating Board Members or Introducing Proposals,” beginning on page 6 of this proxy statement. |
5. | Science Committee. Our Science Committee was formed in June 2003, consists of Messrs. Gilbert, Kennedy, Robbins, Jobe, and Toth, and is chaired by Mr. Kennedy. Our Science Committee is primarily responsible for overseeing all aspects of our product development and setting the overall direction of our product research and development. |
Board Member | Audit Committee | Compensation and Stock Option Plan Committee | Nominating/ Governance and Compliance Committee | Science Committee | ||||||||||||||||
Chairman fee(1) | $ | 372,910 | $ | 20,000 | $ | 7,500 | $ | 12,500 | $ | 7,500 | ||||||||||
Independent director retainer(1) | $ | 35,000 | $ | — | $ | — | $ | — | $ | — | ||||||||||
In-person meeting fee | $ | 1,000 | $ | 1,000 | $ | 1,000 | $ | 1,000 | $ | 1,000 | ||||||||||
Telephonic meeting fee | $ | 500 | $ | 500 | $ | 500 | $ | 500 | $ | 500 | ||||||||||
Re-elected Board members(2) | $ | — | $ | — | $ | — | $ | — | $ | — |
(1) | The Chairman fee and director retainer are paid monthly during the calendar year. |
(2) | Each non-employee director re-elected to the Board by our shareholders was granted 5,000 stock options. The stock options are priced on the date of grant and expire in ten years. One-third of the stock options vest on the date of grant, another one-third of the stock options vest on the first anniversary date of grant, and the remaining one-third of the stock options vest on the second anniversary of the date of grant. |
Director | Fees Earned or Paid in Cash(1) | Option Awards(2) | All Other Compensation | Total | |||||||||||||
J. Stanley Fredrick | $ | 359,394 | $ | 48,200 | $ | 17,001 | (3) | $ | 424,595 | ||||||||
Gerald E. Gilbert | $ | 73,000 | $ | 17,850 | $ | ─ | $ | 90,850 | |||||||||
Larry A. Jobe | $ | 78,500 | $ | 17,850 | $ | ─ | $ | 96,350 | |||||||||
Alan D. Kennedy | $ | 68,000 | $ | 17,850 | $ | ─ | $ | 85,850 | |||||||||
Marlin Ray Robbins | $ | ─ | $ | 17,850 | $ | 2,443,052 | (4) | $ | 2,460,902 | ||||||||
Robert A. Toth | $ | 67,000 | $ | 17,850 | $ | ─ | $ | 84,850 |
(1) | The amounts reported in this column represent the aggregate dollar amount of annual retainer fees, committee and/or chairmanship fees, and meeting fees, as described in the table above. |
(2) | The amounts reported in this column represent the aggregate grant date fair value computed in accordance with FASB ASC Topic 718 “Stock Compensation” for two categories of option awards. The first was a grant of 5,000 stock options with an exercise price of $5.72 which was awarded to each director. The second was a grant that was awarded to Mr. Fredrick in connection with his re-election to the Board at the 2013 Annual Shareholders’ Meeting. He received a grant of 5,000 stock options with an exercise price of $9.89 pursuant to our policy that each non-employee director re-elected to the Board by our shareholders is granted 5,000 stock options. For the aforementioned grants, one-third of the stock options vest on the date of grant, another one-third of the stock options vest on the first anniversary date of the grant, and the remaining one-third of the stock options vest on the second anniversary of the date of grant. The stock options are priced on the date of grant. See table below titled “Directors’ Stock Options Outstanding” for aggregate options outstanding at year end. |
(3) | Included in other compensation is our payment for Mr. Fredrick’s 2013 medical and dental insurance premiums of $13,516, travel of $2,917 and membership dues for a private club of $568. |
(4) | Mr. Robbins holds positions in our associate global downline network marketing system and we paid him commissions of approximately $2.4 million in connection therewith. |
