The Board has determined that each of Messrs. Gilbert, Jobe, Kennedy,Schrier, and Toth and Dr. Ferrell qualify as “independent” as defined by applicable NASDAQ and SEC rules. In making this determination, the Board has concluded that none of these members has a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.
|
| | | | | |
Director’s Name | Audit
Audit Committee | |
Compensation and Stock Option Plan
Committee
| Nominating/ Governance, and Compliance Committee | Nominating/
Governance,
andAssociate Compliance
Committee Subcommittee
| |
Science and Marketing Committee |
Non-Employee Independent Directors: | | | | | |
Linda K. Ferrell, Ph.D. | | | | C | X |
Gerald E. Gilbert | X | | X | | C | | X |
Larry A. Jobe | C | X | X | | X | | X |
Alan D. KennedyEric W. Schrier | X | X | | X | | X | | C |
Robert A. Toth(1) | X | | C | | X | X | X |
Non-Employee Directors: | | | | | | | |
J. Stanley Fredrick(1)(2) | | | | | | | |
Marlin RayKevin Robbins | | | | | | | X |
(1)
| Chairman of the Board of Directors |
(1) Vice Chairman of the Board of Directors(2) Chairman of the Board of Directors
The committees and their functions are as follows:
| |
1. | Audit Committee. Our Audit Committee consists of Messrs. Gilbert, Jobe, KennedySchrier, and Toth and is chaired by Mr. Jobe. The Board has determined that each member of our Audit Committee meets the independence and financial literacy requirements for purposes of serving on such committee under applicable NASDAQ and SEC rules and that Mr. Jobe qualifies as an “audit committee financial expert” as defined by the SEC. Our Audit Committee is primarily responsible for approving all services provided by our independent registered public accounting firm, reviewing our annual audit results, and meeting with our independent registered public accounting firm to periodically review our internal controls, internal control over financial reporting, and financial management practices. Our Audit Committee’s responsibilities are stated more fully in its amended and restated charter, which is posted on our corporate website at www.mannatech.comir.mannatech.com. Our Audit Committee’s report appears in this proxy statement on page 4440.. |
| |
2. | Compensation and Stock Option Plan Committee. Our Compensation and Stock Option Plan Committee consists of Messrs. Gilbert, Jobe, KennedySchrier, and Toth and is chaired by Mr. Toth. The Board has determined that each member of our Compensation and Stock Option Plan Committee meets the independence requirements for purposes of serving on such committee under applicable NASDAQ and SEC rules. None of our executive officers serves as a member of any board of directors or as a member of any other compensation committee for any other entity that has or has had one or more of their executive officers serving as a member of the Board or on our Compensation and Stock Option Plan Committee. Our Compensation and Stock Option Plan Committee is primarily responsible for establishing all compensation for our executive officers and directors including salaries, bonuses, stock option grants, and stock option plan administration. Our Compensation and Stock Option Plan Committee’s responsibilities are stated more fully in its revised charter, which is posted on our corporate website at www.mannatech.com. |
officers serves as a member of any board of directors or as a member of any other compensation committee for any other entity that has or has had one or more of their executive officers serving as a member of the Board or on our Compensation and Stock Option Plan Committee. Our Compensation and Stock Option Plan Committee is primarily responsible for establishing all compensation for our executive officers and directors including salaries, bonuses, stock option grants, and stock option plan administration. Our Compensation and Stock Option Plan Committee may ask members of management or others whose advice and counsel are relevant to the issues then being considered by the Committee to attend any meetings and to provide such pertinent information as the Committee may request. Our Compensation and Stock Option Plan Committee’s responsibilities are stated more fully in its revised charter, which is posted on our corporate website at ir.mannatech.com.
| |
3. | Nominating/Governance, and Compliance Committee. Our Nominating/Governance, and Compliance Committee consists of Messrs. Gilbert, Jobe, Kennedy and Toth and is chaired by Mr. Gilbert. The Board has determined that each member of the Nominating/Governance, and Compliance Committee meets the independence requirements for purposes of serving on such committee under applicable NASDAQ and SEC rules. Our Nominating/Governance, and Compliance Committee is primarily responsible for reviewing and recommending nominees to the Board, developing plans regarding the size and composition of the Board, developing management succession planning, and establishing and maintaining policies and procedures to handle and investigate complaints, including whistleblower or other confidential complaints. Our Nominating/Governance, and Compliance Committee is also responsible for directing the investigation of complaints including advising the Board about the outcome of any complaints or any other legal matters. For information on criteria for director nominees, see “Consideration of Director Nominees”, beginning on page 22. 16. Our Nominating/Governance and Compliance Committee’s responsibilities are stated more fully in its charter that is posted on our corporate website at www.mannatech.comir.mannatech.com. For additional information on nominating nominees to the Board see “Shareholder Procedures for Nominating Board Members or Introducing Proposals,” beginning on page 6 of this proxy statement. |
| |
4. | Associate Compliance Subcommittee. Our Associate Compliance Subcommittee is a subcommittee of the Nominating/Governance and Compliance Committee. It was formed in May 2015 and consists of Messrs. Schrier and Toth and is chaired by Dr. Ferrell. The Associate Compliance Subcommittee assists and supports the Nominating/Governance and Compliance Committee with its mandate from the Board pertaining to the oversight of management’s responsibilities regarding the Company’s compliance with legal and regulatory requirements related to the marketing, distribution, and sale of the Company’s products by the Company’s independent associates. The Associate Compliance Subcommittee’s responsibilities are stated more fully in its charter that is posted on our corporate website at ir.mannatech.com. |
| |
5. | Science and Marketing Committee. Our Science and Marketing Committee was formed in June 2003 and consists of Messrs. Gilbert, Kennedy,Schrier, Robbins, Jobe, and Toth, and is chaired byDr. Ferrell. The Board elected Mr. Kennedy.Schrier as Chairman of the Science and Marketing Committee. Our Science and Marketing Committee is primarily responsible for overseeing all aspects of our product development and setting the overall direction of our product research and development.development and the marketing of our innovative products. The committee also oversees management’s implementation and maintenance of the Company’s Global Scientific Advisory Board to aid the Company in driving the development of innovative products for its global markets. The Science and Marketing Committee’s responsibilities are stated more fully in its charter that is posted on our corporate website at ir.mannatech.com. |
Shareholder Communication with Our Board of Directors
We request that any shareholders interested in communicating directly with individual directors or with our entire Board submit such correspondence in writing. To submit written correspondence to the Board, fax such correspondence to (972) 471-7342,471-1571, or send by email to BoardofDirectors@mannatech.com, or mail to Mannatech, Incorporated, Attention CFO,Corporate Secretary, “For Mannatech’s Board of Directors,” 600 S. Royal Lane, Suite 200, Coppell, Texas 75019. Upon receipt, a copy of such correspondence will be given to both the Corporate Secretary and to J. Stanley Fredrick, our Chairman of the Board. All correspondence to specific Board members will be delivered directly to the individual Board member. A voice message can be left for the Board at (972) 471-6512. Our Executive Officers and designated officials may be given access to such shareholder communications with the Board, except in instances in which the charters of our committees require anonymity.
In order to help promote the highest levels of business ethics, the Board adopted a Code of Ethics for our executive officers and directors in 2003. The Code of Ethics was amended in April 2006 and is published on our corporate website at www.mannatech.comir.mannatech.com. Any change in or waiver from and the grounds for such change in or waiver offrom our Code of Ethics shall be promptly disclosed by publishing such change or waiver on our corporate website at www.mannatech.com.ir.mannatech.com. Our Code of Ethics applies to all of our executive officers and directors. Our Code of Ethics was designed to ensure that our business is conducted in a consistent legal and ethical manner and sets forth guidelines for all areas of professional conduct, including conflicts of interest, employment policies, protection of confidential information, and fiduciary duties.
Compensation of Directors
We compensate our non-employee directors for serving and participating on the Board, for chairing committees, and for attending Board and Board committee meetings. Our Nominating/Governance and Compliance Committee reviews the compensation of our non-employee directors and recommends to the Compensation and Stock Option Plan Committee any changes to director compensation that the Nominating/Governance and Compliance Committee deems appropriate. Our Compensation and Stock Option Plan Committee then reviews such recommendations and after due deliberation and consideration approves any such changes it deems appropriate and recommends them to the Board. The Board then reviews such recommendations and after due deliberation and consideration approves any such changes it deems appropriate. Non-employee director fees during 20132016 were as follows:
|
| | | | | | | | | | | | | | | | | | | | | | | |
| Board Member | | Audit Committee | | Compensation and Stock Option Plan Committee | | Nominating/ Governance and Compliance Committee | | Associate Compliance Sub-Committee | | Science and Marketing Committee |
Chairman fee(1) | $ | 372,910 |
|
| $ | 20,000 |
|
| $ | 18,000 |
|
| $ | 12,500 |
|
| $ | 5,000 |
|
| $ | 7,500 |
|
Vice Chairman fee(1) | $ | 100,000 |
|
| $ | — |
|
| $ | — |
|
| $ | — |
|
| $ | — |
|
| $ | — |
|
Independent director retainer(1) | $ | 70,000 |
|
| $ | — |
|
| $ | — |
|
| $ | — |
|
| $ | — |
|
| $ | — |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Telephonic meeting fee | $ | 500 |
|
| $ | 500 |
|
| $ | 500 |
|
| $ | 500 |
|
| $ | 500 |
|
| $ | 500 |
|
Re-elected Board members(2) | $ | — |
|
| $ | — |
|
| $ | — |
|
| $ | — |
|
| $ | — |
|
| $ | — |
|
| | Board Member | | | Audit Committee | | | Compensation and Stock Option Plan Committee | | | Nominating/ Governance and Compliance Committee | | | | |
Chairman fee(1) | | $ | 372,910 | | | $ | 20,000 | | | $ | 7,500 | | | $ | 12,500 | | | $ | 7,500 | |
Independent director retainer(1) | | $ | 35,000 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | |
In-person meeting fee | | $ | 1,000 | | | $ | 1,000 | | | $ | 1,000 | | | $ | 1,000 | | | $ | 1,000 | |
Telephonic meeting fee | | $ | 500 | | | $ | 500 | | | $ | 500 | | | $ | 500 | | | $ | 500 | |
Re-elected Board members(2) | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | |
| |
(1) | The Chairman fee, Vice Chairman fee, and director retainer are paid monthly during the calendar year. |
| |
(2) | Each non-employee director re-elected to the Board by our shareholders was granted 5,000 stock options. The stock options are priced on the date of grant and expire in ten years. One-third of the stock options vest on the date of grant, another one-third of the stock options vest on the first anniversary date of grant, and the remaining one-third of the stock options vest on the second anniversary of the date of grant. |
All directors are reimbursed for any reasonable out-of-pocket travel expenses in connection with their travel to and attendance at any of the Board’s meetings or committee meetings.
For fiscal year 2016, the annual retainer for independent directors was $70,000. Directors received a $500 fee for attending telephonic board and committee meetings. The Directors did not receive any fees for attending in-person board or committee meetings. The Board added an equity component to the compensation package at the November 2015 Board meeting whereby in addition to the retainer and fees, the Directors would receive $35,000 in a restricted stock grant, with 1/3 vesting immediately, 1/3 after one year, and 1/3 after two years. However, at the December 2016 Board meeting, the Board approved accelerating the vesting schedule of the equity award so that the last two years of the award vested as of the closing stock price on December 7, 2016.
For fiscal year 2017, the annual retainer for independent Directors remains at $70,000 and the telephonic Board and telephonic committee meeting fees and chairman, vice chairman, and committee chairman fees will remain at the 2016 levels. The equity component remains at $35,000; however, at its December 2016 meeting, the Board approved changing the equity component from a restricted grant to immediate vesting each year beginning on the first trading day of January for the respective year. For January 2017, the grant immediately vested on January 3, 2017.
2013
2016 Director Compensation Table
The table below summarizes the compensation paid during 20132016 to our non-employee directors. We have not granted stock awards to our non-employee directors, and ourOur non-employee directors do not receive non-equity incentive plan compensation, or nonqualified deferred compensation.
