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UNITED STATES

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No.     )

Filed by the Registrant  x

Filed by a Party other than the Registranto

Check the appropriate box:

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Preliminary Proxy Statement

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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

x

o

Definitive Proxy Statement

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Definitive Additional Materials

o

Soliciting Material under §240.14a-12

NATURE’S SUNSHINE PRODUCTS, INC.

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

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(2)

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Aggregate number of securities to which transaction applies:

(3)

(3)

Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):

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Fee paid previously with preliminary materials.

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oCheck box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

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NATURE’S SUNSHINE PRODUCTS, INC.

2500 West Executive Parkway, Suite 100

Lehi, UT 84043



March 27, 2015

[ __ ], 2016


Dear Fellow Shareholder:


You are cordially invited to attend the 20152016 Nature’s Sunshine Products, Inc. Annual Meeting of Shareholders, which will be held at our principal executive offices, located at 2500 West Executive Parkway, Suite 100, Lehi, Utah 84043, on Wednesday,Thursday, May 6, 2015,5, 2016, at 10:9:00 a.m. Mountain Daylight Time.


The matters to be acted upon at the 2016 Annual Meeting, are described in the accompanying notice of Annual Meeting of Shareholders and Proxy Statement. A copy of our annual report is also enclosed.


Whether or not you plan to attend the Annual Meeting, and regardless of the number of shares you hold, it is important that your shares be represented and voted at the meeting. Therefore, I urge you to vote as promptly as possible. You may vote your shares by visiting the website http://www.proxyvote.com. To limit printing and other expenses for the Company and its shareholders, shareholders will not receive a printed copy of the proxy materials unless they have previously made a permanent election to receive these materials in printed form. Timely voting will ensure your representation at the Annual Meeting. If you decide to attend the Annual Meeting, you will be able to vote in person, even if you have previously submitted your proxy.


Thank you for your continued support of Nature’s Sunshine.

Sunshine Products, Inc.



Sincerely,

/s/ GREGORY L. PROBERT

Gregory L. Probert

Chairman and Chief Executive Officer





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NATURE’S SUNSHINE PRODUCTS, INC.


NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

TO BE HELD MAY 6, 2015

5, 2016

To the Shareholders of Nature’s Sunshine Products, Inc.:


Notice is hereby given that the 20152016 Annual Meeting of Shareholders (the “Annual Meeting”), of Nature’s Sunshine Products, Inc., a Utah corporation (the “Company”), will be held at our principal executive offices located at 2500 West Executive Parkway, Suite 100, Lehi, Utah 84043, on Wednesday,Thursday, May 6, 2015,5, 2016, at 10:9:00 a.m. Mountain Daylight Time, for the following purposes, aswhich are more fully described in the proxy statement accompanying this notice:


1.                                     To elect nine directors ofto the Company’sCompany's Board of Directors (the “Board” or the “Board of Directors”). The Company intends to present for election the following nine nominees, all of whom are current directors of the Company:are: Li Dongjiu, Albert R. Dowden, Kristine F. Hughes, Robert B. Mercer, Willem Mesdag, Gregory L. Probert, Mary Beth Springer, Rebecca L. Steinfort, J. Christopher Teets and Jeffrey D. Watkins;Watkins. All nine candidates are current directors of the Company;


2.                                     To ratify the appointment of Deloitte & Touche LLP, as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2015;2016;


3.                                     To vote on an advisory resolution to approveratify the compensation of the Company’s named executive officers;Company's Third Amended and Restated Bylaws;


4.To vote on an advisory, non-binding resolution to approve the compensation of the Company’s named executive officers; and

4.5.                                     To transact such other business as may properly come before the Annual Meeting or any adjournment or postponement thereof.


The Board of Directors set the close of business on March 7, 2016, as the record date for the Annual Meeting. Only shareholders of record as of the close of business on March 12, 2015,record date are entitled to receive notice of, attend, and to vote at the Annual Meeting and any adjournment or postponement thereof.


You are cordially invited to attend the Annual Meeting in person. Whether or not you plan to attend the Annual Meeting, and regardless of the number of shares you hold, it is important that your shares be represented and voted at the meeting. You may vote your shares by visiting the website http://www.proxyvote.com. To limit printing and other expenses for the Company and its shareholders, shareholders will not receive a printed copy of the proxy materials unless they have previously made a permanent election to receive these materials in printed form. For detailed information regarding voting instructions, please refer to the sections entitled “If I am a shareholder of record of Common Stock, how do I vote?” and “If I am a beneficial owner of shares held in street name, how do I vote?” beginning on page 2 of the accompanying proxy statement. If you attend the Annual Meeting and vote by ballot, your proxy will be revoked automatically and only your vote at the Annual Meeting will be counted.

By Order of the Board of Directors

Lehi, Utah

/s/ RICHARD D. STRULSON

March [ __ ], 2016

Richard D. Strulson

Lehi, Utah

Executive Vice President, General Counsel,

March 27, 2015

Chief Compliance Officer and Secretary


IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE

2015

2016 ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON MAY 6, 2015

5, 2016


The Proxy Statement, Proxy Card and Annual Report to Shareholders are available at

http:

https://www.naturessunshine.com/us/company/investing/sec.aspx.

c1/proxy-materials



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NATURE’S SUNSHINE PRODUCTS, INC.


PROXY STATEMENT

FOR

2015

2016 ANNUAL MEETING OF SHAREHOLDERS


TABLE OF CONTENTS

Page

Page
Questions and Answers about the 20152016 Annual Meeting and this Proxy Statement

1

Proposal One:one: Election of Directors

6

Nominees to Serve as Directors

6

Corporate Governance

8

9

Director Independence

8

9

Board Committees

8

9

Board Structure and Risk Oversight

10

Board Meetings in Fiscal Year 2014

2015

11

Annual Meeting Attendance

11

Communications with Directors

11

12

Code of Ethics

11

12

Director Compensation

11

12

Proposal Two: Ratification of Appointment of Independent Registered Public Accounting Firm

13

16

Fees Paid to Independent Registered Public Accounting Firm

13

16

Pre-Approval Policies and Procedures

14

16

Audit Committee Report*

Report

14

17

Proposal Three: Ratification of Third Amended and Restated Bylaws

18
Proposal Four: Advisory Resolution to Approve Executive Compensation

15

19

Security Ownership of Certain Beneficial Owners and Management

16

20

Changes in Control

18

Section 16(a) Beneficial Ownership Reporting Compliance

18

22

Executive Compensation

19

23

Compensation Discussion and Analysis

19

23

Compensation Committee Report*

Report

28

36

Risk Assessment of Compensation Program

28

36

Executive Compensation

29

Summary Compensation Table
36

Grants of Plan-Based Awards in Fiscal Year 2014

2015

31

38

Outstanding Equity Awards at Fiscal Year End

32

39

Option Exercises

34

42

Pension Benefits

34

Employment Agreements
42

Employment Agreements and

Potential Payments upon aUpon Termination or Change in Control

34

43

Potential Payments upon Termination

36

Potential Payment upon a Change in Control (No Termination of Employment)

36

Equity Compensation Plans

36

46

Certain Relationships and Related Transactions

37

46

Householding of Proxy Materials

37

46
Other Matters
48





*These items are not considered proxy solicitation materials and are not deemed filed with the Securities and Exchange Commission.

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PROXY STATEMENT

FOR

2015

2016 ANNUAL MEETING OF SHAREHOLDERS



The enclosed proxy is solicited on behalf of the Board of Directors of Nature’s Sunshine Products, Inc., a Utah corporation, for use at the 20152016 Annual Meeting of Shareholders (the “Annual Meeting”), to be held on Wednesday,Thursday, May 6, 2015,5, 2016, and at any adjournment or postponement thereof. The Annual Meeting will be held at 10:9:00 a.m. Mountain Daylight Time at our principal executive offices located at 2500 West Executive Parkway, Suite 100, Lehi, Utah 84043. The proxy solicitation materials are being sent on or about March 27, 2015,[ __ ], 2016, to our shareholders entitled to vote at the Annual Meeting. In this proxy statement, “Nature’s Sunshine,” the “Company,” “we,” “us” and “our” refer to Nature’s Sunshine Products, Inc.


Pursuant to rules of the United States Securities and Exchange Commission (the “SEC”), we are providing our shareholders with access to our Notice of Annual Meeting of Shareholders, Proxy Statement and proxy card (referred to as the “proxy materials”), and Annual Report for the year ended December 31, 20142015 (referred to as the “Annual Report”), over the internet. Because you received by mail a Notice Regarding the Availability of Proxy Materials, including a notice of Annual Meeting of Shareholders (referred to as the “Notice”), you will not receive a printed copy of the proxy materials unless you have previously made a permanentan election to receive these materials in printed form. Instead, all shareholders will have the ability to access the proxy materials and Annual Report by visiting the website at http://www.proxyvote.com. Instructions on how to access the proxy materials over the internet or to request a printed copy may be found on the Notice. In addition, all shareholders may request to receive proxy materials in printed form by mail or electronically by e-mail on an ongoing basis.


QUESTIONS AND ANSWERS ABOUT THE 20152016 ANNUAL MEETING

AND THIS PROXY STATEMENT


What is the purpose of the Annual Meeting?


At the Annual Meeting, shareholders will vote on the following three proposals, which are summarized in the preceding notice and described in more detail beginning on page 6 of this proxy statement:

·


To elect nine directors of the Company’s Board of Directors (the “Board”) (Proposal One);

·


To ratify the appointment of Deloitte & Touche LLP, as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 20152016 (Proposal Two);

·


To ratify the Company's Third Amended and Restated Bylaws (Proposal Three);

To vote on an advisory, non-binding resolution to approve the compensation of the Company’s named executive officers (Proposal Three)Four); and

·


To transact such other business as may properly come before the Annual Meeting or any adjournment or postponement thereof.


What are the Board’s voting recommendations?


Our Board of Directors recommends that you vote your shares:

·


FOR each of the nine director nominees to the Board (Proposal One);

·


FOR the proposal to appointappointment of Deloitte & Touche LLP, as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 20152016 (Proposal Two); and

·


FOR the ratification of the Company's Third Amended and Restated Bylaws (Proposal Three); and

FOR the advisory (non-binding) resolution to approve the compensation of the Company’s named executive officers (Proposal Three)Four).



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Where are the Company’s principal executive offices located, and what is the Company’s main telephone number?


The Company’s principal executive offices are currently located at 2500 West Executive Parkway, Suite 100, Lehi, UT 84043. The Company’s main telephone number is (801) 341-7900.


Who is entitled to vote at the Annual Meeting?


The record date for the Annual Meeting is March 12, 2015.7, 2016 (the "Record Date"). Only shareholders of record at the close of business on that datethe Record Date are entitled to vote at the Annual Meeting. As of March 12, 2015, 18,664,371the Record Date, 18,738,387 shares of our Common Stock, no par value per share, were outstanding and entitled to vote.


A list of shareholders entitled to vote at the Annual Meeting will be available for inspection at our principal executive offices.


How many votes do I have?

Each holder


All shareholders of Common Stock onrecord as of the record date isRecord Date are entitled to one vote per share held. As a result, a total of 18,664,371 votes may be castCommon Stock held on the Record Date for each matter presented for a vote at the Annual Meeting.

meeting.


What is the difference between a shareholder of record and a beneficial owner of shares held in street name?


Shareholder of Record.  If your shares are registered directly in your name with the Company’s transfer agent, American Stock Transfer & Trust Company, you are considered the shareholder of record with respect to those shares.


Beneficial Owner of Shares Held in Street Name.  If your shares are held in an account at a brokerage firm, bank, broker-dealer or other similar organization, then you are the beneficial owner of shares held in “street name.” The organization holding your account is considered the shareholder of record for purposes of voting at the Annual Meeting. As a beneficial owner, you have the right to direct that organization on how to vote the shares held in your account.


If I am a shareholder of record of Common Stock, how do I vote?


If you are a shareholder of record, you may vote using the internet, by telephone, or (if you received printed proxy materials) by mailing a completed proxy card. To vote by mailing a proxy card, please sign and return the enclosed proxy card in the enclosed prepaid envelope and your shares will be voted at the Annual Meeting in the manner you directed. The instructions for voting using the internet or telephone are set forth in the Notice. You may also vote your shares in person at the Annual Meeting. If you are a shareholder of record, you may request a ballot at the Annual Meeting.


If I am a beneficial owner of shares held in street name, how do I vote?


If you are the beneficial owner of shares held in street name, you will receive instructions from the brokerage firm, bank, broker-dealer or other similar organization (the “record holder”), that must be followed for the record holder to vote your shares per your instructions. Please complete and return the voting instruction card in the prepaid postage envelope provided. Please also check with your record holder to see if you are eligible to vote your shares over the internet or by telephone.


If your shares are held in street name and you wish to vote in person at the Annual Meeting, you must obtain a proxy issued in your name from the record holder and bring it with you to the meeting. We recommend that you vote your shares in advance as described above so that your vote will be counted if you later decide not to attend the Annual Meeting.


What is a quorum?


A quorum must be present at the Annual Meeting for any business to be conducted. The presence at the Annual Meeting, either in person or by proxy, of holders of a majority of the shares of Common Stock outstanding on the record date will constitute a quorum. There were 18,738,387 shares of our Common Stock outstanding on the Record Date. Accordingly, shares representing 9,332,1869,369,194 votes must be present, in person or by proxy, at the Annual Meeting to constitute a quorum. Abstentions and “broker non-votes” will be counted for the purpose of determining whether a quorum is present for the transaction of business.


If a quorum is not present, the Annual Meeting will be adjourned until a quorum is obtained.



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What is a broker non-vote?


If you are a beneficial owner of shares held in street name and do not provide the record holder with specific voting instructions, the record holder may generally vote on specified routine matters but cannot vote on non-routine matters. If the record holder does not receive instructions from you on how to vote your shares on a non-routine matter, the record holder will inform the inspector of election that it does not have the authority to vote on this matter with respect to your shares. This is generally referred to as a “broker non-vote.” In the Annual Meeting, Proposal One (election of Directors), Proposal Three (ratification of Bylaws) and Proposal ThreeFour (advisory vote on executive compensation) isare considered a non-routine mattermatters on which brokers are not empowered to vote. Accordingly, there may be broker non-votes on these proposals.


What vote is required for each item?


Approval of Proposal One: directors are elected by a plurality of the votes cast by the shares entitled to vote at the Annual Meeting. Accordingly, the nine nominees receiving the highest number of votes cast will be elected as directors. Abstentions will have no effect on the outcome of the election of candidates for director. Broker non-votes will have no effect on Proposal One. Should any nominee become unavailable to serve before the Annual Meeting, the proxies will be voted by the proxy holders for such other person as may be designated by our Board of Directors or for such lesser number of nominees as may be prescribed by the Board of Directors. Votes cast for the election of any nominee who has become unavailable will be disregarded.


Approval of Proposal Two, ratification of independent registered public accounting firm, requires the votes cast in favor of the proposal to exceed the votes cast against such proposal. Abstention will have no effect on the outcome of Proposal Two. The ratification of an independent registered public accounting firm is a matter on which a broker is generally empowered to vote. Accordingly, no broker non-votes are expected to exist in connection with Proposal Two.


Approval of Proposal Three, ratification of the Company's Third Amended and Restated Bylaws (the "Third Restated Bylaws"), requires the votes cast in favor of such proposal to exceed the votes cast against such proposal. If Proposal Three is approved, the Third Restated Bylaws will continue in effect. However, if Proposal Three is not approved, the Company's Third Restated Bylaws will be revoked.

Approval of Proposal Four, an advisory resolution on the compensation of the named executive officers, requires the votes cast in favor of the proposal to exceed the votes cast against such proposal. However,Although Proposal ThreeFour is only advisory and the outcome of the votes is not binding on the Company and the Board of Directors. Accordingly, abstentionDirectors, the Company and the Board of Directors will consider the outcome when setting compensation for the named executive officers. Abstention and broker non-votes will have no effect on the outcome of Proposal Three.

Four.


What happens if I do not give specific voting instructions?


If you are a shareholder of record and you submit your proxy, but do not specify in your proxy instructions how the shares represented thereby are to be voted, your shares will be voted in the manner recommended by the Board on all matters presented in this proxy statement and as the proxy holders may determine in their discretion with respect to any other matters properly presented for a vote at the Annual Meeting.


If you are a beneficial owner of shares held in street name and you do not specify how the shares represented thereby are to be voted, your broker may generally exercise its discretionary authority to vote your shares on routine matters (Proposal Two), but your broker will not be permitted to vote your shares with respect to non-routine matters (Proposals One, Three and Three)Four). See also above for an explanation of “broker non-votes.”


Although we do not know of any business to be considered at the Annual Meeting other than the proposals described in this proxy statement, if any other business is properly presented at the Annual Meeting, your signed proxy will give authority to the Board to vote on such matters at their discretion.


What if I receive more than one set of proxy materials, proxy card or voting instruction form?


If you receive more than one set of proxy materials, proxy card or voting instruction form because your shares are held in multiple accounts or registered in different names or addresses, please vote your shares held in each account to ensure that all of your shares will be voted.



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Who will count the votes and how will my vote(s) be counted?


All votes will be tabulated by the inspector of election appointed for the Annual Meeting, who will separately tabulate affirmative and negative votes, abstentions and broker non-votes. If your proxy is properly submitted, the shares represented thereby will be voted at the Annual Meeting in accordance with your instructions.

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Can I change my vote after I have voted?


If you are a shareholder of record, you may revoke or change your vote at any time before the Annual Meeting by filing a notice of revocation or another proxy card with a later date with the Corporate Secretary at Nature’s Sunshine Products, Inc., 2500 West Executive Parkway, Suite 100, Lehi, Utah 84043, or by submitting a new vote via internet or telephone. All voting revocations or changes must be received by the Corporate Secretary prior to the Annual Meeting to be valid. If you are a shareholder of record and attend the Annual Meeting and vote by ballot, any proxy that you submitted previously to vote the same shares will be revoked automatically and only your vote at the Annual Meeting will be counted.


If you are a beneficial owner of shares held in street name, you should contact your record holder to obtain instructions if you wish to revoke or change your vote before the Annual Meeting. Please note, however, that if your shares are held in street name, your vote in person at the Annual Meeting will not be effective unless you have obtained and present a legal proxy issued in your name from your record holder.


Where can I find the voting results of the Annual Meeting?


The preliminary voting results will be announced at the Annual Meeting. The final voting results will be tallied by the inspector of election and publisheddisclosed by the Company in the Company’sa Current Report on Form 8-K following the Annual Meeting, which the Company is required to file with the SEC within four days of the event.

Meeting.


How and when may I submit a shareholder proposal for the 20162017 Annual Meeting of Shareholders?


In the event that a shareholder wishes to submit a proposal to be considered for presentation at the 20162017 Annual Meeting of Shareholders and included in our proxy statement and form of proxy card used in connection with that meeting, the proposal must be forwarded in writing to our Corporate Secretary so that it is received no later than November 30, 2015.[ __ ], 2016. If the 20162017 Annual Meeting of Shareholders is held on a date more than thirty calendar days from May 6, 2016,5, 2017, a shareholder proposal must be received a reasonable time before the Company begins to print and mail its proxy solicitation materials. Any such proposal must comply with the requirements of Rule 14a-8 promulgated under the Securities Exchange Act of 1934, as amended, referred to in this proxy statement as the Exchange Act. In addition, the proxy solicited by the Board for the 2016 Annual Meeting will confer discretionary authority to vote on any shareholder proposal presented at that meeting, if we do not receive notice of such proposal prior to March 6, 2016.


If a shareholder wishes to present a proposal at our 20162017 Annual Meeting of shareholders and the proposal is not intended to be included in our proxy statement relating to the 20162017 Annual Meeting, the shareholder must give advance notice to us prior to the deadline (the “Bylaw Deadline”), for the Annual Meeting determined in accordance with our amended and restated bylaws (“Bylaws”).Third Restated Bylaws. Under our Bylaws, in order to be deemed properly presented, the notice of a proposal must be delivered to our Corporate Secretary no later than March 6, 2016,5, 2017, and no earlier than February 5, 2016,6, 2017, which dates are the sixtieth (60th) day and the ninetieth (90th) day, respectively, prior to the anniversary of the date of this year’s Annual Meeting.


However, if we determine to change the date of the 20162017 Annual Meeting so that it occurs more than 30 days prior to, or more than 30 days after, May 6, 2016,5, 2017, shareholder proposals intended for presentation at the 20162017 Annual Meeting, but not intended to be included in our proxy statement relating to the 20162017 Annual Meeting, must be received by our Corporate Secretary no earlier than the ninetieth (90th) day prior to such Annual Meeting and no later than the (i) sixtieth (60th) day prior to such Annual Meeting or (ii) the tenth (10th) day following the day on which public disclosure of the date of the Annual Meeting is made by the Company, whichever occurs later (the “Alternate Date”). If a shareholder gives notice of such proposal after the Bylaw Deadline (or the Alternate Date, if applicable), the shareholder will not be permitted to present the proposal to the shareholders for a vote at the 20162017 Annual Meeting. All shareholder proposals must comply with the requirements of our Bylaws.


To forward any shareholder proposals or notices of proposals or to receive a copy of our Bylaws, you can write to the Corporate Secretary at Nature’s Sunshine Products, Inc., 2500 West Executive Parkway, Suite 100, Lehi, Utah 84043.



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Who will bear the cost of soliciting proxies?


The Company will bear the entire cost of the solicitation of proxies for the Annual Meeting, including the preparation, assembly, printing, and mailing of this proxy statement, the proxy card and any additional solicitation materials furnished to shareholders. Copies of solicitation materials will be furnished to brokerage firms, banks, broker-dealers or other similar organizations holding shares in their names that are beneficially owned by others so that they may forward the solicitation materials to the beneficial owners. We may reimburse such persons for their reasonable expenses in forwarding solicitation materials to beneficial owners. The original solicitation of proxies may be supplemented by solicitation by personal contact, telephone, facsimile, email or any other means by our directors, officers or employees, and we will reimburse any reasonable expenses incurred for that purpose. No additional compensation will be paid to those individuals for any such services.



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MATTERS TO BE CONSIDERED AT THE ANNUAL MEETING



PROPOSAL ONE:


ELECTION OF DIRECTORS


General


Directors are elected at Annual Meetingsthe Company's annual meetings of shareholders. Our Articles of Incorporation provide for the election of Directors for one-year terms expiring at the next annual meeting of shareholders. A Director appointed by the Board of Directors to fill a vacancy will serve until the next annual meeting.

On August 29, 2014, we announced that Li Dongjiu was appointed by the Board of Directors as a Director of the Company to fill a vacancy, effective August 26, 2014. On February 2, 2015, we announced that Rebecca L. Steinfort was appointed by the Board of Directors as a Director of the Company to fill a vacancy, effective January 27, 2015.


Director Qualifications


The Board believes that the Board, as a whole, should possess a combination of skills, professional experience and diversity of backgrounds necessary to oversee the Company’s business. In addition, the Board believes that there are certain attributes that every director should possess. Accordingly, the Board and the Governance Committee consider the qualifications of Directors and director candidates individually and in the broader context of the Board’s overall composition and the Company’s current and future needs.

To further develop the necessary attributes and skillset of the current Board, the Board has implemented a new board effectiveness and continuing education program. The Board gathered for an educational seminar with an independent governance consultant in early 2014 to initiate the process. The Board undertook self and peer evaluations to ensure appropriate performance and address any identified concerns.  Also, as part of the program, the Board has joined the National Association of Corporate Directors, or NACD. The NACD provides various resources to our Board members such as the following:

·Proprietary research, briefings, and governance news about current and emerging issues;

·Best-in-class continuing education and board training;

·Prestigious director credentials and strategic board composition analysis; and

·Networking with more than 14,000 directors and the nation’s most authoritative governance experts.


Nominees to Serve as Directors


The current members of the Board of Directors, who are nominees for election to the Board, are as follows:

Name

 

Age

 

Position

 

Director
Since

Li Dongjiu

 

50

 

Director

 

2014

Albert R. Dowden

 

73

 

Director

 

2009

Kristine F. Hughes

 

76

 

Director, Vice Chairperson

 

1980

Robert B. Mercer

 

63

 

Director

 

2010

Willem Mesdag

 

61

 

Director, Lead Independent Director

 

2009

Gregory L. Probert

 

58

 

Director, Chairman and Chief Executive Officer

 

2011

Mary Beth Springer

 

50

 

Director

 

2013

Rebecca L. Steinfort

 

45

 

Director

 

2015

Jeffrey D. Watkins

 

54

 

Director

 

2009

Name Age Position 
Director
Since
Li Dongjiu 51  Director 2014
Albert R. Dowden 74  Director 2009
Kristine F. Hughes 77  Director, Vice Chairperson 1980
Robert B. Mercer 64  Director 2010
Gregory L. Probert 59  Director, Chairman and Chief Executive Officer 2011
Mary Beth Springer 51  Director, Lead Independent Director 2013
Rebecca L. Steinfort 46  Director 2015
J. Christopher Teets* 43  Director 2015
Jeffrey D. Watkins 54  Director 2009
* Mr. Teets was appointed by the Board of Directors as a Director of the Company to fill a vacancy effective December 22, 2015.
No family relationship exists among any of our director nominees or executive officers. To the best of our knowledge, there are no pending material legal proceedings in which any of our directors or nominees for director, or any of their associates, is a party adverse to us or any of our affiliates, or has a material interest adverse to us or any of our affiliates. Except as described below, to the best of our knowledge, there have been no events under any bankruptcy act, no criminal proceedings and no judgments, sanctions, or injunctions that are material to the evaluation of the ability or integrity of any of our directors or nominees for director during the past 10 years.

The principal occupations and business experience, for at least the past five years, of each nominee for election to the Board as Directors are as follows:


Li Dongjiu.Dongjiu. Mr. Li has served as the Senior Vice President and Chairman of the Pharmaceutical Commerce and Consumption Management Committee of Shanghai Fosun Pharmaceutical (Group) Co., Ltd. (“Fosun Pharma”) since 2009. Prior From 1987 to Fosun Pharma, he was a Deputy General Manager2009, Mr. Li held various senior level positions at North China Pharmaceutical Co. Ltd. from 1987 to 2009. He currently servesMr. Li has served as a directorDirector of Sinopharm Group,Holding Limited, Commissioner for the UN Commission for Life-saving commodities for Women and is theChildren, and Vice President of the China Nonprescription Medicines Association (CNMA), and Vice President of the China Association of Pharmaceutical Commerce (CAPC).  Mr. Dongjiu received his M.A.Li has a Ph.D and a Masters degree from Wuhan Transportation Technology University, an M.B.A. from China Europe International Business School (CEIBS), a Masters of International Relations in Economy and TradeArts degree from The Flinders University of South Australia in 2005; his M.S. of Management Science& Nankai University, and a B.Sc. from Dalian Engineering fromand Technology


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Wuhan University of Technology in 1999; and his B.S of Chemical Engineering from the Dalian University of Technology in 1987.University. The Governance Committee believes Mr. Li’sLi's extensive pharmaceutical and international experience enhances the Board’s knowledge and skill in these key areas. Mr. Li is being nominated by the Company pursuant to an agreement between the Company and Shanghai Fosun Pharma related to the Company and Fosun Pharma’stheir Chinese joint venture.