Director | Grant Date | Aggregate Number of Shares Underlying Outstanding Stock Options | Exercise Price Per Share | Grant Date Fair Value of Option Awards | Calculated Fair Value Price Per Share | Fair Value of Option Awards Recognized in 2013(a) | |||||||||||||||||
J. Stanley Fredrick | June 10, 2010 | 6,976 | $ | 23.70 | $ | 82,326 | $ | 11.80 | $ | — | |||||||||||||
August 16, 2010 | 392 | $ | 27.10 | $ | 5,491 | $ | 14.01 | $ | — | ||||||||||||||
February 21, 2013 | 5,000 | $ | 5.72 | $ | 17,850 | $ | 3.57 | $ | 5,119 | ||||||||||||||
June 5, 2013 | 5,000 | $ | 9.89 | $ | 30,350 | $ | 6.07 | $ | 15,608 | ||||||||||||||
17,368 | $ | 136,017 | $ | 20,727 | |||||||||||||||||||
Gerald E. Gilbert | November 20, 2008 | 1,000 | $ | 25.00 | $ | 10,300 | $ | 10.30 | $ | — | |||||||||||||
June 10, 2009 | 5,000 | $ | 30.00 | $ | 72,000 | $ | 14.40 | $ | — | ||||||||||||||
August 16, 2010 | 2,315 | $ | 24.60 | $ | 32,421 | $ | 14.00 | $ | — | ||||||||||||||
May 30, 2012 | 5,000 | $ | 5.19 | $ | 16,050 | $ | 3.21 | $ | 5,362 | ||||||||||||||
February 21, 2013 | 5,000 | $ | 5.72 | $ | 17,850 | $ | 3.57 | $ | 5,119 | ||||||||||||||
18,315 | $ | 148,621 | $ | 10,481 | |||||||||||||||||||
Larry A. Jobe | November 20, 2008 | 1,000 | $ | 25.00 | $ | 10,300 | $ | 10.30 | $ | — | |||||||||||||
June 10, 2009 | 5,000 | $ | 30.00 | $ | 72,000 | $ | 14.40 | $ | — | ||||||||||||||
August 16, 2010 | 1,410 | $ | 24.60 | $ | 19,740 | $ | 14.00 | $ | — | ||||||||||||||
May 30, 2012 | 5,000 | $ | 5.19 | $ | 16,050 | $ | 3.21 | $ | 5,362 | ||||||||||||||
February 21, 2013 | 5,000 | $ | 5.72 | $ | 17,850 | $ | 3.57 | $ | 5,119 | ||||||||||||||
17,410 | $ | 135,940 | $ | 10,481 | |||||||||||||||||||
Alan D. Kennedy | November 20, 2008 | 1,000 | $ | 25.00 | $ | 10,300 | $ | 10.30 | $ | — | |||||||||||||
August 16, 2010 | 2,441 | $ | 24.60 | $ | 34,184 | $ | 14.40 | $ | — | ||||||||||||||
June 9, 2011 | 13,157 | $ | 11.40 | $ | 84,211 | $ | 6.40 | $ | 12,228 | ||||||||||||||
February 21, 2013 | 5,000 | $ | 5.72 | $ | 17,850 | $ | 3.57 | $ | 5,119 | ||||||||||||||
21,598 | $ | 146,545 | $ | 17,346 | |||||||||||||||||||
Marlin Ray Robbins | June 12, 2006 | 1,115 | $ | 112.10 | $ | 54,373 | $ | 48.77 | $ | — | |||||||||||||
November 20, 2008 | 1,000 | $ | 25.00 | $ | 10,300 | $ | 10.30 | $ | — | ||||||||||||||
June 10, 2009 | 5,000 | $ | 30.00 | $ | 72,000 | $ | 14.40 | $ | — | ||||||||||||||
May 30, 2012 | 5,000 | $ | 5.19 | $ | 25,950 | $ | 3.21 | $ | 5,362 | ||||||||||||||
February 21, 2013 | 5,000 | $ | 5.72 | $ | 17,850 | $ | 3.57 | $ | 5,119 | ||||||||||||||
17,115 | $ | 170,573 | $ | 10,481 | |||||||||||||||||||
Robert A. Toth | August 16, 2010 | 2,410 | $ | 24.60 | $ | 33,751 | $ | 14.00 | $ | 989 | (b) | ||||||||||||
June 9, 2011 | 13,157 | $ | 11.40 | $ | 84,211 | $ | 6.40 | $ | 12,228 | ||||||||||||||
February 21, 2013 | 5,000 | $ | 5.72 | $ | 17,850 | $ | 3.57 | $ | 5,119 | ||||||||||||||
20,567 | $ | 135,812 | $ | 18,335 |
(a) | Represents the calculated stock-based compensation expense recognized in our consolidated financial statements for the fair value of the option awards in accordance with FASB ASC Topic 718 “Stock Compensation”. Assumptions made in the calculation of these amounts are included in Note 11 to our audited financial statements for the fiscal year ended December 31, 2013, included in our Annual Report on Form 10-K filed with the SEC on March 18, 2014. |
(b) | Represents costs recognized in connection with our stock option exchange program conducted in 2010 and consists of 2013 expenses applicable to the surrendered options, the remaining unamortized compensation cost of the surrendered options, if any, prorated based on the number of days outstanding. There was no incremental stock option expense resulting from the exchange because the fair value of the replacement options was approximately equal to the fair value of the surrendered options they replaced. |