|
| | | | | | | | | | | | | | | | | | | | |
Director | | Fees Earned or Paid in Cash (1) | | Stock Awards(2) | | Option Awards | | All Other Compensation | | Total |
J. Stanley Fredrick |
| $ | 356,034 |
|
| $ | 34,999 |
|
| $ | 60,900 |
| (3) | $ | 10,865 |
| (5) | $ | 462,798 |
|
Gerald E. Gilbert |
| $ | 85,500 |
|
| $ | 34,999 |
|
| $ | — |
|
| $ | — |
|
| $ | 120,499 |
|
Larry A. Jobe |
| $ | 93,000 |
|
| $ | 34,999 |
|
| $ | — |
|
| $ | — |
|
| $ | 127,999 |
|
Kevin Robbins |
| $ | — |
|
| $ | — |
|
| $ | 38,900 |
| (4) | $ | — |
|
| $ | 38,900 |
|
Marlin Ray Robbins |
| $ | 80,000 |
|
| $ | 34,999 |
|
| $ | — |
|
| $ | 2,662,388 |
| (6) | $ | 2,777,387 |
|
Eric W. Schrier |
| $ | 80,500 |
|
| $ | 34,999 |
|
| $ | 60,900 |
| (3) | $ | — |
|
| $ | 176,399 |
|
Linda K. Ferrell, Ph.D. |
| $ | 76,000 |
|
| $ | 34,999 |
|
| $ | — |
|
| $ | — |
|
| $ | 110,999 |
|
Robert A. Toth |
| $ | 191,000 |
|
| $ | 34,999 |
|
| $ | — |
|
| $ | 12,191 |
| (5) | $ | 238,190 |
|
Director | | Fees Earned or Paid in Cash(1) | | | Option Awards(2) | | | All Other Compensation | | | | Total | |
J. Stanley Fredrick | | $ | 359,394 | | | $ | 48,200 | | | $ | 17,001 | | (3) | | $ | 424,595 | |
Gerald E. Gilbert | | $ | 73,000 | | | $ | 17,850 | | | $ | ─ | | | | $ | 90,850 | |
Larry A. Jobe | | $ | 78,500 | | | $ | 17,850 | | | $ | ─ | | | | $ | 96,350 | |
Alan D. Kennedy | | $ | 68,000 | | | $ | 17,850 | | | $ | ─ | | | | $ | 85,850 | |
Marlin Ray Robbins | | $ | ─ | | | $ | 17,850 | | | $ | 2,443,052 | | (4) | | $ | 2,460,902 | |
Robert A. Toth | | $ | 67,000 | | | $ | 17,850 | | | $ | ─ | | | | $ | 84,850 | |
| |
(1) | The amounts reported in this column represent the aggregate dollar amount of annual retainer fees, committee and/or chairmanship fees, and meeting fees, as described in the table above. The Chairman fee is 372,910, and Mr. Fredrick reimburses the company $16,876 for his health insurance. |
| |
(2) | As part of the equity component to the Director compensation package approved at the November 2015 Board meeting, each Director received a restricted grant of 1,844 shares of stock. The grant was effective on January 4, 2016 and the price per share was $18.98. One-third of the grant vested immediately with an additional 1/3 vesting on the first anniversary and the remaining 1/3 vesting on the second anniversary. On December 7, 2016, the Board modified the vesting period for the grant so that the final two years would vest immediately on December 7, 2016. |
| |
(3) | The amounts reported in this column represent the aggregate grant date fair value computed in accordance with FASB ASC Topic 718 “Stock Compensation” for two categories of option awards. The first was a grant of 5,000. Messrs. J. Stanley Fredrick and Eric Schrier were awarded stock options with an exercise price of $5.72 which was awarded to each director. The second was a grant that was awarded to Mr. Fredrick in connection with histheir re-election to the Board at the 20132016 Annual Shareholders’ Meeting. HeThey each received a grant of 5,000 stock options with an exercise price of $9.89$21.18 pursuant to our policy that each non-employee director re-elected to the Board by our shareholders is granted 5,000 stock options. For the aforementioned grants, one-third of the stock options vest on the date of grant, another one-third of the stock options vest on the first anniversary date of the grant, and the remaining one-third of the stock options vest on the second anniversary of the date of grant. The stock options are priced on the date of grant. See table below titled “Directors’ Stock Options Outstanding” for aggregate options outstanding at year end.year-end. |
| (3) | Included in other compensation is our payment for Mr. Fredrick’s 2013 medical and dental insurance premiums of $13,516, travel of $2,917 and membership dues for a private club of $568. |
| (4) | The amounts reported in this column represent the aggregate grant date fair value computed in accordance with FASB ASC Topic 718 “Stock Compensation”. Kevin Robbins, son of Marlin Ray Robbins, was elected to the Board on December 7, 2016. He was awarded 5,000 options on December 7, 2016 with 1/3 vesting immediately, 1/3 on the first-year anniversary, and 1/3 on the second-year anniversary. The exercise price on December 7, 2016 was $17.28 per share. Mr. K. Robbins holds positions in our associate global downline network marketing system and we paid him approximately $159,000 in connection therewith. |
| |
(5) | Included in other compensation is our payment for Mr. Fredrick’s travel of $9,070 and other miscellaneous expenses of $1,795 and Mr. Toth's travel of $11,864 and other miscellaneous expenses of $327. |
| |
(6) | Mr. M. Robbins holds positions in our associate global downline network marketing system and we paid him commissions of approximately $2.4$2.7 million in connection therewith. Mr. Robbins resigned from the Board in November 2016. Although Mr. Robbins resigned in November, the Board approved the immediate vesting of the final two years of his 2016 equity award on December 7, 2016. |
Directors’ Stock Options Outstanding
The table below summarizes the outstanding stock options of our non-employee directors as of December 31, 2013:2016:
| | Director | | Grant Date | | Aggregate Number of Shares Underlying Outstanding Stock Options | | | Exercise Price Per Share | | | Grant Date Fair Value of Option Awards | | | Calculated Fair Value Price Per Share | | | Fair Value of Option Awards Recognized in 2013(a) | | | | Grant Date | | Aggregate Number of Shares Underlying Outstanding Stock Options | | Exercise Price Per Share | | Grant Date Fair Value of Option Awards | | Calculated Fair Value Price Per Share | | Fair Value of Option Awards Recognized in 2016(a) |
J. Stanley Fredrick | | June 10, 2010 | | | 6,976 | | | $ | 23.70 | | | $ | 82,326 | | | $ | 11.80 | | | $ | — | | | | June 10, 2010 | | 6,976 |
| | $ | 23.70 |
| | $ | 82,317 |
| | $ | 11.80 |
| | $ | — |
|
| | August 16, 2010 | | | 392 | | | $ | 27.10 | | | $ | 5,491 | | | $ | 14.01 | | | $ | — | | | | February 21, 2013 | | 5,000 |
| | $ | 5.72 |
| | $ | 17,850 |
| | $ | 3.57 |
| | $ | 847 |
|
| | February 21, 2013 | | | 5,000 | | | $ | 5.72 | | | $ | 17,850 | | | $ | 3.57 | | | $ | 5,119 | | | | June 5, 2013 | | 5,000 |
| | $ | 9.89 |
| | $ | 30,350 |
| | $ | 6.07 |
| | $ | — |
|
| | June 5, 2013 | | | 5,000 | | | $ | 9.89 | | | $ | 30,350 | | | $ | 6.07 | | | $ | 15,608 | | | | February 20, 2014 | | 8,000 |
| | $ | 19.60 |
| | $ | 97,660 |
| | $ | 12.21 |
| | $ | 4,548 |
|
| | | | | 17,368 | | | | | | | $ | 136,017 | | | | | | | $ | 20,727 | | | | June 22, 2016 | | 5,000 |
| | $ | 21.18 |
| | $ | 63,205 |
| | $ | 12.64 |
| | $ | 32,151 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | 29,976 |
| | | | $ | 291,382 |
| | | | $ | 37,546 |
|
| | | | | | | | | | | |
Linda K. Ferrell, Ph.D. | | | April 1, 2015 | | 5,000 |
| | $ | 18.55 |
| | $ | 55,421 |
| | $ | 11.08 |
| | $ | 23,160 |
|
| | | 5,000 |
| | | | $ | 55,421 |
| | | | $ | 23,160 |
|
| | | | | | | | | | | |
Gerald E. Gilbert | | November 20, 2008 | | | 1,000 | | | $ | 25.00 | | | $ | 10,300 | | | $ | 10.30 | | | $ | — | | | | November 20, 2008 | | 1,000 |
| | $ | 25.00 |
| | $ | 10,300 |
| | $ | 10.30 |
| | $ | — |
|
| | | June 10, 2009 | | 5,000 |
| | $ | 30.00 |
| | $ | 72,000 |
| | $ | 14.40 |
| | $ | — |
|
| | | August 16, 2010 | | 2,315 |
| | $ | 24.60 |
| | $ | 32,421 |
| | $ | 14.00 |
| | $ | — |
|
| | June 10, 2009 | | | 5,000 | | | $ | 30.00 | | | $ | 72,000 | | | $ | 14.40 | | | $ | — | | | | May 30, 2012 | | 1,667 |
| | $ | 5.19 |
| | $ | 16,050 |
| | $ | 3.21 |
| | $ | — |
|
| | August 16, 2010 | | | 2,315 | | | $ | 24.60 | | | $ | 32,421 | | | $ | 14.00 | | | $ | — | | | | February 21, 2013 | | 3,333 |
| | $ | 5.72 |
| | $ | 17,850 |
| | $ | 3.57 |
| | $ | 847 |
|
| | May 30, 2012 | | | 5,000 | | | $ | 5.19 | | | $ | 16,050 | | | $ | 3.21 | | | $ | 5,362 | | | | February 20, 2014 | | 5,000 |
| | $ | 19.60 |
| | $ | 61,037 |
| | $ | 12.21 |
| | $ | 2,843 |
|
| | February 21, 2013 | | | 5,000 | | | $ | 5.72 | | | $ | 17,850 | | | $ | 3.57 | | | $ | 5,119 | | | | May 28, 2015 | | 5,000 |
| | $ | 20.95 |
| | $ | 62,740 |
| | $ | 12.55 |
| | $ | 20,947 |
|
| | | | | 18,315 | | | | | | | $ | 148,621 | | | | | | | $ | 10,481 | | | | 23,315 |
| | | | $ | 272,398 |
| | | | $ | 24,637 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Larry A. Jobe | | November 20, 2008 | | | 1,000 | | | $ | 25.00 | | | $ | 10,300 | | | $ | 10.30 | | | $ | — | | | | November 20, 2008 | | 1,000 |
| | $ | 25.00 |
| | $ | 10,300 |
| | $ | 10.30 |
| | $ | — |
|
| | June 10, 2009 | | | 5,000 | | | $ | 30.00 | | | $ | 72,000 | | | $ | 14.40 | | | $ | — | | | | June 10, 2009 | | 5,000 |
| | $ | 30.00 |
| | $ | 72,000 |
| | $ | 14.40 |
| | $ | — |
|
| | August 16, 2010 | | | 1,410 | | | $ | 24.60 | | | $ | 19,740 | | | $ | 14.00 | | | $ | — | | | | August 16, 2010 | | 1,410 |
| | $ | 24.60 |
| | $ | 19,740 |
| | $ | 14.00 |
| | $ | — |
|
| | May 30, 2012 | | | 5,000 | | | $ | 5.19 | | | $ | 16,050 | | | $ | 3.21 | | | $ | 5,362 | | | | February 21, 2013 | | — |
| | $ | 5.72 |
| | $ | 17,850 |
| | $ | 3.57 |
| | $ | 847 |
|
| | February 21, 2013 | | | 5,000 | | | $ | 5.72 | | | $ | 17,850 | | | $ | 3.57 | | | $ | 5,119 | | | | February 20, 2014 | | 5,000 |
| | $ | 19.60 |
| | $ | 61,037 |
| | $ | 12.21 |
| | $ | 2,843 |
|
| | | | | 17,410 | | | | | | | $ | 135,940 | | | | | | | $ | 10,481 | | | | May 28, 2015 | | 5,000 |
| | $ | 20.95 |
| | $ | 62,740 |
| | $ | 12.55 |
| | $ | 20,947 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | 17,410 |
| | | | $ | 243,667 |
| | | | $ | 24,637 |
|
Alan D. Kennedy | | November 20, 2008 | | | 1,000 | | | $ | 25.00 | | | $ | 10,300 | | | $ | 10.30 | | | $ | — | | | |
| | | | | | | | | | | |
Kevin Robbins | | | December 7, 2016 | | 5,000 |
| | $ | 17.28 |
| | $ | 52,019 |
| | $ | 10.40 |
| | $ | 18,480 |
|
| | | 5,000 |
| | | | $ | 52,019 |
| | | | $ | 18,480 |
|
| | | | | | | | | | | |
Marlin Ray Robbins(b) | | | November 20, 2008 | | 1,000 |
| | $ | 25.00 |
| | $ | 10,300 |
| | $ | 10.30 |
| | $ | — |
|
| | August 16, 2010 | | | 2,441 | | | $ | 24.60 | | | $ | 34,184 | | | $ | 14.40 | | | $ | — | | | | June 10, 2009 | | 5,000 |
| | $ | 30.00 |
| | $ | 72,000 |
| | $ | 14.40 |
| | $ | — |
|
| | June 9, 2011 | | | 13,157 | | | $ | 11.40 | | | $ | 84,211 | | | $ | 6.40 | | | $ | 12,228 | | | | May 30, 2012 | | 5,000 |
| | $ | 5.19 |
| | $ | 16,050 |
| | $ | 3.21 |
| | $ | — |
|
| | February 21, 2013 | | | 5,000 | | | $ | 5.72 | | | $ | 17,850 | | | $ | 3.57 | | | $ | 5,119 | | | | February 21, 2013 | | 5,000 |
| | $ | 5.72 |
| | $ | 17,850 |
| | $ | 3.57 |
| | $ | 847 |
|
| | | | | 21,598 | | | | | | | $ | 146,545 | | | | | | | $ | 17,346 | | | | February 20, 2014 | | 5,000 |
| | $ | 19.60 |
| | $ | 61,037 |
| | $ | 12.21 |
| | $ | 2,843 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | May 28, 2015 | | 5,000 |
| | $ | 20.95 |
| | $ | 62,740 |
| | $ | 12.55 |
| | $ | 29,427 |
|
Marlin Ray Robbins | | June 12, 2006 | | | 1,115 | | | $ | 112.10 | | | $ | 54,373 | | | $ | 48.77 | | | $ | — | | | |
| | November 20, 2008 | | | 1,000 | | | $ | 25.00 | | | $ | 10,300 | | | $ | 10.30 | | | $ | — | | | | 26,000 |
| | | | $ | 239,977 |
| | | | $ | 33,117 |
|
| | June 10, 2009 | | | 5,000 | | | $ | 30.00 | | | $ | 72,000 | | | $ | 14.40 | | | $ | — | | | |
|
| | | |
|
| | | |
|
|
| | May 30, 2012 | | | 5,000 | | | $ | 5.19 | | | $ | 25,950 | | | $ | 3.21 | | | $ | 5,362 | | | |
Eric W. Schrier | | | October 29, 2014 | | 5,000 |
| | $ | 14.19 |
| | $ | 42,545 |
| | $ | 8.51 |
| | $ | 11,741 |
|
| | February 21, 2013 | | | 5,000 | | | $ | 5.72 | | | $ | 17,850 | | | $ | 3.57 | | | $ | 5,119 | | | | June 22, 2016 | | 5,000 |
| | $ | 21.18 |
| | $ | 63,205 |
| | $ | 12.64 |
| | $ | 32,151 |
|
| | | | | 17,115 | | | | | | | $ | 170,573 | | | | | | | $ | 10,481 | | | | 10,000 |
| | | | $ | 105,750 |
| | | | $ | 43,892 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Robert A. Toth | | August 16, 2010 | | | 2,410 | | | $ | 24.60 | | | $ | 33,751 | | | $ | 14.00 | | | $ | 989 | | (b) | | August 16, 2010 | | 2,410 |
| | $ | 24.60 |
| | $ | 33,751 |
| | $ | 14.00 |
| | $ | — |
|
| | June 9, 2011 | | | 13,157 | | | $ | 11.40 | | | $ | 84,211 | | | $ | 6.40 | | | $ | 12,228 | | | | June 9, 2011 | | 13,157 |
| | $ | 11.40 |
| | $ | 84,211 |
| | $ | 6.40 |
| | $ | — |
|
| | February 21, 2013 | | | 5,000 | | | $ | 5.72 | | | $ | 17,850 | | | $ | 3.57 | | | $ | 5,119 | | | | February 21, 2013 | | 5,000 |
| | $ | 5.72 |
| | $ | 17,850 |
| | $ | 3.57 |
| | $ | 847 |
|
| | | | | 20,567 | | | | | | | $ | 135,812 | | | | | | | $ | 18,335 | | | | February 20, 2014 | | 5,000 |
| | $ | 19.60 |
| | $ | 61,037 |
| | $ | 12.21 |
| | $ | 2,843 |
|
| | | May 28, 2014 | | 5,000 |
| | $ | 14.68 |
| | $ | 45,092 |
| | $ | 9.02 |
| | $ | 6,119 |
|
| | | 30,567 |
| | | | $ | 241,941 |
| | | | $ | 9,809 |
|
| | | | | | | | | | | |
| |
(a) | Represents the calculated stock-based compensation expense recognized in our consolidated financial statements for the fair value of the option awards in accordance with FASB ASC Topic 718 “Stock Compensation”. Assumptions made in the calculation of these amounts are included in Note 11 to our audited financial statements for the fiscal year ended December 31, 2013,2016, included in our Annual Report on Form 10-K filed with the SEC on March 18, 2014.14, 2017. |
| |
(b) | Represents costs recognized in connection with our stock option exchange program conducted in 2010 and consists of 2013 expenses applicable to the surrendered options, the remaining unamortized compensation costOn November 10, 2016, Mr. Robbins resigned from his position as a member of the surrendered options, if any, prorated based on the numberCompany's Board of days outstanding. There was no incremental stock option expense resulting from the exchange because the fair valueDirectors. Mr. Robbins is an active associate with 22 years of the replacement options was approximately equal to the fair value of the surrendered options they replaced.field experience and will remain active in field sales activities. |
Directors’ Stock Ownership Guidelines
We encourage our non-employee directors to own shares of our common stock equal to three times the value of a director’s annual board retainer in order to demonstrate to our shareholders and the investment community that our directors are personally committed to our success. However, we do not have a formal policy requiring our directors to own any specific number of shares.