Albert R. Dowden. Mr. Dowden serves as a Director of the Invesco mutual funds and previously served as a Director of various Reich & Tang mutual funds, Homeowners of America Holding Corporation and Homeowners of America Insurance, The Hertz Corporation, Volvo Group North America, Inc., Magellan Insurance Company, Genmar, National Media Corp. and CompuDyne Corp. Prior to these director positions, Mr. Dowden was a founder and Managing Director of The Boss Group, a Houston based private investment and management firm, until 2012. Mr. Dowden held various positions at Volvo Group North America, Inc. and AB Volvo from 1974 to 1998, including President and Chief Executive Officer of Volvo Group North America, Inc. from 1991 to 1998,, Senior Vice President of AB Volvo, from 1991 to 1998, and General Counsel of AB Volvo’s North American operations from 1974 to 1979.operations. Prior to joining Volvo in 1974, he practiced law with the New York-basedYork based international law firm of Rogers & Wells (now Clifford Chance). Mr. Dowden currently serves as a director of the Invesco Mutual Funds and various Reich & Tang mutual funds. Mr. Dowden is a founder and has served as managing director of The Boss Group, a Houston based private investment and management firm, since 2004. Mr. Dowden has previously served as a director of The Hertz Corporation, Volvo Group North America, Magellan Insurance Co., Genmar, National Media Corp. and CompuDyne Corp. Mr. Dowden received his J.D. from New York University School of Law in 1966 and his B.A. from Middlebury College in 1963. The Governance Committee nominated Mr. Dowden’sDowden to the Board because of its believe that Mr. Dowden's extensive operational, legal and corporate governance experience involving consumer-oriented public companies enhanceswould enhance the Board’s knowledge and skill in these key areas.


Kristine F. Hughes. Ms. Hughes has served as the Vice Chairperson of our Board of Directors since January 2013. Previously, she2013, and previously served as the Chairperson of our Board of Directors from December 1984 to December 2012. She was a co-founder in 1972 of Hughes Development Corporation, a predecessor of our Company, and has served as an officer or director of our Company and its predecessors since 1980. Ms. Hughes is the spouse of Eugene L. Hughes, one of our founders and a director emeritus. The Governance Committee nominated Ms. Hughes’Hughes to the Board because of its belief that her extensive experience as a co-founder, senior officer and member of the Board of Directors provides her with industry-specific management and governance knowledge and skills that strengthen the Board’s collective qualifications, skills and experience.


Robert B. Mercer.Mercer. Mr. Mercer served as Vice President Dealer Operations for Mazda North America from 2007 to 2009, and as Vice President, General Counsel and Secretary for Mazda North America from 2002 until 2007 a position he also held withand as Senior Vice President, Government and Industry Relations, and General Counsel and Secretary for Volvo North America for approximately 20 years prior. While at Mazda, Mr. Mercer was a member of its Executive and Audit Committees, and was also responsible for Internal Audit. He has been elected to several corporate and charitable boards and currently serves as a member of the Board of Visitors of Duke MedicineHealth and theas President and a Board of Directors member of the UtahUtah-Idaho Chapter of Juvenile Diabetes Research Foundation, and he previously served as President and a Board of Director member of the Orange County, California Chapter of the Juvenile Diabetes Research Foundation. Mr. Mercer received his J.D. from University of Maryland School of Law in 1976 and his B.A. from Duke University in 1973. The Governance Committee nominated Mr. Mercer to the Board because of its belief that he brings significant operational, legal and corporate governance experience to the Board, including experience with public, consumer-oriented companies, which supplements the Board’s skills in these key areas.

Willem Mesdag.  Mr. Mesdag is the Managing Partner of Red Mountain Capital Partners LLC, an investment management firm. Prior to founding Red Mountain in 2005, Mr. Mesdag was a Partner and Managing Director of Goldman, Sachs & Co., which he joined in 1981. Prior to Goldman Sachs, he was a securities lawyer at Ballard, Spahr, Andrews & Ingersoll, which he joined in 1978. Mr. Mesdag currently serves as a director of Destination XL Group, Inc. and Encore Capital Group, Inc. and previously served as a director of 3i Group plc, Cost Plus, Inc. and Skandia Group AB.  Mr. Mesdag received his J.D. from Cornell Law School in 1978 and his B.A. from Northwestern University in 1974. Having had an extensive career in international investment banking and finance and having served on the boards of a number of public and private U.S. and European companies, Mr. Mesdag brings to the Board significant knowledge and experience related to business and financial issues and corporate governance.


Gregory L. Probert.Mr. Probert has served as the Company’s Chief Executive Officer Since October 2013, and as Chairman of the Board of Directors since October 1,January 2013. On April 1, 2013, he was appointedPrior to serve as our Interim Chief Executive Officer, following his appointment as the Chairman of the Board, in January 2013.  HeMr. Probert served as the Executive Vice Chairman of the Board of Directors from June 2011 tountil December 2012 and as an independent consultant to the Company from SeptemberOctober 2010 to June 2011. Previously, heFrom 2008 to 2010, Mr. Probert was Chairman of the Board and Chief Executive Officer of Penta Water Company, from 2008 to 2010.  Penta Water Companywhich filed for bankruptcy protection in 2009. Prior to that, heMr. Probert was President and Chief Operating Officer of Herbalife International of America from 2003 to 2008, Chief Executive Officer of DMX Music from 2001 to 2003, and held various senior positions, including Executive Vice President of Worldwide Home Entertainment, at The Walt Disney Company from 1988 to 2000. Mr. Probert received his B.A. from University of Southern California in 1979. The Governance Committee nominated Mr. Probert to the Board because of its belief that he brings to our Board significant direct selling experience, as well as extensive leadership and operational management skills in global consumer-oriented businesses, which strengthens the Board’s aptitude in these key areas.


Mary Beth Springer.  Ms. Springer held various positions at The Clorox Company from 1990 to 2011, including Executive Vice President and General Manager from 2009 to 2011; Group Vice President, Chief Strategy and Growth Officer from 2007 to 2009; Group Vice President and General Manager from 2005 to 2007; Vice President and General Manager from 2002 to 2004; and Vice President of Marketing from 2000 to 2002. Ms. Springer currently serves as a director of Central Garden & Pet Company and is a member of the Board of Trustees of Bryn Mawr College. Ms. Springer received her M.B.A. from Harvard Business School in 1990 and her A.B. from Bryn Mawr College in

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1986. DueThe Governance Committee nominated Ms. Springer to the Board due to her expertise and experience in the consumer products market, Ms. Springerwhich the Governance Committee believes will further stimulate the Board’s collective operational and growth policies and initiatives.



7


Rebecca L. Steinfort. Ms. Steinfort is the Chief Executive Officer of Hero Management LLC, a leading provider of healthcare practice management services for dental, orthodontic and vision care practices that serve the pediatric Medicaid population. Prior to joining Hero Management LLC in 2015, Ms. Steinfort held various positions at DaVita Healthcare Partners beginning in 2009, including Co-Founder and Chief Operating Officer of Paladina Health, aDaVita’s primary-care subsidiary of Davita Healthcare Partners, Inc. Prior to Paladina Health, she held executive positions at Davita Healthcare Partners, Inc., including Chief Marketing Officer from 2009 to 20012 and Chief Strategy and Marketing Officer from 2009 to 2012. Prior to DaVita,of DaVita's dialysis business unit. Ms. Steinfort held various leadership positions at Quiznos frombetween 2007 toand 2009, including Executive Vice President and Chief Marketing Officer. Prior to Quiznos, Ms. Steinfort was a Senior Vice President withheld various senior executive positions at Level 3 Communications, LLC where she was responsible for Integration and Development Services from 2005 to 2006 and Corporate Strategy from 2001 to 2005.2006. Ms. Steinfort received her M.B.A. from Harvard Business School and her B.A. from Princeton University. The Governance Committee nominated Ms. Steinfort’sSteinfort to the Board because of its belief that her extensive healthcare, marketing and strategic experience enhances the Board’s knowledge and skill in these key areas.


J. Christopher Teets. Mr. Teets has served as a Partner of Red Mountain Capital Partners LLC, an investment management firm, since February 2005. Before joining Red Mountain Capital, Mr. Teets was an investment banker at Goldman, Sachs & Co. Prior to joining Goldman Sachs in 2000, Mr. Teets worked in the investment banking division of Citigroup. Mr. Teets currently serves on the boards of directors of Marlin Business Services Corp. and Air Transport Services Group, Inc. He previously served on the boards of directors of Affirmative Insurance Holdings, Inc. and Encore Capital Group, Inc. Mr. Teets holds a bachelor’s degree from Occidental College and an M.Sc. degree from the London School of Economics. The Governance Committee nominated Mr. Teets to the Board because of his extensive investment banking and board experience, which the Governance Committee believes strengthens the Board's collective qualifications, skills and experience.

Jeffrey D. Watkins.Mr. Watkins is currently President of Prescott Group Capital Management, LLC, a registered investment advisor, and serves as the co-manager of Prescott Mid Cap, L.P. Prior to joining Prescott in July 2001, Mr. Watkins served for 18 years as a portfolio manager for Capital Advisors, Inc., a registered investment advisor. Mr. Watkins previously served as a Director of Annuity and Life Re, Ltd., from 2003 until 2009, and as a Director of Carreker Corporation from 2006 until 2007. Mr. Watkins received his B.S.B.A. from the University of Tulsa in 1983. The Governance Committee nominated Mr. Watkins previously served as a director of Annuity and Life Re, Ltd. and Carreker Corporation. As a result of these and other professional experiences, Mr. Watkinsto the Board because he possesses particular knowledge and experience in finance and capital structure, which strengthens the Board’s collective qualifications, skills and experience.


Recommendation of the Board of Directors

The Board of Directors unanimously recommends a vote FOR the election of each of the foregoing nominees to the Board of Directors.

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CORPORATE GOVERNANCE

Director Independence


The Board of Directors has determined that all of its current directors and nominees for election at the Annual Meeting, except Mr. Probert and Ms. Hughes, are independent directors under the current standards for “independence” established by NASDAQ. In making this determination, our Board considered Li Dongjiu’s affiliation with Fosun Pharma, one of our shareholders, Mr. Mesdag’sTeets’ affiliation with Red Mountain Capital Partners LLC, an affiliate of one of our shareholders, and Mr. Watkins’ affiliation with Prescott Group Capital Management, LLC, one of our shareholders.


Board Committees


The Board of Directors has four standing committees: Audit Committee, Compensation Committee, Compliance Committee and Governance Committee. Each standing committee operates under a written charter adopted by the Board. You can access the current committee charters on our website at www.natr.com or by writing to our Corporate Secretary at our principal executive offices at 2500 West Executive Parkway, Lehi, Utah 84043.

With the exception of Ms. Hughes, who serves on the Governance Committee, the


The Board has determined that the committee chairs and members are independent under the current standards for “independence” established by NASDAQ. The current members of the committees are identified in the table below.


Director

Audit Committee

Compensation Committee

Governance Committee

Compliance Committee

Li Dongjiu

x

Director

Audit CommitteeCompensation CommitteeGovernance CommitteeCompliance Committee
Li DongjiuX
Albert R. Dowden

x

X

Chair

Kristine F. Hughes

x

Robert B. Mercer

Chair

x

X

Willem Mesdag

x

Chair

Mary Beth Springer

x

Chair

X

Rebecca L. Steinfort

x

X

x

Chair

J. Christopher Teets

XX
Jeffrey D. Watkins

x

X

x

X


The Audit Committee.  The Audit Committee oversees our financial statements, preparation process and related compliance matters and performance of the internal audit function. The Committee is also responsible for engagement and oversight of our independent registered public accounting firm and reviews the adequacy and effectiveness of our internal control system and procedures. Our Board of Directors has determined that Robert B. Mercer, Mary Beth Springer,J. Christopher Teets and Jeffrey D. Watkins of our Audit Committee are audit committee financial experts, as that term is defined in Item 407(d)(5)(ii) of Regulation S-K promulgated by the SEC.  Effective January 27,December 22, 2015, Mr. DowdenMs. Springer was replaced by Mr. Teets on the Audit Committee by Ms. Steinfort.Committee.

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Table of Contents

The Compensation Committee.  The Compensation Committee reviews compensation policies applicable to executive officers and board members, establishes the compensation to be paid to our Chief Executive Officer and Chairman and determines the compensation and benefits of all Directors on the Board. The Chief Executive Officer makes recommendations to our Compensation Committee with respect to the compensation of our other executive officers, and the Compensation Committee considers such recommendations in establishing the officers’ compensation. The Compensation Committee establishes the compensation to be paid to our Chief Executive Officer without input from the Chief Executive Officer. At the discretion of the Committee, compensation packages for the Chief Executive Officer, when appropriate, are submitted to the Board of Directors for final approval. In addition, the Compensation Committee evaluates the performance of our executive officers versus agreed upon objectives and administers or makes recommendations to the Board with respect to the administration of the Company’s equity-based and other incentive compensation plans.  All members of the Compensation Committee shall meet the independence and experience requirements of the NASDAQ Stock Market, Section 10A(m)(3) of the Securities Exchange Act of 1934 (the “Exchange Act”), and the rules and regulations of the SEC, as affirmatively determined by the Company’s Board.  In addition, at least two Committee members shall qualify as “non-employee directors” within the meaning of SEC Rule 16b-3 and as “outside dicretors”directors” within the meaning of Section 162(m) of the Internal Revenue Code of 1986, as amended, or such successor provisions.  Effective March 1, 2015, Mr. Mercer was replaced on the Compensation Committee by Mr. Dowden.


The Compensation Committee is authorized to engage independent compensation consultants and other professionals to assist in the design, formulation, analysis and implementation of compensation programs for the Company’s executive

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officers and other key employees. The Compensation Committee retained the services of Fredric W. Cook & Co., Inc. ("F.W. Cook,Cook"), a leading compensation consulting firm, to provide advice and recommendations regarding the Company’s executive compensation programs, including equity compensation practices and cash compensation structure for executive officers. F.W. Cook also provides advice to the Compensation Committee with respect to the compensation and benefits of Directors of the Board.

The Compliance Committee. To further mitigate any compliance risk, a Compliance Committee of the Board of Directors was created in 2014. The purpose of the Compliance Committee of the Board of Directors of the Company shall be to oversee the Company’s efforts with respect to operational compliance.  “Operational Compliance” shall be defined to include: distributor compliance and direct selling best practices; employee compliance, including code of conduct and other mandated trainings; product and product distribution regulatory compliance, including adherence to FTC, FDA and other similar regulatory bodies’ mandates; and non-financial whistleblower reports. The committee shall consist of at least three directors, one of whom shall be the Chair of the Company’s Audit Committee. A majority of the members of the compliance committee shall meet the independence and experience requirements of the NASDAQ Stock Market, Section 10A(m)(3) of the Exchange Act and the rules and regulations of the SEC, as affirmatively determined by the Company’s Board.

The Governance Committee.  The Governance Committee makes recommendations to the Board of Directors about the size and composition of the Board or any of its committees, evaluates nominations received from shareholders, and develops and recommends to the Board corporate governance principles applicable to our Company. In selecting or recommending candidates, the Governance Committee takes into consideration any criteria approved by the Board, which may be set forth in any corporate governance guidelines adopted by the Board and such other factors as it deems appropriate. These factors may include judgment, skill, diversity, experience with businesses and other organizations of comparable size, the interplay of the candidate’s experience with the experience of other Board members, and the extent to which the candidate would be a desirable addition to the Board and any of its committees. Currently all members of the Governance Committee meet the independence requirements of the NASDAQ Stock Market. Ms. Hughes resigned from the Governance Committee effective April 28, 2015. Effective December 22, 2015, Ms. Springer rotated off of the Audit Committee to fill a vacancy on the Governance Committee.


The Governance Committee may also consider director candidates proposed by management and by shareholders of the Company. Recommendations for consideration by the Governance Committee, including recommendations from shareholders of the Company, should be sent in writing, together with appropriate biographical information concerning each proposed nominee, to our Corporate Secretary at our principal executive offices at 2500 West Executive Parkway, Suite 100, Lehi, Utah 84043. The Governance Committee will consider a properly submitted shareholder nomination that meets the requirements under our Bylaws. Our Bylaws require, among other things, an advance written notice of the nomination in writing of not later than the sixtieth (60th), nor earlier than the ninetieth (90th) day, from the date of the annual meeting. This notice must also include certain information relating to the nominee and the nominating shareholders as described more fully in our Bylaws.

The ComplianceGovernance Committee. To further mitigate did not receive any compliance risk, a Compliance Committeedirector nominations from shareholders of the Company for the 2016 Annual Meeting. There have not been any material changes to the procedures by which shareholders may recommend nominees to the Board since our last disclosures regarding the Governance Committee's policies for considering shareholder nominees to the Board of Directors was created in 2014. The purpose of the committee of the Board of Directors of the Company shall be to oversee the Company’s efforts with respect to operational compliance.  “Operational Compliance” shall be defined to include: distributor compliance and direct selling best practices; employee compliance, including code of conduct and other mandated trainings; product and product distribution regulatory compliance, including adherence to FTC, FDA and other similar regulatory bodies’ mandates; and non-financial whistleblower reports. The committee shall consist of at least three directors, one of whom shall be the Chair of the Company’s Audit Committee. A majority of the members of the compliance committee shall meet the independence and experience requirements of the NASDAQ Stock Market, Section 10A(m)(3) of the Exchange Act and the rules and regulations of the SEC, as affirmatively determined by the Company’s Board.Directors.

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Table of Contents

Board Structure and Risk Oversight


Leadership Structure of the Board


Under our bylaws,Bylaws, the Board is not required to appoint our Chief Executive Officer as the Chairman of the Board, and the Board does not have a policy on whether the roles of Chief Executive Officer and Chairman of the Board should be separate. On April 1, 2013, we appointed Mr. Probert as the Interim Chief Executive Officer. Mr. Probert was subsequently appointed as the Chief Executive Officer, effective October 1, 2013. The Board believes thatAccordingly, Mr. Probert’s roleProbert serves as theboth our Chief Executive Officer and Chairman of the Board. The Governance Committee periodically revisits the combined role of Chief Executive Officer and Chairman of the Board and will provide stability and continuityrecommend to the day-to-day operationsBoard that the roles be separated if it determines that doing so is in the best interest of the Company in a time of transition, given his in-depth understanding of our business operations.

Company.


As our Chairman, Mr. Probert is responsible for chairing Board meetings and meetings of shareholders, setting the agendas for Board meetings and providing information to the Board members in advance of meetings and between meetings. All of our directors are independent under applicable NASDAQ corporate governance rules, except for Mr. Probert and Ms. Hughes. The Board believes that the independent directors provide effective oversight of management. In addition to feedback provided during the course of Board meetings, the independent directors have regular executive sessions without any members of management present. Furthermore, the independent directors have selected Willem Mesdag as the “Leadselect a "Lead Independent Director”Director" to coordinate and manage

10


the activities of the independent directors. In November 2015, the independent directors selected Ms. Mary Beth Springer as the Lead Independent Director. The specific responsibilities of the Lead Independent Director include to:

include:


·                 call, setcalling, setting the agenda and presidepresiding over meetings of independent directors;


·                 consultconsulting with the Chairman on the content of the agenda for boardBoard and shareholder meetings;


·                 coordinatecoordinating and leadleading the relevant activities of the Board on matters in which the Chairman has a conflict of interest;


·                 reviewreviewing the performance of the Chairman, following consultation with independent directors;


·                 recommendrecommending to the Chairman or approve,approving, if appropriate, the retention of outside advisers and consultants to the Board; and


·                 performperforming such other duties as the Board may delegate to the Lead Independent Director.


We believe that our leadership structure of the Board, including the combination of the Chairman and Chief Executive Officer positions, is appropriate because it provides both unified and consistent leadership and, combined with the Lead Independent Director, effective independent oversight and expertise in the management of our complex operations as a consumer product and direct-selling business.


Board’s Role in the Oversight of Risk Management


The Board of Directors is primarily responsible for assessing risks associated with the Company’s business. However, the Board delegates certain of such responsibilities to other groups. The Audit Committee is responsible for reviewing with management the Company’s policies and procedures with respect to risk assessment and risk management, including reviewing certain risks associated with our financial and accounting systems, accounting policies, investment strategies, regulatory compliance with mandates from the SEC and other government bodies that regulate the financial and securities industry, insurance programs, and other matters. Under the direction of the Audit Committee, the Company’s internal audit department assists the Company in the evaluation and improvement of the effectiveness of risk management. In addition, under the direction of the Board and certain of its committees, the Company’s legal department assists in the oversight of corporate compliance activities. As discussed under “Risk Assessment of Compensation Programs,” the Compensation Committee also reviews certain risks associated with our overall compensation program for employees to help ensure that the program does not encourage employees to take excessive risks. The Compliance Committee, created in 2014, oversees risks associated with what the Company considers its operational compliance, which includes risks associated with distributor compliance and direct selling best practices, employee compliance, including code of conduct and other mandated trainings, product and product distribution regulatory compliance, including adherence to mandates from the FTC, the FDA and other similar regulatory bodies, and non-financial whistleblower reports. In addition, the Governance Committee monitors the effectiveness of our corporate governance guidelines and policies and manages risks associated with the independence of the Board of Directors and potential conflicts of interest. On a regular basis and from time to time as necessary or appropriate, updates are provided by these groups to the Board of Directors regarding their risk assessment and risk management activities and other risk-related matters. To further mitigate any compliance risk, a Compliance Committee of the Board of Directors was created in 2014. The purpose of the committee shall be to oversee the Company’s efforts with respect to operational compliance.

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Table of Contents

Board Meetings in Fiscal Year 2014

2015


During fiscal year 2014,2015, our Board of Directors held 4 formal regular6 meetings and numerous informal informational sessions. Each member of the Board of Directors during fiscal year 20142015, attended or participated in 75 percent or more of the aggregate of (i) the total number of regular meetings of the Board of Directors held during the fiscal year or the portion thereof following such person’s appointment to the Board and (ii) the total number of meetings held by all committees of the Board on which such director served during the fiscal year or the portion thereof following such person’s appointment to one or more of those committees.


During fiscal year 2014,2015, the Audit Committee held 4 formal5 meetings, as well as numerous informal informational sessions, the Compensation Committee held 5 formal4 meetings, as well as numerous informalthe Compliance Committee held 4 meetings and the Governance Committee held 4 formal3 meetings.

The committees also held numerous informal informational sessions during the year.


Annual Meeting Attendance



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Although the Company does not have a formal policy regarding attendance by members of the Board of Directors at the Annual Meetings of shareholders, directors are encouraged to attend such meetings. AtAll of our directors were in attendance at the Annual Meeting of shareholders held in fiscal year 2014, all of our directors were in attendance.

2015.


Communications with Directors


We have not in the past adopted a formal process for shareholder communications with the Board of Directors. Nevertheless, the directors have endeavored to ensure that the views of shareholders are heard by the Board or individual directors, as applicable, and that appropriate responses are provided to shareholders in a timely manner. Communications to the Board of Directors may be submitted in writing to our Corporate Secretary at our principal executive offices at 2500 West Executive Parkway, Suite 100, Lehi, Utah 84043. The Board of Directors relies upon the Corporate Secretary to forward written questions or comments to named directors or committees thereof, as appropriate. General comments or inquiries from shareholders are forwarded to the appropriate individual within the Company, including the Chief Executive Officer, as appropriate.


Code of Ethics


We have adopted a revised Code of Conduct on November 6, 2013,(the "Code"), that applies to all of our employees, including our Chief Executive Officer, Chief Financial Officer, Chief Accounting Officer and senior financial and accounting officers. The material changes to the Code were to (i) add an introductory letter from the Chairman and CEO, (ii) clarify existing principles and policies contained within the Code and (iii) add new sections to address (a) addresses a range of topics, including:

the importance of meeting quality standards, (b) workplace violence, (c) standards;
respect in the workplace;
maintaining accurate books and records;
protecting Company property, (d)property;
anti-bribery and anti-corruption compliance and policies;
conflicts of interest;
fair sales and marketing practices as well as competition;
handling inside information;
trade controls;
use of social media, (e) moneymedia;
compliance with anti-money laundering (f) laws;
political and charitable activities, (g) activities;
environmental sustainabilitysustainability; and (h)
good corporate citizenship. In addition to these material changes, several immaterial changes were made to enhance the presentation of the principles and policies contained within the Code.

A copy of ourThe Code of Conduct is available on our website at www.natr.com or by writing to our Corporate Secretary at our principal executive offices at 2500 West Executive Parkway, Suite 100, Lehi, Utah 84043. We intend to post on our internet website all amendments to, or waivers from, ourthe Code of Conduct that are required to be disclosed by applicable law.


Director Compensation

Equity Compensation

The following table sets forth certain information regarding the compensation of each individual who served as a non-employee member of our Board of Directors during the 2014 fiscal year.