Name | Number of Outstanding Shares | Number of Shares Underlying Options (1) | Total Number of Outstanding Shares and Shares Underlying Options (1) (2) | % of Class Outstanding(1) | ||||||||||||
Beneficial Owners of 5% or More | ||||||||||||||||
Michael Challen(3) | 241,258 | ─ | 241,258 | 9.1 | % | |||||||||||
Tyler Rameson(4) | 241,258 | ─ | 241,258 | 9.1 | % | |||||||||||
Directors and Named Executive Officers | ||||||||||||||||
J. Stanley Fredrick(5) | 315,406 | (6) | 15,033 | 330,439 | 12.4 | % | ||||||||||
Marlin Ray Robbins | 59,000 | 15,447 | 74,447 | 2.8 | % | |||||||||||
Robert A. Toth | 35,000 | 18,899 | 53,899 | 2.0 | % | |||||||||||
Larry A. Jobe | 34,999 | 10,743 | 45,742 | 1.7 | % | |||||||||||
Gerald E. Gilbert | 6,000 | 16,647 | 22,647 | 0.9 | % | |||||||||||
Alan D. Kennedy | 3,410 | (7) | 19,930 | 23,340 | 0.9 | % | ||||||||||
Robert A. Sinnott, Ph.D | 4,041 | (8) | 8,918 | 12,959 | 0.5 | % | ||||||||||
Alfredo (Al) Bala | ─ | 1,834 | 1,834 | 0.1 | % | |||||||||||
Roy Truett(9) | ─ | ─ | ─ | ─ | % | |||||||||||
All 11 executive officers and directors as a group | 460,186 | 114,707 | 574,893 | 21.6 | % |
(1) | Shares of our common stock subject to stock options, warrants, or any other convertible security currently exercisable or convertible, or exercisable or convertible within 60 days of April 15, 2014, are deemed outstanding for computing the percentage of the person or entity holding such securities, but are not outstanding for computing the percentage of any other person or entity. |
(2) | The information contained in this table with respect to beneficial ownership reflects “beneficial ownership” as defined in Rule 13d-3 under the Exchange Act. All information with respect to the beneficial ownership of any shareholder has been furnished by such shareholder and, except as otherwise indicated or pursuant to community property laws, each shareholder has sole voting and investment power with respect to shares listed as beneficially owned by such shareholder. |
(3) | The information regarding the beneficial ownership of Michael Challen is based on the Schedule 13G filed with the SEC by Mr. Challen on November 12, 2013, in which Mr. Challen indicated he had sole power to vote and dispose of all such shares. The address for Mr. Challen is 1576 La Coronilla Drive, Santa Barbara, CA 93109. |
(4) | The information regarding the beneficial ownership of Tyler Rameson is based on the Schedule 13G filed with the SEC by Mr. Rameson on November 12, 2013, in which Mr. Rameson indicated he had sole power to vote and dispose of all such shares. The address for Mr. Rameson is 10 East Yanonali Street, Suite 2A, Santa Barbara, CA 93101. |
(5) | Mr. Fredrick beneficially owns more than 5% of our common stock. Mr. Fredrick maintain offices at 600 S. Royal Lane, Suite 200, Coppell, Texas 75019. |
(6) | The number of shares owned by Mr. Fredrick includes 190,406 shares of our common stock directly held by Mr. Fredrick and 125,000 shares of our common stock held through JSF Resources LTD Partnership. JSF Resources LTD is a limited partnership that is owned by FSJ Secure Trust, of which Mr. Fredrick is the sole beneficiary. Mr. Fredrick pledged 40,000 shares he holds individually as collateral for a loan. |
(7) | Includes 3,310 shares of our common stock directly held by Mr. Kennedy and 100 shares of our common stock held through Kennedy Family Trust, for which Mr. Kennedy is trustee and grantor and whose beneficiaries are Mr. Kennedy’s wife and children. |
(8) | Dr. Sinnott holds 1,666 shares directly and 2,375 shares are held indirectly. The indirect holdings are held by Dr. Sinnott’s wife as custodian for his three sons. Dr. Sinnott has disclaimed beneficial ownership of these shares. |