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information as of April 15, 2014,March 31, 2017, concerning beneficial ownership of shares of our common stock by (a) each person known by us to beneficially own 5% or more of our outstanding shares of common stock, (b) each of our directors and “Named Executive Officers,” and (c) all of our current directors and executive officers as a group.
|
| | | | | | | | | | | | |
Name | | Number of Outstanding Shares | | Number of Shares Underlying Options (1) | | Total Number of Outstanding Shares and Shares Underlying Options (1) (2) | | % of Class Outstanding(1) |
Beneficial Owners of 5% or More | | | | | | | | |
Tyler Rameson(3) | | 239,398 |
|
| — |
|
| 239,398 |
|
| 8.8 | % |
Michael Challen(4) | | 190,057 |
|
| — |
|
| 190,057 |
|
| 7.0 | % |
Renaissance Technologies LLC / Renaissance Technologies Holdings Corporation(5) | | 199,260 |
|
| — |
|
| 199,260 |
|
| 7.4 | % |
Directors and Named Executive Officers | | | | | | | | |
J. Stanley Fredrick(6) | | 319,974 |
| (7) | 26,642 |
|
| 346,616 |
|
| 12.8 | % |
Robert A. Toth | | 57,568 |
|
| 30,567 |
|
| 88,135 |
|
| 3.3 | % |
Larry A. Jobe | | 55,000 |
|
| 15,743 |
|
| 70,743 |
|
| 2.6 | % |
Gerald E. Gilbert | | 15,568 |
|
| 21,648 |
|
| 37,216 |
|
| 1.4 | % |
Eric W. Schrier | | 3,568 |
|
| 6,666 |
|
| 10,234 |
|
| 0.4 | % |
Linda K. Ferrell, Ph.D. | | 3,568 |
|
| 3,333 |
|
| 6,901 |
|
| 0.3 | % |
Kevin A. Robbins | | 5,324 |
|
| 1,666 |
|
| 6,990 |
|
| 0.3 | % |
Alfredo (Al) Bala | | 10,030 |
|
| 6,667 |
|
| 16,697 |
|
| 0.6 | % |
Joel R. Bikman | | 1,900 |
|
| 5,333 |
|
| 7,233 |
|
| 0.3 | % |
Yong Jae (Patrick) Park | | — |
|
| 3,000 |
|
| 3,000 |
|
| 0.1 | % |
All 15 executive officers and directors as a group | | 473,530 |
|
| 151,932 |
|
| 625,462 |
|
| 23.1 | % |
Name | | Number of Outstanding Shares | | | Number of Shares Underlying Options (1) | | | Total Number of Outstanding Shares and Shares Underlying Options (1) (2) | | | % of Class Outstanding(1) | |
Beneficial Owners of 5% or More | | | | | | | | | | | | |
Michael Challen(3) | | | 241,258 | | | | ─ | | | | 241,258 | | | | 9.1 | % |
Tyler Rameson(4) | | | 241,258 | | | | ─ | | | | 241,258 | | | | 9.1 | % |
Directors and Named Executive Officers | | | | | | | | | | | | | | | | |
J. Stanley Fredrick(5) | | | 315,406 | (6) | | | 15,033 | | | | 330,439 | | | | 12.4 | % |
Marlin Ray Robbins | | | 59,000 | | | | 15,447 | | | | 74,447 | | | | 2.8 | % |
Robert A. Toth | | | 35,000 | | | | 18,899 | | | | 53,899 | | | | 2.0 | % |
Larry A. Jobe | | | 34,999 | | | | 10,743 | | | | 45,742 | | | | 1.7 | % |
Gerald E. Gilbert | | | 6,000 | | | | 16,647 | | | | 22,647 | | | | 0.9 | % |
Alan D. Kennedy | | | 3,410 | (7) | | | 19,930 | | | | 23,340 | | | | 0.9 | % |
Robert A. Sinnott, Ph.D | | | 4,041 | (8) | | | 8,918 | | | | 12,959 | | | | 0.5 | % |
Alfredo (Al) Bala | | | ─ | | | | 1,834 | | | | 1,834 | | | | 0.1 | % |
Roy Truett(9) | | | ─ | | | | ─ | | | | ─ | | | | ─ | % |
| | | | | | | | | | | | | | | | |
All 11 executive officers and directors as a group | | | 460,186 | | | | 114,707 | | | | 574,893 | | | | 21.6 | % |
| |
(1) | Shares of our common stock subject to stock options, warrants, or any other convertible security currently exercisable or convertible, or exercisable or convertible within 60 days of April 15, 2014,March 31, 2017, are deemed outstanding for computing the percentage of the person or entity holding such securities, but are not outstanding for computing the percentage of any other person or entity. |
| |
(2) | The information contained in this table with respect to beneficial ownership reflects “beneficial ownership” as defined in Rule 13d-3 under the Exchange Act. All information with respect to the beneficial ownership of any shareholder has been furnished by such shareholder and, except as otherwise indicated or pursuant to community property laws, each shareholder has sole voting and investment power with respect to shares listed as beneficially owned by such shareholder. |
(3) | The information regarding the beneficial ownership of Michael Challen is based on the Schedule 13G filed with the SEC by Mr. Challen on November 12, 2013, in which Mr. Challen indicated he had sole power to vote and dispose of all such shares. The address for Mr. Challen is 1576 La Coronilla Drive, Santa Barbara, CA 93109. |
(4)(3) | The information regarding the beneficial ownership of Tyler Rameson is based on the Schedule 13G filed with the SEC by Mr. Rameson on November 12, 2013,January 10, 2017, in which Mr. Rameson indicated he had sole power to vote and dispose of all such shares. The address for Mr. Rameson is 10 East Yanonali Street, Suite 2A,1805 Jelinda Drive, Santa Barbara, CA 93101. |
| |
(4) | The information regarding the beneficial ownership of Michael Challen is based on the Schedule 13G/A filed with the SEC by Mr. Challen on January 30, 2017, in which Mr. Challen indicated he had sole power to vote and dispose of all such shares. The address for Mr. Challen is 2786 Puesta Del Sol, Santa Barbara, CA 93105. |
| |
(5) | The information regarding the beneficial ownership of Renaissance Technologies LLC/Renaissance Technologies Holdings Corporation is based on the Schedule 13G/A filed with the SEC by Renaissance Technologies LLC/Renaissance Technologies Holdings Corporation on February 14, 2017, in which each of Renaissance Technologies LLC and Renaissance Technologies Holdings Corporation indicated it had sole power to dispose of 198,655 of such shares, sole power to vote 195,160 of such shares and shared power to dispose of 605 of such shares. The address for Renaissance Technologies LLC/Renaissance Technologies Holdings Corporation is 800 Third Avenue, New York, NY 10022. |
| |
(6) | Mr. Fredrick beneficially owns more than 5% of our common stock. Mr. Fredrick maintainmaintains offices at 600 S. Royal Lane, Suite 200, Coppell, Texas 75019. |
(6) | |
(7) | The number of shares owned by Mr. Fredrick includes 190,406194,974 shares of our common stock directly held by Mr. Fredrick and 125,000 shares of our common stock held through JSF Resources LTD Partnership. JSF Resources LTD is a limited partnership that is owned by FSJ Secure Trust, of which Mr. Fredrick is the sole beneficiary. Mr. Fredrick pledged 40,000 shares he holds individually as collateral for a loan. |
(7) | Includes 3,310 shares of our common stock directly held by Mr. Kennedy and 100 shares of our common stock held through Kennedy Family Trust, for which Mr. Kennedy is trustee and grantor and whose beneficiaries are Mr. Kennedy’s wife and children. |
(8) | Dr. Sinnott holds 1,666 shares directly and 2,375 shares are held indirectly. The indirect holdings are held by Dr. Sinnott’s wife as custodian for his three sons. Dr. Sinnott has disclaimed beneficial ownership of these shares. |
(9) | Mr. Truett resigned as President of International and Chief Operating Officer on January 28, 2014. In connection with Mr. Truett’s departure on January 31, 2014, he forfeited 10,000 unvested incentive stock options. |
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires our directors, executive officers, and persons who own more than 10% of our common stock to file initial reports of ownership and reports of changes in their beneficial ownership of our common stock with the SEC. Such persons are required by the SEC regulations to furnish us with copies of all Section 16(a) reports they file.
Based solely upon a review of such reports or written representations furnished to us that no other reports were required, we believe that during the year ended December 31, 2013,2016, except as noted below, all of our executive officers and greater than 10% beneficial owners complied with all applicable Section 16(a) filing requirements. Further, based solely on a review of such reports or written reports or written representations furnished to us, during the fiscal year ended December 31, 2013, our directors filed the following late Form 4s. Messrs:2016, each of Linda K. Ferrell, Ph.D., Larry A. Jobe, Robert A. Toth, Gerald E. Gilbert, J. Stanley Fredrick, Robbins, Jobe, Toth, KennedyEric W. Schrier and Gilbert eachMarlin Ray Robbins filed a late Form 4 related to a grant of options in February 2013restricted stock on January 4, 2016. For fiscal year ended December 31, 2016, Erin K. Barta and Mr. TothLanden Fredrick filed a late Form 43 related to being designated a purchase of stockSection 16 officer in May 2013.February 2016.
28
This executive compensation discussion describes our compensation program for the year ended December 31, 20132016 for our Named Executive Officers listed below, which we refer to collectively as our “Named Executive Officers”.
Alfredo (Al) Bala – CEO and President
| · | Robert A. Sinnott, Ph.D. – CEO and Chief Science Officer |
Yong Jae (Patrick) Park – Regional President Asia | · | Alfredo Bala – President International, Executive Vice President, Chief Sales &Joel Bikman – Senior Vice President of Sales and Marketing Officer |
| · | Roy Truett – Former President of International and Chief Operating Officer |
Dr. SinnottAlfredo (Al) Bala is a Named Executive Officer based on his position, while the other individuals listed above were Named Executive Officers based on compensation earned in 2013.2016.
We compensate our executive officers through our executive compensation program that is designed to maintain a fair, equitable, and competitive compensation package that allows the Company to attract and retain top executive talent. Based on recommendations made by our Compensation and Stock Option Plan Committee, the Board approves all compensation related to our executive officers, including our Named Executive Officers. The Compensation and Stock Option Plan Committee annually reviews each executive officer’s responsibilities and performance. In general, our executive compensation program for executive officers, including our Named Executive Officers, consists of payment of an annual base salary; participation in our Management Non-Equity Incentive Bonus Plan; stock option awards; and certain other benefits and perquisites.