Name

 

Fees Earned or
Paid in Cash
($)(1)

 

Stock
Awards
($)(2)

 

Option
Awards
($)

 

All Other
Compensation
($)(3)

 

Total
($)

 

Li Dongjiu

 

17,473

 

—

 

—

 

—

 

17,473

 

Albert R. Dowden

 

68,000

 

41,243

 

—

 

750

 

109,993

 

Kristine F. Hughes

 

75,000

 

41,243

 

—

 

19,656

 

135,899

 

Willem Mesdag

 

68,000

 

41,243

 

—

 

179

 

109,422

 

Robert B. Mercer

 

78,750

 

41,243

 

—

 

750

 

120,743

 

Mary Beth Springer

 

71,875

 

41,243

 

—

 

—

 

113,118

 

Jeffrey D. Watkins

 

73,625

 

41,243

 

—

 

—

 

114,868

 

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Table of Contents

(1)Consists of retainer fees for service as a member of the Board paid on a monthly basis. The aggregate payments include the following categories of payments:

Name

 

Retainer ($)

 

Vice Chairperson
Additional Retainer ($)

 

Committee Member
Additional Retainer ($)

 

Total ($)

 

Li Dongjiu

 

17,473

 

—

 

—

 

17,473

 

Albert R. Dowden

 

50,000

 

—

 

18,000

 

68,000

 

Kristine F. Hughes

 

50,000

 

25,000

 

—

 

75,000

 

Robert B. Mercer

 

50,000

 

—

 

28,750

 

78,750

 

Willem Mesdag

 

50,000

 

—

 

18,000

 

68,000

 

Mary Beth Springer

 

50,000

 

—

 

21,875

 

71,875

 

Jeffrey D. Watkins

 

50,000

 

—

 

23,625

 

73,625

 

(2)On May 7, 2014, the Board approved restricted stock unit grants (RSUs) of 3,729 shares of our Common Stock for each non-executive Director.  The RSUs vest in 12 monthly installments over a one-year period from the grant date subject to accelerated vesting upon a change in control. The shares that vest under each award will be delivered to the director upon the earlier of the director’s separation from the Board or the expiration of the 2-year restriction period subsequent to the vesting of the entire RSU grant. The amount reflected in column (c) above represents the grant date fair value of the RSUs calculated in accordance with FASB ASC Topic 718.

On September 19, 2014, the Company paid a special one-time cash dividend of $1.50 per common share. In accordance with the provisions of the Company’s stock incentive plans, additional RSUs were awarded based on the closing share price on the ex-dividend date in order to prevent a dilution of benefits or potential benefits intended to be made available to the RSU holders. Therefore, an additional 1,009 shares of RSUs were issued to compensate the Directors for the previously made RSU grants and no additional share-based compensation expense was recorded. See Note 11 to the Notes to Consolidated Financial Statements set forth in Item 1 of the 2014 Annual Report filed with the SEC on Form 10-K filed on March 13, 2015 for a description of the assumptions used in calculating such fair value. For this purpose, the estimate of forfeitures relating to vesting conditions is disregarded.

(3)“All Other Compensation” includes the following amounts paid by the Company for the fiscal year ended December 31, 2014:

Name

 

Life
Insurance
Premiums
($)

 

Product
Credit*
($)

 

Total
($)

 

Li Dongjiu

 

—

 

—

 

—

 

Albert R. Dowden

 

—

 

750

 

750

 

Kristine F. Hughes

 

18,165

 

1,491

 

19,656

 

Robert B. Mercer

 

—

 

750

 

750

 

Willem Mesdag

 

—

 

179

 

179

 

Mary Beth Springer

 

—

 

—

 

—

 

Jeffrey D. Watkins

 

—

 

—

 

—

 

*Represents credits to purchase the Company’s products.

On May 3, 2012, the Board adopted a new non-employee director compensation plan that became effective on May 4, 2012.  Under the revised program, each. Each non-employee director receives an annual grant of a restricted stock unit ("RSU") award with a grant date value equal to $50,000 (based on the closing selling price of our common stock on the grant date). Each such award vests in 12 equal successive monthly installments, over the 1-yeara one-year period measured from the grant date, subject to continued Board service and accelerates in full upon a change in control. The shares that vest under each award are delivered to the director upon the earlier of the director’sdirector's separation from the Board or the expiration of a two-year period subsequent to the 3-year period measured fromvesting of the grant date.

entire RSU grant.


Cash Compensation. Each non-employee Board member receives an annual retainer of $50,000 (pro-rated for any partial year of service). The Vice Chairperson receives an additional retainer of $25,000. In addition to the annual retainer, each member of the Audit Committee receives a retainer of $10,000, with the Chairperson receiving an additional $10,000; each member of the Compensation Committee receives an additionala retainer of $7,500, with the Chairperson receiving an additional $7,500; each member of the Governance Committee receives an additionala retainer of $3,000,$5,000, with the Chairperson receiving an additional $5,000; and each member of the Compliance Committee receives an additionala retainer of $3,000,$5,000, with the Chairperson receiving an additional $5,000.



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The following table sets forth certain information regarding the compensation of each individual who served as a non-employee member of our Board of Directors during the 2015 fiscal year. Mr. Probert, who is our only employee on our Board of Directors, received no additional compensation for his service on our Board of Directors.
Name 
Fees Earned or
Paid in Cash
($)(1)
 
Stock
Awards
($)(2)
 
Option
Awards
($)
 
All Other
Compensation
($)(3)
 
Total
($)
Li Dongjiu 54,083 - - 750 54,833
Albert R. Dowden 66,667 41,241 - 704 108,612
Kristine F. Hughes 75,750 41,241 - 21,585 138,576
Robert B. Mercer 75,333 41,241 - 747 117,321
Willem Mesdag 78,667 41,241  - 243 102,967
Mary Beth Springer 75,000 41,241 - 750 116,991
Rebecca Lee Steinfort 59,930 41,241 
118,250(4)
 719 220,140
J Christopher Teets(5)
 - - 
79,000(6)
 - 79,000
Jeffrey D. Watkins 68,000 41,241 - 750 109,991

(1)Consists of retainer fees for service as a member of the Board paid on a monthly basis. The aggregate payments include the following categories of payments:
Name Retainer ($) 
Vice Chairperson
Additional Retainer ($)
 
Committee Member
Additional Retainer ($)
 Total ($)
Li Dongjiu 50,000 - 4,083 54,083
Albert R. Dowden 50,000 - 16,667 66,667
Kristine F. Hughes 50,000 25,000 750 75,750
Robert B. Mercer 50,000 - 25,333 75,333
Willem Mesdag 50,000 - 28,667 78,667
Mary Beth Springer 50,000 - 25,000 75,000
Rebecca Lee Steinfort 46,505 - 13,425 59,930
J Christopher Teets - - - -
Jeffrey D. Watkins 50,000 - 18,000 68,000

13



(2)On May 6, 2015, the Board approved RSU grants of 3,876 shares of our Common Stock for each non-executive Director. The RSUs vest in 12 monthly installments over a one-year period from the grant date, subject to accelerated vesting upon a change in control. The shares that vest under each award will be delivered to the director upon the earlier of the director’s separation from the Board or the expiration of the 2-year restriction period subsequent to the vesting of the entire RSU grant. The amount reflected in this column above represents the grant date fair value of the RSUs calculated in accordance with FASB ASC Topic 718.

(3)“All Other Compensation” includes the following amounts paid by the Company for the fiscal year ended December 31, 2015:
Name Life Insurance Premiums ($) Product Credit* ($) Total ($)
Li Dongjiu - 750 750
Albert R. Dowden - 704 704
Kristine F. Hughes 20,085 1,500 21,585
Robert B. Mercer - 747 747
Willem Mesdag - 243 243
Mary Beth Springer - 750 750
Rebecca Lee Steinfort - 719 719
J. Christopher Teets - - -
Jeffrey D. Watkins - 750 750
*Represents credits to purchase the Company’s products.

(4)On January 27, 2015, the Board approved a grant of an option to purchase 25,000 shares of our Common Stock to Ms. Steinfort, who joined the Board of Directors in January 2015. The option has a maximum term of 10 years and vested and became exercisable upon issuance. The amounts reflected in this column represent the grant date fair value of such option award calculated in accordance with FASB ASC Topic 718. See Note 11 of the Notes to Consolidated Financial Statements set forth in the 2015 Annual Report on Form 10-K filed with the SEC on March 14, 2016 for a description of the assumptions used in calculating such fair value. For this purpose, the estimate of forfeitures relating to vesting conditions is disregarded.

(5)Mr. Teets was appointed to the Board of Directors effective December 22, 2015.

(6)December 22, 2015, the Board approved a grant of an option to purchase 25,000 shares of our Common Stock to Mr. Teets, who joined the Board of Directors in December 2015. The option has a maximum term of 10 years and vested and became exercisable upon issuance. The amounts reflected in this column represent the grant date fair value of such option award calculated in accordance with FASB ASC Topic 718. See Note 11 of the Notes to Consolidated Financial Statements set forth in the 2015 Annual Report on Form 10-K filed with the SEC on March 14, 2016 for a description of the assumptions used in calculating such fair value. For this purpose, the estimate of forfeitures relating to vesting conditions is disregarded.

Expenses.Expenses. Board members wereare reimbursed for travel and other expenses incurred in connection with their duties as directors to the extent such expenses wereare submitted to the Company for reimbursement.

12



Table of Contents

The table below summarizes the equity-based awards held by the Company’s non-employee directors as of December 31, 2014.

 

 

Stock Awards

 

Option Awards

 

Name

 

Number of
Securities
Underlying
Restricted Stock
Units

 

Number of
Securities
Underlying
Unexercised
Options
Exercisable

 

Number of
Securities
Underlying
Unexercised
Options Un-
exercisable

 

Exercise Price of
Options
Exercisable
($)

 

Expiration Date
of Options
Exercisable

 

Li Dongjiu

 

—

 

—

 

—

 

—

 

—

 

Albert R. Dowden

 

11,199

 

25,000

 

—

 

2.35

 

9/24/2019

 

Kristine F. Hughes

 

11,199

 

—

 

—

 

—

 

—

 

Robert B. Mercer

 

11,199

 

25,000

 

—

 

5.79

 

10/14/2020

 

Willem Mesdag

 

11,199

 

25,000

 

—

 

2.35

 

9/24/2019

 

Mary Beth Springer

 

4,098

 

25,000

 

—

 

16.33

 

9/4/2023

 

Jeffrey D. Watkins

 

11,199

 

25,000

 

—

 

2.35

 

9/24/2019

 

Recommendation of the Board of Directors

The Board of Directors unanimously recommends a vote FOR the election of each of the foregoing nominees to the Board of Directors.

2015.


14


  Stock Awards Option Awards
Name Number of Securities Underlying Restricted Stock Units Number of Securities Underlying Unexercised Options Exercisable Number of Securities Underlying Unexercised Options Un-exercisable Exercise Price of Options Exercisable ($) Expiration Date of Options Exercisable
Li Dongjiu - - - - -
Albert R. Dowden 15,075 25,000 - 2.35 9/24/2019
Kristine F. Hughes 15,075 - - - -
Robert B. Mercer 15,075 25,000 - 5.79 10/14/2020
Willem Mesdag 13,460 25,000 - 2.35 9/24/2019
Mary Beth Springer 7,974 25,000 - 16.33 9/4/2023
Rebecca Lee Springer 3,876 25,000 - 14.50 1/27/202
J Christopher Teets - 25,000 - 11.21 12/22/2025
Jeffrey D. Watkins 15,075 25,000 - 2.35 9/24/2019



15



PROPOSAL TWO:


RATIFICATION OF APPOINTMENT OF INDEPENDENT

REGISTERED PUBLIC ACCOUNTING FIRM


Our Board of Directors has subject to shareholder approval, retained Deloitte & Touche LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2015.2016. Deloitte & Touche LLP also served as our independent registered public accounting firm for fiscal year 2014.2015. As a matter of good corporate governance, we are asking shareholders to ratify the selection of Deloitte & Touche LLP as our independent registered public accounting firm. A representative of Deloitte & Touche LLP is expected to be present at the Annual Meeting. He or she will have an opportunity to make a statement at the Annual Meeting and will be available to respond to appropriate questions.


Fees Paid to Independent Registered Public Accounting Firm


We engaged Deloitte & Touche LLP as our independent registered public accounting firm on February 2, 2007. The table below presents the aggregate fees incurred by the Company during the fiscal years ended December 31, 20142015 and 20132014 for professional services rendered by Deloitte & Touche LLP. All of the fees below were approved by the Audit Committee. The Audit Committee has considered whether the provision of non-audit services is compatible with maintaining the principal accountant’s independence and has concluded that it is.

 

 

2014

 

2013

 

Audit Fees(1)

 

918,000

 

905,000

 

Audit-Related Fees(2)

 

203,000

 

100,000

 

Tax Fees(3)

 

519,000

 

390,000

 

All Other Fees

 

—

 

—

 

Total Fees

 

1,640,000

 

1,395,000

 

(1)Reflects aggregate fees billed by Deloitte & Touche LLP for professional services rendered for the audit of the Company’s consolidated financial statements for the fiscal years ended December 31, 2014 and 2013.

(2)During the fiscal years ended December 31, 2014 and 2013, Deloitte & Touche provided services for audit related activities related to statutory audits.

(3)Reflects aggregate fees billed by Deloitte & Touche LLP for tax services for the fiscal years ended December 31, 2014 and 2013 related to tax compliance and international tax guidance.

13

 2015 2014
Audit Fees (1)$920,000
 $918,000
Audit-Related Fees (2)40,500
 203,000
Tax Fees (3)354,000
 519,000
All Other Fees-
 -
Total Fees1,314,500
 1,640,000

(1)Reflects aggregate fees billed by Deloitte & Touche LLP for professional services rendered for the audit of the Company's consolidated financial statements for the fiscal year ended December 31, 2015 and 2014.

Table of Contents


(2)During the fiscal years ended December 31, 2015 and 2014, Deloitte & Touche provided services for audit related activities related to statutory auditors.

(3)Reflects aggregate fees billed by Deloitte & Touche LLP for tax services for the fiscal years ended December 31, 2015 and 2014 related to tax compliance and international tax guidance.

Pre-Approval Policies and Procedures


The Company reviews a schedule of audit and non-audit services expected to be performed by the Company’s independent registered public accounting firm in a given fiscal year. In addition, the Audit Committee may delegate authority to its Chairperson to pre-approve certain additional audit and non-audit services rendered by Company’s independent registered public accounting firm (other than services that have been generally pre-approved by the Audit Committee) during the period between meetings of the Audit Committee. The Chairperson must report any such pre-approval decisions to the Audit Committee at its next scheduled meeting. During the year ended December 31, 2014, 100 percent2015, all of the aggregate amounts set forth above under the captions “Audit-Related Fees,” “Tax Fees,” and “All Other Fees” were pre-approved by the Chairperson of the Audit Committee and subsequently reported to the Audit Committee in accordance with the procedures set forth above.


Recommendation of the Board of Directors


The Board of Directors unanimously recommends a vote FOR the ratification of Deloitte & Touche LLP

LLP.


16


AUDIT COMMITTEE REPORT


In connection with the audited financial statements as of and for the year ended December 31, 2014,2015, the Audit Committee (i) has reviewed and discussed the audited financial statements with management, (ii) has discussed with the independent registered public accounting firm the matters required to be discussed by the Statement on Auditing Standards No. 61, as amended (AICPA, Professional Standards, Vol. 1. AU section 380), as adopted by the Public Company Accounting Oversight Board in Rule 3200T, or any successful standard and (iii) 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 the independent registered public accounting firm’s communications with the Audit Committee concerning independence, and has discussed with the independent registered public accounting firm the firm’s independence. Based on the foregoing review and discussions, the Audit Committee recommended to the Board of Directors that the audited financial statements be included in the Annual Report on Form 10-K for the fiscal year ended December 31, 20142015, for filing with the SEC.


Submitted by:

Robert B. Mercer, Chair

Albert R. Dowden

Mary Beth Springer

Rebecca L. Steinfort
J. Christopher Teets
Jeffrey D. Watkins


The information contained in the above report shall not be deemed to be “soliciting material” or to be “filed” with the Securities and Exchange Commission, nor shall such information be incorporated by reference into any future filings with the Securities and Exchange Commission, or subject to the liabilities of Section 18 of the Exchange Act, except to the extent that the Company specifically incorporates it by reference into a document filed under the Securities Act of 1933, as amended, or Securities Exchange Act of 1934, as amended.

14


17



Table

PROPOSAL THREE:

RATIFICATION OF THE COMPANY'S THIRD AMENDED AND RESTATED BYLAWS

Acting in accordance with the Utah Revised Business Corporation Act (the "Utah Corporation Act"), our Board of ContentsDirectors approved and adopted the Third Amended and Restated Bylaws (the "Third Restated Bylaws"), on August 26, 2014. The Third Restated Bylaws replaced the Second Amended and Restated Bylaws of the Company in their entirety. The sole purpose of the Third Restated Bylaws was to add Section 2.16 of the Third Restated Bylaws, which requires any unsuccessful shareholder litigant in a suit against the Company to reimburse the Company for all of the Company’s litigation costs, including reasonable attorney fees. Other than the addition of Section 2.16, no change was made to the Second Amended and Restated Bylaws. This type of bylaw provision is known as a fee-shifting bylaw because it shifts the burden to pay for the Company's attorneys' fees from the Company to the unsuccessful shareholder litigant who initiated the lawsuit.

The complete text of Section 2.16 is set forth below:

2.16    Litigation Costs. To the fullest extent permitted by law, in the event that (i) any current Company shareholder or anyone on its behalf (“Claiming Party”) initiates or asserts any claim or counterclaim (“Claim”), or joins, offers substantial assistance to or has a direct financial interest in any Claim against the Company or any of its directors, officers employees or affiliates (the “Company Parties”) and (ii) the Claiming Party (or the third party that received substantial assistance from the Claiming Party or in whose Claim the Claiming Party had a direct financial interest) does not obtain a judgment on the merits that substantially achieves, in substance and amount, the full remedy sought, then each Claiming Party shall be obligated jointly and severally to reimburse the Company Parties for all reasonable fees, costs and expenses of every kind and description (including, but not limited to, all reasonable attorneys’ fees and other litigation expenses) that the Company Parties may incur in connection with such Claim.

Background of Proposal

The purpose of Section 2.16 of the Third Restated Bylaws is to reduce the risk to the Company posed by frivolous lawsuits, which can be very expensive and time-consuming for the Company to defend. We believe Section 2.16 of the Third Restated Bylaws reduces the risk of frivolous shareholder litigation because we believe a shareholder is less likely to bring a frivolous lawsuit if he or she will be responsible to pay the Company's attorney fees if the case is unsuccessful. We do not believe Section 2.16 would discourage shareholders from bringing a meritorious lawsuit against the Company because we believe a shareholder with a meritorious lawsuit is not likely to be deterred by the risk of paying for the Company's litigation costs in the event the lawsuit is unsuccessful.

Effect of Advisory Vote

Although shareholder approval of the Third Restated Bylaws is not required, we are seeking shareholder ratification and will remove Section 2.16 if the shareholder votes for the ratification of the Third Restated Bylaws do not exceed the shareholder votes cast against the Third Restated Bylaws.

Recommendation of the Board of Directors

The Board of Directors unanimously recommends a vote FOR the ratification of the Third Restated Bylaws.


18




PROPOSAL THREE:

FOUR:


ADVISORY RESOLUTION TO APPROVE EXECUTIVE COMPENSATION

Under


In accordance with Section 14A of the Dodd-Frank Wall Street Reform and Consumer ProtectionSecurities Act enacted in July 2010 (the “Dodd-Frank Act”), the Company’sof 1934, as amended, we are asking our shareholders are entitled to vote to approve the following non-binding, advisory resolution on our executive compensation as disclosed in this proxy statement:

RESOLVED, the compensation of ourthe Company’s named executive officers as disclosed in thisthe proxy statement in accordance with the standards established underpursuant to Item 402 of Regulation S-K, under the Exchange Act. Based upon the outcome of our 2011 say-on-pay frequency vote, the Company will hold an annual advisory say-on-pay vote until the next say-on-pay frequency vote which, in accordance with applicable law, will occur no later than the Company’s Annual Meeting of stockholders in 2017.  However, the shareholder vote on executive compensation is an advisory vote only, and it is not binding on the Company or our Board orincluding the Compensation Committee.

As described in the section titled “Compensation Discussion and Analysis,” the Company’s executivevarious compensation programs are designed to attract, retaintables and reward executives whose contributions support the Company’s long-term success by linking executive compensation to Company performance. These programs have been designed to ensure alignment of management’s action with shareholder interests.accompanying narrative discussion, is hereby APPROVED.


     Shareholders are urged to read the “Compensation Discussion and Analysis” section of this proxy statement, as well as the Summary Compensation Table and related compensation tables and narrative in this proxy statement, which more thoroughly discusses how we believe ourprovide detailed information on the Company's compensation policies and procedures complementpractices and the compensation of our compensation philosophy. The Board and our Compensation Committee believe that these policies and procedures are effective in implementing our compensation philosophy and in achieving its goals.

named executive officers.


Although the vote is an advisory, non-binding vote, the Board and the Compensation Committee value the opinions of the shareholders and will take into account the outcome of the vote when considering future compensation decisions affecting the Company’s executive officers.

The vote on this resolution is not intended to address any specific element of compensation; rather, the vote relates to the compensation of our named executive officers, as described in this proxy statement.

We are asking our shareholders to vote for the following resolution:

“RESOLVED, the compensation of the Company’s named executive officers as disclosed in the proxy statement pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, the various compensation tables and the accompanying narrative discussion, is hereby APPROVED.”


Recommendation of the Board of Directors


The Board of Directors unanimously recommends a vote FOR the approval, on an advisory (non-binding) basis, of the compensation of our named executive officers as disclosed in this proxy statement pursuant to the SEC’s compensation disclosure rules.

15



19



Table of Contents


SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT


The following table sets forth information regarding beneficial ownership of our Common Stock as of February 1, 2015,19, 2016, except as otherwise stated, by (1) each person who is known by us to beneficially own more than five percent of the outstanding shares of our Common Stock, (2) each of our directors, (3) each of our named executive officers in the Summary Compensation Table, and (4) all directors and executive officers of the Company as a group. As of February 1, 2015,19, 2016, there were 18,574,80218,712,499 shares of Common Stock issued and outstanding. To our knowledge and except as otherwise indicated, the persons named in the table have sole voting and investment power with respect to all shares shown as beneficially owned by them, subject to community property laws where applicable. Unless we indicate otherwise, each holder’s address is c/o Nature’s Sunshine Products, Inc., 2500 West Executive Parkway, Suite 100, Lehi, Utah 84043

Name and Address of Beneficial Owner

 

Number of
Shares(1)

 

Percent of
Class(2)

 

Beneficial Owners of More than 5%

 

 

 

 

 

Shanghai Fosun Pharmaceutical (Group) Co., Ltd. (3)

 

2,854,607

 

15.4

%

No. 268 South Zhongshan Road

 

 

 

 

 

Shanghai 200010, P.R. China

 

 

 

 

 

Red Mountain Capital Partners LLC (4)

 

2,407,801

 

13.0

%

10100 Santa Monica Blvd, Suite 925

 

 

 

 

 

Los Angeles, CA 90067

 

 

 

 

 

Prescott Group Capital Management, LLC (5)

 

1,865,383

 

10.0

%

1924 South Utica, Suite 1120

 

 

 

 

 

Tulsa, OK 74104

 

 

 

 

 

Nelson Obus (6)

 

1,823,639

 

9.8

%

c/o Wynnefield Capital Management, LLC

 

 

 

 

 

450 Seventh Avenue, Suite 509

 

 

 

 

 

New York, New York 10123

 

 

 

 

 

First Wilshire Securities Management, Inc. (7)

 

1,273,950

 

6.9

%

1224 East Green Street, Suite 200

 

 

 

 

 

Pasadena, CA 91106

 

 

 

 

 

Paradigm Capital Management, Inc. (8)

 

1,196,065

 

6.4

%

9 Elk Street

 

 

 

 

 

Albany, NY 12207

 

 

 

 

 

Directors and Executive Officers

 

 

 

 

 

Willem Mesdag, Lead Independent Director (9)

 

2,439,902

 

13.1

%

Jeffrey D. Watkins, Director (10)

 

1,897,484

 

10.2

%

Kristine F. Hughes, Vice Chairperson of the Board (11)

 

879,267

 

4.7

%

Gregory L. Probert, Chairman and Chief Executive Officer (12)

 

343,492

 

1.8

%

D. Wynne Roberts, Chief Executive Officer of Synergy WorldWide (13)

 

144,024

 

*

 

Stephen M. Bunker, Executive Vice President, Chief Financial Officer & Treasurer (14)

 

112,385

 

*

 

Robert B. Mercer, Director (15)

 

33,363

 

*

 

Albert R. Dowden, Director (16)

 

33,140

 

*

 

Richard D. Strulson, Executive Vice President, General Counsel, Chief Compliance Officer, and Secretary (18)

 

27,221

 

*

 

Matthew L. Tripp, Executive Vice President and Chief Scientific Officer (19)

 

22,221

 

*

 

Mary Beth Springer, Director (17)

 

25,000

 

*

 

Rebecca L. Steinfort, Director (20)

 

25,000

 

*

 

Li Dongjiu, Director (21)

 

—

 

*

 

All Directors and named executive officers as a group (13 persons) (22)

 

5,982,499

 

32.2

%

84043.

*Less than one percent.

(1)All entries exclude beneficial ownership of shares that are issuable pursuant to awards that have not vested or that are not otherwise exercisable as of the date hereof and which will not become vested or exercisable within 60 days of February 1, 2015.

(2)Calculated based on 18,574,802 shares of our Common Stock outstanding on February 1, 2015, with percentages rounded to the nearest one-tenth of one percent. Shares of Common Stock subject to options that are presently exercisable or exercisable within 60 days are deemed to be beneficially owned by the person holding the option for the purpose of computing the percentage ownership of that person but not treated as outstanding for computing the percentage of any other person.

(3)On August 25, 2014, pursuant to the Stock Purchase Agreement, the Company issued 2,854,607 shares of its common stock (the “Shares”) to Fosun Pharma. The Shares were offered to Fosun Pharma in an offering exempt from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”) pursuant to Section 4(2) of the Securities Act, and Regulation D thereunder.