(9) | Mr. Truett resigned as President of International and Chief Operating Officer on January 28, 2014. In connection with Mr. Truett’s departure on January 31, 2014, he forfeited 10,000 unvested incentive stock options. |
· | Robert A. Sinnott, Ph.D. – CEO and Chief Science Officer |
· | Alfredo Bala – President International, Executive Vice President, Chief Sales & Marketing Officer |
· | Roy Truett – Former President of International and Chief Operating Officer |
Name & Principal Position | Year | Salary(1) | Bonus | Option Award (2) | Non-Equity Incentive Plan Compensation(3) | All Other Compensation (4) | Total | ||||||||||||||||||||
Robert A. Sinnott, Ph.D. | 2013 | $ | 350,000 | $ | 20,512 | (5) | $ | 17,850 | $ | ─ | $ | 41,048 | $ | 429,410 | |||||||||||||
CEO & Chief Science Officer | 2012 | $ | 350,000 | $ | ─ | $ | ─ | $ | 5,078 | $ | 15,958 | $ | 371,036 | ||||||||||||||
Alfredo (Al) Bala | 2013 | $ | 300,000 | $ | 15,569 | (6) | $ | 17,850 | $ | ─ | $ | 15,240 | $ | 348,659 | |||||||||||||
President International, Executive Vice President, Chief Sales & Marketing Officer | 2012 | $ | 300,000 | $ | ─ | $ | ─ | $ | 4,531 | $ | 17,061 | $ | 321,592 | ||||||||||||||
Roy Truett(7) | 2013 | $ | 273,308 | $ | 50,534 | (8) | $ | 35,300 | $ | ─ | $ | 47,824 | $ | 406,966 | |||||||||||||
Former, President of International and Chief Operating Officer | 2012 | $ | ─ | $ | ─ | $ | ─ | $ | ─ | $ | ─ | $ | ─ |
(1) | The amounts reported in this column represents the total amount paid to the executive during the year as a result of the executive’s annual base salary and the number of payroll periods in the respective year. |
(2) | The amounts reported in this column represent the aggregate grant date fair value computed in accordance with FASB ASC Topic 718 “Stock Compensation” for option awards granted in 2012, and 2013, respectively. Assumptions made in the calculation of these amounts are included in Note 11 to our audited financial statements for the fiscal year ended December 31, 2013, included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 18, 2014. |
(3) | The amounts reported in this column represent non-equity incentive plan compensation paid in March 2013 under our Management Non-Equity Incentive Bonus Plan with respect to 2008 performance. We did not meet performance targets and no bonuses were earned in 2013 and 2012 under our Management Non-Equity Incentive Bonus Plan. Amounts reported in 2012 represent 5% of the 2008 bonus amounts that were paid in 2013 subject to the executive’s employment with us on the payment date. |
(4) | The amounts reported in this column include, among other items, an automobile allowance or automobile lease payments, matching contributions to our 401(k) plan, automobile insurance coverage, and travel expenses paid on behalf of each Named Executive Officer, and are detailed in the “All Other Compensation” table included below. |
(5) | Amount represents a $500 Christmas Bonus, grossed-up for taxes, paid in December 2013 and a $20,000 bonus awarded at the discretion of the Board of Directors paid in March 2014. |
(6) | Amount represents a $500 Christmas Bonus, grossed-up for taxes, paid in December 2013 and a $15,000 bonus awarded at the discretion of the Board of Directors paid in March 2014. |
(7) | Mr. Truett resigned as President of International and Chief Operating Officer on January 28, 2014. In connection with Mr. Truett’s departure, on January 30, 2014, the Company and Mr. Truett entered into a Separation Agreement and Release. Under the terms of this agreement, Mr. Truett was released from the post-employment non-compete obligations of his employment agreement. Mr. Truett’s last day with the Company was January 31, 2014. |
(8) | Amount represents a $50,000 signing bonus paid in March 2013 and a $500 Christmas Bonus, grossed-up for taxes paid in December 2013. |