Summary Compensation Table (2012(2015 & 2013)2016)
The following table summarizes the total compensation awarded to our Named Executive Officers for the fiscal years ended December 31, 20122015 and 2013:2016:
Name & Principal Position | | Year | | | Salary(1) | | | Bonus | | | Option Award (2) | | | Non-Equity Incentive Plan Compensation(3) | | | All Other Compensation (4) | | | Total | |
Robert A. Sinnott, Ph.D. | | 2013 | | | $ | 350,000 | | | $ | 20,512 | (5) | | $ | 17,850 | | | $ | ─ | | | $ | 41,048 | | | $ | 429,410 | |
CEO & Chief Science Officer | | 2012 | | | $ | 350,000 | | | $ | ─ | | | $ | ─ | | | $ | 5,078 | | | $ | 15,958 | | | $ | 371,036 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
Alfredo (Al) Bala | | 2013 | | | $ | 300,000 | | | $ | 15,569 | (6) | | $ | 17,850 | | | $ | ─ | | | $ | 15,240 | | | $ | 348,659 | |
President International, Executive Vice President, Chief Sales & Marketing Officer | | 2012 | | | $ | 300,000 | | | $ | ─ | | | $ | ─ | | | $ | 4,531 | | | $ | 17,061 | | | $ | 321,592 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
Roy Truett(7) | | 2013 | | | $ | 273,308 | | | $ | 50,534 | (8) | | $ | 35,300 | | | $ | ─ | | | $ | 47,824 | | | $ | 406,966 | |
Former, President of International and Chief Operating Officer | | 2012 | | | $ | ─ | | | $ | ─ | | | $ | ─ | | | $ | ─ | | | $ | ─ | | | $ | ─ | |
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
Name & Principal Position | Year | | Salary(1) | | Bonus | | Option Award(2) | | Non-Equity Incentive Plan Compensation(3) | | All Other Compensation(4) | | Total |
| | | | | | | | | | | | | |
Alfredo (Al) Bala CEO and President | 2016 | | $ | 400,000 |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | 26,398 |
| | $ | 426,398 |
|
2015 | | $ | 350,308 |
| | $ | — |
| | $ | — |
| | $ | 181,000 |
| | $ | 15,964 |
| | $ | 547,272 |
|
| | | | | | | | | | | | | |
Yong Jae (Patrick) Park (5) Regional President Asia | 2016 | | $ | 297,039 |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | 46,058 |
| | $ | 343,097 |
|
2015 | | $ | 280,665 |
| | $ | 165,614 |
| (6)
| $ | — |
| | $ | 27,294 |
| (7)
| $ | 24,362 |
| | $ | 497,935 |
|
| | | | | | | | | | | | | |
Joel Bikman Senior Vice President of Sales and Marketing | 2016 | | $ | 295,000 |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | 26,149 |
| | $ | 321,149 |
|
2015 | | $ | 281,923 |
| | $ | — |
| | $ | 53,024 |
| | $ | 113,000 |
| | $ | 14,820 |
| | $ | 462,767 |
|
| | | | | | | | | | | | |
| | | | | | | | | | | | | |
| |
(1) | The amounts reported in this column representsrepresent the total amount paid to the executive during the year as a result of the executive’s annual base salary and the number of payroll periods in the respective year. |
| |
(2) | The amounts reported in this column represent the aggregate grant date fair value computed in accordance with FASB ASC Topic 718 “Stock Compensation” for option awards granted in 2012, and 2013, respectively.2015. Assumptions made in the calculation of these amounts are included in Note 11 to our audited financial statements for the fiscal year ended December 31, 2013,2016, included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 18, 2014.14, 2017. |
| |
(3) | The amounts reported in this column represent non-equity incentive plan compensation paid in March 20132016 under our Management Non-Equity Incentive Bonus Plan with respect to 20082015 performance. We did not meet performance targets and no bonuses were earned in 2013 and 2012 under our Management Non-Equity Incentive Bonus Plan. Amounts reported in 2012 represent 5% of the 2008 bonus amounts that were paid in 2013 subject to the executive’s employment with us on the payment date. |
| |
(4) | The amounts reported in this column include, among other items, an automobile allowance or automobile lease payments, matching contributions to our 401(k) plan, automobile insurance coverage, and travel expensesstatutory pension and insurance paid on behalf of each Named Executive Officer, and are detailed in the “All Other Compensation” table included below. |
| |
(5) | Amount represents a $500 Christmas Bonus, grossed-upMr. Park’s compensation is denominated in Korean Won except for taxes, paidthe Non-Equity Incentive Plan Compensation, which is denominated in United States Dollars. The Company has converted the compensation denominated in Korean Won to United States Dollars using the average daily exchange rate for the period from January 1 through December 2013 and a $20,000 bonus awarded at the discretion31 of the respective year. Using this methodology, the conversion rate for 2016 is 1,162.79 Korean Won per United States Dollar and the conversion rate for 2015 is 1,068.89 Korean Won per United States Dollar. |
| |
(6) | The Board of Directors awarded Mr. Park a discretionary bonus of ₩195,000,000 in 2015, which was paid in March 2014.2016. |
(6) | Amount represents a $500 Christmas Bonus, grossed-up for taxes, paid in December 2013 and a $15,000 bonus awarded at the discretion of the Board of Directors paid in March 2014. |
(7) | Pursuant to the 2015 non-equity incentive plan approved by the Compensation and Stock Option Plan Committee for Mr. Truett resigned as President of International and Chief Operating Officer on January 28, 2014. In connection with Mr. Truett’s departure, on January 30, 2014, the Company and Mr. Truett entered into a Separation Agreement and Release. Under the terms of this agreement, Mr. Truett was released from the post-employment non-compete obligations of his employment agreement. Mr. Truett’s last day with the Company was January 31, 2014.Park, he earned ₩32,016,400 (or $27,294). |
(8) | Amount represents a $50,000 signing bonus paid in March 2013 and a $500 Christmas Bonus, grossed-up for taxes paid in December 2013. |
All Other Compensation Table
(2012(2015 and
2013)2016)
The amounts included in the “All Other Compensation” column of the Summary Compensation Table above are broken down as follows:
|
| | | | | | | | | | | | | | |
| | | Automobile Lease Payments | | Company Matching 401(k) Contribution | |
Life Insurance | | Statutory Pension and Insurance(1) | | Total All Other Compensation |
Name | Yr. | | ($) | | ($) | | ($) | | ($) | | ($) |
| | | | | | | | | | | |
Alfredo (Al) Bala | 2016 |
| 12,000 |
| 12,592 |
|
| 1,806 |
|
| — |
|
| 26,398 |
2015 |
| 12,000 |
| 2,550 |
|
| 1,414 |
|
| — |
|
| 15,964 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Yong Jae (Patrick) Park | 2016 |
| 23,646 |
| — |
|
| 845 |
|
| 21,566 |
|
| 46,057 |
| 2015 |
| 24,362 |
| — |
|
| — |
|
| — |
|
| 24,362 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Joel Bikman | 2016 |
| 12,000 |
| 13,855 |
|
| 294 |
|
| — |
|
| 26,149 |
| 2015 |
| 12,000 |
| 2,550 |
|
| 270 |
|
| — |
|
| 14,820 |
| | | | | | | | | | | |
| | | | | Automobile Lease Payments | | | Insurance Premium for Leased Automobile | | | Company Matching 401(k) Contribution | | | Life Insurance | | | Travel Expenses (1) | | | Temporary Housing / Relocation Expense | | | Commuting Expenses | | | Total All Other Compensation | |
Name | | Yr. | | | ($) | | | ($) | | | ($) | | | ($) | | | ($) | | | ($) | | | ($) | | | ($) | |
Robert A. Sinnott, Ph.D. | | 2013 | | | | 12,000 | | | | ─ | | | | 2,550 | | | | 542 | | | | 25,956 | | | | ─ | | | | ─ | | | | 41,048 | |
| | 2012 | | | | 12,000 | | | | ─ | | | | 3,416 | | | | 542 | | | | ─ | | | | ─ | | | | ─ | | | | 15,958 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Alfredo (Al) Bala | | 2013 | | | | 12,000 | | | | ─ | | | | 2,550 | | | | 690 | | | | ─ | | | | ─ | | | | ─ | | | | 15,240 | |
| | 2012 | | | | 12,798 | | | | 528 | | | | 3,045 | | | | 690 | | | | ─ | | | | ─ | | | | ─ | | | | 17,061 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Roy Truett | | 2013 | | | | 10,000 | | | | ─ | | | | 1,700 | | | | 382 | | | | ─ | | | | 23,973 | | | | 11,769 | | | | 47,824 | |
| | 2012 | | | | ─ | | | | ─ | | | | ─ | | | | ─ | | | | ─ | | | | ─ | | | | ─ | | | | ─ | |
| (1) | The amounts reported in this column reflect travel-related costs, including airfare, meals and entertainment, for our Named Executive Officers’ family members to travel with them at our Company-related events. |
(1)The amounts reported in this column reflect Korean statutory pension and insurance for Mr. Park.
Executive Employment Agreements
We enter into employment agreements with certain executive officers, including our Named Executive Officers. Pursuant to the terms of the employment agreements, some of our executive officers are entitled to severance in certain events of early termination. These provisions are described in the section titled “Potential Payments Upon Termination or Change in Control” appearing later in this Proxy Statement. In the employment agreements, we have agreed to pay relocation expenses for newly hired executives, provide a leased vehicle or pay a monthly automobile allowance, and allow our executives to participate in our Management Non-Equity Incentive Bonus Plan and in all of our other employee benefit plans. In addition, the employment agreements contain covenants regarding (i) confidentiality and non-disparagement that apply to the executive both during and after employment and (ii) non-competition and non-solicitation that apply to the executive during employment and for one year after termination.The following is a description of the other material terms of the employment agreements with our Named Executive Officers as of December 31, 2013:2016:
|
| | | | | | | | | | | | | | | | | | | |
Named Executive Officer | | Position | | Effective Date of Agreement | | Expiration Date | | 2015 Annual Base Salary | | 2016 Annual Base Salary | | 2017 Annual Base Salary | |
Alfredo (Al) Bala | | CEO | | October 2007 | | August 2017 | (1) | $ | 324,000 |
| | $ | 400,000 |
| | $ | 400,000 |
| |
Yong Jae (Patrick) Park | | Regional President Asia | | October 2009 | | September 2017 | (2) | $ | 285,000 |
| (3) | $ | 313,500 |
| (3) | $ | 283,800 |
| (3) |
Named Executive Officer | | Position | | Effective Date of Agreement | | Expiration Date | | | 2012 Annual Base Salary | | | 2013 Annual Base Salary | | | 2014 Annual Base Salary | |
Robert A. Sinnott, Ph.D. | | CEO and Chief Science Officer | | October 2007 | (1) | December 2014 | (1) | | $ | 350,000 | | | $ | 350,000 | | | $ | 390,000 | |
Alfredo (Al) Bala | | President International, Executive Vice President, Chief Sales & Marketing Officer | | October 2007 | | December 2014 | (2) | | $ | 290,000 | | | $ | 300,000 | | | $ | 324,000 | |
Roy Truett(3) | | Former President of International and Chief Operating Officer | | March 2013 | | March 2014 | | | $ | N/A | | | $ | 340,000 | | | $ | 340,000 | |
| (1) | The employment agreement for Dr. Sinnott was amended in December 2009 and had an initial term of one year with automatic renewals for successive one-year periods unless terminated pursuant to the terms of the contract. |
| (2)(1) | The employment agreement for Mr. Bala had an initial term of two years with automatic renewals for successive one-year periods unless terminated pursuant to the terms of the contract. |
| |
(2) | The employment agreement for Mr. Park had an initial term of one year with automatic renewals for successive one-year periods unless terminated pursuant to the terms of the contract. |
| |
(3) | Mr. Truett resigned as PresidentPark’s annual base salary was ₩300,000,000 for 2015, ₩330,000,000 for 2016, and ₩330,000,000 for 2017 converted to United States Dollars using an exchange rate of International₩1,053 per $1 for 2015, ₩1,053 per $1 for 2016 and Chief Operating Officer on January 28, 2014. In connection with Mr. Truett’s departure, on January 30, 2014, the Company and Mr. Truett entered into a Separation Agreement and Release. Under the terms of this agreement, Mr. Truett was released from the post-employment non-compete obligations of his employment agreement. His last day with the Company was January 31, 2014.₩1,163 per $1 for 2017. |
In October 2007, we entered into a one-year employment agreement, with automatic renewals for successive one-year periods, with Dr. Sinnott, our CEO and Chief Science Officer. Pursuant to the terms of the employment agreement, we agreed to pay Dr. Sinnott an annual base salary of $312,000. In accordance with the terms of the employment agreement allowing increases to base salary, the Board and the Committee review Dr. Sinnott’s base salary annually in accordance with their annual review of salaries for our Namedhis role as Executive Officers and make any adjustments they deem appropriate. In 2008, we increased Dr. Sinnott’s annual base salary to $325,000. In February 2010, we increased Dr. Sinnott’s annual base salary to $350,000 in connection with his promotion to Co-CEO prior to his promotion to CEO in 2011. In February 2014, we increased Dr. Sinnott’s annual base salary to $390,000 in connection with his performance evaluation and to align with the compensation levels of our competitors.
In October 2007,Vice President, Sales & Marketing, we entered into a two-year employment agreement, with automatic renewals for successive one-year periods, with Mr. Bala our Executive Vice President, Sales & Marketing.in October 2007. Pursuant to the terms of the employment agreement, we agreed to pay Mr. Bala an annual base salary of $275,000. In accordance with the terms of the employment agreement allowing increases to base salary, the Board and the Compensation and Stock Option Plan Committee review Mr. Bala’s base salary annually in accordance with their annual review of salaries for our Named Executive Officers and make any adjustments they deem appropriate. In 2008, we increased Mr. Bala’s annual base salary to $290,000. Effective for 2012, we increased Mr. Bala’s annual base salary to $300,000 in connection with his promotion to Executive Vice President, Sales & Marketing. In February 2014, we increased Mr. Bala’s annual base salary to $324,000 in connection with his performance evaluation and to align with the compensation levels of our competitors. In May 2014, he was named President, and in August 2015, he was promoted to CEO. His annual base salary was increased to $400,000 as of August 2015.
In March 2013,October 2009, we entered into a one-year employment agreement, with automatic renewals for successive one-year periods, with Mr. Truett,Park, our formerRegional President of International and Chief Operating Officer.Asia. Pursuant to the terms of the employment agreement, we agreed to pay Mr. TruettPark an annual base salary of $340,000. Additionalapproximately $117,000 (₩123,000,000 at ₩1,052.88 per $1). In accordance with the terms of the employment agreement included our paymentsallowing increases to base salary, the Board and the Compensation and Stock Option Plan Committee review Mr. Park’s base salary annually in accordance with their annual review of salaries and make any adjustments they deem appropriate. In 2011, we increased Mr. Park’s annual base salary to approximately $139,000 (₩146,324,375 using aforementioned exchange rate). Effective for (i) up2012, we increased Mr. Park’s annual base salary to $30,000approximately $175,000 (₩184,500,000 using aforementioned exchange rate). Effective for moving expenses; (ii) up2013, we increased Mr. Park’s annual base salary to $30,000 for closing costs relatedapproximately $227,000 (₩238,978,500 using aforementioned exchange rate). In November 2013, we increased Mr. Park’s annual base salary to the purchase of a residence; (iii) commutingapproximately $247,000 (₩260,486,560 using aforementioned exchange rate). In November 2014, we increased Mr. Park’s annual base salary to approximately $285,000 (₩300,000,000 using aforementioned exchange rate) in connection with his performance evaluation and temporary housing costs for a period of up to six months; (iv) a signing bonus of $50,000; (v) eligibility to earn up to $52,000 pursuant to the 2013 executive bonus plan; and (vi) a monthly car allowance of $1,000. Mr. Truett resigned on January 28, 2014 as President of International and Chief Operating Officer. His last dayalign with the Companycompensation levels of our competitors. In 2016, Mr. Park’s annual base salary was January 31, 2014.increased to (₩330,000,000).
2016 Grants of Plan Based Awards
No stock awardsThere were grantedno grants of Plan Based Awards to our Named Executive Officers in 2013. We granted the following stock options to our Named Executive Officers in 2013:2016.