16

Name and Address of Beneficial Owner 
Number of
Shares (1)
 
Percent of
Class (2)
Beneficial Owners of More than 5%    
Shanghai Fosun Pharmaceutical (Group) Co., Ltd. (3) 2,854,607
 15.3%
No. 268 South Zhongshan Road   
Shanghai 200010, P.R. China   
Red Mountain Capital Partners LLC (4) 2,474,337
 13.2%
10100 Santa Monica Blvd, Suite 925   
Los Angeles, CA 90067   
Nelson Obus (5) 2,111,553
 11.3%
c/o Wynnefield Capital Management, LLC    
450 Seventh Avenue, Suite 509    
New York, New York 10123    
Prescott Group Capital Management, LLC (6) 1,865,383
 10.0%
1924 South Utica, Suite 1120   
Tulsa, OK 74104   
Paradigm Capital Management, Inc. (7) 1,265,265
 6.8%
9 Elk Street   
Albany, NY 12207   
Directors and Named Executive Officers    
Jeffrey D. Watkins, Director (8) 1,907,888
 10.2%
Kristine F. Hughes, Vice Chairperson of the Board (9) 803,056
 4.3%
Gregory L. Probert, Chairman and Chief Executive Officer (10) 482,529
 2.6%
Stephen M. Bunker, Executive Vice President, Chief Financial Officer & Treasurer (11) 130,058
 *
Adriana Mendizabal, President of NSP Americas (12) 80,133
 *
Richard D. Strulson, Executive Vice President, General Counsel, Chief Compliance Officer, and Secretary (13) 59,963
 *
Robert B. Mercer, Director (14) 43,620
 *
Albert R. Dowden, Director (15) 40,501
 *
Paul E. Noack, President of China and New Markets (16) 39,833
 *
Mary Beth Springer, Director (17) 32,328
 *
Rebecca L. Steinfort, Director (18) 28,230
 *
J. Christopher Teets, Director (19) 25,000
 *
Li Dongjiu, Director (20) —
 —
All Directors and executive officers as a group (14 persons) (21) 3,719,022
 19.9%




20



*Less than one percent.

Table of Contents

(4)Based on Schedule 13F-HR filed with the SEC on February 13, 2015, and Schedule 13D/A filed with the SEC on September 2, 2014, by Red Mountain Capital Partners LLC (“RMCP LLC”), includes 2,407,801 shares held by Red Mountain Partners, L.P. (“RMP”). RMCP GP LLC (“RMCP GP”) is the general partner of RMP and RMCP LLC is the managing member of RMCP GP. Red Mountain Capital Management, Inc. (“RMCM”) is the managing member of RMCP LLC, and Willem Mesdag is the president, sole executive officer, sole director and sole shareholder of RMCM. Each of RMCP GP, RMCP LLC, RMCM and Mr. Mesdag may be deemed to beneficially own, and to have voting and dispositive power over, 2,407,801 shares held by RMP. Each of RMCP GP, RMCP LLC, RMCM and Mr. Mesdag, however, disclaims beneficial ownership of these shares.

(5)Based on Schedule 13F-HR filed with the SEC on February 6, 2015, includes 1,865,383 shares purchased by Prescott Group Aggressive Small Cap, L.P. and Prescott Group Aggressive Small Cap II, L.P. (collectively, the “Small Cap Funds”) through the account of Prescott Group Aggressive Small Cap Master Fund, G.P. (“Prescott Master Fund”), of which the Small Cap Funds are general partners. As general partner of the Small Cap Funds, Prescott Group Capital Management, LLC (“Prescott Capital”) may be deemed to beneficially own 1,865,383 shares. As the principal of Prescott Capital, Phil Frohlich may also be deemed to beneficially own the 1,865,383 shares held by Prescott Master Fund. Each of Prescott Capital and Mr. Frohlich, however, disclaims beneficial ownership of these shares. Prescott Capital and Mr. Frohlich have the sole voting and dispositive power over these shares.

(6)Based on Schedule 13G/A filed with the SEC on February 17, 2015, includes 568,304 shares held by Wynnefield Partners Small Cap Value, L.P., 844,930 shares held by Wynnefield Partners Small Cap Value, L.P. I, 365,094 shares held by Wynnefield Small Cap Value Offshore Fund, Ltd., and 45,311 shares held by Wynnefield Capital, Inc. Profit Sharing Plan. Wynnefield Capital Management, LLC has an indirect beneficial interest in the shares held by Wynnefield Partners Small Cap Value, L.P. and Wynnefield Partners Small Cap Value, L.P. I, and Wynnefield Capital, Inc. have an indirect beneficial interest in the shares held by Wynnefield Small Cap Value Offshore Fund, Ltd. As co-managing member of Wynnefield Capital Management, LLC, principal executive officer of Wynnefield Capital, Inc., general partner of Channel Partnership II, L.P. and portfolio manager of Wynnefield Capital, Inc. Profit Sharing Plan, Mr. Obus may be deemed to have beneficial ownership in, and to have sole voting and dispositive power over, 1,823,639 shares. Mr. Obus, however, disclaims any beneficial ownership of these shares.

(7)Based on Schedule 13G/A filed with the SEC on February 17, 2015, First Wilshire Securities Management, Inc. beneficially owns 1,273,950 shares, of which it has sole voting power over 245,632 shares and sole dispositive power over 1,273,950.

(8)Based on Schedule 13G/A filed with the SEC on February 12, 2015, Paradigm Capital Management, Inc. has sole voting and dispositive power over these shares.

(9)Includes options exercisable for 25,000 shares and vested awards for 7,101 shares of Common Stock within 60 days of February 1, 2015. See Footnote 4 above. Mr. Mesdag’s address is c/o Red Mountain Capital Partners LLC, 10100 Santa Monica Blvd, Suite 925, Los Angeles, CA 90067.

(10)Includes 1,865,383 share beneficially owned by Prescott Group Capital Management, LLC. As president of Prescott Group Capital Management, LLC, Mr. Watkins may be deemed to beneficially own, and to have shared voting and dispositive power over, these shares. See also Footnote 5 above. Mr. Watkins’s address is c/o Prescott Group Capital Management, LLC, 1924 South Utica, Suite 1120, Tulsa, OK 74104. In addition, includes options exercisable for 25,000 shares and vested awards for 7,101 shares of Common Stock within 60 days of February 1, 2015.

(11)Includes (i) 79,352 shares that Mr. Hughes holds indirectly and (ii) 799,275 shares held by various family trusts, of which Mr. and Ms. Hughes are co-trustees and beneficiaries. Both Mr. and Ms. Hughes have shared voting and dispositive power over these shares. In addition, includes vested awards for 7,101 shares of Common Stock within 60 days of February 1, 2015.

(12)Includes options exercisable for 303,125 of Common Stock within 60 days of February 1, 2015, and 40,367 shares that Mr. Probert holds directly.

(13)Includes options exercisable for 141,667 shares of Common Stock within 60 days of February 1, 2015, and 2,357 that Mr. Roberts holds directly.

(14)Includes options exercisable for 111,188 shares of Common Stock within 60 days of February 1, 2015 and 1,197 shares that Mr. Bunker holds directly.

17

(1)All entries exclude beneficial ownership of shares that are issuable pursuant to awards that have not vested or that are not otherwise exercisable as of the date hereof and which will not become vested or exercisable within 60 days of February 1, 2016.

(2)Calculated based on 18,626,748 shares of our Common Stock outstanding on February 1, 2016, with percentages rounded to the nearest one-tenth of one percent. Shares of Common Stock subject to options that are presently exercisable or exercisable within 60 days are deemed to be beneficially owned by the person holding the option for the purpose of computing the percentage ownership of that person but not treated as outstanding for computing the percentage of any other person.

(3)On August 25, 2014, pursuant to a Stock Purchase Agreement, the Company issued 2,854,607 shares of its common stock (the “Shares”) to Fosun Pharma. The Shares were offered to Fosun Pharma in an offering exempt from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”) pursuant to Section 4(2) of the Securities Act, and Regulation D thereunder.

(4)Based on Schedule 13F-HR filed with the SEC on February 13, 2015, and Schedule 13D/A filed with the SEC on September 2, 2014, by Red Mountain Capital Partners LLC (“RMCP LLC”), and Form 4 filed with the SEC on January 13, 2016, by Willem Mesdag, includes 2,407,801 shares held by Red Mountain Partners, L.P. (“RMP”) and 66,536 shares held by RMCP LLC. RMCP GP LLC (“RMCP GP”) is the general partner of RMP and RMCP LLC is the managing member of RMCP GP. Red Mountain Capital Management, Inc. (“RMCM”) is the managing member of RMCP LLC, and Mr. Mesdag is the president, sole executive officer, sole director and sole shareholder of RMCM. Each of RMCP GP, RMCP LLC, RMCM and Mr. Mesdag may be deemed to beneficially own, and to have voting and dispositive power over, 2,407,801 shares held by RMP. Each of RMCM and Mr. Mesdag may be deemed to beneficially own, and have voting and dispositive power over, the 65,536 shares held by RMCP LLC. Each of RMCM and Mr. Mesdag, however, disclaims beneficial ownership of all of these shares.

(5)Based on Schedule 13G/A filed with the SEC on February 16, 2016, includes 658,829 shares held by Wynnefield Partners Small Cap Value, L.P., 994,255 shares held by Wynnefield Partners Small Cap Value, L.P. I, 413,158 shares held by Wynnefield Small Cap Value Offshore Fund, Ltd., and 45,311 shares held by Wynnefield Capital, Inc. Profit Sharing Plan. Wynnefield Capital Management, LLC has an indirect beneficial interest in the shares held by Wynnefield Partners Small Cap Value, L.P. and Wynnefield Partners Small Cap Value, L.P. I, and Wynnefield Capital, Inc. have an indirect beneficial interest in the shares held by Wynnefield Small Cap Value Offshore Fund, Ltd. As co-managing member of Wynnefield Capital Management, LLC, principal executive officer of Wynnefield Capital, Inc., general partner of Channel Partnership II, L.P. and portfolio manager of Wynnefield Capital, Inc. Profit Sharing Plan, Mr. Obus may be deemed to have beneficial ownership in, and to have sole voting and dispositive power over, 2,111,553 shares. Mr. Obus, however, disclaims any beneficial ownership of these shares.

(6)Based on Schedule 13F-HR filed with the SEC on February 6, 2015, includes 1,865,383 shares purchased by Prescott Group Aggressive Small Cap, L.P. and Prescott Group Aggressive Small Cap II, L.P. (collectively, the “Small Cap Funds”) through the account of Prescott Group Aggressive Small Cap Master Fund, G.P. (“Prescott Master Fund”), of which the Small Cap Funds are general partners. As general partner of the Small Cap Funds, Prescott Group Capital Management, LLC (“Prescott Capital”) may be deemed to beneficially own 1,865,383 shares. As the principal of Prescott Capital, Phil Frohlich may also be deemed to beneficially own the 1,865,383 shares held by Prescott Master Fund. Each of Prescott Capital and Mr. Frohlich, however, disclaims beneficial ownership of these shares. Prescott Capital and Mr. Frohlich have the sole voting and dispositive power over these shares.

(7)Based on Schedule 13G/A filed with the SEC on February 10, 2016, Paradigm Capital Management, Inc. has sole voting and dispositive power over 1,265,265 shares.

(8)Includes 1,865,383 share beneficially owned by Prescott Group Capital Management, LLC. As president of Prescott Group Capital Management, LLC, Mr. Watkins may be deemed to beneficially own, and to have shared voting and dispositive power over, these shares. See also Footnote 6 above. Mr. Watkins's address is c/o Prescott Group Capital Management, LLC, 1924 South Utica, Suite 1120, Tulsa, OK 74104. Also includes options exercisable for 25,000 shares and vested awards for 14,429 shares of Common Stock within 60 days of February 1, 2016, and 3,076 shares of Common Stock held by Mr. Watkins directly.


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(9)Includes (i) 79,352 shares that Ms. Hughes holds indirectly and (ii) 709,275 shares held by various family trusts, of which Mr. and Ms. Hughes are co-trustees and beneficiaries. Both Mr. and Ms. Hughes have shared voting and dispositive power over these shares. In addition, includes vested awards for 14,429 shares of Common Stock within 60 days of February 1, 2016.

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(15)Includes options exercisable for 25,000 shares and vested awards for 7,101 shares of Common Stock within 60 days of February 1, 2015.

(16)Includes options exercisable for 25,000 shares and vested awards for 7,101 shares of Common Stock within 60 days of February 1, 2015.

(17)Includes options exercisable for 25,000 shares of Common Stock within 60 days of February 1, 2015.

(18)Includes options exercisable for 26,042 shares of Common Stock within 60 days of February 1, 2015 and 1,179 shares that Mr. Strulson holds directly.

(19)Includes options exercisable for 21,042 shares of Common Stock within 60 days of February 1, 2015 and 1,179 shares that Mr. Tripp holds directly.

(20)Includes options exercisable for 25,000 shares of Common Stock within 60 days of February 1, 2015.

(21)Due to certain legal and regulatory requirements related to the issuance of SEC-registered and NASDAQ-listed securities to Chinese nationals, the Company does not issue any options to Mr. Li.

(22)Includes options exercisable for 728,064 shares and vested awards for 35,505 shares of Common Stock within 60 days of February 1, 2015.

Changes in Control

(10)Includes options exercisable for 396,041 shares and vested awards for 4,167 Common Stock within 60 days of February 1, 2016, and 82,321 shares that Mr. Probert holds directly.

(11)Includes options exercisable for 122,125 shares and vested awards for 1,459 of Common Stock within 60 days of February 1, 2016, and 6,474 shares that Mr. Bunker holds directly.

(12)Includes options exercisable for 74,375 shares and vested awards for 1,250 shares of Common Stock within 60 days of February 1, 2016, and 4,488 shares that Ms. Mendizabal holds directly.

(13)Includes options exercisable for 52,048 shares and vested awards for 1,459 shares of Common Stock within 60 days of February 1, 2016, and 6,456 shares that Mr. Strulson holds directly.

(14)Includes options exercisable for 25,000 shares and vested awards for 14,429 shares of Common Stock within 60 days of February 1, 2016, and 4,191 shares that Mr. Mercer holds directly.

(15)Includes options exercisable for 25,000 shares and vested awards for 14,429 shares of Common Stock within 60 days of February 1, 2016, and 1,072 shares that Mr. Dowden holds directly.

(16)Includes options exercisable for 25,000 shares of Common Stock within 60 days of February 1, 2016, and 14,833 shares that Mr. Noack holds directly.

(17)Includes options exercisable for 25,000 shares and vested awards for 7,328 shares of Common Stock within 60 days of February 1, 2016.

(18)Includes options exercisable for 25,000 shares and vested awards for 3,230 shares of Common Stock within 60 days of February 1, 2016.

(19)Includes options exercisable for 25,000 shares of Common Stock within 60 days of February 1, 2016. Mr. Teets’ address is c/o Red Mountain Capital Partners LLC, 10100 Santa Monica Blvd., Suite 925, Los Angeles, California.

(20)Due to certain legal and regulatory requirements related to the issuance of SEC-registered and NASDAQ-listed securities to Chinese nationals, the Company does not issue any options to Mr. Li. Mr. Li’s address is c/o Shanghai Fosun Pharmaceutical (Group) Co., Ltd., No. 268 South Zhongshan Road, Shanghai 200010, P.R. China.

(21)Includes options exercisable for 859,089 shares and vested awards for 77,983 shares of Common Stock within 60 days of February 1, 2016, and 127,920 shares held directly by our directors and executive officers as a group.

We are not aware of any other arrangement or event, the occurrence of which would result in a change in control of the Company.


SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE


Section 16(a) of the Exchange Act requires the Company’s directors, officers and persons who beneficially own more than 10 percent of a registered class of the Company’s equity securities, to file initial reports of ownership on Form 3 and changes in ownership on Forms 4 or 5 with the SEC. Such directors, officers and 10 percent shareholders also are required by SEC rules to furnish the Company with copies of all Section 16(a) reports they file. Based solely on its review of the copies of such forms furnished or available to the Company, the Company believes that its directors, officers and 10 percent shareholders complied with all Section 16(a) filing requirements for the fiscal year ended December 31, 2014.

182015, except for one Form 4 filed on February 5, 2015, which reported a January 27, 2015 grant of stock options to Ms. Rebecca L. Steinfort.


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EXECUTIVE COMPENSATION


Compensation Discussion and Analysis


This Compensation Discussion and Analysis provides disclosure about the policies and objectives underlying the compensation programs forof our executive officers. Accordingly,officers in 2015, including the following “named executive officers”:
Named Executive OfficerPosition
Gregory L. ProbertChairman and Chief Executive Officer
Stephen M. BunkerExecutive Vice President, Chief Financial Officer and Treasurer
Adriana MendizabalPresident of NSP Americas
Paul E. NoackPresident of China and New Markets
Richard D. StrulsonExecutive Vice President, General Counsel and Chief Compliance Officer
D. Wynne RobertsFormer Chief Executive Officer of Synergy Worldwide*

* Mr. Roberts' employment with the Company terminated effective April 15, 2015. Mr. Roberts is included as a named executive officer because he otherwise would have been includable on the basis of total compensation for 2015, had he been an executive officer at the end of 2015.

In this section, we will addressexplain how our Compensation Committee made decisions related to the compensation of our named executive officers during 2015 and analyze each elementwe provide an overview of the compensation provided to our current Chief Executive Officer, our Chief Financial Officer and the other executive officers named (named executive officers)information set forth in the Summary Compensation Table which followsand other compensation tables contained in this discussion. The Compensation Committeeproxy statement. We also address any actions taken regarding executive compensation after the end of our Boardfiscal 2015, that could affect a fair understanding of Directors generally administers the compensation programs for our named executive officers.  However, our Board of Directors approves the base salary and cash bonus of our Chief Executive Officer.

officers' compensation during fiscal 2015.


Executive Summary


The Company’sCompany's overarching compensation goal is to reward our executives in a manner that supports a pay-for-performance philosophy, while maintaining an overall level of compensation that allows us to attract and retain the best available executive team.

We are


In 2015, the Company embarked on an aggressive, five-year strategic plan to drive a global companymulti-year turnaround and ourtransformation of the Company. Front-loaded, performance-based compensation decisions for 2014 were affected bywas used to support this turnaround effort to drive long term shareholder value. Negative currency headwinds, the continued geopolitical and international economic events outside of our control, particularlystrife in Russiathe Russia/Ukraine region, and Ukraine, which negatively impacted revenue andsignificant strategic future growth investments in China, all contributed to make 2015 a challenging operating income resultsyear for the entire Company.

The Company has tried to score the incentive compensation plans in a manner that recognizes that unplanned world events were outside of the executive team’s control, while also recognizing the importance of ongoing operations to long-term shareholder creation.

·Including results from Venezuela’s discontinued operations, the Company’s consolidated net sales decreased 1.1by 11.4 percent compared to $373.92014, to $324.7 million in 2014, although the loss2015. The revenue decline was the result of negative currency fluctuations.  If measuredfluctuations, the loss of revenue due to the ongoing political and economic issues in Russia, Ukraine and the former CIS countries, as well as the impact of discontinuing our operations in Vietnam. Measured in local currency, net sales increaseddecreased by 0.76.7 percent compared to 2013.2014. The fluctuations in foreign exchange rates had an unfavorable $5.4$17.2 million impact on 20142015 net sales. The Company excludes the impact of foreign exchange rates when assessing its financial results for compensation purposes because it is viewed as not being within the control of the executive team. Excluding the revenue declines from Russia, Ukraine and the surrounding region, ceasing operations in Vietnam, and negative currency fluctuations, the Company’s revenue levels were flat compared to 2014. Operating income decreased by 33.1 percent compared26.8 to 2013, to $16.1$13.9 million during the year ended December 31, 2015, compared to 2014.

· Negative currency fluctuations decreased operating income by $5.6 million during the year.


Overall revenue and operating income results for 2014 were2015, continued to be materially harmed by events in Russia, Ukraine, and the surrounding region. This region ashad been the Company’s second largest global market at the start of 2014 and was growing at a resultdouble-digit rate until the civil unrest commenced in the first quarter of 2014. The Company relies on consumer spending, which declined in the Ukrainian war zone and was impacted even further by rapid currency devaluation in Russia, Ukraine and the surrounding region. The unforeseen Ukrainian political and economic turmoil that began early in 2014, resulted in business levels that shifted from strong growth to a steep decline in a very short period of time and more than offset the above-plan growth that occurred throughout the rest of the current political uncertainty in Ukraine and across the region, and the market decline in the value of the Ukrainian hryvnia and Russian ruble against the U.S. dollar. Although changes in exchange rates between the U.S. dollar and Ukrainian hryvnia do not result in currency fluctuations within our financial statements, the Company’s products in Ukraine and Russia are priced in local currencies pegged to current U.S. dollar exchange rates and therefore become more expensive when the local currency declines in value.world. Overall, revenue from this region declined from $62.7 million in 2013 to $50.3 million in 2014 and operating income declined by almost $4 million.to $27.4 in 2015. Due to the unexpected and unpreventableunpredictable nature of these events,this region, the

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Compensation Committee made compensation decisions that adjusted the decision to exclude it from the Company’s bonus goals afterwhen the first halfgoals were set at the start of 2014.

·2015.


Operating income results were also impacted by strategic merger and acquisition (M&A) activity undertaken or consideredfuture growth investments, particularly in the first halfstrategically important market of China. China represents a significant long-term growth opportunity, but the Company does not expect to begin to realize revenues until later in 2016. Infrastructure costs in 2015, associated with establishing business operations in China were $5.2 million, $4.1 million greater than 2014. Also, negatively affecting operating income was $4.5 million in unfavorable currency impacts on cost of sales. The M&A activityperformance based long-term compensation program was not includeddesigned around providing a long-term incentive for multi-year growth in China that would transform the Company.

Due to the overall business environment and the significant revenue loss from Russia/Ukraine and the surrounding region, the Company initiated a major companywide restructuring action in Q2 of 2015. This created a restructuring charge of $3.3 million, which resulted in annualized operating savings of approximately $8.0 million, most of which will be realized in future years. This restructuring reduced global headcount by 10%.

Perhaps most importantly, the Company initiated a new five year strategic growth plan in 2015, that is designed to deliver significant growth during the strategic window. This strategy, built around successful entry into and growth in China, as well as creation of new lines of business for NSP and Synergy using scientifically differentiated products, will largely redefine the company in the annual budget set atyears ahead. Substantial progress was made in 2015, implementing plans that will deliver the startresults targeted by the five-year strategic plan. In connection with this strategy, the Board of Directors asked Gregory L. Probert, Chairman and CEO, to sign a new employment agreement and relocate to the Salt Lake City area. As part of the year and resultednew employment agreement, the Company provided a contingent multi-year special performance equity award that inflates the appearance of CEO pay in a China joint venture agreement2015, but does not actually vest unless the CEO drives transformational performance resulting in the achievement of aggressive EPS growth goals. The special performance stock unit goals through 2019, align with Fosun Pharma, which initiated the Company’s business presencehigh growth long-range plan. The compensation of Mr. Probert is further inflated in 2015, by an award of sign-on options in addition to the rapidly growingannual and strategically important China market.special long-term grants. Mr. Probert had not been granted a sign-on grant when he stepped in as interim CEO in 2013. The Compensation Committee took these unplanned costs into considerationgrant date value of the equity grants received by the CEO in determining appropriate 20142015 was $2,931,100, which is considerably higher than the grant date value of the grant received by the CEO for 2016 of $499,800. The compensation committee considered 2015 as a one-time staking year to motivate and reward the CEO, and the other named executive officers, for the executive team.

five-year business transformation.


The Company tries to provideprovides compensation in a manner that is aligned with long-term performance and has tried to improveimproving governance and risk mitigation elements within the compensation structure.

·


We continue to structure a substantial portion of the total direct compensation of our named executive officers in the form of annual performance-based cash incentive and long-term stock-based compensation, including performance-contingent, stock-based compensation. This allows us to create a positive relationship between our operational performance and shareholder return.

·


Our annual bonus plan is designed to ensure that a significant portion of total cash compensation of our named executive officers is performance-based. In general our target total annual cash compensation is at or below the peer median.  Our CEO’s 2014 salary, equity grant, and total compensation value were all

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below the median of aour peer group used byand our independenttotal direct compensation consultant, Frederic W. Cook & Co. (F.W. Cook), to benchmark pay and performance.

·        ��                     is at or above median of our peer group.


As a result of our financial and overall business performance, we paid bonuses to our named executive officers for 20142015, that averaged 78%74% of their target bonus amount. This below-target bonus was to reflectformulaic under the pre-established bonus plan and reflects the Company’s pay-for-performance philosophy, while also taking into account the unplanned geopolitical events and M&A growth costs.

·No salary increases were made in 2014 to any memberphilosophy.


Vesting of a significant portion of the Company’s senior executive team.

·We granted equity awards in 2014 that vest based on service time considerations.  However, equity awardsRSUs granted in 2015, have 50%is subject to the Company achieving certain performance targets measured by its EPS and revenue. The performance goals are designed to reward the successful execution of the restricted stock units (RSUs) based on multi-year EPS and revenueCompany's newly created five-year strategic plan. If the Company does not meet the performance goals, that are consistent with the newly created five year strategic plan.  These goals represent long-term growth that is above the 75th percentile of our peer group’s historical performance and reinforce the business strategy and impact of the China business opportunity.

·based RSUs will be forfeited.


In 2014, the Compensation Committee retained F.W. Cook, aan independent compensation consulting firm, to conduct a comprehensive benchmark study and advise the committee on structuring executive compensation to ensure that our compensation continues to retain and motivate our executive officers, and at the same time

24


reinforces the Company’sCompany's strategic objectives. F.W. Cook’sCook's study found that base salaries and total target cash compensation for our named executive officers were mostly at or below the median of our peer group. In some cases, equity awards were also below the median andof our peer group. Further, 2014 target total direct compensation was below the median of our peer group for most executive officers including the CEO.

·The Company’s five-year total shareholder annualized rate of return was 17%, which was above the median of the compensation peer group.

·Mr. Probert.


The Company and CEOMr. Probert began discussions in 2014, and entered into an amended and restated employment contract in early 2015, that includes relocationincluded Mr. Probert relocating from California to Utah by the end of 2015, which will end2015. During the need for the Company to reimburse himrelocation transition period, Mr. Probert was reimbursed for temporary housing and travel expenses onceexpenses. Mr. Probert re-located to Utah in 2015 and, accordingly, the Company has ceased temporary travel and relocation is complete.

·reimbursements for Mr. Probert.


The aforementioned amended and restated employment agreement for Mr. Probert also includes a cash compensation claw-back policy, stock ownership guidelines and 2015 equity awards that include so called “double trigger” change-of-control vesting acceleration provisions requiring both a (1) a Change-of-Control Event (as defined therein), and (2) termination of Mr. Probert’s employment or his resignation for Good Reason (as defined therein) within 24 months of the Change of Control Event.


The Company initiated stock ownership guidelines for all executive officers, including an ownership guideline of $1 million for Mr. Probert.