Automobile Lease Payments | Insurance Premium for Leased Automobile | Company Matching 401(k) Contribution | Life Insurance | Travel Expenses (1) | Temporary Housing / Relocation Expense | Commuting Expenses | Total All Other Compensation | ||||||||||||||||||||||||||||
Name | Yr. | ($) | ($) | ($) | ($) | ($) | ($) | ($) | ($) | ||||||||||||||||||||||||||
Robert A. Sinnott, Ph.D. | 2013 | 12,000 | ─ | 2,550 | 542 | 25,956 | ─ | ─ | 41,048 | ||||||||||||||||||||||||||
2012 | 12,000 | ─ | 3,416 | 542 | ─ | ─ | ─ | 15,958 | |||||||||||||||||||||||||||
Alfredo (Al) Bala | 2013 | 12,000 | ─ | 2,550 | 690 | ─ | ─ | ─ | 15,240 | ||||||||||||||||||||||||||
2012 | 12,798 | 528 | 3,045 | 690 | ─ | ─ | ─ | 17,061 | |||||||||||||||||||||||||||
Roy Truett | 2013 | 10,000 | ─ | 1,700 | 382 | ─ | 23,973 | 11,769 | 47,824 | ||||||||||||||||||||||||||
2012 | ─ | ─ | ─ | ─ | ─ | ─ | ─ | ─ |
(1) | The amounts reported in this column reflect travel-related costs, including airfare, meals and entertainment, for our Named Executive Officers’ family members to travel with them at our Company-related events. |
Named Executive Officer | Position | Effective Date of Agreement | Expiration Date | 2012 Annual Base Salary | 2013 Annual Base Salary | 2014 Annual Base Salary | |||||||||||||
Robert A. Sinnott, Ph.D. | CEO and Chief Science Officer | October 2007 | (1) | December 2014 | (1) | $ | 350,000 | $ | 350,000 | $ | 390,000 | ||||||||
Alfredo (Al) Bala | President International, Executive Vice President, Chief Sales & Marketing Officer | October 2007 | December 2014 | (2) | $ | 290,000 | $ | 300,000 | $ | 324,000 | |||||||||
Roy Truett(3) | Former President of International and Chief Operating Officer | March 2013 | March 2014 | $ | N/A | $ | 340,000 | $ | 340,000 |
(1) | The employment agreement for Dr. Sinnott was amended in December 2009 and had an initial term of one year with automatic renewals for successive one-year periods unless terminated pursuant to the terms of the contract. |
(2) | The employment agreement for Mr. Bala had an initial term of two years with automatic renewals for successive one-year periods unless terminated pursuant to the terms of the contract. |
(3) | Mr. Truett resigned as President of International and Chief Operating Officer on January 28, 2014. In connection with Mr. Truett’s departure, on January 30, 2014, the Company and Mr. Truett entered into a Separation Agreement and Release. Under the terms of this agreement, Mr. Truett was released from the post-employment non-compete obligations of his employment agreement. His last day with the Company was January 31, 2014. |
Name | Grant Date | Number of Securities Underlying Options (#) | Exercise Price of Option Awards ($/Sh) | Grant Date Fair Value of Option Awards | |||||||||
Robert A. Sinnott, Ph.D. | 2/20/2013 | 5,000 | $ | 5.72 | $ | 17,850 | |||||||
Alfredo (Al) Bala | 2/20/2013 | 5,000 | $ | 5.72 | $ | 17,850 | |||||||
Roy Truett | 3/3/2013 | 10,000 | (1) | $ | 5.69 | $ | 35,300 |
(1) | Mr. Truett resigned as President of International and Chief Operating Officer on January 28, 2014. In connection with Mr. Truett’s departure on January 31, 2014, he forfeited 10,000 unvested incentive stock options. |
Plan Category | Number of securities to be issued upon exercise of outstanding options, warrants, and rights (a) | Weighted-average exercise price of outstanding options, warrants, and rights (b) | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c) | |||||||||
Equity compensation plan approved by shareholders | 232,660 | $ | 16.54 | 20,599 | ||||||||
Equity compensation plans not approved by shareholders | — | — | — | |||||||||
Total | 232,660 | 20,599 |
Income/(Loss) from Operations |
+ Depreciation Expense |
+ Amortization Expense |