Name | Grant Date | | Number of Securities Underlying Options (#) | | | Exercise Price of Option Awards ($/Sh) | | | Grant Date Fair Value of Option Awards | |
Robert A. Sinnott, Ph.D. | 2/20/2013 | | | 5,000 | | | $ | 5.72 | | | $ | 17,850 | |
Alfredo (Al) Bala | 2/20/2013 | | | 5,000 | | | $ | 5.72 | | | $ | 17,850 | |
Roy Truett | 3/3/2013 | | | 10,000 | (1) | | $ | 5.69 | | | $ | 35,300 | |
| (1) | Mr. Truett resigned as President of International and Chief Operating Officer on January 28, 2014. In connection with Mr. Truett’s departure on January 31, 2014, he forfeited 10,000 unvested incentive stock options. |
No stock awards and no stock options were granted to our Named Executive Officers in 2012.
Equity Compensation Plan Information
We use stock option plans to encourage investment by our officers, employees, and non-employee directors in shares of our common stock so they will have an increased vested interest in and greater concern for Mannatech’s welfare.
We had one stock option plan in effect as of December 31, 2013, which is as follows:
The Board and a majority of our shareholders approved the Mannatech, Incorporated 2008 Stock Incentive Plan in February 2008 and in 2012 and 2014 amended the plan to increase the number of shares of common stock subject to the plan (as amended, the “2008 Plan”). Our 2008 Plan enables us to attract and retain employees, consultants and directors who will contribute to our long-term success and aligns the interests of those individuals with the interests of our shareholders. Awards of stock options, including incentive and nonstatutorynon-statutory stock options, and restricted stock may be issued under our 2008 Plan. The Compensation and Stock Option Plan Committee administers the 2008 Plan. The 2008 Plan is our only equity compensation plan in effect as of December 31, 2016.
There are 200,000330,000 shares of our common stock currently reserved for issuance under our 2008 Plan, which does not include certain shares available for issuance under our predecessor stock plan. In the event of certain changes to our common stock, including due to a merger, consolidation, reorganization, reincorporation, stock dividend, non-cash dividend, stock split, liquidation, combination, stock exchange, or change in corporate structure, we may adjust the number of shares subject to our 2008 Plan and to any outstanding awards.
Generally, the exercise price with respect to stock options granted pursuant to our 2008 Plan cannot be less than 100% of the fair market value per share of our common stock on the date of grant. Unless the Compensation and Stock Option Plan Committee specifies otherwise, in general, stock options vest annually over a two- or three- year period and have a ten-year term.
Participants in our 2008 Plan may pay the exercise price for stock options in cash, shares of common stock, via a broker-assisted cashless exercise method or in any other form of legal consideration that the Compensation and Stock Option Plan Committee approves.
Our 2008 Plan also permits awards of restricted shares of our common stock, or restricted stock, and the Compensation and Stock Option Plan Committee determines the vesting schedule for such restricted stock.
If we undergo a change in control or certain other significant corporate transactions, our 2008 Plan provides that we may assume, continue, substitute for, or cancel any outstanding awards. For purposes of our 2008 Plan, a “change in control” generally means (i) the direct or indirect sale, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of our assets to a third-party, (ii) the replacement of the majority of the incumbent members of the Board, (iii) the adoption of a plan relating to our
liquidation or dissolution, or (iv) the consummation of any transaction (including a merger or consolidation) that results in a third-party becoming the beneficial owner of more than 50% of our voting power.
In the event that any award under our 2008 Plan is determined to be nonqualified deferred compensation subject to Section 409A of the Code, the award will have to comply with certain technical tax limitations with respect to when awards may be exercised or paid for.
Our 2008 Plan will terminate automatically on February 20, 2018, unless the Board terminates it sooner. The Board may amend our 2008 Plan at any time but to the extent shareholder approval is necessary pursuant to the 2008 Plan or marketplace rules of NASDAQ, an amendment may not become effective until we obtain shareholder approval. If the shareholders approve the 2017 Plan, no further awards will be granted thereafter under the 2008 Plan.
The following table provides information as of April 15, 201421, 2017 about our common stock that may be issued upon the exercise of stock options under the 2008 Plan.
Plan Category | | Number of securities to be issued upon exercise of outstanding options, warrants, and rights (a) | | | Weighted-average exercise price of outstanding options, warrants, and rights (b) | | | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c) | |
Equity compensation plan approved by shareholders | | | 232,660 | | | $ | 16.54 | | | | 20,599 | |
Equity compensation plans not approved by shareholders | | | — | | | | — | | | | — | |
Total | | | 232,660 | | | | | | | | 20,599 | |
32 |
| | | | | | | | | | |
Plan Category | | Number of securities to be issued upon exercise of outstanding options, warrants, and rights (a) | | Weighted-average exercise price of outstanding options, warrants, and rights (b) | | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c) |
Equity compensation plan approved by shareholders | | 242,441 |
| | $ | 17.11 |
| | 68,326 |
|
Equity compensation plans not approved by shareholders | | — |
| | — |
| | — |
|
Total | | 242,441 |
| | | | 68,326 |
|
Non-Equity Incentive Plan
We award annual cash bonuses under our Management Non-Equity Incentive Bonus Plan for achievement of specified performance objectives within a specific performance period, which is typically one year or less. We make awards from an established incentive pool. The Compensation and Stock Option Plan Committee determines the total size of our incentive pool by taking into account our financial performance. We believe this pool-based bonus system helps foster teamwork and ensures that all executives work collectively to improve our performance.
20132016 Non-Equity Incentive Plan
For 2013,2016, the Board has approved two bonus opportunities for our Named Executive Officers, regional presidents and other senior executives designated by the Compensation and Stock Option Plan Committee under our Management Non-Equity Incentive Bonus Plan.
The common measurement for both bonus opportunities is based on Adjusted Operating Income, which isProfit, as determined as follows:by generally accepted accounting principles (“GAAP”).
Income/(Loss) from Operations |
+ Depreciation Expense |
+ Amortization Expense |
+ Stock Option Expense |
+ Net Inventory Reduction/(Increase) |
= Adjusted Operating Income |
| 1. | Annual Bonus Opportunity |
This bonus opportunity is available to senior management of the Company (including our senior executive officers). Our Named Executive Officers and other senior management designated by the Compensation and Stock Option Plan Committee will bewere eligible for a bonus if the Company achieves one of the four Adjustedachieved Operating IncomeProfit targets as of the end of fiscal year 2013.2016. To achieve a bonus opportunity, the actual Adjusted Operating IncomeProfit for fiscal year 20132016 must behave been equal to or greater than the Adjusted Operating Income targetProfit targets as set forth below. The maximum potential bonus that an eligible senior executive officer will be entitled to receive under this bonus opportunity is 30% of his or her base salary. The maximum potential bonus for senior management, excluding senior executive officers, is 20% of his or her base salary.
The following table represents the 2013 net operating income targetsexecutives, Messrs. Bala, Bikman, L. Fredrick, Johnson, Park, and bonus opportunities:
2013 Adjusted Operating Income Targets – Annual Bonus
| | 1st Target | | | 2nd Target | | | 3rd Target | | | 4th Target | |
Adjusted Operating Income* | | $10 million | | | $11.5 million | | | $13 million | | | $14.3 million | |
Bonus Opportunity ** | | 7.5% / 5.0% | | | 15.0% / 10.0% | | | 22.5% / 15.0% | | | 30.0% / 20.0% | |
* Before accrual of Annual Bonus Opportunity.
** Senior executive officers / senior management exclusive of senior executive officers.
Based on the annual 2013 Adjusted Operating Income, the senior management of the Company (including our senior executive officers) did not qualify for any bonus as delineated above. Therefore, no bonuses were paid under this incentive plan.
| 2. | Quarterly Bonus Opportunity |
This bonus opportunity is only available to senior executive officers. For 2013, the Board and the Compensation and Stock Option Plan Committee implemented a quarterly bonus opportunity as an incentive for our senior executive officers to achieve Adjusted Operating Income above the annual bonus targets. To achieve a bonus opportunity, the actual Adjusted Operating Income, after ratable accrual of the annual bonus, must exceed the quarterly Adjusted Operating Income target. Once a quarterly bonus is earned, it is not subject to forfeiture based on the failure to meet future Adjusted Operating Income targets. The maximum potential bonus that an eligible senior executive officer will beSimons, are entitled to receive under this bonus opportunity is 100% of histheir respective base salaries. The maximum potential bonus for other executives is either 12.50% or her salary if25% depending on the Company meets all prescribed Adjustedactual Operating Income targets.Profit target achieved. Bonuses are earned and payable after the Audit Committee has accepted the financial statements for full-year 2016.
The following table represents the 2013 Adjusted2016 Operating IncomeProfit targets and bonus opportunities:
2013 Adjusted2016 Operating IncomeProfit Targets – QuarterlyAnnual Bonus
| | End of 2nd Quarter | | | End of 3rd Quarter | | | End of Year | |
Adjusted Operating Income* | | $8.6 million | | | $14.2 million | | | $18.7 million | |
Bonus Opportunity | | 25% | | | 25% | | | 50% | |
* |
| | | | |
| 1st Target | 2nd Target | 3rd Target | 4th Target |
Operating Profit Target (1) | $12.5 million | $13.5 million | $16.0 million | $18.0 million |
Senior Executive Bonus Opportunity (2) | 25% | 50% | 75% | 100% |
Executive Bonus Opportunity (3) | 12.50% | 25% | —% | —% |
(1) After ratable accrual of Annual Bonus Opportunity.Opportunity
The Named(2) Messrs. Bala, Bikman, L. Fredrick, Johnson, Park, and Simons are eligible for the Senior Executive Officers and other senior executives participating in both bonus opportunities will be paid the greatertier of the 2016 Mannatech Management Bonus Plan.
(3) This bonus amounts achieved pursuant to the two bonus opportunities, but cannot be paid under both the annual and quarterly bonus opportunities. Based on the actual Adjusted Operating Income achieved in 2013, the senior executive officers did not qualifytier is reserved for the bonus as delineated above. Therefore, no bonuses were paid under this incentive plan.
In summary, no bonuses were paid out in 2013 to the senior executive officers pursuant to the Quarterly Bonus Opportunity, nor to theother members of senior management group, including the senior executive officers, pursuant to the Annual Bonus Opportunity.
In 2013, the Board and the Compensation and Stock Option Plan Committee awarded a discretionary cash bonus to Messrs. Sinnott and Bala, in addition to others in the executive management group. Although the Company did not achieve the targets set forth in the non-equity incentive plan, we granted these bonuses in connection with our 2013 operating results that included achieving net sales in 2013 in excess of 2012 net sales and operating the Company profitably during 2013. Prior to 2013, the Company had not achieved a year-over-year increase in net sales, nor full year profitability since 2007.
2014 Non-Equity Incentive Plan
For 2014, the Board has approved two bonus opportunities for our Named Executive Officers and other senior executivesas designated by the Compensation and Stock Option Plan Committee under our Management Non-Equity Incentive Bonus Plan.Committee.
The common measurement for both bonus opportunities is based on Income from Operations, as determined by generally accepted accounting principles (“GAAP”).
| 1. | Annual Bonus Opportunity |
This bonus opportunity is available to senior management ofFor the year ending December 31, 2016, the Company (including our senior executive officers). Our Named Executive Officersearned $0.7 million in operating income, and other senior management designated by the Compensation and Stock Option Plan Committee will be eligible for a bonus if the Company achieves one of the four Income from Operations targets as of the end of fiscal year 2014. To achieve a bonus opportunity, the actual Income from Operations for fiscal year 2014 must be equal to or greater than the Income from Operations1st Operating Profit target as set forth below. The maximum potential bonus that an eligible senior executive officer will be entitled to receive under this bonus opportunity is 30% of his or her base salary. The maximum potential bonus for senior management, excluding senior executive officers, is 20% of his or her base salary.
The following table represents the 2014 Income from Operations targets and bonus opportunities:
2014 Income from Operations Targets – Annual Bonus
| | 1st Target | | | 2nd Target | | | 3rd Target | | | 4th Target | |
Income from Operations* | | $7 million | | | $8 million | | | $9 million | | | $10 million | |
Bonus Opportunity ** | | 7.5% / 5.0% | | | 15.0% / 10.0% | | | 22.5% / 15.0% | | | 30.0% / 20.0% | |
* After accrual of Annual Bonus Opportunity.
** Senior executive officers / senior management exclusive of senior executive officers.
| 2. | Quarterly Bonus Opportunity |
This bonus opportunity is only available to senior executive officers. The quarterly bonus opportunity is an incentive for our senior executive officers to achieve Income from Operations above the annual bonus targets. To achieve a bonus opportunity, the actual Income from Operations, after ratable accrual of the annual bonus, must exceed the quarterly Income from Operations target. Once a quarterly bonus is earned, it iswas not subject to forfeiture based on the failure to meet future Income from Operations targets. The maximum potential bonus that an eligible senior executive officer will be entitled to receive under this bonus opportunity is 100% of his or her salary if the Company meets all prescribed Income from Operations targets.achieved.
The following table represents the 2014 Income from Operations targets and bonus opportunities:
2014 Income from Operations Targets – Quarterly Bonus
| | End of 2nd Quarter | | | End of 3rd Quarter | | | End of Year | |
Adjusted Operating Income* | | $4.6 million | | | $8.9 million | | | $12.8 million | |
Bonus Opportunity | | 25% | | | 25% | | | 50% | |
* Before ratable accrual of Annual Bonus Opportunity.
The Named Executive Officers and other senior executives participating in both bonus opportunities will be paid the greater of the bonus amounts achieved pursuant to the two bonus opportunities, but cannot be paid under both the annual and quarterly bonus opportunities.
For 2014, the maximum bonus opportunity (expressed as a percentage of base salary) that could be earned by each Named Executive Officer under each of the two bonus opportunities discussed above is as follows:
Named Executive Officer | Position | Maximum Potential Bonus (Annual Bonus opportunity) | Maximum Potential Bonus (Quarterly Bonus opportunity) |
Robert A. Sinnott, Ph.D. | CEO and Chief Science Officer | 30% | 100% |
Roy Truett | Former President of International and Chief Operating Officer, (resigned January 2014) | N/A | N/A |
Alfredo Bala | President International, Executive Vice President, Chief Sales & Marketing Officer | 30% | 100% |
401(k) Plan
On May 9, 1997, we adopted a 401(k) Pre-tax Savings Plan (the “401(k) Plan”). All full time employees, including our Named Executive Officers, who have completed three months of service and are at least 21 years of age are eligible to participate in our 401(k) Plan. During 2013,2016, employees were allowed to contribute to our 401(k) Plan up to the maximum annual limit of their current annual compensation, as statutorily prescribed. The 401(k) plan permits matching employer contributions in the amount of $0.50 for each $1.00 contributed by a participating employee up to a maximum of 2%6% of the participant’s annual salary. The 401(k) Plan also allows us to make discretionary profit-sharing contributions each year based upon our profit. Employee contributions and our matching contributions are paid to a corporate trustee and are invested as directed by the participant. Our contributions to our 401(k) Plan vest over five years or earlier if the participant retires at age 65, becomes disabled, or dies. Payments to participants may be made in the case of financial hardship, and distributions may be made in a lump sum. Our 401(k) Plan is intended to qualify under Section 401(a) of the Code, so that contributions made by employees or by us to our 401(k) Plan, and income earned on these contributions, are not taxable to our employees until withdrawn from the 401(k) Plan.