The amended and restated employment agreement with Mr. Probert contains a global incentive "clawback" provision pursuant to which, in the event that during the term of the employment agreement, and for a period of two years after its termination, the Company is required to restate its financial statements due to a material non-compliance with any applicable financial reporting requirement, as determined by the Company's Board of Directors, the Company has the right, exercisable in its sole discretion, to review the amount of incentive cash compensation paid to Mr. Probert and the amount of unvested equity compensation granted to him pursuant to existing grants of stock options and RSUs during the period of time encompassed by the restatement and recalculate Mr. Probert's compensation for the look-back period based upon the restated financial statements, provided, however, that this look-back period shall be no longer than two years. If, pursuant to this review and recalculation, the amount of compensation that the Company would have paid under the restated financial statements for the look-back period is less than the actual amount of compensation that was paid to Mr. Probert during the look-back period, Mr. Probert shall repay the difference to the Company in a time and manner mutually agreed to between the Company and Mr. Probert.

Company policy prohibits executives from entering into hedging transactions, such as put and call options that would operate to lock-in value of their equity compensation awards at specified levels. Executive officers are also prohibited from pledging the Company’s stock or holding such stock in margin accounts. Accordingly, similar to any other shareholder, the executive officers bear the full risk of economic loss with respect to their equity holdings.

Compensation Policy for Executive Officers.


We have designed the various elements comprising the compensation packages of our executive officers to achieve the following objectives:

·


attract and retain qualified executives who will help the Company meets its goals;

·


reflect individual accomplishments and contributions to the Company, as well as overall Company performance; and

·


align each executive officer’sofficer's interests with those of the Company’s shareholders.

Company's shareholders; and


support the long-range strategic plan with short- and long-term incentives.

The Compensation Committee seeks to achieve these objectives by:

·


Establishing a compensation structure that is both market competitivemarket-competitive and internally fair;

·



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Linking a substantial portion of compensation to the Company’sCompany's financial performance and the individual’sindividual's contribution to that performance;

·


Providing below-target compensation for under-performance and upward compensation leverage for exceptional performance;performance through emphasis on annual cash incentives, performance equity and

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stock options; and


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·Providing long-term equity-based incentives and encouraging direct share ownership by executive officers.

officers, as well as ownership guidelines that provide an incentive for officers to consider long-term value maintenance in addition to growth.


For our compensation programs, the Compensation Committee utilizes a combination of cash and equity incentive programs under which the compensation of the executive officers will varyvaries with our performance and the market price of our common stock. The general objective is to emphasizebalance equity compensation overwith short-term cash compensation, but there is no target that applies to all officers. The actual levels at which we may set compensation for a particular executive officer may vary based on the Company’sCompany's overall financial performance and an evaluation of each executive officer’sofficer's individual performance level, experience and his or her potential contribution to the Company’sCompany's future growth. Also, actual pay may be below the levels set as a target if performance is below our annual goals, as was the case in 2014 when bonus was funded below-target, and as will be increasingly true in 2015 as half of executive officer equity awards are subject to multi-year EPS and revenue performance goals that we believe are rigorous and require a high level of growth.

goals.


Setting Executive Compensation


Major compensation decisions for each fiscal year, including base salary adjustments, the determination of target annual bonus opportunities and the determination of long-term equity incentive awards, are generally made by the Compensation Committee during the first quarter of the current year. Foryear or the 2014 fiscal year, such decisions were made in March 2014.last quarter of the previous year. The principal factors that the Compensation Committee considerconsiders when setting the compensation levels for the named executive officers are as follows:

·


Comparison of the Company’sCompany's performance against certain operational and qualitative goals identified in the Company’sCompany's strategic plan;

·


Comparative market data;

·


Our Chief Executive Officer’sOfficer's recommendations for the other named executive officers;

·


Individual performance as assessed by the Compensation Committee, with input from the Chief Executive Officer as to the named executive officers other than himself; and

·


Tenure, scope of responsibilities, experience and qualifications, future potential and internal pay equity.


Impact of 20142015 Say-on-Pay Vote: The most recent shareholder advisory vote on executive officer compensation required under the federal securities laws was held on May 7, 2014,6, 2015, after the Compensation Committee had approved the 20142015 compensation of the named executive officers. More than 9495 percent of the votes cast on such proposal were in favor of the compensation of the named executive officers, as that compensation was disclosed in the Compensation Discussion and Analysis and the various compensation tables and narrative that appeared in the Company’sCompany's proxy statement dated March 28, 2014.27, 2015. Based on that level of shareholder approval, the Compensation Committee decided not to make any material changes to the Company’sCompany's compensation philosophies, policies and practices for the remainder of the 20142015 fiscal year. However, the Compensation Committee will continue to take into account future shareholder advisory votes on executive compensation in order to determine whether any subsequent changes to the Company’sCompany's executive compensation programs and policies would be warranted to reflect any shareholder concerns reflected in those advisory votes. Further, the Committee is working to improve the ongoing program in 2015 and beyond in spite of the high level of shareholder support for past practice.  Based on the voting preference of our shareholders, the frequency of future Say-on-Pay votes will be every year.


Role of External Advisor: In 2014, the Compensation Committee engaged the services of F. W.F.W. Cook, a leading consulting firm in the area of executive compensation, to conduct an independent comprehensive benchmark study of executive compensation practices at the Company against other comparable public companies in our industry.

Benchmarking: In setting executive officer compensation opportunities forNovember 2014, F.W. Cook provided an Executive Compensation Report to the Compensation Committee referenced(the “Executive Compensation Report”). The Compensation Committee considered the Executive Compensation Report provided byand the recommendations of F.W. Cook in early 2012.  A similar study was completed bysetting executive compensation for the 2015 fiscal year.



26


Benchmarking: F.W. Cook in November 2014, which was used fora peer group consisting of 15 publically traded U.S. based specialty retail and personal product companies to perform market comparisons of our executive compensation program and to help set 2015 compensation.

prepare its Executive Compensation Report. The companies in the peer companies utilized for the 2012 study that was used to set 2014 compensation, as well as the 2014 peer companies used for confirmation and benchmarking for 2015 decisionsgroup were selected by the Compensation Committee, in accordance with the recommendation of F.W. Cook,chosen on the basis of objective industry classifications, and financial size criteria (revenueannual revenue and market capitalization at the time of the study).report. The Compensation Committee believes that all of the companies in the peer companiesgroup represent primary competitors for executive talent and investment capital.    Competitive comparisons in 2012 were based on a peer group of 18 publicly traded U.S.-based specialty retail and personal products companies

21talent.



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and the late 2014 study was based on 15 such companies.  Nature’s Sunshine’s revenue is slightly below the median of the peers and this was considered in setting pay levels, where most officers have cash compensation that is below the peer median.

The companies in the 2012 peer group are listed below:

Hain Celestial

Mannatech

Nu Skin Enterprises

NutriSystem

Prestige Brands

Revlon

Elizabeth Arden

Medifast

Blyth

Boulder Brands

Vitamin Shoppe

Vitacost.com

USANA Health Sciences

Synutra

Omega Protein

Inter Parfums

Omega Protein

Nutraceutical

Perfumania Holdings

Nutraceutical

Inventure Foods
LifeVantage

In 2014, the peer group was reviewed and Inventure Foods, and LifeVantage were added as peers (both are smaller than us), while Hain Celestial, Mannatech, Prestige Brands, Revlon and Synutra were removed from the 2014 peer for being too large or too small for direct compensation comparison, or because they are a foreign company with a foreign pay model.


Role of Management: As in prior years, our Chief Executive Officer presented to the Compensation Committee his recommendations for 20142015 base salaries, bonuses and equity grants for the named executive officers (other than himself), taking into consideration the expected total cash compensation for such officers for 20142015, and the comparative market data for total cash compensation for comparable positions. These recommendations were based on the Company’sexecutive's expect role in the Company's transformation, the Company's performance measured in terms of the sales revenue and operating income levels attained by the division for which the executive was primarily responsible, where applicable, or by the Company as a whole, as well as the executive’sexecutive's performance against individual performance objectives, and the comparative analysis of the Company’sCompany's compensation practice to market for each such officer. The Compensation Committee discussed these recommendations with the Chief Executive Officer and made the final determination on the base salaries, bonuses and equity grants for these officers based on these recommendations and its review of the Executive Compensation Report, with such adjustments as it deemed appropriate.


The Compensation Committee recommended to our Board of Directors the base salary and cash bonus for our Chief Executive Officer. The Board approved the Chief Executive Officer’sOfficer's compensation as recommended by the Compensation Committee. As noted, Thethe Company and the CEOour Chief Executive Officer entered into a new employment contract in early 2015. Further discussion of this new agreement is included below.


Elements of Compensation. 

Each named executive officer’sofficer's compensation package consists of three elements: (i) a base salary, (ii) aannual cash bonusincentive based upon Company financial performance and the named executive officer's individual officer’s personal performance, and (iii) participation in long-term, stock-based incentive awards, in the form of RSUs, performance-contingent RSUs and, in some cases, stock options and restricted stock units.options. In addition, the named executive officers are provided with certain benefits and perquisites and are entitled to certain severance benefits in the event their employment terminates under certain specified circumstances, as more fully described below.


Each of the majorthree primary elements comprising the compensation package for named executive officers (salary, bonus and equity) is designed to achieve one or more of the Company’sCompany's overall objectives in fashioning a competitive level of compensation, tying compensation to individual and company performance and establishing a meaningful and substantial link between each named executive officer’sofficer's compensation and our long-term financial success.


There is no pre-established policy for the allocation of compensation between cash and non-cash components or between short-term and long-term components, nor are there any pre-established ratios between the Chief Executive Officer’sOfficer's compensation and that of the other named executive officers. Instead, the mix of compensation for each named executive officer is based on a review of the marketpeer group data and a subjective analysis of that individual’sindividual's performance and contribution to the Company’sCompany's financial performance. Our mix of compensation elements is designed to reward results and motivate long-term performance through a combination of cash and equity incentive awards.


Base Salary. Base salary is intended to attract and retain qualified executives and to provide a level of security and stability from year to year and is not dependent to any material extent on the Company’sCompany's financial performance. The F.W. Cook 2014 review of executive compensation

27


Executive Compensation Report indicated that base salaries for certain of our named executive officers in 2014 were below the 50th percentile of our peer group, includingand our Chief Executive Officer’s base salary was below the CEO’s salary.

22


Table25th percentile of Contents

Afterour peer group.


None of the named executive officers received a salary increase effective in 2014. In December 2014, after reviewing financial performance, the Executive Compensation Report and the CEO’sChief Executive Officer’s recommendations, the Compensation Committee did not approveapproved and awardawarded salary increases to the named executive officers, during 2014.

Name

 

Base Salary as of
December 31, 2014 ($)

 

Base Salary as of
January 1, 2014 ($)

 

Percentage Increase
(%)

 

Gregory L. Probert

 

525,000

 

525,000

 

—

 

Stephen M. Bunker

 

305,000

 

305,000

 

—

 

D. Wynne Roberts

 

415,000

 

415,000

 

—

 

Richard D. Strulson

 

305,000

 

305,000

 

—

 

Matthew L. Tripp

 

275,000

 

275,000

 

—

 

other than the Chief Executive Officer, effective January 1, 2015 as follows:

Name Base Salary as of January 1, 2015 ($) Base Salary as of December 31, 2014 ($) Percentage Increase (%)
Stephen M. Bunker 320,000 305,000 4.9
Adrianna Mendizabal 272,950 265,000 3.0
Paul E. Noack 350,000 350,000 -
Richard D. Strulson 320,000 305,000 4.9
D. Wynne Roberts 415,000 415,000 -

The Compensation Committee, based on the Executive Compensation Report and to be more in line with base salaries of Chief Executive Officers of our peer group, recommended to our Board of Directors, and our Board of Directors approved, an increase to our Chief Executive Officer’s base salary effective January 1, 2015 as follows:
Name Base Salary as of January 1, 2015 ($) Base Salary as of December 31, 2014 ($) Percentage Increase (%)
Gregory L. Probert 600,000 525,000 14.3

The Compensation Committee reviewed the base salaries of the Company’s executive officers, including the named executive officers, in November 2015. After review of the Chief Executive Officer’s recommendations for the base salary of the named executive officers in 2016, the Compensation Committee decided to limit any base salary increases to market adjustments and to adjustments based on increases in the scope of responsibility to certain named executive officers. Market adjustments were intended to bring the base salaries of the named executive officers closer to the 50th percentile of base salaries for comparable positions at the companies in the peer group used to prepare the Executive Compensation Report. For 2016, the Compensation Committee set the named executive officer’s base salaries as follows, which base salaries became effective January 1, 2016:
Name Base Salary as of January 1, 2016 ($) Base Salary as of December 31, 2015 ($) Percentage Increase (%)
Stephen M. Bunker 320,000 320,000 -
Adrianna Mendizabal 293,868 272,950 7.7
Paul E. Noack 400,500 350,000 14.4
Richard D. Strulson 347,000 320,000 8.4
D. Wynne Roberts - - -

In November 2015, the Compensation Committee analyzed the base salary of the Chief Executive Officer. The Compensation Committee decided to limit any increase to the Chief Executive Officers base salary to a market adjustment and recommended to the Board of Directors, and the Board of Directors approved, an adjustment to the Chief Executive Officer’s base salary to bring it closer to the 50th percentile of base salaries for Chief Executive Officers at the companies in the peer group used to prepare the Executive Compensation Report. As such, the Board of Directors, following the recommendation of the Compensation Committee, provided the following increase to the Chief Executive Officer’s base salaries, which increase became effective on January 1, 2016, and remains below the median for CEO salary versus the peer group data provided by F.W. Cook in the Executive Compensation Report:

28


Name Base Salary as of January 1, 2016 ($) Base Salary as of December 31, 2015 ($) Percentage Increase (%)
Gregory L. Probert 618,000 600,000 3.0

Annual Cash BonusIncentive.  The annual cash bonus programincentive is designed to advance a pay-for-performance policy by bringing the total cash compensation for our executivesnamed executive officers to target in a typical year and to exceed target when justified by Company performance.


For 2014,2015, the Compensation Committee adopted a performance-based bonus plan, with 65%an annual cash incentive program for our named executive officers in which, except for Mr. Noack, 50% of the bonus is based on the attainment of corporate financial performance goals and 35%50% is based on the Compensation Committee’s subjective evaluation of performance against individual objectives determined early in the year. The Compensation Committee related Ms. Mendizabal's bonus to take into account accomplishments not directly accounted for by an analysisthe financial performance of the Company’sCompany's division over which she is primarily responsible, NSP Americas, instead of relating her bonus to the Company's overall finance performance. The Compensation Committee changed the weighting of the factors for Mr. Noack in recognition of his responsibilities relating to the Company's anticipated entry into the China market. For Mr. Noack, 35% of his bonus is based on the Company's financial performance.performance and 65% is based on his performance against individual objectives set early in the year. In addition, the Compensation Committee retained the discretion to increase or decrease the aggregate bonus amount to be paid to any individual under the bonus plan by up to 10% of that person’s aggregate target, based on its subjective evaluation of general corporate and individual performance.

Our Compensation Committee believes that basing a portion of the bonus on individual performance takes into account that many accomplishments are not directly accounted for by an analysis of the Company’s financial performance.


The 20142015 target bonusescash incentive (as a percentage of base salary) for each named executive officer are as follows:


Name

NameTarget BonusCash Incentive (as
% of Base Salary)

Gregory L. Probert

100

%

100%

Stephen M. Bunker

55

%

55%

Adriana Mendizabal

50%
Paul E. Noack75%
Richard D. Strulson55%
D. Wynne Roberts

75

%

Richard D. Strulson

55

%

Matthew L. Tripp

50

%

75%


The portion of the bonus to becash incentive based on the attainment of corporate financial performance goals required attainment of minimum financial performance thresholds and could range from 50% to 200% of the targeted dollar amount of the bonus attributable to these financial goals. The maximum bonus payable under the plan to any named executive officer is 175%160% of his or her target amount.

The


Except in the case of Ms. Mendizabal, the corporate financial performance goals for 2015 were based on the Company’s revenue (30%) and the Company’s operating income, (35%), both excluding foreign currency exchange impact since it is outside the control of the executive team and the goal of the cash bonus program is to reward operating achievement. The corporate financial performance goals for determining Ms. Mendizabal's were based on the revenue and operating income generated by the business division for which she is responsible, NSP Americas. Compensation decisions, including the bonus goals were set in March 2014,early 2015, for the 20142015 fiscal year. However, this was before it became clearAt the extent to which political uncertainty existed in our second largest market, Russia/Central and Eastern Europe. Net sales decreased primarily as a result oftime the current political uncertainty in Ukraine and across the region, and the market decline in the value of the Ukrainian hryvnia and Russian ruble against the U.S. dollar. Although changes in exchange rates between the U.S. dollar and Ukrainian hryvnia do not result in currency fluctuations within our financial statements, the Company’s products in Ukraine and Russia are priced local currencies pegged to current U.S. dollar exchange rates and therefore become more expensive when the local currency declines in value. The decline in the value of the Ukrainian hryvnia and Russian ruble against the U.S. dollar that began in early 2014, and the unexpected effect that the insurgency had on the business environment, ledtargets were set, the Compensation Committee, with the Board’s approval, made the decision to determine that it would be fair to adjust the executive bonus goals after the first half of the year for events outside of management’s control. This adjustment included a revision inexclude from the corporate performance goals forbonus targets revenue and operating income infrom Russia Central and Eastern Europe. This adjustment amountedthe surrounding region due to $10.5 million in revenue and $2.8 million in operating income.the extraordinary volatility of the Russian markets. The Compensation Committee also made the decision not to include unexpected non-operating costs ($1.944 million) from unplanned M&A activity, includingthat the Fosun deal that allowed us to enter into the China market.  The M&A costs reduced the 1st half operating income results.  All other previously established bonus goals were left unchanged.

23

target would not be adversely affected by the restructuring charges in order to encourage and motivate maximum cost savings.


Table of Contents

Following the Committee’s adjustments, the funding schedule for the corporate portion of the first half bonus based on the Company's financial performance was as follows, with the actual payout calculations based on linear interpolations of the funding slopes, rather than by the sample thresholds below:

Revenue (30% of target bonus)
(excluding foreign currency exchange impact)

 

Operating Income (35% of target bonus)
(excluding foreign currency exchange impact)

 

1st Half 2014 Revenue
(mils)

 

Payout as % of Target

 

1st Half 2014 Operating
Income (mils)

 

Payout as % of Target

 

 

 

$

182.2

 

50.0

%

 

 

$

13.1

 

50.0

%

 

 

$

188.0

 

75.0

%

 

 

$

13.9

 

75.0

%

Goal

 

$

193.8

 

100.0

%

Goal

 

$

14.6

 

100.0

%

 

 

$

197.1

 

120.0

%

 

 

$

15.2

 

120.0

%

 

 

$

200.2

 

140.0

%

 

 

$

15.8

 

140.0

%

 

 

$

203.5

 

160.0

%

 

 

$

16.3

 

160.0

%

 

 

$

206.8

 

180.0

%

 

 

$

16.9

 

180.0

%

 

 

$

209.9

 

200.0

%

 

 

$

17.5

 

200.0

%

1st half 2014


29


Revenue (25% of target bonus)
(excluding foreign currency exchange impact)
 
Operating Income (25% of target bonus)
(excluding foreign currency exchange and restructuring impact)
2015 Revenue
($) (mils)
 Payout as % of Target 
2015 Operating Income
($) (mils)
 Payout as % of Target
< 322,239 —
 < 19,526 —
322,239 50% 19,526 50%
332,523 75% 20,611 75%
Target 342,807 100% Target 21,696 100%
348,635 120% 22,564 120%
354,120 140% 23,432 140%
359,947 160% 24,300 160%
365,775 180% 25,167 180%
371,260 200% 26,035 200%

2015 bonuses based on corporate performance were based on the following results:

Revenue
(excluding foreign currency exchange impact)

 

Operating Income
(excluding foreign currency exchange impact)

 

1st Half 2014
Revenue
(mils)

 

% Target
Achieved

 

Payout as % of
Target

 

1st Half 2014
Operating Income
(mils)

 

% Target
Achieved

 

Payout as %
of Target

 

$

190.5

 

98.3

%

86.8

%

$

14.9

 

102.3

%

111.5

%

Revenue
(excluding foreign currency exchange impact)
 
Operating Income
(excluding foreign currency exchange and restructuring impact)
2015 Revenue
($) (mils)
 % Target Achieved Payout as % of Target 
2015 Operating Income
($) (mils)
 % Target Achieved Payout as % of Target
316,415 92.3% —
 21,110 97.3% 86.5%

The Company's revenue for 2015, excluding the impact of foreign currency exchange rates, was below the minimum threshold amount, resulting in no payout for the revenue target. The Company's operating income for 2015, excluding impact of foreign currency exchange rate and restructuring charges, was 96.7% of the goal, resulting in a payout equal to 84% of target.

The Compensation Committee made the determination to base the calculation of Ms. Mendizabal's 2015 bonus on the financial performance of the business division for which she is responsible, NSP Americas, instead of on Company-wide financial performance goals. The funding schedule for the corporate portion of the second halfMs. Mendizabal's bonus based on NSP America's financial performance was as follows:

Revenue (30% of target bonus)
(excluding foreign currency exchange impact)

 

Operating Income (35% of target bonus)
(excluding foreign currency exchange impact)

 

2nd Half 2014 Revenue
(mils)

 

Payout as % of Target

 

2nd Half 2014 Operating
Income (mils)

 

Payout as % of Target

 

 

 

$

176.1

 

50.0

%

 

 

$

12.4

 

50.0

%

 

 

$

181.7

 

75.0

%

 

 

$

13.1

 

75.0

%

Goal

 

$

187.4

 

100.0

%

Goal

 

$

13.8

 

100.0

%

 

 

$

190.5

 

120.0

%

 

 

$

14.3

 

120.0

%

 

 

$

193.5

 

140.0

%

 

 

$

14.9

 

140.0

%

 

 

$

196.7

 

160.0

%

 

 

$

15.4

 

160.0

%

 

 

$

199.9

 

180.0

%

 

 

$

16.0

 

180.0

%

 

 

$

202.9

 

200.0

%

 

 

$

16.5

 

200.0

%

2nd half 2014 bonuses based on corporate performance were based on the following results:

Revenue
(excluding foreign currency exchange impact)

 

Operating Income
(excluding foreign currency exchange impact)

 

2nd Half 2014
Revenue
(mils)

 

% Target
Achieved

 

Payout as % of
Target

 

2nd Half 2014
Operating Income
(mils)

 

% Target
Achieved

 

Payout as %
of Target

 

$

188.8

 

100.8

%

109.6

%

$

3.2

 

23.0

%

0.0

%

On a full year blended basis, 98% of the 30% revenue target was achieved (this is 29.4% of target) and 56% of the 35% operating income target was achieved (this is 19.6% of target). 

Revenue for NSP Americas
(excluding foreign currency exchange impact)
 
Operating Income for NSP Americas
(excluding foreign currency exchange and restructuring impact)
2015 Revenue ($) Payout as % of Target 2015 Operating Income ($) Payout as % of Target
< 175,086 —
 < 40,548 —
175,086 50% 40,548 50%
180,674 75% 42,800 75%
Threshold 186,262 100% Threshold 45,053 100%
189,428 120% 46,855 120%
192,409 140% 48,657 140%
195,575 160% 50,459 160%
198,742 180% 52,261 180%
201,722 200% 54,064 200%


30


Revenue
(excluding foreign currency exchange impact)
 
Operating Income
(excluding foreign currency exchange and restructuring impact)
2015 Revenue ($) % Target Achieved Payout as % of Target 2015 Operating Income ($) % Target Achieved Payout as % of Target
185,193 99.4% 95.3% 44,213 98.1% 90.7%

The remaining 35%50% of bonus potential was based on each named executive’s individual performance.

performance, except in the case of Mr. Noack whose individual performance accounted for 65% of his bonus potential. In determining the bonus for each named executive officer, the Compensation Committee reviewed the executive’snamed executive officer’s individual performance, and the date of employment with the Company for the executives employed during 2014, as well as general corporate performance not otherwise captured in the financial performance goals. The Compensation Committee determined that although a portion of the financial performance goals were not met, the Company’s management made substantial progress on key objectives in support of long-term growth. These key objectives included the development and early execution stages of a detailed five-year strategic plan, a strategic joint venturesignificant progress in Chinabuilding the organization and the resultant initiation ofteam to accelerate the Company’s entry into the China market, the recruitment of key additional management team members, the improvement

24


Table of Contents

of corporate leadership throughout the organization, and themajor restructuring of the Company’scompany and reduction in operating expenses, substantial progress in creating new business unitsmodels that will drive growth in key markets, and segments to improve efficiencies and to capitalize onleveraging the Company’s strengths ofnew science capabilities to create differentiated product quality and distribution channels.systems. In addition, the Compensation Committee recognized the challenge of the current global economic environment, particularly in markets that represent a significant portion of the Company’s business, such as Russia, Ukraine and the surrounding region. The Committee determined that, in accordance with its discretion as established in the bonus plan, it should award bonuses that reflect each executive officer’s individual performance in light of the circumstances described above, to achieve their appropriate levels of compensation.

Applying these factors and methodology, on February 25, 2015, the Board of Directors, based on the recommendation of the Compensation Committee, awarded Mr. Probert a bonus in the amount of $422,625, which was 80.5% of target.  When combining 1st and 2nd half results, this represented a blended 98% of target for net sales revenue (29.4% out of 30%), a blended 56% of target for operating income (19.6% out of 35%), and 31.5% of target for individual performance out of 35%.

The Compensation Committee awarded bonuses for the other named executive officers on February 25, 2015, as follows: Mr. Bunker—$126,232; Mr. Roberts—$214,763; Mr. Strulson—$140,910; and Mr. Tripp—$115,500.   Each of the named executive officer’s bonus represented a blended 98% of target for net sales revenue (29.4% out of 30%), a blended 56% for operating income (19.6 out of 35%), and a range of 20.0% to 35.0% of target for individual performance (out of 35%).  The average bonus payout for the other named executive officers was 76% target.


In determining the bonus amount for each named executive officer and whether the individual performance goals were met, the Compensation Committee reviewed the executive’s individual performance and madetook into account the following determinations:

individual contributions made by each named executive officer during 2015:

Executive

Basis for Committee’s Determination

Named Executive Officer2015 Individual Contribution
Gregory L. Probert
As the Company’s Chairman and CEO, Mr. Probert has initiated an aggressive strategic plan to transform the Company and achieve above market growth. He also led the restructuring efforts necessitated by the negative impact of events in the Russia/Ukraine region and currency headwinds.


Stephen M. Bunker

As the Company’s Chief Financial Officer, Mr. Bunker strengthened the Company’s finance department talent and capabilities; improved the Company’s budget and planning processes; and developed and implemented a long-term tax strategy and plan.