+ Stock Option Expense |
+ Net Inventory Reduction/(Increase) |
= Adjusted Operating Income |
1. | Annual Bonus Opportunity |
1st Target | 2nd Target | 3rd Target | 4th Target | |||||||||
Adjusted Operating Income* | $10 million | $11.5 million | $13 million | $14.3 million | ||||||||
Bonus Opportunity ** | 7.5% / 5.0% | 15.0% / 10.0% | 22.5% / 15.0% | 30.0% / 20.0% |
2. | Quarterly Bonus Opportunity |
End of 2nd Quarter | End of 3rd Quarter | End of Year | |||||||
Adjusted Operating Income* | $8.6 million | $14.2 million | $18.7 million | ||||||
Bonus Opportunity | 25% | 25% | 50% |
1. | Annual Bonus Opportunity |
1st Target | 2nd Target | 3rd Target | 4th Target | |||||||||
Income from Operations* | $7 million | $8 million | $9 million | $10 million | ||||||||
Bonus Opportunity ** | 7.5% / 5.0% | 15.0% / 10.0% | 22.5% / 15.0% | 30.0% / 20.0% |
2. | Quarterly Bonus Opportunity |
End of 2nd Quarter | End of 3rd Quarter | End of Year | |||||||
Adjusted Operating Income* | $4.6 million | $8.9 million | $12.8 million | ||||||
Bonus Opportunity | 25% | 25% | 50% |
Named Executive Officer | Position | Maximum Potential Bonus (Annual Bonus opportunity) | Maximum Potential Bonus (Quarterly Bonus opportunity) |
Robert A. Sinnott, Ph.D. | CEO and Chief Science Officer | 30% | 100% |
Roy Truett | Former President of International and Chief Operating Officer, (resigned January 2014) | N/A | N/A |
Alfredo Bala | President International, Executive Vice President, Chief Sales & Marketing Officer | 30% | 100% |
Named Executive Officer | Number of Securities Underlying Unexercised Options Exercisable (#) | Number of Securities Underlying Unexercised Options Unexercisable (#) | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price ($/Sh) | Option Expiration Date | ||||||||||
Robert A. Sinnott, Ph.D. | 600 | ─ | ─ | $ | 63.90 | February 22, 2018 | |||||||||
1,000 | ─ | ─ | $ | 25.00 | November 19, 2018 | ||||||||||
7,499 | ─ | ─ | $ | 31.00 | December 21, 2019 | ||||||||||
1,485 | ─ | ─ | $ | 24.60 | August 15, 2020 | ||||||||||
─ | 5,000 | (1) | ─ | $ | 5.72 | February 20, 2023 | |||||||||
10,584 | 5,000 | ─ | |||||||||||||
Alfredo (Al) Bala | ─ | 167 | (2) | ─ | $ | 11.40 | June 8, 2021 | ||||||||
─ | 5,000 | (1) | ─ | $ | 5.72 | February 20, 2023 | |||||||||
─ | 5,167 | ─ | |||||||||||||
Roy Truett | ─ | 10,000 | ─ | $ | 5.69 | March 3, 2023 | (3) | ||||||||
─ | 10,000 | ─ |
(1) | The options vest in three equal annual installments beginning February 21, 2014. |
(2) | Stock options vest on June 9, 2014. |
(3) | Pursuant to Mr. Truett’s resignation, all stock options were forfeited effective January 31, 2014. |
Named Executive Officer | Number of Shares Acquired on Exercise | Value Realized on Exercise(1) | ||||||
Robert A. Sinnott, Ph.D. | ─ | $ | ─ | |||||
Alfredo (Al) Bala | 3,330 | $ | 14,468 | |||||
Roy Truett | ─ | $ | ─ |
(1) | Value realized is calculated by multiplying the number of shares acquired by the difference between the market price on the date of exercise and the exercise price of the option. |
Termination Event | Cash Severance | Acceleration of Equity Incentive Awards | Total Termination Payments | |||||||||
Termination With Cause | $ | ─ | $ | ─ | $ | ─ | ||||||
Termination Without Cause | $ | 390,000 | $ | ─ | $ | 390,000 | ||||||
Resignation for Good Reason | $ | 390,000 | $ | ─ | $ | 390,000 | ||||||
Resignation without Good Reason | $ | ─ | $ | ─ | $ | ─ | ||||||
Disability | $ | 390,000 | $ | ─ | $ | 390,000 | ||||||
Death | $ | ─ | $ | ─ | $ | ─ | ||||||
Non-Renewal of his Employment Agreement | $ | ─ | $ | ─ | $ | ─ | ||||||
Change in Control | $ | ─ | $ | 56,200 | (1) | $ | ─ |
(1) | Amount reflects 5,000 unvested stock options calculated using the difference between the exercise price of the options and the closing price of our common stock of $16.96 on December 31, 2013. |