2016 Outstanding Equity Awards at Fiscal Year End Table
The following table sets forth certain information about outstanding equity awards held by our Named Executive Officers at December 31, 2013:2016:
|
| | | | | | | | | | | | | | | | | | | | | | | |
| | Option Awards | | Stock Awards |
Named Executive Officer | | Number of Securities Underlying Unexercised Options Exercisable (#) | | Number of Securities Underlying Unexercised Options Unexercisable (#) | | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | | Option Exercise Price ($/Sh) | | Option Expiration Date | | Number of shares or units of stock that have not vested (#) | | Market value of shares of units of stock that have not vested ($) |
| | | | | | | | | | | | | | |
Alfredo (Al) Bala | | | | | | | | | | | | | | |
February 21, 2013 | | 1,667 |
|
| — |
| | — |
|
| $ | 5.72 |
| | February 21, 2023 |
|
| — |
|
| — |
|
February 20, 2014 | | 3,333 |
|
| 1,667 |
| | — |
|
| $ | 19.60 |
| | February 20, 2024 |
|
| — |
|
| — |
|
August 26, 2015(1) | | — |
|
| — |
| | — |
|
| $ | — |
| | — |
|
| 7,500 |
|
| $ | 127,125 |
|
| | 5,000 |
|
| 1,667 |
| |
|
|
|
| |
|
|
|
|
|
|
| |
|
|
|
|
| |
|
|
|
| |
|
|
|
|
|
|
Joel R. Bikman | |
|
|
|
|
| |
|
|
|
| |
|
|
|
|
|
|
April 28, 2014 | | 3,333 |
|
| 1,667 |
| | — |
|
| $ | 17.10 |
| | April 28, 2024 |
|
| — |
|
| — |
|
August 26, 2015 | | 2,000 |
|
| 4,000 |
| | — |
|
| $ | 16.95 |
| | August 26, 2025 |
|
| — |
|
| — |
|
| | 5,333 |
|
| 5,667 |
| |
|
|
|
| |
|
|
|
|
|
|
| |
|
|
|
|
| |
|
|
|
| |
|
|
|
|
|
|
Yong Jae (Patrick) Park | |
|
|
|
|
| |
|
|
|
| |
|
|
|
|
|
|
October 28, 2014 | | 3,000 |
|
| 1,500 |
| | — |
|
| $ | 14.33 |
| | October 28, 2024 |
|
| — |
|
| — |
|
| | 3,000 |
|
| 1,500 |
| |
|
|
|
| | | | | | |
Named Executive Officer | | Number of Securities Underlying Unexercised Options Exercisable (#) | | | Number of Securities Underlying Unexercised Options Unexercisable (#) | | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | | Option Exercise Price ($/Sh) | | Option Expiration Date | |
Robert A. Sinnott, Ph.D. | | | 600 | | | ─ | | ─ | | $ | 63.90 | | February 22, 2018 | |
| | | 1,000 | | | ─ | | ─ | | $ | 25.00 | | November 19, 2018 | |
| | | 7,499 | | | ─ | | ─ | | $ | 31.00 | | December 21, 2019 | |
| | | 1,485 | | | ─ | | ─ | | $ | 24.60 | | August 15, 2020 | |
| | ─ | | | | 5,000 | (1) | ─ | | $ | 5.72 | | February 20, 2023 | |
| | | 10,584 | | | | 5,000 | | ─ | | | | | | |
| | | | | | | | | | | | | | | |
Alfredo (Al) Bala | | ─ | | | | 167 | (2) | ─ | | $ | 11.40 | | June 8, 2021 | |
| | ─ | | | | 5,000 | (1) | ─ | | $ | 5.72 | | February 20, 2023 | |
| | ─ | | | | 5,167 | | ─ | | | | | | |
| | | | | | | | | | | | | | | |
Roy Truett | | ─ | | | | 10,000 | | ─ | | $ | 5.69 | | March 3, 2023 | (3) |
| | ─ | | | | 10,000 | | ─ | | | | | | |
| |
(1) | The options vest in three equal annual installments beginning February 21, 2014.On August 26, 2015, the Board granted Mr. Bala 10,000 shares at $16.95 per share of restricted stock that vests as follows: 2,500 on August 26, 2016, 2,500 on August 26, 2017, 2,500 on August 26, 2018, and 2,500 on August 26, 2019 |
(2) | Stock options vest on June 9, 2014. |
(3) | Pursuant to Mr. Truett’s resignation, all stock options were forfeited effective January 31, 2014. |
Retirement Benefits and Non-Qualified Deferred Compensation
Our Named Executive Officers do not participate in any retirement plans, pension plans (other than the 401(k) Plan) or non-qualified deferred compensation plans.
Option Exercises and Stock Vested
We have not grantedNo stock awards to ouroptions were exercised and no restricted stock units vested for any Named Executive Officers and therefore, no stock awards vested in 2013. The following table sets forth certain information concerning the exercise of stock options held by our Named Executive officers during 2013:2016.
Named Executive Officer | | Number of Shares Acquired on Exercise | | | Value Realized on Exercise(1) | |
Robert A. Sinnott, Ph.D. | | | ─ | | | $ | ─ | |
Alfredo (Al) Bala | | | 3,330 | | | $ | 14,468 | |
Roy Truett | | | ─ | | | $ | ─ | |
(1) | Value realized is calculated by multiplying the number of shares acquired by the difference between the market price on the date of exercise and the exercise price of the option. |
Potential Payments Upon Termination or Change in Control
Each of ourMr. Bala and Mr. Park are the only Named Executive Officers who have employment agreements with our Named Executive Officersthe Company. Each employment agreement provides for certain payments and benefits in the event of early termination. However, none of these employment agreements requires payment upon a change in control of the Company. The 2008 Plan does, however, provide for accelerated vesting of options in the event of a change in control or other event for which the Board determines such accelerated vesting would be equitable under the circumstances. In addition, the 2008 Plan provides that upon termination of employment for cause, all outstanding options, whether vested or unvested, will immediately be forfeited. If employment is terminated for any other reason, the executive officer may, for a limited time period, exercise those options that were exercisable immediately prior to his or her termination of employment. For purposes of the 2008 Plan, the term “cause” will be the same as defined in an executive’s employment agreement and absent such agreement, the term “cause” means (i) the commission of a felony or crime involving moral turpitude or other act of willful malfeasance or material fiduciary breach, (ii) conduct tending to bring the Company into substantial public disgrace, or disrepute, (iii) gross negligence or willful misconduct with respect to the Company or (iv) a material violation of state or federal securities laws. Under the 2008 Plan, a “change of control” means (a) the sale of substantially all of the
properties or assets of the Company, (b) a change in the Board resulting in the current directors (along with any directors nominated for election or appointed by at least 2/3 vote of the directors) ceasing to comprise at least a majority of the Board, (c) the liquidation or dissolution of the Company, or (d) the acquisition of beneficial ownership of more than 50% of the voting power of the Company. The following discussion summarizes our payment obligations to our Named Executive Officers upon termination or change in control (as defined under “Equity Compensation Plan Information” above) assuming such termination or change in control occurred on December 31, 2013:
Dr. Robert A. Sinnott, Ph.D. – CEO and Chief Science Officer:
Under the terms of his employment agreement, if Dr. Sinnott resigns for good reason or we terminate Dr. Sinnott without cause or due to disability, he will continue to receive his base salary for twelve months from the termination date. Notwithstanding the statement above, if Dr. Sinnott’s employment is terminated for cause, if he resigns without good reason, or is terminated due to his death, he is entitled to (i) any remaining base salary earned and not yet paid through the termination date; (ii) any annual bonus, or portion thereof, that is earned through the termination date; (iii) all reimbursable expenses due but not yet paid through the termination date; and (iv) all earned or vested benefits (or an amount equivalent to the value of such benefits) payable under our benefit plans or arrangements through the termination date. Under the employment agreement, a termination for “cause” means (A) we determined that Dr. Sinnott has neglected, failed, or refused to render the services or to perform any other of his duties or obligations under his employment agreement, (B) Dr. Sinnott’s violation of any provision or obligation under his employment agreement, (C) Dr. Sinnott’s indictment for, or plea of no contest with respect to, any crime that adversely affects or may adversely affect us or the utility of Dr. Sinnott’s services to us, or (D) any other act or omission of Dr. Sinnott involving fraud, theft, dishonesty, disloyalty, or illegality that harms or embarrasses us. Dr. Sinnott may resign for “good reason” if we (W) deny any compensation due under his employment agreement, (X) require him to be based outside of Dallas County, Texas, (Y) decrease his title or pay or remove a material portion of his significant duties or responsibilities without his consent, or (Z) breach his employment agreement. For purposes of the agreement, the term “disability” means Dr. Sinnott becomes incapacitated by accident, sickness, or other circumstances that, in the reasonable judgment of the Board renders or is expected to render Dr. Sinnott mentally or physically incapable of performing the essential duties and services required of him under the agreement, with or without reasonable accommodation, for a period of at least 90 consecutive calendar days. As of December 31, 2013, Dr. Sinnott’s annual base salary was $350,000, which was increased to $390,000 in February 2014. Dr. Sinnott’s employment agreement will expire on December 15, 2014.
The following table shows the potential payments upon termination of Dr. Sinnott’s employment under the circumstances described above or the occurrence of a change in control assuming such termination or change in control occurred on December 31, 2013.2016:
Termination Event | | Cash Severance | | | Acceleration of Equity Incentive Awards | | | Total Termination Payments | |
Termination With Cause | | $ | ─ | | | $ | ─ | | | $ | ─ | |
Termination Without Cause | | $ | 390,000 | | | $ | ─ | | | $ | 390,000 | |
Resignation for Good Reason | | $ | 390,000 | | | $ | ─ | | | $ | 390,000 | |
Resignation without Good Reason | | $ | ─ | | | $ | ─ | | | $ | ─ | |
Disability | | $ | 390,000 | | | $ | ─ | | | $ | 390,000 | |
Death | | $ | ─ | | | $ | ─ | | | $ | ─ | |
Non-Renewal of his Employment Agreement | | $ | ─ | | | $ | ─ | | | $ | ─ | |
Change in Control | | $ | ─ | | | $ | 56,200 | (1) | | $ | ─ | |
| (1) | Amount reflects 5,000 unvested stock options calculated using the difference between the exercise price of the options and the closing price of our common stock of $16.96 on December 31, 2013. |
Alfredo (Al) Bala – President International, Executive Vice President, Chief Sales & Marketing Officer:President:
Under the terms of his employment agreement, if Mr. Bala resigns for good reason or we terminate Mr. Bala without cause or due to disability, he will continue to receive his base salary through the end of the agreement term or for a period of twelve months from his last day of employment, whichever is longer. Notwithstanding the statement above, if Mr. Bala’s employment is terminated for cause, if he resigns without good reason, or is terminated due to his death, he is entitled to (i) any remaining base salary earned and not yet paid through the termination date; (ii) any annual bonus, or portion thereof, that is earned through the termination date; (iii) all reimbursable expenses due but not yet paid through the termination date; and (iv) all earned or vested benefits (or an amount equivalent to the value of such benefits) payable under our benefit plans or arrangements through the termination date. Under the agreement, a termination for “cause” means (A) we have determined that Mr. Bala has neglected, failed, or refused to render the services or to perform any other of his duties or obligations under the agreement, (B) Mr. Bala’s violation of any provision or obligation under the agreement, (C) Mr. Bala’s indictment for, or plea of no contest with respect to, any crime that adversely affects the utility of his services to us, or (D) any other act or omission of Mr. Bala involving fraud, theft, dishonesty, disloyalty, or illegality that harms or embarrasses us. The agreement defines a resignation for “good reason” as (W) any denial of compensation due and owing to Mr. Bala under the agreement, (X) any requirement that Mr. Bala be based anywhere other than Dallas County, Texas, except for travel incident to our business, (Y) our demotion of Mr. Bala in title or pay, or our removal of a material portion of Mr. Bala’s significant duties or responsibilities without Mr. Bala’s consent, or (Z) our material breach of the agreement. For purposes of the agreement, the term “disability” means Mr. Bala becomes incapacitated by accident, sickness, or other circumstances that, in the reasonable judgment of the Board renders or is expected to render Mr. Bala mentally or physically incapable of performing the essential duties and services required of him under the agreement, with or without reasonable accommodation, for a period of at least 90 consecutive calendar days. As of December 31, 2013,2016, Mr. Bala’s annual base salary was $300,000 which was increased to $324,000 in February 2014.$400,000. Mr. Bala’s employment agreement will expirerenew automatically for a one year period on December 15, 2014.September 30 of each year unless terminated pursuant to its terms.