D. Wynne Roberts

Adriana Mendizabal

As

Ms. Mendizabal is responsible for the Company’s Presidentlargest and Chief Operating Officer, most profitable business, NSP Americas. She has been successful in turning around the U.S. business from a long period of slow decline to six consecutive quarters of growth.

Paul E. Noack
Mr. Roberts playedNoack has been responsible for the Company’s market entry strategy and execution in China. He has hired and developed a primary rolestrong local team in the development of the long-range strategic growth plan; set clear priorities atChina and positioned the business segmentto launch in 2016. Mr. Noack is also responsible for the Company’s strategic plan and country level for investment and resources; and effectively implemented the organizational restructuring.

wholesale markets.

Richard D. Strulson

Mr. Strulson has built a strong legal team, including hiring an experienced general counsel for China and Asia, and created a new distributor compliance department.

Matthew L. Tripp

Dr. Tripp has defined and developed the Company’s science strategy and vision to achieve higher organic growth and profitability through innovation. He has also evaluated and is working to optimize the product road map in order to enhance competitive differentiation and clinical performance.




31


2015 Cash Incentive Awards. Applying the factors and methodology described above, on February 23, 2016, the Compensation Committee awarded the following cash incentive awards to our named executive officers, except for our Chief Executive Officer whose cash incentive award was awarded by the Board of Directors based on the recommendation of the Compensation Committee:
Named Executive Officer Percentage of Target Cash Bonus ($)
Gregory L. Probert 72% 429,750
Stephen M. Bunker 47% 82,060
Adriana Mendizabal 96% 131,664
Paul E. Noack 88% 230,934
Richard D. Strulson 72% 126,060

Long-Term IncentivesIncentive Awards. We provide long-term incentivesincentive awards in the form of stock option and restricted stock unit grants. RSUs pursuant to the Nature’s Sunshine Products, Inc. 2012 Stock Incentive Plan (the “2012 Incentive Plan”), and the Nature’s Sunshine Products, Inc. 2009 Stock Incentive Plan (the “2009 Incentive Plan”).

The Compensation Committee believes that equity grants align2015 awards were granted with the interestsgoal of reinvigorating long-term performance and transforming the Company through achievement of the executive officerlong-range strategic plan, which begins with those of the shareholders and provide the officer with a significant incentive to manage the Company from the perspective of an owner with an equity stakeinvestments in the business. Beginninginitial years in 2010, the vesting of a significantorder to create material growth by 2019. A portion of stock options has been tied to the attainment by the Company of certain operating metrics. For example, 25% of the stock option grants were tied to operating metrics in both 2012 and 2013. However, for the 2014 equity grants, the vesting was solely based on service conditions due to the appointment of a new CEO in 2013, and the new strategic plan that was in the process of being implemented at the time of the grant. Now that the new strategic plan has been implemented, the 2015 equity grant will consist of a greater portion of equity that iswas subject to vesting conditions tied to the Company’s operating metrics. The Committee believes that performance-based equity further rewards long-term decision making and value creation, and align shareholders’shareholders' and managements’managements' interests.


25


Table of Contents

20142015 Awards. On February 11,December 12, 2014, the Compensation Committee approved two separate grants of RSUs to each named executive officer; a 2015 LTIP grant and a special, one-time equity grant. The special equity grant was a one-time, front-loaded grant designed to support the new strategic plan and included rigorous performance metrics connected to achieving strategic plan financial objectives. The effect is that compensation appears inflated due to the performance contingent long-term equity grants, but future years will be lower and the performance shares will be forfeited if the performance metrics are not achieved.


In addition, Mr. Probert was granted a belated new hire grant upon signing his amended and restated employment agreement on February 11, 2015, which secured his service long-term. The amended and restated employment agreement provided for the grant of a stock optionsoption to purchase 185,000 shares of the Company’s common stock at an exercise price equal to the closing price of the Company’s common stock on the grant date. This one time grant was made in recognition that he did not receive a “sign-on” grant when he assumed the role as Chairman and interim CEO. The number of restricted stock units of Common Stock ofand options granted to the Company under the 2012 Plan to certain named executive officers.  The number of shares subject to each grant isofficers in 2015, are as follows:

Name

 

Restricted Stock Units

 

Stock Options

 

Gregory L. Probert

 

16,667

 

50,000

 

Stephen M. Bunker

 

5,834

 

17,500

 

D. Wynne Roberts

 

11,667

 

35,000

 

Richard D. Strulson

 

5,834

 

17,500

 

Matthew L. Tripp

 

5,834

 

17,500

 

The 2014 equity grants vest in equal annual installments over a 4-year period of service measured from the grant date.  The vesting will accelerate

  Restricted Stock Units  
 2015 LTIP Grant Special Equity Grant Stock Options
Name Time Based Vesting Conditions Vest Subject to Revenue Targets Time Based Vesting Conditions Vest Subject to EPS Targets  
 (1) (2) (1) (3) (4)
Gregory L. Probert 30,000 30,000 50,000 50,000 185,000
Stephen M. Bunker 3,334 3,334 12,500 12,500 -
Adriana Mendizabal 3,000 3,000 12,500 12,500 -
Paul E. Noack 7,000 7,000 37,500 37,500 -
Richard D. Strulson 3,334 3,334 12,500 12,500 -
D. Wynne Roberts 5,000 5,000 15,000 15,000 -

(1)
The RSUs set forth in the table above under the columns entitled "Time Based Vesting Conditions" vest in three equal annual installments over each year of service measured from the grant date, subject to the executive's continued employment with the Company.


32


(2)
The RSUs set forth in the column entitled "Vest Subject to Revenue Targets" vest upon achievement of pre-determined revenue targets starting at $400 million over a rolling one-year period commencing April 1, 2015, provided the executive remains in employment with the Company through the end of the last quarter in which the revenue target is achieved. The revenue target must be achieved on or before September 1, 2018.

(3)
The RSUs set forth in the column entitled "Vest Subject to EPS Targets," vest upon achievement of pre-determined EPS targets, with 90% vesting at EPS targets greater than $2.00 per share over a rolling one-year period commencing January 1, 2015, provided the executive remains in employment with the Company through the end of the last quarter in which the performance goal is achieved. The EPS targets must by achieved on or before March 15, 2021.

(4)Pursuant to his amended and restated employment agreement dated February 11, 2015, Mr. Probert was granted a stock option to purchase 185,000 shares of the Company's common stock at an exercise price of $14.22 per share, which was the closing price of the Company's common stock on the grant date.

Vesting accelerates in full upon termination of employment by reason of death or disability and certain terminations of employment following a change in control. The awards are designed to act as retention tools and to continue to incentivize the officers and align their interests with those of the shareholders. The exercise price per share of the stock options was originally granted at $15.38, the closing price per share of our common stock on the grant date. On September 19, 2014, the Company paid a special cash dividend of $1.50 per common share. In accordance with the provisions of the Company’s stock incentive plans, the exercise price of all outstanding stock options on the ex-dividend date were decreased by $1.50 per share in order to prevent a dilution of benefits or potential benefits intended to be made available to the stock option holders. This is a required adjustment for a capital event in the plan and was not a repricing, since it followed a special cash dividend.  As such, the current exercise price is $13.88. Each stock option has a term of ten years.

The Company believes the vesting acceleration of equity awards upon a change in control is appropriate as those awards are designed to serve as the primary vehicle for wealth creation and the accumulation of financial resources for their retirement years, and a change in control event is an appropriate liquidation point for awards intended for such purpose. The Company does not provide the executive officers with any defined benefit pension plan or supplemental executive retirement plan, and the only other opportunities for wealth accumulation and retirement funds isare through the limited deferral opportunities provided under the Company’sCompany's 401(k) savings plan and the non-qualified deferred compensation plan.


Future2016 Grants. TheIn November 2015, the Compensation Committee expectsapproved a grant of restricted stock units to each of the named executive officers. The grants were made effective on January 1, 2016 in the following amounts:
  Restricted Stock Units
  Subject to Time Based Vesting Conditions Subject to Revenue Based Vesting Conditions
Name (1) (2)
Gregory L. Probert 30,000 30,000
Stephen M. Bunker - -
Adriana Mendizabal 3,500 3,500
Paul E. Noack 10,000 10,000
Richard D. Strulson 4,000 4,000

(1)
The RSUs set forth in the column entitled "Subject to Time Based Vesting Conditions," vest in three equal annual installments over each year of service measured from the grant date, subject to the executive's continued employment with the Company.

(2)
The RSUs set forth in the column entitled "Subject to Revenue Based Vesting Conditions," vest upon achievement of pre-determined revenue targets starting at $450 over a rolling one-year period commencing after April 1, 2015, provided the executive remains in employment with the Company through the end of the last quarter in which the revenue target is achieved. The revenue targets must be achieved on or before September 1, 2019.

CEO Compensation Excluding One-Time Items. Significant elements of the CEO's compensation in 2015 were one-time compensation items that make it difficult to compare the CEO's compensation in 2015, against previous years and makes it a poor indicator of the CEO's compensation in future grants on a discretionary basis. Theyears. These one-time items resulted primarily from the CEO's amended and restated employment agreement, entered into in February 2015, and the Company's five-year strategic plan implemented in August 2014. For example, the following items are one-time compensation items that the Compensation Committee does not have any policy or practice of timing awardsbelieves are worth noting:


33


The special equity grant awarded to the releaseCEO in 2015, is designed to award the CEO if the Company achieves EPS goals set out in the five-year strategic plan. The grant date value of the Company’s financial reports.special equity award, as shown in the Summary Compensation Table, is approximately $1.2 million;

As part of the CEO's amended and restated employment agreement, entered into in February 2015, the CEO was granted a stock option to purchase 185,000 shares of the Company's common stock at a price of $14.22 per share. This option was granted to the CEO to recognize that he was not provided a new hire grant when he assumed his Chairman and CEO role. The grant date value of this stock option granted to the CEO in 2015, as shown in the Summary Compensation Table, is approximately $0.8 million; and

The CEO's employment agreement required him to relocate to Utah and provided that the Company would reimburse him for certain relocation expenses. The CEO completed his relocation to Utah, and the Company paid his relocation expenses in 2015. Prior to his relocation to Utah, the Company reimbursed the CEO for reasonable commuting, temporary housing, automobile and other miscellaneous expenses associated with his travel between Los Angeles, California and Lehi, Utah in 2015. These reimbursements, together with the payment of the CEO's resulting personal tax liability, totaled approximately $0.4 million and are included in the Summary Compensation Table in the column entitled "

All Other Compensation."


The one-time nature of these elements of the CEO's compensation in 2015, cause the CEO's compensation to be substantially greater than it has been in previous years and for the CEO's compensation in 2015 to not be indicative of CEO compensation in future years. The following table, which should be read together with the Summary Compensation Table, illustrates the CEO's 2015 compensation after adjusting for the above mentioned one-time items and, for purposes of comparison only, includes anticipated figures for the CEO's 2016 compensation:
Name Year Salary ($) Non-Equity Incentive Plan ($) Stock Option Awards ($) Restricted Stock Unit Awards ($) All Other Compensation ($) Total ($)
Gregory L. Probert 2015 600,000 429,750 - 762,000(1) 71,706(2) 1,863,456
  2016 618,000 618,000(3) - 499,800(4) - 1,735,800

(1)Includes the RSU award described above as 2015 LTIP Grant, but excludes the RSU award described above as the Special Equity Grant.

(2)Excludes the relocation and commuting costs reimbursed by the Company in 2015, and the resulting tax liability for which the Company also reimbursed Mr. Probert in 2015.

(3)This amount is an estimate of the annual cash incentive award for 2016, and assumes the cash incentive award is paid at the target amount.

(4)Reflects the aggregate grant date fair value of the RSUs granted to Mr. Probert on January 1, 2016.

Executive Officer Perquisites. In 2014,2015, we provided each of our named executive officers the opportunity to receive up to $2,500$3,000 for tuition assistance; however, none of our executive officers elected to receive tuition assistance. These perquisites are not a significant component of our executive compensation program. In addition, Mr. Probert who was hired as full-time CEOChief Executive Officer in 2013, and had not yet moved to Utah from his California residence was reimbursed for commuting expenses, temporary living accommodations and the associated personal tax liability. However, in connection with an amendment and restatement to Mr. Probert’s employment agreement more fully described below, Mr. Probert will movewas required to relocate to Utah from California in 2015. He completed his relocation in 2015, and the Company reimbursed certain expenses related thereto, which will endended the need to reimburse himMr. Probert for temporary housing and travel, after a lump sum payment to assist in commuting during a relocation transition period.travel.


Other Programs. Our executive officers, including our named executive officers, are eligible to participate in our 401(k) employee savings plan, medical plans and other benefit plans on the same basis as all other regular U.S. employees.


Deferred Compensation Programs. The Company has adopted a deferred compensation plan, the SEDP,“SEDP,” for its executive officers, certain other selected employees and its non-employee directors to enable them to save for retirement by deferring their income and the associated tax to a future date following termination of employment. Under the SEDP, the

34


named executive officers and other participants have the opportunity to defer compensation to future dates specified by the participant with a return based on investment alternatives selected by the participant. The Company believes that the SEDP is comparable to similar plans offered by its competitors. The amounts deferred under the SEDP for the named executive officers are reported below in the Summary Compensation Table and the Nonqualified Deferred Compensation Table.


Stock Ownership Guideline. The new CEOOur Chief Executive Officer’s employment agreement contains a stock ownership guideline whereinwhereby Mr. Probert agrees to maintain ownership of capital stock or an equity position in the Company having an aggregate value in the amount of One Million Dollars ($1,000,000).$1 million. The agreement provides that such equity position may be maintained by accumulating such Equityequity through the vesting of Mr. Probert’s future grants of stock options and RSUs, in addition to shares of the Company’s capital stock that Mr. Probert currently owns, and the vesting of his existing grants of stock options and RSUs. Mr. Probert currently meets this requirement. The Compensation Committee also initiated a stock ownership requirement for all executive officers equal to one year base salary, subject to the same conditions as Mr. Probert.

26



Table of Contents

Clawback Policy. The employment agreement alsowith Mr. Probert, our Chief Executive Officer, includes a global incentive “clawback” provision pursuant to which, in the event that during the term of the employment agreement, and for a period of two (2)2 years after the termination of the employment agreement, the Company is required to restate its financial statements due to a material non-compliance with any applicable financial reporting requirement or securities law as determined by the Company’sCompany's Board of Directors, the Company shall havehas the right, exercisable in its sole discretion, to review the amount of cash compensation paid to Mr. Probert and the amount of unvested equity compensation granted to him pursuant to existing grants of stock options and RSUs (collectively, “Compensation”"Compensation"), during the period of time encompassed by the restatementprovided, however, that this look-back period shall be no longer than two (2) years, and recalculate Mr. Probert’s Compensation for the look-back period based upon the restated financial statements.statements, provided, however, that this look-back period shall be no longer than two (2) years. If, pursuant to this review and recalculation, the amount of Compensation that the Company would have paid under the restated financial statements for the look-back period is less than the actual amount of Compensation that was paid to Mr. Probert during the look-back period, Mr. Probert shall repay the difference to the Company in a time and manner mutually agreed to between Company and Mr. Probert.


Hedging. Company policy prohibits executives from entering into hedging transactions (such as put and call options), that would operate to lock-in value of their equity compensation awards at specified levels. Executive officers are also prohibited from pledging the Company’sCompany's stock or holding such stock in margin accounts. Accordingly, similar to any other shareholder, the executive officers bear the full risk of economic loss with respect to their equity holdings.


Employment Agreements. We have entered into employment agreements with each of our named executive officers. We believe the employment agreements allow our named executive officers to continue to focus their attention on our business operations and strategic plans without undue concern over their own financial situations during periods when substantial disruptions and distractions might otherwise prevail. Upon the cessation of a named executive officer’sEach employment due to termination by the Company without cause or by reason of death or incapacity,agreement entitles the named executive officer with the exception of Mr. Probert, will receive continued payment ofto specific termination benefits if his or her base and reimbursementemployment is terminated under certain circumstances, see the section entitled “Potential Payments Upon Termination or Change in Control” below for medical insurance coverage for a period of 12 months.  Mr. Bunker is also entitled to a reimbursement of up to $6,000 of any tax liability incurred by him in the event benefits received pursuant to continued health coverage result in taxable income.additional information.


In 2015, we entered into an amended and restated employment agreement with Gregory L. Probert. A summary of the material terms of Mr. Probert’s amended and restated employment agreement are described more fully below.

below in the section entitled "Employment Agreements."


A summary of the material terms of the officer employment agreements with each named executive officer, together with a quantification of the severance benefits payable under those agreements to each of the executive officers named in the Summary Compensation Table may be found in the sectionsections below entitled “Employment"Employment Agreements” and “Potential Payments upon Termination or Change in Control.”

Control."


Compliance with Internal Revenue Code Section 162(m). Section 162(m) of the Internal Revenue Code disallows a tax deduction to publicly held companies for compensation paid to certain of their named executivecovered officers to the extent such compensation exceeds $1.0 million per covered officer in any year. The limitation applies only to non-performance-based compensation under the terms of Section 162(m). We attempt to structure our compensation arrangements to achieve deductibility under Section 162(m), unless the benefit of such deductibility is outweighed by the need for flexibility or the attainment of other corporate objectives. The compensation paid to our named executive officers for 20142015, did not exceed the $1.0 million threshold per officer.  However, as we continue to increaseofficer, except for Mr. Probert. While the Compensation Committee considers the deductibility of executive compensation under Section 162(m) when evaluating particular compensation programs in the context of the Compensation Committee's broader compensation objectives and overall compensation philosophy, the Compensation Committee understands that if salaries and bonuses for our named executive officers, together with the amounts recognized from equity awards, it is possible that the non-performance-based compensation payable to our named executive officers will exceed the $1.0 million limit under Section 162(m) in one or more future years. We believe that in establishing the cash and equity incentive

35


compensation programs for our named executive officers, the potential deductibility of the compensation payable under those programs should be only one of a number of relevant factors taken into consideration, and not the sole governing factor. For that reason, we may deem it appropriate to provide one or more named executive officers with the opportunity to earn incentive compensation, whether through annual cash bonusincentive programs tied to our financial performance or through equity awards, which together with base salary in the aggregate may be in excess of the amount deductible by reason of Section 162(m) or other provisions of the Internal Revenue Code. We believe it is important to maintain cash and equity incentive compensation at the levels needed to attract and retain the named executive officers essential to our success, even if all or part of that compensation may not be deductible by reason of the Section 162(m) limitation.

27



Table of Contents

Compensation Committee Report


The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis disclosure with management. Based on this review and discussion, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement.

Submitted by:


Albert R. Dowden
Mary Beth Springer, Committee Chair

Robert B. Mercer

Jeffrey D. Watkins


Compensation Committee Interlocks and Insider Participation. No member of the Compensation Committee, at any time during 2014,2015, was an officer or employee of the Company. None of our named executive officers, with the exception of Mr. Probert, as noted above, at any time during 2014,2015 served on theour Board of Directors or Compensation Committee of any entity that had one or more executive officers serving as a member of our Board of Directors or our Compensation Committee.



Compensation Risk Assessment


The Company’sCompany's compensation programs are designed to maintain an appropriate balance between incentives for long-term and short-term performances by utilizing a combination of compensation components, including base salary, annual cash bonusincentive awards and long-term equity awards. Although not all employees in the organization have compensation comprised of all three of these components, our compensation programs are generally structured so that any cash bonusincentive awards based on short-term performances are not likely to constitute the predominant element of an employee’semployee's total compensation package and that other components will serve to balance the package. For this reason, the Company does not believe that its use of any cash bonusincentive awards based upon short-term performance is reasonably likely to encourage excessive risk-taking by the participants in those compensation programs.


In addition, a newly institutedthe Company believes the stock ownership guideline for the CEOguidelines in Mr. Probert’s amended and restated employment agreement moderates the incentive to take excessive risk.

28


Summary Compensation Table

Table of Contents

Executive Compensation

The following summary compensation table sets forth a summary,provides compensation information of our named executive officers for the years ended December 31, 2015, 2014 2013 and 2012, of the compensation of the principal executive officer, the principal financial officer and the three most highly compensated executive officers of2013.


36


Name & Principal Position Year 
Salary
($)(1)
 
Non-Equity Incentive Plan
($)(2)
 
Stock Option
Awards
($)(3)
 Restricted Stock Unit Awards ($)(4) 
All Other
Compensation
($)(5)
 
Total
($)
Gregory L. Probert,
 2015 600,000 429,750 899,100 2,032,000 507,167 4,468,017
Chief Executive Officer 2014 525,000 358,063 775,250 - 146,545 1,736,723
  2013 456,865 108,000 361,000 - 81,311 790,311
Stephen M. Bunker,
 2015 320,000 82,060 - 402,184 86,180 890,424
EVP, CFO & Treasurer 2014 305,000 126,232 114,275 - 11,001 623,566
  2013 300,173 96,792 215,600 - 7,951 611,808
Adriana Mendizabal,
 2015 272,950 131,664 - 393,700 54,398 852,712
President NSP Americas 2014 265,000 65,190 97,950 71,900 10,278 510,318
  2013 262,269 123,490 184,800 - 10,102 580,661
Paul E. Noack,
 2015 350,000 230,934 - 1,130,300 66,025 1,777,259
President of China & New Markets 2014 78,077 - 541,000 - 52,467 671,544
  2013 - - - - - -
D. Wynne Roberts,
 2015 415,540 - - 514,001 65,737 995,278
Former CEO of Synergy Worldwide (A) 2014 415,000 214,763 228,550 167,772 8,208 1,034,293
  2013 384,635 210,716 821,700 - 20,430 1,437481
Richard D. Strulson,
 2015 320,000 126,060 - 402,184 26,624 874,868
EVP, GC, CCO & Secretary 2014 305,000 140,910 114,275 83,894 59,867 703,946
  2013 49,269 50,000 507,000 - 78,184 684,453

(A)    Mr. Roberts' employment with the Company (not including the principal executive officer and the principal financial officer) whose total compensation for the 2014 fiscal year was in excess of $100,000 and who were serving as executive officers at the end of 2014. The listed individuals shall be hereinafter referred to as the “named executive officers.” No other executive officers who would have otherwise been includable in such table on the basis of total compensation for 2014 have been excluded by reason of their termination of employment or change in executive status during that year.

Summary Compensation Table

Name & Principal
Position

 

Year

 

Salary
($)(1)

 

Non-Equity
Incentive Plan
($)(2)

 

Stock
Option
Awards
($)(3)

 

Restricted
Stock Unit
Awards ($)(4)

 

All Other
Compensation
($)(5)

 

Total
($)

 

Gregory L. Probert,

 

2014

 

525,000

 

422,625

 

326,500

 

239,672

 

128,304

 

1,642,101

 

Chief Executive Officer(A)

 

2013

 

456,865

 

358,063

 

775,250

 

—

 

146,545

 

1,736,723

 

 

2012

 

240,000

 

108,000

 

361,000

 

—

 

81,311

 

790,311

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stephen M. Bunker,

 

2014

 

305,000

 

126,232

 

114,275

 

83,894

 

11,030

 

640,431

 

EVP, CFO & Treasurer

 

2013

 

300,173

 

96,792

 

215,600

 

—

 

11,001

 

623,566

 

 

2012

 

261,719

 

89,438

 

252,700

 

—

 

7,951

 

611,808

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

D. Wynne Roberts,

 

2014

 

415,000

 

214,763

 

228,550

 

167,772

 

8,208

 

1,034,293

 

CEO of Synergy WorldWide(B)

 

2013

 

384,635

 

210,716

 

821,700

 

—

 

20,430

 

1,437,481

 

 

2012

 

293,870

 

195,000

 

1,054,350

 

—

 

3,341

 

1,546,561

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Richard D. Strulson,

 

2014

 

305,000

 

140,910

 

114,275

 

83,894

 

59,867

 

703,946

 

EVP, GC, CCO & Secretary(C)

 

2013

 

49,269

 

50,000

 

507,000

 

—

 

78,184

 

684,453

 

 

2012

 

—

 

—

 

—

 

—

 

—

 

—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Matthew L. Tripp,

 

2014

 

275,000

 

115,500

 

114,275

 

83,894

 

10,770

 

599,439

 

Chief Scientific Officer(D)

 

2013

 

181,923

 

62,061

 

292,000

 

—

 

66,814

 

602,798

 

 

2012

 

—

 

—

 

—

 

—

 

—

 

—

 

(A) On March 6, 2013, we announced the appointment of Mr. Probert as the Interim Chief Executive Officer and full-time status,terminated effective April 1, 2013. Mr. Probert had previously been serving as Executive Chairman of the Board with a 50% time commitment.  Subsequently, Mr. Probert was appointed as the Chief Executive Officer, effective October 1, 2013.

(B) On January 30, 2012, we announced the appointment of Mr. Roberts as President and Chief Operating Officer. In December 2014, Mr. Roberts was subsequently appointed as the Chief Executive Officer of Synergy WorldWide.

(C) On October 3, 2013, we announced the appointment of Mr. Strulson as the Executive Vice President, General Counsel, Chief Compliance Officer, and Secretary.

(D) On April 23, 2013, we announced the appointment of Mr. Tripp as the Executive Vice President and Chief Scientific Officer.

(1)Amounts for 2014 include amounts that were deferred from the executive salaries into the 401(k) plan for 2014, as follows: Mr. Probert—$17,500; Mr. Bunker—$23,000; Mr. Roberts—$0; Mr. Strulson—$13,741; and Mr. Tripp—$23,000.  Mr. Probert, Mr. Strulson, and Mr. Tripp were all hired into their current positions in 2013.

(2)For a detailed discussion of bonus payments made in 2014 under the Company’s cash bonus program, see the section above entitled “Compensation Discussion and Analysis—Cash bonus.”

(3)Amounts reflect the aggregate grant date fair value of the stock option grant made in each applicable fiscal year, in each instance calculated in accordance with FASB ASC Topic 718. See Note 11 to the Notes to Consolidated Financial Statements set forth in Item 8 of the 2014 Annual Report filed on Form 10-K filed with the SEC on March 13, 2015 for a description of the assumptions used in calculating such fair value. For this purpose, the estimate of forfeitures relating to vesting conditions is disregarded.  The equity awards are time-based stock options.

29

15, 2015.

(1)Amounts for 2015, include amounts that were deferred from the executive salaries into the 401(k) plan for 2015, as follows: Mr. Probert-$24,000; Mr. Bunker-$24,000; Ms. Mendizabal-$18,000; Mr. Noack-$24,000; Mr. Roberts-$0; and Mr. Strulson-$24,000.