Termination Event | Cash Severance | Acceleration of Equity Awards | Total Termination Payments | ||||||||||
Termination With Cause | $ | ─ | $ | ─ | $ | ─ | |||||||
Termination Without Cause | $ | 324,000 | $ | ─ | $ | 324,000 | |||||||
Resignation for Good Reason | $ | 324,000 | $ | ─ | $ | 324,000 | |||||||
Resignation without Good Reason | $ | ─ | $ | ─ | $ | ─ | |||||||
Disability | $ | 324,000 | $ | ─ | $ | 324,000 | |||||||
Death | $ | ─ | $ | ─ | $ | ─ | |||||||
Non-Renewal of his Employment Agreement | $ | ─ | $ | ─ | $ | ─ | |||||||
Change in Control | $ | ─ | $ | 57,129 | (1) | $ | 57,129 |
(1) | Amount reflects 5,167 unvested stock options calculated using the difference between the exercise price of the options and the closing price of our common stock of $16.96 on December 31, 2013. |
Termination Event | Cash Severance | Acceleration of Equity Awards | Total Termination Payments | |||||||||
Termination With Cause | $ | ─ | $ | ─ | $ | ─ | ||||||
Termination Without Cause | $ | 340,000 | $ | ─ | $ | 340,000 | ||||||
Resignation for Good Reason | $ | 340,000 | $ | ─ | $ | 340,000 | ||||||
Resignation without Good Reason | $ | ─ | $ | ─ | $ | ─ | ||||||
Disability | $ | 340,000 | $ | ─ | $ | 340,000 | ||||||
Death | $ | ─ | $ | ─ | $ | ─ | ||||||
Non-Renewal of his Employment Agreement | $ | ─ | $ | ─ | $ | ─ | ||||||
Change in Control | $ | ─ | $ | 112,700 | $ | 112,700 |
2013 | 2012 | |||||||||
Sold Products | $ | 0.2 | million | $ | 0.3 | million | ||||
Contributed Cash Donations | $ | 0.9 | million | $ | 0.1 | million | ||||
Products donated in lieu of Cash | $ | -- | $ | 0.1 | million |
The Audit Committee | |
Larry A. Jobe, Chairman | |
Gerald E. Gilbert | |
Alan D. Kennedy | |
Robert A. Toth |
By order of our Board of Directors, | |
J. Stanley Fredrick | |
Chairman of the Board of Directors |
· | the date; |
· | the full name of the designee; |
· | the number of shares you hold and to be voted by the designee; |
· | the nature and extent of the authority granted to the designee; |
· | the expiration date that terminates the designee’s rights to cast your vote on your behalf; and |
· | your signature. |
1. | Purpose; Eligibility. |
2. | Definitions. |
3. | Administration. |
4. | Shares Subject to the Plan. |
5. | Eligibility. |
6. | Option Provisions. |
7. | Provisions of Awards Other Than Options. |
8. | Additional Conditions Applicable to Nonqualified Deferred Compensation Under Section 409A of the Code. |
9. | Covenants of the Company. |
10. | Use of Proceeds from Stock. |
11. | Miscellaneous. |
12. | Adjustments Upon Changes in Stock. |
13. | Amendment of the Plan and Awards. |
14. | General Provisions. |
15. | Market Stand-Off. |
16. | Effective Date of Plan. |
17. | Termination or Suspension of the Plan. |
18. | Choice of Law. |
19. | Execution. |
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MANNATECH, INCORPORATED THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS ANNUAL MEETING OF SHAREHOLDERS MAY 28, 2014 The shareholder(s) hereby appoint(s) Larry A. Jobe as proxy, with the power to appoint his substitute, and hereby authorize(s) him to represent and to vote, as designated on the reverse side of this ballot, all of the shares of Common Stock of Mannatech, Incorporated that the shareholder(s) is/are entitled to vote at the Annual Meeting of Shareholders to be held at 9:00 a.m., Central Daylight Time, on Wednesday, May 28, 2014, at the Grapevine Convention Center, and any adjournment or postponement thereof. THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED BY THE SHAREHOLDER(S). IF NO SUCH DIRECTIONS ARE MADE, THIS PROXY WILL BE VOTED "FOR" PROPOSALS 1, 2, 3 AND 4. PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED REPLY ENVELOPE (Continued and to be signed on reverse side) |