The following table shows the potential payments upon termination of Mr. Bala’s employment under the circumstances described above or the occurrence of a change in control assuming such termination or change in control occurred on December 31, 2013.2016.
| | Termination Event | | Cash Severance | | | Acceleration of Equity Awards | | | | Total Termination Payments | | | Cash Severance | | Acceleration of Equity Awards | | Total Termination Payments |
Termination With Cause | | $ | ─ | | | $ | ─ | | | | $ | ─ | | | $ | — |
| | $ | — |
| | $ | — |
|
Termination Without Cause | | $ | 324,000 | | | $ | ─ | | | | $ | 324,000 | | | $ | 400,000 |
| | $ | — |
| | $ | 400,000 |
|
Resignation for Good Reason | | $ | 324,000 | | | $ | ─ | | | | $ | 324,000 | | | $ | 400,000 |
| | $ | — |
| | $ | 400,000 |
|
Resignation without Good Reason | | $ | ─ | | | $ | ─ | | | | $ | ─ | | | $ | — |
| | $ | — |
| | $ | — |
|
Disability | | $ | 324,000 | | | $ | ─ | | | | $ | 324,000 | | | $ | 400,000 |
| | $ | — |
| | $ | 400,000 |
|
Death | | $ | ─ | | | $ | ─ | | | | $ | ─ | | | $ | — |
| | $ | — |
| | $ | — |
|
Non-Renewal of his Employment Agreement | | $ | ─ | | | $ | ─ | | | | $ | ─ | | | $ | — |
| | $ | — |
| | $ | — |
|
Change in Control | | $ | ─ | | | $ | 57,129 | | (1) | | $ | 57,129 | | | $ | — |
| | $ | 33,840 |
| (1) | $ | 33,840 |
|
| |
(1) | Amount reflects 5,1671,667 unvested stock options calculated using the difference between the exercise price of the options and the closing price of our common stock of $16.96$20.30 on December 31, 2013.30, 2016. |
Roy TruettYong Jae (Patrick) Park – FormerRegional President of International and Chief Operating Officer:Asia:
Under the terms of his employment agreement with Mannatech Korea, Ltd., a subsidiary of the Company, Mr. Park shall receive an end of service payment, regardless of the reason for termination of employment, which will accrue at the rate of forty-five days base salary for each consecutive year of service. Either party may terminate the agreement at any time by giving thirty days advance notice to the other party. The Company may terminate the agreement without notice if Mr. Truett resigns for good reasonPark materially breaches his duties as set forth in the agreement or we terminatein the Company’s regulations or, in the absence of such breach, if the Company pays Mr. Truett without cause or due to disability, he will continue to receive hisPark thirty days base salary through the end of the agreement term or for a period of twelve months from his last day of employment, whichever is longer. Notwithstanding the statement above, if Mr. Truett’s employment is terminated for cause, if he resigns without good reason, or is terminated due to his death, he is entitled to (i) any remaining base salary earned and not yet paid through the termination date; (ii) any annual bonus, or portion thereof, that is earned through the termination date; (iii) all reimbursable expenses due but not yet paid through the termination date; and (iv) all earned or vested benefits (or an amount equivalent to the valuein lieu of such benefits) payable under our benefit plans or arrangements through the termination date. Under the agreement, a termination for “cause” means (A) we have determined that Mr. Truett has neglected, failed, or refused to render the services or to perform any other of his duties or obligations under the agreement, (B) Mr. Truett’s violation of any provision or obligation under the agreement, (C) Mr. Truett’s indictment for, or plea of no contest with respect to, any crime that adversely affects the utility of his services to us, or (D) any other act or omission of Mr. Truett involving fraud, theft, dishonesty, disloyalty, or illegality that harms or embarrasses us. The agreement defines a resignation for “good reason” as (W) any denial of compensation due and owing to Mr. Truett under the agreement, (X) any requirement that Mr. Truett be based anywhere other than Dallas County, Texas, except for travel incident to our business, (Y) our demotion of Mr. Truett in title or pay, or our removal of a material portion of Mr. Truett’s significant duties or responsibilities without Mr. Truett’s consent, or (Z) our material breach of the agreement. For purposes of the agreement, the term “disability” means Mr. Truett becomes incapacitated by accident, sickness, or other circumstances that, in the reasonable judgment of the Board renders or is expected to render Mr. Truett mentally or physically incapable of performing the essential duties and services required of him under the agreement, with or without reasonable accommodation, for a period of at least 90 consecutive calendar days.advance notice. As of December 31, 2013,2016, Mr. Truett’sPark’s annual base salary was $340,000.330,000,000 KRW. Mr. Park’s employment agreement will renew automatically for a one-year period on September 30 of each year unless terminated pursuant to its terms.
The following table shows the potential payments upon termination of Mr. Truett’sPark’s employment under the circumstances described above or the occurrence of a change in control assuming such termination or change in control occurred on December 31, 2013.2016.
Termination Event | | Cash Severance | | | Acceleration of Equity Awards | | | Total Termination Payments | |
Termination With Cause | | $ | ─ | | | $ | ─ | | | $ | ─ | |
Termination Without Cause | | $ | 340,000 | | | $ | ─ | | | $ | 340,000 | |
Resignation for Good Reason | | $ | 340,000 | | | $ | ─ | | | $ | 340,000 | |
Resignation without Good Reason | | $ | ─ | | | $ | ─ | | | $ | ─ | |
Disability | | $ | 340,000 | | | $ | ─ | | | $ | 340,000 | |
Death | | $ | ─ | | | $ | ─ | | | $ | ─ | |
Non-Renewal of his Employment Agreement | | $ | ─ | | | $ | ─ | | | $ | ─ | |
Change in Control | | $ | ─ | | | $ | 112,700 | | | $ | 112,700 | |
On January 28, 2014, Mr. Truett resigned as President of International and Chief Operating Officer. In connection with Mr. Truett’s departure, on February 3, 2014, the Company and Mr. Truett entered into a Separation Agreement and Release, effective January 30, 2014 (the “Agreement”). Under the terms of the Agreement, the Company and Mr. Truett have agreed, among other things, that Mr. Truett was released from his post-employment non-compete obligations, provided that he complies with the terms and conditions of the Agreement. Mr. Truett’s last day with the Company was January 31, 2014. |
| | | | | | | | | | | | |
Termination Event | | Cash Severance (1) | | Acceleration of Equity Awards | | Total Termination Payments |
Termination With Cause | | $ | 244,923 |
| | $ | — |
| | $ | 244,923 |
|
Termination Without Cause | | $ | 244,923 |
| | $ | — |
| | $ | 244,923 |
|
Resignation for Good Reason | | $ | 244,923 |
| | $ | — |
| | $ | 244,923 |
|
Resignation without Good Reason | | $ | 244,923 |
| | $ | — |
| | $ | 244,923 |
|
Non-Renewal of his Employment Agreement | | $ | 244,923 |
| | $ | — |
| | $ | 244,923 |
|
Change in Control | | $ | — |
| | $ | 30,450 |
| (2) | $ | 30,450 |
|
| |
(1) | All amounts translated from ₩330,000,000 using a 2016 exchange rate of ₩1,163 per $1. |
| |
(2) | Amount reflects 1,500 unvested stock options calculated using the difference between the exercise price of the options and the closing price of our common stock of $20.30 on December 30, 2016. |
Named Executive Officers Stock Ownership Guidelines
We do not have stock ownership guidelines for our Named Executive Officers.
$1 Million Pay Deductibility Cap
Under Section 162(m) of the Code (as interpreted by IRS Notice 2007- 49), public companies are precluded from receiving a tax deduction on compensation paid to their chief executive officer and the three most highly compensated officers of the company (other than the chief executive officer and the chief financial officer) if such officer’s compensation exceeds $1 million, unless the compensation is excluded from the $1 million limit as a result of being classified as performance-based compensation. Currently, our executive officers’ cash compensation levels have not exceeded the $1 million limit, and our stock option grants qualify as performance-based compensation under Section 162(m). Nonetheless, we annually review all of our executive officers’ compensation in an effort to comply with Section 162(m).
Compensation and Stock Option Plan Committee Interlocks and Insider Participation
Messrs. Jobe, Gilbert, Kennedy,Schrier, and Toth served during 20132016 and currently serve on our Compensation and Stock Option Plan Committee. None of these individuals is or has been an officer or employee of ours. None of our executive officers is a member of any other company’s board of directors, or serves as a member of any other company’s compensation committee that has or has had one or more executive officers serving as a member of the Board or our Compensation and Stock Option Plan Committee.
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Transactions involving M5M Foundation
For the year ended December 31, 2016, the Company made cash donations of $0.6 million to the M5M Foundation, a 501(c)(3) charitable organization that works to combat the epidemic of childhood malnutrition on a global scale. For the year ended December 31, 2015, the Company made cash donations of $0.9 million to the M5M Foundation. Several of the Company’s directors and officers and their family members serve on the board of the M5M Foundation, including:
Alfredo Bala, the Company’s CEO and President;
Christopher Simons, the Company’s Regional President EMEA/Australia/North America;
Landen Fredrick, the Company’s Senior Vice President, Global Operations and the son of J. Stanley Fredrick, the Company’s Chairman of the Board and a major shareholder; and
Lorrie Fry, the daughter of Larry Jobe, a member of our Board.
Transactions involving J. Stanley Fredrick
During 2013,For the years ended December 31, 2016 and 2015, we paid employment compensation of approximately $155,000$293,500 and $251,000, respectively, in salary, bonus, auto allowance, and other compensation to Landen Fredrick, son of J. Stanley Fredrick, the Company’s Chairman of the Board and a major shareholder. From January 1 through March 31, 2017, we paid employment compensation of approximately $68,900 in salary, bonus, auto allowance, and other compensation to Landen Fredrick. In addition, Landen Fredrick participated in the employee health care benefit plans available to all employees of the Company. Landen Fredrick has served as Senior Vice President of Global Operations since August of 2016. Prior to that, Mr. Fredrick served as Senior Vice President, Supply Chain and IT since August of 2015, Vice President, Global Operations since May of 2013. Prior to that, Mr. Fredrick served2013, as Vice President, North American Sales and Operations since January of 2011, as Vice President, North American Sales since February of 2010 and as Senior Director of Tools and Training since his hire in May of 2006. Landen Fredrick also serves on the Board of the M5M Foundation.
Transactions involving Samuel Caster
Mr. Caster, the Company’s founder and former Chairman of the Board, founded MannaRelief in 1999 and served as its Chairman from 1999 through August 2007. MannaRelief employs William A. Mullens, Mr. Caster’s brother-in-law, as its Executive Director. Mr. Caster’s wife, Linda Caster, serves as MannaRelief’s Chairman of the Board. MannaRelief is a 501(c)(3) charitable organization that provides charitable services for children. MannaRelief is not owned or operated by the Company.
Historically, the Company has made cash donations to MannaRelief, sold products to MannaRelief at cost plus shipping and handling charges, and shipped products purchased by MannaRelief to its chosen recipients. In addition, certain Company employees and consultants periodically volunteer to work or host various fund raising projects and events for MannaRelief at no cost to MannaRelief. The Company has made cash donations and sold products to MannaRelief as follows:
| | 2013 | | 2012 |
Sold Products | | $ | 0.2 | | million | | $ | 0.3 | | million |
Contributed Cash Donations | | $ | 0.9 | | million | | $ | 0.1 | | million |
Products donated in lieu of Cash | | $ | -- | | | | $ | 0.1 | | million |
During 2013, the Company entered into three consulting agreements with Wonder Enterprises, LLC (f/k/a Salinda Enterprises, LLC, hereinafter “Wonder”) for consulting services performed by Mr. Caster, the owner and employee of Wonder. The first of these consulting agreements was entered into on March 6, 2013 and was effective from January 1, 2013 until May 31, 2013. The second consulting agreement was entered into on June 3, 2013 and was effective from June 1, 2013 until November 30, 2013. For each of these two consulting agreements, the Company paid Wonder $300,000 plus reimbursable expenses. On December 4, 2013, the Company entered into the third consulting agreement with Wonder, effective on December 1, 2013. Pursuant to the terms of this consulting agreement, the Company paid Wonder $150,000 plus reimbursable expenses. This consulting agreement was not renewed and terminated according to its terms on February 28, 2014. Currently, there is no outstanding consulting agreement with Wonder, and Mr. Caster no longer serves as a consultant to the Company.
Transactions involvingMarlin Ray Robbins
Mr. Marlin Ray Robbins iswas a member of the Company’s Board of Directors anduntil his resignation from the Board on November 10, 2016. He is the father of Mr. Kevin Robbins, current member of the Company's Board of Directors. He is also a major shareholder. Mr. Robbins holds multiple positions in the Company’s associate global downline network marketing system. In addition, several of Mr. Robbins’ family members are independent associates. The Company pays commissions and incentives to its independent associates and during 20132016 and 2012,2015, the Company paid aggregate commissions and incentives to Mr. Robbins and his family of approximately $2.6$2.9 million and $3.0$3.2 million, respectively. During the first quarter of 2017, the Company paid aggregate commissions and incentives to Mr. Robbins and his family of $0.6 million. The aggregate amount of commissions and incentives paid to Mr. Robbins was approximately $2.4$2.7 million and $2.6$2.9 million in 20132016 and 2012,2015, respectively. The aggregate amount of commissionscommission and incentives paid to family members was approximately $0.2 million and $0.3 million in 2016 and $0.42015, respectively, of which $0.2 million in 2013 and 2012, respectively. The majority of $0.3 million and $0.4 million paid to family members in each of 2013 and 2012, respectively, was paid each year to his son, Kevin Robbins, in the amount of approximately $0.2and less than $0.1 million was paid each year as well asto his daughter, Marla Finley, and his daughter-in-law, Demra Robbins, who both share an account that totaledaccount. For the first quarter 2017, the aggregate amount of commission and incentives paid to Mr. Robbins was approximately $0.1$0.6 million, and $0.2 million in 2013commissions and 2012, respectively.incentives paid to his family members were less than $0.1 million. All commissions and incentives were paid to Mr. Robbins and his family members are in accordance with the Company’s global associate career and compensation plan. The Company has also contracted with a software development firm owned by Ryan Robbins, the son of Mr. Ray Robbins. The value of services performed during each of 2016 and 2015 by Mr. Ryan Robbins was less than $0.1 million.
Transactions involving Kevin Robbins
Mr. Kevin Robbins was elected to the Board on December 7, 2016. As noted above, Mr. K. Robbins is the son of Mr. Ray Robbins. The aggregate amount of commission and incentives paid to Mr. K. Robbins was approximately $0.2 million in each of 2016 and 2015, For the first quarter 2017, the aggregate amount of commission and incentives paid to Mr. K. Robbins was less than $0.1 million, and he was paid $13,500 for consulting services related to our associate commission plan. Dawn Robbins, the wife of Mr. K. Robbins, is not an independent associate with the Company; however, she does have a member account. Members do not participate in the commission plan and do not earn commissions or incentives under the
Company’s global associate career and compensation plan. As noted above, Mr. K. Robbins’ sister, Marla Finley, and sister-in-law, Demra Robbins, share an account and are also independent associates earning commissions under the plan. Additionally and as noted above, the Company contracted with a software development firm owned by Ryan Robbins, Mr. K. Robbins’ brother. The value of the services performed during each of 2016 and 2015 by Mr. Ryan Robbins was less than $0.1 million.
Transactions involving Alfredo (Al) Bala
Johanna Bala, the wife of Alfredo (Al) Bala, the Company’s CEO and President, is an independent associate who earns commissions and incentives in accordance with the Company’s global associate career and compensation plan. The aggregate amount of commission and incentives paid to Johanna Bala was approximately $0.1 million and $0.2 million in 2016 and 2015, respectively. During the first quarter of 2017, the aggregate amount of commissions and incentives paid to Johanna Bala was less than $0.1 million.