(2)
For a detailed discussion of bonus payments made in 2015, under the Company’s annual cash incentive program, see the section above entitled “Compensation Discussion and Analysis-Cash bonus.”

(3)Amounts reflect the aggregate grant date fair value of the stock option grant made in each applicable fiscal year, in each instance calculated in accordance with FASB ASC Topic 718. See Note 11 of the Notes to Consolidated Financial Statements set forth in the 2015 Annual Report on Form 10-K filed with the SEC on March 14, 2016, for a description of the assumptions used in calculating such fair value. For this purpose, the estimate of forfeitures relating to vesting conditions is disregarded. The equity awards are time-based stock options.

(4)Amounts reflect the aggregate grant date fair value of the RSU grant made in each applicable fiscal year, in each instance calculated in accordance with FASB ASC Topic 718. See Note 11 of the Notes to Consolidated Financial Statements set forth in the 2015 Annual Report on Form 10-K filed with the SEC on March 14, 2015, for a description of the assumptions used in calculating such fair value. For this purpose, the estimate of forfeitures relating to vesting conditions is disregarded. The equity awards are time-based RSUs.

(5)“All Other Compensation” includes the following amounts paid by the Company for the fiscal year ended December 31, 2015. The amounts disclosed are the actual costs to the Company of providing these benefits.
Name 
401(k) Plan
Company
Contribution ($)
 Life Insurance Premium($) Miscellaneous Other ($) Total ($)
Gregory L. Probert 3,667 6,133 497,367 (A) 507,167
Stephen M. Bunker 5,673 3,156 77,351(B) 86,180
Adrianna Mendizabal 6,263 1,420 46,715 (C) 54,398
Paul E. Noack 6,235 1,863 57,927 (D) 66,025
D. Wynne Roberts - 1,904 63,833 (E) 65,737
Richard D. Strulson 7,444 1,101 18,079 (F) 26,624


37


(A)Includes $289,828 of expenses in connection with Mr. Probert’s relocation of residence from California to Utah and the personal tax benefit associated with this benefit of $65,940, the reimbursement of reasonable commuting, temporary housing, automobile and other miscellaneous expenses associated with his travel between Los Angeles, California, and Lehi, Utah of $42,277 and the personal tax liability associated with these benefits $37,416 prior to his relocation to Utah from California. In addition, this amount includes $61,156 one-time payout of PTO and $705 product credit. The one-time payout of PTO resulted from the Compensation Committee’s elimination of paid vacation for members of the Company’s senior management team and represents the PTO balance as of December 31, 2014.

Table of Contents

(4)Amounts reflect the aggregate grant date fair value of the restricted stock unit grant made in each applicable fiscal year, in each instance calculated in accordance with FASB ASC Topic 718. See Note 11 to the Notes to Consolidated Financial Statements set forth in Item 8 of the 2014 Annual Report filed on Form 10-K filed with the SEC on March 13, 2015 for a description of the assumptions used in calculating such fair value. For this purpose, the estimate of forfeitures relating to vesting conditions is disregarded.  The equity awards are time-based restricted stock units.

(5)“All Other Compensation” includes the following amounts paid by the Company for the fiscal year ended December 31, 2014. The amounts disclosed are the actual costs to the Company of providing these benefits.

Name

 

401(k) Plan
Company
Contribution ($)

 

Life Insurance
Premium($)

 

Disability Insurance
Premium ($)

 

Miscellaneous
Other ($)

 

Total ($)

 

Gregory L. Probert

 

7,526

 

7,526

 

540

 

112,713

(A)

128,304

 

Stephen M. Bunker

 

7,800

 

2,971

 

360

 

—

 

11,030

 

D. Wynne Roberts

 

—

 

6,306

 

540

 

1,362

(B)

6,846

 

Richard D. Strulson

 

6,300

 

1,040

 

360

 

52,167

(C)

59,867

 

Matthew L. Tripp

 

6,342

 

4,068

 

360

 

—

 

10,770

 


(B)Includes $75,901 one-time PTO payout and $1,350 of product credit.


(C)Includes $45,965 one-time PTO payout and $750 of product credit.

(D)Includes $50,000 signing bonus, $7,177 one-time PTO payout and $750 of product credit.

(A)Includes the reimbursement of reasonable commuting, temporary housing, automobile and other miscellaneous expenses associated with his travel between Los Angeles, California, and Lehi, Utah of $69,689 and the personal tax liability associated with these benefits of $43,024. In accordance with his amended and restated employment agreement, Mr. Probert will be relocating to Utah, which will end the need to reimburse him for temporary housing and travel once the relocation is complete.

(B)Includes the reimbursement of travel expenses of $1,362.

(C)Includes the reimbursement of relocation expenses of $50,000 and the cost of COBRA coverage of $2,167.

30
(E)Includes $42,275 one-time PTO payout, $11,310 of relocation costs related to closing on residence in Utah and the related tax benefit, $9,498 for the cost of Cobra paid out following the termination of Mr. Robert’s employment, and $750 of product credit.


(F)Includes $16,879 one-time PTO payout and $1,101 of product credit.



Table of Contents

Grants of Plan-Based Awards in Fiscal Year 2014

2015


The following table provides certain summary information concerning each grant of an award made to the named executive officers in 20142015, under a compensation plan.

 

 

 

 

Estimated Future Payouts Under
Non-Equity Incentive
Plan Awards

 

Estimated Future Payouts Under Equity
Incentive
Plan Awards

 

Exercise
or Base
Price of
Stock
Awards

 

Adjusted
Exercise
or Base
Price of
Option

 

Aggregate
Grant Date
Fair
Value of
Stock
Option
Awards

 

Name

 

Grant Date

 

Target ($)

 

Maximum ($)

 

Threshold (#)

 

Target (#)

 

Maximum (#)

 

($/Sh)

 

Awards

 

($)

 

Gregory L. Probert

 

—

 

525,000

 

918,750

 

—

 

—

 

—

 

—

 

—

 

—

 

Gregory L. Probert

 

2/11/2014

(1)

—

 

—

 

12,500

 

50,000

 

—

 

15.38

*

13.88

 

326,500

 

Gregory L. Probert

 

2/11/2014

(2)

—

 

—

 

4,166

 

16,667

 

—

 

15.38

*

—

 

239,672

 

Gregory L. Probert

 

9/19/2014

(3)

—

 

—

 

413

 

1,652

 

—

 

15.00

*

—

 

—

 

Stephen M. Bunker

 

—

 

167,750

 

293,563

 

—

 

—

 

—

 

—

 

—

 

—

 

Stephen M. Bunker

 

2/11/2014

(1)

—

 

—

 

4,375

 

17,500

 

—

 

15.38

*

13.88

 

114,275

 

Stephen M. Bunker

 

2/11/2014

(2)

—

 

—

 

1,458

 

5,834

 

—

 

15.38

*

—

 

83,894

 

Stephen M. Bunker

 

9/19/2014

(3)

—

 

—

 

144

 

578

 

—

 

15.00

*

—

 

—

 

D. Wynne Roberts

 

—

 

311,250

 

544,688

 

—

 

—

 

—

 

—

 

—

 

—

 

D. Wynne Roberts

 

2/11/2014

(1)

—

 

—

 

8,750

 

35,000

 

—

 

15.38

*

13.88

 

228,550

 

D. Wynne Roberts

 

2/11/2014

(2)

—

 

—

 

2,916

 

11,667

 

—

 

15.38

*

—

 

167,772

 

D. Wynne Roberts

 

9/19/2014

(3)

—

 

—

 

289

 

1,156

 

—

 

15.00

*

—

 

—

 

Richard D. Strulson

 

—

 

167,750

 

293,563

 

—

 

—

 

—

 

—

 

—

 

—

 

Richard D. Strulson

 

2/11/2014

(1)

—

 

—

 

4,375

 

17,500

 

—

 

15.38

*

13.88

 

114,275

 

Richard D. Strulson

 

2/11/2014

(2)

—

 

—

 

1,458

 

5,834

 

—

 

15.38

*

—

 

83,894

 

Richard D. Strulson

 

9/19/2014

(3)

—

 

—

 

144

 

578

 

—

 

15.00

*

—

 

—

 

Matthew L. Tripp

 

—

 

137,500

 

240,625

 

—

 

—

 

—

 

—

 

—

 

—

 

Matthew L. Tripp

 

2/11/2014

(1)

—

 

—

 

4,375

 

17,500

 

—

 

15.38

*

13.88

 

114,275

 

Matthew L. Tripp

 

2/11/2014

(2)

—

 

—

 

1,458

 

5,834

 

—

 

15.38

*

—

 

83,894

 

Matthew L. Tripp

 

9/19/2014

(3)

—

 

—

 

144

 

578

 

—

 

15.00

*

—

 

—

 

* On September 19, 2014, the Company paid a special cash dividend of $1.50 per common share. In accordance with the provisions of the Company’s stock incentive plans, the exercise price of all outstanding stock options on the ex-dividend date were decreased by $1.50 per share in order to prevent a dilution of benefits or potential benefits intended to be made available to the stock option holders.

(1)Option grant vests in four equal annual installments over each year of service measured from February 11, 2014, subject to the executive’s

      
Estimated Future Payouts Under Non-Equity Incentive
Plan Awards
 
Estimated Future Payouts Under Equity Incentive
Plan Awards
 
Exercise
or Base
Price of
Stock
Awards ($/Sh)
 
Aggregate Grant Date
Fair
Value of
Stock
Option Awards ($)
Name Grant Date Threshold ($)  Target ($) Maximum ($) Threshold (#) Target (#) Maximum (#)  
Gregory L. Probert —
 300,000 600,000 960,000 - - - - -
Gregory L. Probert 2/15/2015(1)
 - - - 61,666 185,000 - 14.22 899,100
Gregory L. Probert 1/15/2015(2)
 - - - 26,667 80,000 - 13.50 1,080,000
Gregory L. Probert 1/15/2015(3)
 - - - 5,000 50,000 - 11.90 595,000
Gregory L. Probert 1/15/2015(4)
 - - - 15,000 30,000 - 11.90 357,000
Stephen M. Bunker -
 88,000 176,000 281,600 - - - - -
Stephen M. Bunker 1/15/2015(2)
 - - - 5,278 15,834 - 13.50 213,759
Stephen M. Bunker 1/15/2015(3)
 - - - 1,250 12,500 - 11.90 148,750
Stephen M. Bunker 1/15/2015(4)
 - - - 1,667 3,334 - 11.90 39,675
Adrianna Mendizabal -
 68,238 136,475 218,360 - - - - -
Adrianna Mendizabal 1/15/2015(2)
 - - - 4,000 12,000 - 13.50 162,000
Adrianna Mendizabal 1/15/2015(3)
 - - - 1,250 12,500 - 11.90 148,750
Adrianna Mendizabal 1/15/2015(4)
 - - - 1,500 3,000 - 11.90 35,700
Paul E. Noack -
 131,250 262,500 420,000 - - - - -
Paul E. Noack 1/15/2015(2)
 - - - 14,833 44,500 - 13.50 600,750
Paul E. Noack 1/15/2015(3)
 - - - 3,750 37,500 - 11.90 446,250
Paul E. Noack 1/15/2015(4)
 - - - 3,500 7,000 - 11.90 83,300
D. Wynne Roberts -
 155,625 311,250 498,000 - - - -  
D. Wynne Roberts 1/15/2015(2) - - - 6,666 20,000 - 13.50 270,001
D. Wynne Roberts 1/15/2015(3) - - - 1,500 15,000 - 11.90 178,500
D. Wynne Roberts 1/15/2015(4) - - - 2,500 5,000 - 11.90 65,500
Richard D. Strulson -
 88,000 176,000 281,600 - - - - -
Richard D. Strulson 1/15/2015(2)
 - - - 5,278 15,834 - 13.50 213,759
Richard D. Strulson 1/15/2015(3)
 - - - 1,250 12,500 - 11.90 148,750
Richard D. Strulson 1/15/2015(4)
 - - - 1,667 3,334 - 11.90 39,675

(1)Option grant vests in three equal annual installments over each year of service measured from February 15, 2014, subject to the executive's continued employment with the Company. Amounts reflect the aggregate grant date fair value of the option grant made in each applicable fiscal year, in each instance calculated in accordance with FASB

38


ASC Topic 718. These options are also subject to accelerated vesting upon a change of control of the Company. See section below entitled "Potential Payments upon Termination or Change in Control."

(2)RSU grant vests in three equal annual installments over each year of service measured from February 11, 2014, subject to the executive's continued employment with the Company. Amounts reflect the aggregate grant date fair value of the option grant made in each applicable fiscal year, in each instance calculated in accordance with FASB ASC Topic 718. These options are also subject to accelerated vesting upon a change of control of the Company. See section below entitled "Employment Agreements and Potential Payments upon Termination or Change in Control."

(3)RSU grant vests upon achievement of pre-determined EPS targets, with 90% vesting at EPS targets greater than $2.00 per share over a rolling one-year period commencing January 1, 2015, provided the executive remains in employment with the Company through the end of the last quarter in which the performance goal is achieved. The EPS target must by achieved on or before March 15, 2021.

Amounts reflect the aggregate grant date fair value of the option grant made in each applicable fiscal year, in each instance calculated in accordance with FASB ASC Topic 718. These options are also subject to accelerated vesting upon a change of control of the Company. See section below entitled “Employment"Employment Agreements and Potential Payments upon Termination or Change in Control.”

"


(4)RSU grant vests upon achievement of pre-determined revenue targets starting at $400 million over a rolling one-year period commencing April 1, 2015, provided the executive remains in employment with the Company through the end of the last quarter in which the revenue target is achieved. The revenue target must by achieved on or before September 1, 2018.

(2)RSU grant vests in four equal annual installments over each year of service measured from February 11, 2014, subject to the executive’s continued employment with the Company. Amounts reflect the aggregate grant date fair value of the option grant made in each applicable fiscal year, in each instance calculated in accordance with FASB ASC Topic 718. These options are also subject to accelerated vesting upon a change of control of the Company. See section below entitled “Employment Agreements and "Potential Payments upon Termination or Change in Control.”Control

(3)."On September 19, 2014, the Company paid a special cash dividend of $1.50 per common share. In accordance with the provisions of the Company’s stock incentive plans, in order to prevent a dilution of benefits or potential benefits intended to be made available to the RSU holders, additional RSUs were granted with zero fair value.

31



Table of Contents

Outstanding Equity Awards at Fiscal Year-End


The following table provides certain summary information concerning outstanding equity awards held by the named executive officers as of December 31, 2014.

 

 

Stock Awards

 

Options Awards

 

Name

 

Number of
Securities
Underlying
Unearned
RSUs (#)

 

Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable

 

Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable

 

Number of
Securities
Underlying
Unexercised
Unearned
Options (#)

 

Option
Exercise
Price
($)

 

Option
Expiration
Date

 

Gregory L. Probert

 

—

 

100,000

 

—

 

—

 

12.05

 

6/16/2021

(1)

 

 

—

 

100,000

 

—

 

—

 

12.05

 

6/16/2021

(2)

 

 

—

 

18,750

 

18,750

 

—

 

11.52

 

3/1/2022

(3)

 

 

—

 

—

 

—

 

12,500

 

11.52

 

3/1/2022

(4)

 

 

—

 

18,750

 

56,250

 

—

 

11.98

 

3/5/2023

(5)

 

 

—

 

—

 

—

 

25,000

 

11.98

 

3/5/2023

(6)

 

 

—

 

25,000

 

—

 

—

 

12.72

 

4/1/2023

(7)

 

 

—

 

—

 

50,000

 

—

 

13.88

 

2/11/2024

(8)

 

 

18,319

 

—

 

—

 

—

 

—

 

—

(9)

TOTAL

 

18,319

 

262,500

 

125,000

 

37,500

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stephen M. Bunker

 

—

 

44,000

 

—

 

—

 

8.37

 

5/10/2020

(10)

 

 

—

 

30,000

 

—

 

—

 

5.88

 

1/3/2021

(10)

 

 

—

 

13,125

 

13,125

 

—

 

11.52

 

3/1/2022

(3)

 

 

—

 

—

 

—

 

8,750

 

11.52

 

3/1/2022

(4)

 

 

—

 

6,563

 

19,687

 

—

 

11.98

 

3/5/2023

(5)

 

 

—

 

—

 

—

 

8,750

 

11.98

 

3/5/2023

(6)

 

 

—

 

—

 

17,500

 

—

 

13.88

 

2/11/2024

(8)

 

 

6,412

 

—

 

—

 

—

 

—

 

—

(9)

TOTAL

 

6,412

 

93,688

 

50,312

 

17,500

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

D. Wynne Roberts

 

—

 

45,000

 

90,000

 

—

 

12.85

 

2/6/2022

(11)

 

 

—

 

13,125

 

39,375

 

—

 

11.98

 

3/5/2023

(5)

 

 

—

 

—

 

—

 

17,500

 

11.98

 

3/5/2023

(6)

 

 

—

 

16,667

 

33,333

 

—

 

16.82

 

10/7/2023

(12)

 

 

—

 

—

 

35,000

 

—

 

13.88

 

2/11/2024

(8)

 

 

12,823

 

—

 

—

 

—

 

—

 

—

(9)

TOTAL

 

12,823

 

74,792

 

197,708

 

17,500

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Richard D. Strulson

 

—

 

21,667

 

43,333

 

—

 

16.80

 

11/4/2023

(13)

 

 

—

 

—

 

17,500

 

—

 

13.88

 

2/11/2024

(8)

 

 

6,412

 

—

 

—

 

—

 

—

 

—

(9)

TOTAL

 

6,412

 

21,667

 

60,833

 

—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Matthew L. Tripp

 

—

 

16,667

 

33,333

 

—

 

11.63

 

5/6/2023

(14)

 

 

—

 

—

 

17,500

 

—

 

13.88

 

2/11/2024

(8)

 

 

6,412

 

—

 

—

 

—

 

—

 

—

(9)

TOTAL

 

6,412

 

16,667

 

50,833

 

—

 

 

 

 

 

On September 19, 2014, the Company paid a special cash dividend of $1.50 per common share. In accordance with the provisions of the Company’s stock incentive plans, the exercise price of all outstanding stock options on the ex-dividend date were decreased by $1.50 per share in order to prevent a dilution of benefits or potential benefits intended to be made available to the stock option holders.  This was a modification required by the stock plan for capitalization adjustments, and was not a goal reset or repricing transaction. Also, in accordance with the provisions of the Company’s stock incentive plans, additional RSUs were issued in order to prevent a dilution of benefits or potential benefits intended to be made available to the RSU holders.

32

2015.

39


Table of Contents

  Stock Awards Options Awards
Name 

Number of
Securities
Underlying
Unearned
RSUs (#)
 
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
 
Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
 

Number of
Securities
Underlying
Unexercised
Unearned
Options (#)
 
Option
Exercise
Price
($)
 
Option
Expiration
Date
Gregory L. Probert - 100,000 - - 12.05 6/16/2021 (1)
  - 100,000 - - 12.05 6/16/2021 (2)
  - 28,125 9,375 - 11.52 3/1/2022 (3)
  - - - 12,500 11.52 3/1/2022 (4)
  - 37,500 37,500 - 11.98 3/5/2023 (5)
  - - - 25,000 11.98 3/5/2023 (6)
  - 25,000 - - 12.72 4/1/2023 (7)
  - 12,500 37,500 - 13.88 2/11/2024 (8)
  - - 185,500 - 14.22 2/12/2025 (9)
  13,739 - - - - - (10)
  80,000 - - - - - (11)
  50,000 - - - - - (12)
  30,000 - - - - - (13)
TOTAL 173,739 303,125 269,875 37,500    
Stephen M. Bunker - 44,000 - - 8.37 5/10/2020 (14)
  - 30,000 - - 5.88 1/3/2021 (14)
  - 19,688 6,562 - 11.52 3/1/2022 (3)
  - - - 8,750 11.52 3/1/2022 (4)
  - 13,125 13,125 - 11.98 3/5/2023 (5)
  - - - 8,750 11.98 3/5/2023 (6)
  - 4,375 13,125 - 13.88 2/11/2024 (8)
  4,808 - - - - - (10)
  15,834 - - - - - (11)
  12,500 - - - - - (12)
  3,334 - - - - - (13)
TOTAL 36,476 93,688 50,312 17,500    
Adrianna Mendizabal - 50,000 - - 13.12 4/2/2022 (15)
  - 11,250 11,250 - 11.98 3/5/2023 (5)
  - - - 7,500 11.98 3/5/2023 (6)
  - 3,750 11,250 - 13.88 2/11/2024 (8)
  4,122 - - - - - (10)
  15,500 - - - - - (11)
  12,500 - - - - - (12)
  3,000 - - - - - (13)
TOTAL 35,122 65,000 22,500 7,500    
Paul E. Noack - 25,000 75,000 - 14.30 10/13/2024 (16)
  44,500 - - - - - (11)
  37,500 - - - - - (12)
  7,000 - - - - - (13)
TOTAL 89,000 25,000 75,000 -    
Richard D. Strulson - 43,334 43,333 - 16.80 11/4/2023 (17)
  - 4,375 13,125 - 13.88 2/11/2024 (8)
  4,808 - - - - - (10)
  15,834 - - - - - (11)
  12,500 - - - - - (12)
  3,334 - - - - - (13)
TOTAL 36,476 47,709 56,458 -    
(1)Option grant vested in three equal installments upon the achievement of 6.0%, 8.0% or 10.0% operating income margins as reported, adjusted for stock-based compensation expense, during four of five consecutive fiscal quarters.


40

(1)Option grant vested in three equal installments upon the achievement of 6.0%, 8.0% or 10.0% operating income margins as reported, adjusted for stock-based compensation expense, during four of five consecutive fiscal quarters.

(2)Option vests in three equal annual installments over each year of service, measured from June 16, 2011, subject to the executive’s continued employment with the Company. These options are also subject to accelerated vesting upon a change of control of the Company or involuntary termination without cause of the executive by the Company.

(3)


(2)Option vests in three equal annual installments over each year of service, measured from June 16, 2011, subject to the executive’s continued employment with the Company. These options are also subject to accelerated vesting upon a change of control of the Company or involuntary termination without cause of the executive by the Company.

(3)Option vests in four equal annual installments over each year of service measured from March 1, 2012, subject to the executive’s continued employment with the Company. These options are also subject to accelerated vesting in full upon termination by reason of death or disability, certain terminations following a change of control of the Company, or upon an involuntary termination without cause of the executive by the Company. The option will vest with respect to the additional shares in which the executive would have vested had the executive remained employed for an additional period of 12 months.

(4)Option grant vests based upon the achievement of between 5.0% and 10.0% cumulative annual net sales revenue growth over a rolling two year period commencing January 1, 2014, subject to the Company maintaining at least an 8.0% operating income margin during the applicable period. The options held by our named executive officers are subject to accelerated vesting upon a change of control of the Company or termination of the executive’s employment by reason of death or disability.

(5)Option vests in four equal annual installments over each year of service measured from March 5, 2013, subject to the executive’s continued employment with the Company. These options are also subject to accelerated vesting in full upon termination by reason of death or disability or certain terminations following a change of control of the Company.

(6)Option grant vests based upon the achievement of between $390.6 million and $469.9 million in rolling annual net sales revenue over a one-year period commencing April 1, 2013. The options held by our named executive officers are subject to accelerated vesting upon a change of control of the Company or termination of the executive’s employment by reason of death or disability.

(7)Options vested on April 1, 2014, subject to the executive’s continued employment with the Company. These options are also subject to accelerated vesting upon a change of control of the Company or involuntary termination without cause of the executive by the Company.

(8)Option vests in four equal annual installments over each year of service measured from February 11, 2014, subject to the executive’s continued employment with the Company. These options are also subject to accelerated vesting in full upon termination by reason of death or disability or certain terminations following a change of control of the Company.

(9)Option vests in three equal annual installments over each year of service measured from February 12, 2015, subject to the executive’s continued employment with the Company. These options are also subject to accelerated vesting in full upon termination by reason of death or disability or certain terminations following a change of control of the Company.

(10)RSU vests in four equal annual installments over each year of service measured from February 11, 2014, subject to the executive’s continued employment with the Company. These RSUs are also subject to accelerated vesting in full upon termination by reason of death or disability or certain terminations following a change of control of the Company.

(11)RSU vests in three equal annual installments over each year of service measured from January 15, 2015, subject to the executive’s continued employment with the Company. These RSUs are also subject to accelerated vesting in full upon termination by reason of death or disability or certain terminations following a change of control of the Company.

(12)RSU vests based upon the achievement of between $1.50, $2.50 and $3.50 earnings per shares over a rolling 4 quarter period and must be achieved on or before March 15, 2022. These RSUs are also subject to accelerated vesting in full upon termination by reason of death or disability or certain terminations following a change of control of the Company.

(13)RSU vests based upon the achievement of between $400.0 million and $450.0 million of net sales revenue over a rolling 4 quarter period and must be achieved on or before September 1, 2018. These RSUs are also subject to accelerated vesting in full upon termination by reason of death or disability or certain terminations following a change of control of the Company.


41


(14)Option grant vested in three equal installments upon the achievement of 6.0%, 8.0% or 10.0% operating income margins as reported, adjusted for stock-based compensation expense, during four of five consecutive fiscal quarters.

(15)Option vests in three equal annual installments over each year of service measured from April 4, 2012, subject to the executive’s continued employment with the Company. These options are also subject to accelerated vesting upon a change of control of the Company.

(16)Option vests in four equal annual installments over each year of service measured from October 13, 2014, subject to the executive’s continued employment with the Company. These options are also subject to accelerated vesting upon a change of control of the Company.

(17)Option vests in three equal annual installments over each year of service measured from November 4, 2013, subject to the executive’s continued employment with the Company. These options are also subject to accelerated vesting upon a change of control of the Company.

Option Exercises and Stock Vested for 2015

The following table sets forth information with respect to shares of the additional shares in which the executive would have vested had the executive remained employed for an additional periodCompany's common stock acquired upon exercise of 12 months.

(4)Option grant vests based upon the achievement of between 5.0% and 10.0% cumulative annual net sales revenue growth over a rolling two year period commencing January 1, 2014, subject to the Company maintaining at least an 8.0% operating income margin during the applicable period. Thestock options held by our named executive officers are subject to accelerated vesting upon a change of control ofduring the Company or termination of the executive’s employment by reason of death or disability.

(5)Option vests in four equal annual installments over each year of service measured from March 5, 2013, subject to the executive’s continued employment with the Company. These options are also subject to accelerated vesting in full upon termination by reason of death or disability or certain terminations following a change of control of the Company.

(6)Option grant vests based upon the achievement of between $390.6 million and $469.9 million in rolling annual net sales revenue over a one-year period commencing April 1, 2013. The options held by our named executive officers are subject to accelerated vesting upon a change of control of the Company or termination of the executive’s employment by reason of death or disability.

(7)Options vested on April 1, 2014, subject to the executive’s continued employment with the Company. These options are also subject to accelerated vesting upon a change of control of the Company or involuntary termination without cause of the executive by the Company.

(8)Option vests in four equal annual installments over each year of service measured from February 11, 2014, subject to the executive’s continued employment with the Company. These options are also subject to accelerated vesting in full upon termination by reason of death or disability or certain terminations following a change of control of the Company.

(9)RSU vests in four equal annual installments over each year of service measured from February 11, 2014, subject to the executive’s continued employment with the Company. These options are also subject to accelerated vesting in full upon termination by reason of death or disability or certain terminations following a change of control of the Company.

(10)Option grant vested in three equal installments upon the achievement of 6.0%, 8.0% or 10.0% operating income margins as reported, adjusted for stock-based compensation expense, during four of five consecutive fiscal quarters.

(11)Option vests in three equal annual installments over each year of service measured from February 6, 2012, subject to the executive’s continued employment with the Company. These options are also subject to accelerated vesting upon a change of control of the Company.

(12)Option vests in three equal annual installments over each year of service measured from October 7, 2013, subject to the executive’s continued employment with the Company. These options are also subject to accelerated vesting upon a change of control of the Company.

(13)Option vests in three equal annual installments over each year of service measured from November 4, 2013, subject to the executive’s continued employment with the Company. These options are also subject to accelerated vesting upon a change of control of the Company.

33ended December 31, 2015:

Name Number of Shares Acquired upon Exercise Value Realized upon Exercise ($)
D. Wynne Roberts 169,975 111,132



Table of Contents

(14)Option vests in three equal annual installments over each year of service measured from May 6, 2013, subject to the executive’s continued employment with the Company. These options are also subject to accelerated vesting upon a change of control of the Company or involuntary termination without cause of the executive by the Company.

Option Exercises for 2014

There were no options exercised in 2014 by the named executive officers.

Pension Benefits for 2014

The Company does not have a pension plan in which the named executive officers can participate to receive payments or other benefits at, following, or in connection with retirement.

Employment Agreements and Potential Payments Upon a Change in Control


The Company has employment agreements in place with each of its named executive officers.officers except Mr. Roberts, whose employment terminated on April 15, 2015. Among other things, these employment agreements set minimumthe initial annual base salaries for each named executive officer, and also establish that each named executive officer is eligible to participate in the Company’sCompany's executive bonus program. Payment of any bonus will be atprogram and set forth certain termination benefits in the sole discretion of the Compensation Committee. The following table includes the minimum annual base salary pursuant to the terms of their respectiveevent his or her employment agreements and their base salaries as of December 31, 2014, as established by the Compensation Committee in accordance with the terms of their respective employment agreements:

Name

 

Minimum Annual
Base Salary ($)

 

Base Salary as of
December 31, 2014 ($)

 

Gregory L. Probert

 

525,000

*

525,000

 

Stephen M. Bunker

 

200,360

 

305,000

 

D. Wynne Roberts

 

325,000

 

415,000

 

Richard D. Strulson

 

305,000

 

305,000

 

Matthew L. Tripp

 

275,000

 

275,000

 

*See further discussion of Mr. Probert’s Amended and Restated Employment Agreement below that was entered into subsequentCompany is terminated. The termination benefits to December 31, 2014, and provides for an annual base salary of $600,000.

Pursuant to the terms of the employment agreement for each ofwhich our named executive officers (other than Mr. Probert, whose agreement iswould be entitled in the event of termination are described below), each named executive officer is eligible to receive certain termination benefits.below in the section entitled “Potential Payments Upon Termination or Change in Control.” The employment agreements forwith our named executive officers, provide that in the event the named executive officer is terminated by the Company without cause or in the event the named executive officer’s employment ceases due to death or incapacity, he will be entitled to receive a severance payment equal to his annual base salaryexcept for the year of termination payable in 12 equal monthly installments and continued medical insurance coverage for 12 months, togetheremployment agreement with a reimbursement of up to $6,000 of any tax liability incurred by the executive in the event benefits received pursuant to such continued coverage result in taxable income to the executive. Pursuant to the terms of their employment agreements,Mr. Probert, provide for a period of one year after the cessation of the named executive officer’shis employment the named executive officer will beduring which he or she is subject to certain non-compete and non-solicitation covenants.

In the case of Mr. Probert, his employment agreement provides for a period of 18-months after the cessation of his employment during which he is subject to certain non-compete and non-solicitation covenants.


Mr. Probert’s Amended and Restated Employment Agreement


On February 11, 2015, the Company entered into an amended and restated employment agreement with Gregory L. Probert, who serves as the Company’s Chairman and Chief Executive Officer. Pursuant to the terms of the agreement, Mr. Probert is entitled to certain compensation and benefits, including an increase to $600,000 of his annual base salary of $600,000, and an option to purchase 185,000 shares of Common Stock of the Company.  The agreement provides thatrequired Mr. Probert will permanentlyto relocate to Utah withand provided that the Company assisting in thewould reimburse him for up to up to $300,000 of certain relocation as follows: (i) reimbursement of not less than three (3) round trip airline tickets for bothexpenses. Mr. Probert andcompleted his spouse to travel from Los Angeles, California to Salt Lake City, Utah for purposes of investigating and locating a new home; (ii) a lump sum of $94,000 (subject to deductions for taxes and withholdings) to cover reasonable commuting, temporary housing, automobile and other miscellaneous expenses associated with his travel between Los Angeles, California, and Lehi, Utah, prior to his permanent relocation to Utah;Utah in 2015 and (iii) the standardCompany paid $289,828 in relocation benefits to him in 2015.

Mr. Probert’s employment agreement sets for executives, including the payment of reasonable real estate fees. However, the agreement provides that the relocationcertain benefits payable to Mr. Probert shall be capped at three-hundred thousand dollars ($300,000).

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The agreement provides thatwould receive in the event that his employment is terminated. Such termination benefits are described below in the section entitled “Potential Payments Upon Termination or Change in Control.”


Mr. Probert is terminated by the Company without cause, or by him for “good reason”, or by reason of death or incapacity, he will be entitled to receive as follows: (a) monthly severance payments equal to one-twelfth of his annual base salary as of the date of terminationProbert’s employment agreement provides for a period equalof 18-months after the cessation of his employment during which he is subject to 18 months; (b) a pro-rata bonus (based on the number of full or partial calendar months he remained employed) for the Company’s fiscal year in which such termination occurs payable at the same time as similar bonuses are paid to the Companies’ other executive employees;certain non-compete and (c) reimbursement for up to 18 months for the cost of COBRA, if elected, in accordance with the Company plan applicable to Company employees then currently in effect.

The agreement also provides that in the event of a change of control that results in termination of Mr. Probert’s employment, he will be entitled to receive as follows: (x) a lump sum payment equal to one and one-half (1 ½) times his annual target cash compensation (defined as his annual base salary plus his annual target bonus of 100% of base salary), payable within 60 days of the change of control event; and (y) a pro-rata bonus (based on the number of full or partial calendar months he remained employed) for the Company’s fiscal year in which such termination occurs, payable at the same time as similar bonuses are paid to the Companies’ other executive employees; and (z) reimbursement for up to 18 months for the cost of COBRA, if elected, in accordance with the Company plan applicable to Company employees then currently in effect.

In addition, Mr. Probert’s covenant not to compete has been extended to 18 months post termination.

non-solicitation covenants.


Under the agreement, Mr. Probert is required to maintain ownership of capital stock or an equity position (“Equity”) in the Company having an aggregate value of $1 million. The agreement provides that such Equity position may be maintained by accumulating such Equity through the vesting of Mr. Probert’s future grants of stock options and Restricted Stock Units (“RSUs”),restricted stock units, in addition to shares of the Company’s capital stock that Mr. Probert currently owns, and the vesting of his existing grants of stock options and RSUs.

restricted stock units.



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The employment agreement alsowith Mr. Probert, our Chief Executive Officer, includes a global incentive “clawback” provision pursuant to which, in the event that during the term of the employment agreement, and for a period of two (2)2 years after the termination of the employment agreement, the Company is required to restate its financial statements due to a material non-compliance with any applicable financial reporting requirement or securities law as determined by the Company’sCompany's Board of Directors, the Company shall havehas the right, exercisable in its sole discretion, to review the amount of cash compensation paid to Mr. Probert and the amount of unvested equity compensation granted to him pursuant to existing grants of stock options and RSUs (collectively, “Compensation”"Compensation")during the period of time encompassed by the restatementprovided, however, that this look-back period shall be no longer than two (2) years, and recalculate Mr. Probert’s Compensation for the look-back period based upon the restated financial statements.statements, provided, however, that this look-back period shall be no longer than two (2) years. If, pursuant to this review and recalculation, the amount of Compensation that the Company would have paid under the restated financial statements for the look-back period is less than the actual amount of Compensation that was paid to Mr. Probert during the look-back period, Mr. Probert shall repay the difference to the Company in a time and manner mutually agreed to between Company and Mr. Probert.


POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL

Equity AwardsThe benefits and payments that the Company’s named executive officers could receive under certain hypothetical termination scenarios are described in the narrative below and quantified in the table that follows. Mr. Roberts' employment terminated without cause effective April 15, 2015. As a result of the termination of his employment, Mr. Roberts received the benefits and payments set forth below under “

Each outstanding option heldTermination Without Cause.”


Potential Payments upon Certain Termination Scenarios

Voluntary Termination and Termination for Cause

If the employment of any of the Company’s named executive officers is voluntarily terminated or terminated by the Company for cause, then no additional payments or benefits will accrue or be paid to the named executive officer under his or her employment agreement, other than what has been accrued and vested in the benefit plans discussed above in this proxy statement. A voluntary termination or involuntary termination for cause will not trigger an acceleration of the vesting of any stock options or other long-term incentive awards, and any such awards that had not already vested would be forfeited.

Termination Without Cause
Under our employment agreements with our named executive officers, will accelerate in full upon athe event that his or her employment is terminated by the Company without “cause” or by the named executive officer for “good reason,” as those terms are defined in the employment agreements, the named executive officer would be entitled to the following benefits and payments:

Payment of all accrued and unpaid base salary through the date of such termination;

Monthly severance payments equal to one-twelfth of the named executive officer’s base salary as of the date of termination for good reason bya period equal to 12 months, except in the case of our Chief Executive Officer who would receive such severance payments for a period of 18 months; and

Reimbursement for the cost the named executive within 24officer incurs for continuation of his or her health insurance coverage under COBRA, and for his family members if he or she provided for their coverage during his or her employment, for a period of 12 months, except in the case of our Chief Executive Officer who would such reimbursement for a period of 18 months.

Additionally, the Company’s employment agreement with the Chief Executive Officer provides that the Company will pay him a pro-rata bonus, based on the number of full or partial calendar months he remained employed, for the Company’s fiscal year in which such termination occurs, which bonus shall be paid at the same time as similar bonuses are paid to the Company’s executive employees for such fiscal year.

A termination without cause will not trigger an acceleration of the vesting of any stock options or other long-term incentive awards, and any such awards that had not already vested would be forfeited.

Termination Due to Death or Incapacity

If a named executive officer’s employment terminates due to death or incapacity, the employment agreements provide that such named executive officer would receive the same benefits and payments as if the employment had terminated without

43


cause. Additionally, the Company’s employment agreement with the Chief Executive Officer provides that the Company will pay him a pro-rata bonus, based on the number of full or partial calendar months he remained employed, for the Company’s fiscal year in which such termination occurs, which bonus shall be paid at the same time as similar bonuses are paid to the Company’s executive employees for such fiscal year.

A termination due to death or incapacity triggers an acceleration of the vesting of any stock options or other long-term incentive awards.

Potential Payments upon Termination Following a Change in Control

Except in the case of the Chief Executive Officer, the Company’s employment agreements with the named executive officers do not provide for additional payments or benefits if a named executive officer is terminated in connection with, or following, a change in control.  Immediate vestingcontrol event. The Company’s employment agreement with its Chief Executive Officer provides that if his employment is terminated in connection with a change in control event the Company will also occurpay him both (i) a lump sum equal to one and one-half times his annual target cash compensation, which amount is equal to his annual base salary plus his annual target bonus of 100% of his base salary, and (ii) a pro-rata bonus for the Company’s fiscal year in which such termination occurs.

The equity awards held by the named executive officers at the time of the a change in control event will vest in full if (i) such equity awards are not replaced with similar equity securities of the surviving entity, or (ii) such equity awards are replaced with similar equity securities of the surviving entity and the employment of the named executive officer is terminated without cause, or terminated by the named executive officer for good reason, within 24 months after the date of the change in control event.
Potential Payments Upon Termination

The following table shows potential payments to the named executive officers upon death or incapacity, termination of employment without cause and termination of employment following a change in control of the Company in whichCompany. The amounts shown assume that the option is not assumed or replaced.  A change in control generally includes: (i) acquisition of more than fifty percent (50%)termination was effective December 31, 2015, the last day of the Company’s voting stock by any person or group of related persons; (ii) consummation of a merger or consolidation as a result of which less than 50%most recently completed fiscal year, and are estimates of the outstanding voting securities are owned by stockholders of the Company immediately prior to such reorganization, (iii) consummation of a sale of all or substantially all of the Company’s assets, (iv) a change in the composition of the Board suchamounts that a majority of the directors who are currently on the Board, together with those subsequently nominated by such directors, no longer constitute a majority of the Board.

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Potential Payments upon Termination

The following table sets forth the estimated payments and benefits that would have been payable to all of the named executive officers under their agreements in the termination circumstances as described above had their employment terminated on December 31, 2014. All cash payments are assumed to be made in a lump sum and would be paid by the Company. There is no Change-in-Control excise tax protection provided to any of the named executive officers. The amounts set forth in this table represent estimates and forward-looking information that is subject to substantial variation, based on the timing of the triggering event. The Company cautions the reader to consider these limitations in reviewing the following table.

 

 

Mr. Probert

 

Mr. Bunker

 

Mr. Roberts

 

Mr. Strulson

 

Mr. Tripp

 

Salary severance

 

$

525,000

 

$

305,000

 

$

415,000

 

$

305,000

 

$

275,000

 

Continued Medical Insurance Coverage

 

8,100

 

8,100

 

8,100

 

8,100

 

8,100

 

Value of Accelerated Vesting (1)

 

652,363

 

264,424

 

473,112

 

111,466

 

217,799

 

Other Benefits (2)

 

—

 

6,000

 

—

 

—

 

—

 

TOTAL

 

1,185,463

 

575,424

 

896,212

 

424,566

 

500,899

 

(1)Represents the intrinsic value of accelerated vesting of all outstanding awards based on $14.82 closing price per share of Common Stock on December 31, 2014.

(2)Represents  reimbursement of up to $6,000 of any tax liability incurred by the named executive officer in the event benefits received pursuant to continued medical insurance coverage result in taxable income to the named executive officer.

Potential Paymentofficers upon a Change in Control (No Terminationtermination. The actual amounts to be paid can only be determined at the actual time of Employment)an officer's termination. No tax gross-ups are paid to the executive officers upon termination of employment


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.
   Termination upon death or incapacity ($) Termination without Cause ($) Termination Following Change in Control
Gregory L. Probert      
 Base Salary Continuation 900,000 900,000 -
 Continuation of Medical Insurance 16,300 16,300 -
 Value of Accelerated Vesting(1) 1,758,239 - 1,758,239
 Other Benefits 600,000(2) 600,000(2) 600,000(2)
 Total 3,274,539 1,516,300 4,158,239
Stephen M. Bunker      
 Base Salary Continuation 320,000 320,000 -
 Continuation of Medical Insurance 16,300 16,300 -
 Value of Accelerated Vesting(1) 501,962 - 501,962
 Other Benefits(2) 6,000 6,000 -
 Total 844,262 342,300 501,962
Adriana Mendizabal      
 Base Salary Continuation 272,950 272,950 -
 Continuation of Medical Insurance 16,300 16,300 -
 Value of Accelerated Vesting(1) 355,435 - 355,435
 Other Benefits - - -
 Total 644,685 289,250 355,435
Paul E. Noack      
 Base Salary Continuation 350,000 350,000 -
 Continuation of Medical Insurance 16,300 16,300 -
 Value of Accelerated Vesting(1) 900,680 - 900,680
 Other Benefits - - -
 Total 1,266,980 366,300 900,680
Richard S. Strulson      
 Base Salary Continuation 320,000 320,000 -
 Continuation of Medical Insurance 16,300 16,300 -
 Value of Accelerated Vesting(1) 369,137 - 360,137
 Other Benefits - - -
 Total 705,437 336,300 360,137


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(1)Represents the intrinsic value of accelerated vesting of all outstanding awards based on $10.12 closing price per share of Common Stock on December 31, 2015.

(2)Mr. Probert would be entitled to a pro-rata bonus based on the number of full or partial calendar months he remained employed during the Company’s fiscal year in which such termination occurs. Assuming the termination of his employment was effective on December 31, 2015, Mr. Probert would be entitled to a bonus based on a full year of employment. The number set forth herein assumes bonus is paid at target, or 100% of Mr. Probert’s base salary.

(3)If Mr. Probert is terminated without cause within twenty-four months of a change in control of the Company, his employment agreement entitles him to receive (i) a lump sum equal to one and one-half times his annual target cash compensation, which amount is equal to his annual base salary of $600,000 plus his annual target bonus of 100% of his base salary, and (ii) a pro-rata bonus for the Company’s fiscal year in which such termination occurs. The amounts set forth above assumes a bonus for a full year paid at the target percentage.

(4)Represents reimbursement of up to $6,000 of any tax liability incurred by Mr. Bunker in the event benefits received pursuant to continued medical insurance coverage result in taxable income to Mr. Bunker.

The following outstanding equity awards held by each named executive officer will vest in full upon a change in control transaction.

 

 

Mr. Probert

 

Mr. Bunker

 

Mr. Roberts

 

Mr. Strulson

 

Mr. Tripp

 

Value of Accelerated Vesting (1)

 

$

652,363

 

$

264,424

 

$

473,112

 

$

111,466

 

$

217,799

 


(1) Represents the intrinsic value of the accelerated vesting of all of the named executive officer’s stock awards based on the $14.82 closing price per share of the Company’s Common Stock on December 31, 2014.

Equity Compensation Plans


The following table contains information regarding the Company’s equity compensation plans as of December 31, 2014:

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
issuance under equity
compensation plans
(excluding securities
reflected in column
(a))

 

 

 

(a)

 

(b)

 

(c)

 

Equity compensation plans approved by security holders (1)

 

2,217,480

 

$

11.96

 

20,753

 

2015:

(1)Consists of two plans:  The Nature’s Sunshine Products, Inc. 2012 Stock Incentive Plan (the “2012 Incentive Plan”) and the Nature’s Sunshine Products, Inc. 2009 Stock Incentive Plan (the “2009 Incentive Plan”). The 2012 Incentive Plan was approved by shareholders on August 1, 2012. The 2009 Incentive Plan was approved by shareholders on November 6, 2009. The terms of these plans are summarized in Note 10, “Capital Transactions”, of the Notes to Consolidated Financial Statements in Item 8, Part 2 of form 10-K filed on March 13, 2015, with the SEC.

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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
issuance under equity
compensation plans
(excluding securities
reflected in column
(a))
  (a) (b) (c)
Equity compensation plans approved by security holders (1) 1,683,193 12.21 885,850

(1)Consists of two plans: the 2012 Incentive Plan and the 2009 Incentive Plan. The 2012 Incentive Plan was approved by shareholders on August 1, 2012, and an amendment was approved by the Company’s shareholders on January 14, 2015 to increase the number of shares available for issuance under the 2012 Incentive Plan by 1,500,000. The 2009 Incentive Plan was approved by shareholders on November 6, 2009. The terms of these plans are summarized in Note 11 of the Notes to Consolidated Financial Statements set forth in the 2015 Annual Report on Form 10-K filed with the SEC on March 14, 2016.



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CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS


The Board’s Audit Committee is responsible for review, approval, or ratification of “related-party transactions” as defined under applicable SEC rules that involve the Company or its subsidiaries. We have adopted written policies and procedures that apply to any transaction or series of transactions in which the Company or a subsidiary is a participant, the amount involved exceeds $120,000, and a related party has a direct or indirect material interest. If the Audit Committee determines a related party has a material interest in a transaction, the Audit Committee may approve, ratify, rescind, or take other action with respect to the transaction in its discretion.


Eugene L. Hughes, a former member of our Board of Directors, and the spouse of Kristine F. Hughes, Vice Chair of our Board of Directors, retired as an employee of the Company effective as of December 22, 2008. The Company and Mr. Hughes entered into a Retirement and Consulting Agreement, dated as of December 9, 2008, pursuant to which Mr. Hughes provides consulting services to the Company for an initial term of eight years following his retirement. In exchange for such consulting services, Mr. Hughes will receivereceived an annual compensation of $215,000 for the first two years of service, and an annual compensation of $100,000 for the remainder of the initial term.

Kristine F. Hughes, the Vice Chairperson of our Board of Directors, is the spouse of Mr. Hughes, who is an emeritus member of our Board of Directors.


HOUSEHOLDING OF PROXY MATERIALS



46


The SEC has adopted rules that permit companies and intermediaries (e.g., brokers) to satisfy the delivery requirements for proxy statements and annual reports with respect to two or more shareholders sharing the same address by delivering a single proxy statement addressed to those shareholders. This process, which is commonly referred to as “householding,” potentially means extra convenience for shareholders and cost savings for companies.


This year, a number of brokers with account holders who are our shareholders will be “householding” the proxy materials. A single proxy statement will be delivered to multiple shareholders sharing an address unless contrary instructions have been received from the affected shareholders. Once you have received notice from your broker that they will be “householding” communications to your address, “householding” will continue until you are notified otherwise or until you revoke your consent. If, at any time, you no longer wish to participate in “householding” and would prefer to receive a separate proxy statement and annual report, you may (i) notify your broker, (ii) direct your written request to our Corporate Secretary at our principal executive offices at 2500 West Executive Parkway, Suite 100, Lehi, Utah 84043, or (3) contact Nature’s Sunshine directly at (801) 341-7900. Shareholders who currently receive multiple copies of the proxy statement at their address and would like to request “householding” of their communications should contact their broker. In addition, we will promptly deliver, upon written or oral request at the address or telephone number above, a separate copy of the proxy statement and annual report to a shareholder at a shared address to which a single copy of these materials was delivered.

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OTHER MATTERS


The Board of Directors knows of no other business that will be presented at the Annual Meeting. If any other business is properly brought before the Annual Meeting, it is intended that the proxies in the enclosed form will be voted in accordance with the judgment of the person voting the proxies.


Whether or not you plan to attend the Annual Meeting and regardless of the number of shares you hold, it is important that your shares be represented and voted at the meeting. Therefore, I urge you to vote as promptly as possible. You may vote your shares by visiting the websitehttp://www.proxyvote.com. To limit printing and other expenses for the Company and its shareholders, shareholders will not receive a printed copy of the proxy materials unless they have previously made a permanent election to receive these materials in printed form. Timely voting will ensure your representation at the Annual Meeting. If you decide to attend the Annual Meeting, you will be able to vote in person, even if you have previously submitted your proxy.


By Order of the Board of Directors

/s/ RICHARD D. STRULSON

Richard D. Strulson

Lehi, Utah

Executive Vice President, General Counsel,

March 27, 2015

[ __ ], 2016

Chief Compliance Officer and Secretary

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NATURE’S SUNSHINE PRODUCTS, INC.

PROXY OF ANNUAL MEETING OF SHAREHOLDERS

TO BE HELD MAY 6, 2015

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned, having received the notice of Annual Meeting of Shareholders and Proxy Statement, hereby revokes all previous proxies and appoints Gregory L. Probert and Stephen M. Bunker, or either of them, the proxy of the undersigned, with full power of substitution, to vote all shares of common stock of Nature’s Sunshine Products, Inc. that the undersigned is entitled to vote, either on his or her own behalf or on behalf of an entity or entities, at the Nature’s Sunshine Products, Inc. Annual Meeting of Shareholders to be held on May 6, 2015, at 10:00 AM Mountain Daylight Time, at our principal executive offices located at 2500 West Executive Parkway, Suite 100, Lehi, Utah 84043, and at any adjournment or postponement thereof, with the same force and effect as the undersigned might or could have if personally present thereat.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE ELECTION OF DIRECTORS, “FOR” PROPOSALS TWO, THREE, AND FOUR. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK, AS SHOWN HERE: x.

1.Proposal One. Election of Directors (Term to Expire at the 2016 Annual Meeting)

o

FOR all nominees

Nominees:

o Li Dongjiu

o Albert R. Dowden

o Kristine F. Hughes

o Robert B. Mercer

o Willem Mesdag

o Gregory L. Probert

o Mary Beth Springer

o Rebecca L. Steinfort

o Jeffrey D. Watkins

o

WITHHOLD AUTHORITY to vote for all nominees

o

FOR ALL EXCEPT (See instructions below)

INSTRUCTIONS:  To withhold authority to vote for any individual nominee(s), mark “FOR ALL EXCEPT” and mark the box next to each nominee you wish to withhold, as shown here: x

2.Proposal Two. Ratification of the appointment of Deloitte & Touche LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2015.

o FOR

o AGAINST

o ABSTAIN

3.Proposal Three. An advisory resolution to approve the compensation of the named executive officers.

o FOR

o AGAINST

o ABSTAIN

THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS SPECIFIED ABOVE. IF NO CHOICE IS SPECIFIED, THIS PROXY WILL BE VOTED IN FAVOR OF ELECTING THE FIVE NOMINEES NOTED HEREON TO THE BOARD OF DIRECTORS, FOR PROPOSALS TWO AND THREE. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY POSTPONEMENT OR ADJOURNMENT THEREOF.

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PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ACCOMPANYING ENVELOPE.

Signature of Shareholder

Signature of Shareholder

Date

Date

NOTE:  Please sign exactly as your name or names appear on this Proxy. When shares are held jointly, each holder should sign. When signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is a partnership, please sign in partnership name by authorized person.