Review and Approval of Related Party Transactions
Our Audit Committee reviews all relationships and transactions, including relationships and transactions with our directors, director nominees, executive officers and their immediate family members, as well as holders known by us to own more than 5% of any class of our voting securities and their family members, who have a direct or indirect material interest. Although the Board does not have a formal policy with respect to related party transactions, in approving or rejecting such proposed transactions, our Audit Committee considers the nature of the related party transaction, the amount and material terms of the transaction, whether the transaction is on terms no less favorable to Mannatech than terms generally available in a similar transaction with an unaffiliated third party, whether the transaction would impair the judgment of a director or executive officer to act in the best interest of Mannatech, and other facts and circumstances available and deemed relevant to our Audit Committee.
42
REPORT OF THE AUDIT COMMITTEE
Our purpose is to assist the Board in overseeing its financial reporting, internal controls, and audit functions. Larry A. Jobe has been the Audit Committee’s Chairman since February 2007 and is designated by the Board as the financial expert of our Audit Committee. Other members include Messrs. Gerald E. Gilbert, Alan D. KennedyEric W. Schrier and Robert A. Toth. The Board has determined that each of the Audit Committee’s members meet the independence and financial literacy requirements for purposes of serving on such committee under applicable rules of NASDAQ and the SEC. We operate under a written charter adopted by the Board. We review and address the adequacy of our charter on an annual basis. See our Fifth Amended and Restated Charter of the Audit Committee, Charter, which is posted on the Company’s corporate website at www.mannatech.comir.mannatech.com.
We are responsible for reviewing the Company’s consolidated financial statements, its systems of internal controls, and internal control over financial reporting. The Company’s independent registered public accounting firm is responsible for auditing our consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”). Our activities are in no way designed to supersede or alter our responsibilities or the responsibilities of the Company’s independent registered public accounting firm. We assist the Board in fulfilling its responsibilities for oversight of the quality and integrity of the Company’s accounting, auditing, and reporting practices, and such other duties as directed by the Board. Our role does not provide any special assurances with regard to the Company’s consolidated financial statements, nor does it involve a professional evaluation of the quality of audits performed by the Company’s independent registered public accounting firm. We strengthened our ability to assist the Board of Directors, and formed a subcommittee called the Disclosure Committee. The Disclosure Committee is comprised of high level employees and officers who report to us and the Company’s Chief Executive Officer and Chief Financial Officer. The Disclosure Committee is responsible for reviewing all of the Company’s filings with the SEC. We have furnished the Board with the following report:
We have reviewed and discussed with the Company’s management their consolidated audited financial statements as of and for the year ended December 31, 2013,2016, and the certification process required by the Sarbanes-Oxley Act of 2002. The Company has represented to us that its consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States of America. We have also discussed the following with BDO USA, LLP, the Company’s independent registered public accounting firm: (i) the auditor’s responsibilities, (ii) any significant issues arising during the audit, and (iii) other matters required to be discussed by Auditing Standard No. 16, “Communications with Audit Committees.” We received the written disclosures from BDO USA, LLP required by Rule 3520 of the PCAOB. We have discussed with the Company’s independent registered public accounting firm the accounting firm’s independence from Company management. In addition, we have discussed the adequacy of the Company’s internal control over financial reporting with the Company’s independent registered public accounting firm and its management.
Based on the review and discussions referred to above, we recommended to the Board and the Board subsequently approved, that the Company’s year-end audited consolidated financial statements be included in the Company’s 20132016 Annual Report on its Form 10-K for the year ended December 31, 20132016 for filing with the SEC.
| The Audit Committee |
| |
| Larry A. Jobe, Chairman |
| Gerald E. Gilbert |
| Alan D. Kennedy |
| Robert A. Toth |
Larry A. Jobe, Chairman
Gerald E. Gilbert
Eric W. Schrier
Robert A. Toth
OTHER MATTERS
The Board does not know of any other matters that are to be presented for action at the 20142017 Annual Shareholders’ Meeting. However, if any other matters properly come before us at the 20142017 Annual Shareholders’ Meeting or any adjournments or postponements thereof, it is intended that the enclosed proxy will be voted in accordance with the judgment of the persons voting the proxy.
ADDITIONAL INFORMATION AVAILABLE
ACCOMPANYING THIS PROXY STATEMENT IS A COPY OF OUR 20132016 ANNUAL SHAREHOLDERS’ REPORT, WHICH INCLUDES CERTAIN INFORMATION THAT WAS CONTAINED IN OUR ANNUAL REPORT ON FORM 10-K. OUR ANNUAL SHAREHOLDERS’ REPORT AND FORM 10-K CAN BE VIEWED ON OUR CORPORATE WEBSITE AT WWW.MANNATECH.COM OR UPON WRITTEN REQUEST BY ANY SHAREHOLDER.
FORWARD-LOOKING STATEMENTS
Certain disclosures and analysis in this proxy statement may include “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to certain events, risks, and uncertainties that may be outside our control. Forward-looking statements generally can be identified by use of phrases or terminology such as “may,” “will,” “should,” “could,” “would,” “expects,” “plans,” “intends,” “anticipates,” “believes,” “estimates,” “predicts,” “projects,” “potential,” or “continue” or the negative of such terms and other comparable terminology. Similarly, descriptions of our objectives, strategies, plans, goals, targets, or other statements other than statements of historical fact contained herein are also considered forward-looking statements. All of these statements are based on assumptions that are subject to change and other risks. Although we believe that the expectations reflected in such forward-looking statements are reasonable, we can give no assurance that such expectations will prove to have been correct. Certain risks and uncertainties inherent in our business are set forth in our filings with the SEC. Estimates of future financial or operating performance provided by us are based on existing market conditions and information available at this time. Actual financial and operating performance may be higher or lower. Future performance is dependent upon many factors, including the success of our international operations, our ability to attract and retain associates, changes in laws and governmental regulations and changes in market conditions. All subsequent written and oral forward-looking statements attributable to us or to individuals acting on our behalf are expressly qualified in their entirety by this paragraph.
|
|
By order of our Board of Directors, |
| |
| J. Stanley Fredrick |
| Chairman of the Board of Directors |
Dated: April 15, 201421, 2017
44
MANNATECH, INCORPORATED
FREQUENTLY ASKED QUESTIONS
Our Board of Directors (the “Board”) urges all shareholders to read all of the information included in the proxy materials provided to them. As a courtesy, the Board is providing each shareholder with the following list of frequently asked questions in hopes of eliminating some of the more commonly asked questions and keeping our shareholders informed of the various policies and procedures that must be followed for the 20142017 Annual Shareholders’ Meeting.
1. Why did I receive a Notice of Internet Availability of Proxy Materials this year instead of a paper copy of the proxy materials?
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1. | Why did I receive a Notice of Internet Availability of Proxy Materials this year instead of a paper copy of the proxy materials? |
Pursuant to rules promulgated by the SEC, we are providing access to our proxy materials over the Internet. As a result, we are mailing to many of our shareholders a Notice of Internet Availability of Proxy Materials instead of a paper copy of our proxy materials. The notice contains instructions on how to access our proxy materials over the Internet, as well as instructions on how to request a paper copy of our proxy materials by mail.
2. Why didn’t I receive a Notice of Internet Availability of Proxy Materials?
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2. | Why didn’t I receive a Notice of Internet Availability of Proxy Materials? |
We are providing some of our shareholders, including those who have previously requested to receive paper copies of the proxy materials, with paper copies of the proxy materials instead of the Notice of Internet Availability of Proxy Materials. In addition, we are providing the Notice of Internet Availability of Proxy Materials by e-mail to those shareholders who have previously elected delivery of the proxy materials electronically. Those shareholders should have received an e-mail containing a link to the website where materials are available.
If you received a paper copy of the proxy materials, you may elect to receive future proxy materials electronically by following the instructions on your proxy card or voting instruction form. Choosing to receive your future proxy materials by e-mail will help us conserve natural resources and reduce the costs of printing and distributing our proxy materials.
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3. | How can I access the proxy materials over the Internet? |
3. How can I access the proxy materials over the Internet?
Your Notice of Internet Availability of Proxy Materials or proxy card will contain instructions on how to view our proxy materials for the 20142017 Annual Shareholders’ Meeting on the Internet. Our proxy materials are also available on our company website at http://www.mannatech.com.ir.mannatech.com.
4. What is the difference between a proxy-voting card and a ballot?
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4. | What is the difference between a proxy-voting card and a ballot? |
A proxy-voting card is mailed to a shareholder. The proxy-voting card gives specific instructions on how to cast a vote prior to our 20142017 Annual Shareholders’ Meeting by mail, telephone, or the Internet. The instructions on the proxy-voting card are different depending on whether the shareholder owns shares directly or through a broker. Shareholders should read and follow all of the instructions in their packets to ensure their votes are counted. Ballots will be handed out at the 20142017 Annual Shareholders’ Meeting to shareholders of record who own shares on the close of business on April 4, 2014.
5. What13, 2017 and to beneficial owners who own shares owned byon the close of business on April 13, 2017that have obtained a shareholder can be voted either bylegal proxy or at the 2014 Annual Shareholders’ Meeting?from their broker of record.
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5. | What shares owned by a shareholder can be voted either by proxy or at the 2017Annual Shareholders’ Meeting? |
All shares owned directly by a shareholder of record or indirectly as a beneficial owner as of the record date, April 4, 2014,13, 2017, may be voted by the shareholder prior to the meeting by telephone or through the Internet, or by returning a proxy card, without having to attend the shareholder meeting in person. At the 20142017 Annual Shareholders’ Meeting, shares may be voted using a ballot by (i) shareholders of record who are verified with a valid form of identification and (ii) beneficial owners who are verified with a power of attorney from the broker of record giving them authority to vote at the meeting. If a shareholder does not have this information from his or her broker, our Inspector of Elections will not be able to count such shareholder’s vote because the broker may have already cast a vote on such shareholder’s behalf. We strongly recommend that a shareholder read the instructions on the Notice of Internet Availability of Proxy Materials or on the proxy-voting card received by the shareholder or provided by the shareholder’s broker prior to the 20142017 Annual Shareholders’ Meeting to understand how to cast a vote at the meeting. A shareholder’s broker can usually mail or fax a shareholder any necessary paperwork prior to the meeting.
6. What is the difference between direct ownership and beneficial ownership?
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6. | What is the difference between direct ownership and beneficial ownership? |
A shareholder has DIRECT OWNERSHIP over its shares if such shareholder is a holder of record of our common stock, meaning the shareholder either holds stock certificates in the shareholder’s own name or holds book-entry shares registered in the shareholder’s own name. This is evidenced by the shareholder’s receipt of all mailings directly from either our transfer agent, Computershare, or us. A shareholder has BENEFICIAL OWNERSHIP over its shares if such shareholder has delivered its stock certificates to a broker or purchased shares through a broker and receives all of our mailings either from a broker or through a solicitor, which is usually Broadridge Financial Solutions, Inc. As a beneficial owner, the shareholder still owns the shares, but our transfer agent does not have individual shareholders’ names from the brokers. The only information our transfer agent has is the aggregate total number of shares each broker of record holds on behalf of its clients.
7. How is voting different for direct holders versus beneficial owners?
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7. | How is voting different for direct holders versus beneficial owners? |
Our transfer agent has the names of the shareholders who directly hold shares of our common stock, but it does not have any detailed information (such as the individual names or number of shares held) concerning shareholders who own shares through brokers. Only the individual brokers have the detailed information about each shareholder’s beneficial ownership. Each brokerage group is responsible for reporting its clients’ votes to our transfer agent and for providing all mailings to our shareholders who own stock through their brokerage firm. Each brokerage group also has its own set of instructions on how to cast a vote with such brokerage firm.
8. What does it mean if I received more than one set of materials?
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8. | What does it mean if I received more than one set of materials? |
This means your shares are registered with different names. For example, you may own some shares directly as a “holder of record” and other shares through a broker in “street name,” or you may own shares through more than one broker. In these situations, you may receive multiple sets of proxy materials. It is necessary for you either to attend in person (please note, however, that if a broker or other nominee holds your shares of record and you wish to vote at the meeting, you must obtain from that registered holder a proxy card issued in your name), follow the instructions to vote your shares by telephone or through the Internet provided in the Notice of Internet Availability of Proxy Materials or return a signed, dated and marked proxy card if you received a paper copy of the proxy card. If you vote by mail, make sure you return each proxy card in the return envelope that accompanied that proxy card.
9. Can I change my proxy vote?
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9. | Can I change my proxy vote? |
Both direct shareholders and beneficial shareholders can revoke a proxy-vote prior to commencement of the 20142017 Annual Shareholders’ Meeting. Attendance at the 20142017 Annual Shareholders’ Meeting will not in itself constitute a revocation of a shareholder’s proxy-vote. Generally, shareholders may revoke their proxy-vote by submitting a new proxy-vote with a later date or by voting in person at our 2014 Annual2017Annual Shareholders’ Meeting. Shareholders should call the telephone number listed within the shareholder information packets to obtain specific instructions on how to revoke their proxy-vote. Specific instructions on how to revoke a proxy-vote may be different depending on whether a shareholder is a direct shareholder of record or a beneficial shareholder.
Each set of instructions should include the shareholder’s account number and the solicitor’s telephone number and email address. Our Inspector of Elections will only count the verified proxy-votes received from each shareholder and brokerage firm with the latest date. Each share of our common stock represents one vote. Shareholders should call the telephone number provided to them in their shareholder information packets if they are unsure or have any questions. Telephone numbers may be different depending on whether a shareholder is a direct shareholder of record or a beneficial shareholder. The telephone numbers may also be different if a shareholder holds shares at different brokerage firms.
10. How can I attend the 2014 Annual Shareholders’ Meeting?
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10. | How can I attend the 2017 Annual Shareholders’ Meeting? |
The 20142017 Annual Shareholders’ Meeting will be held on May 28, 2014June 8, 2017 at 9:00 a.m., Central Daylight Time, at the Grapevine Convention Center in Grapevine, Texas. Shareholders will be admitted upon check-in. No cameras or recording equipment will be permitted in the meeting room.
11. Where can I find the voting results of the 2014 Annual Shareholders’ Meeting?
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11. | Where can I find the voting results of the 2017 Annual Shareholders’ Meeting? |
We will announce preliminary voting results of the 20142017 Annual Shareholders’ Meeting in a press release issued on or about May 28, 2014,June 8, 2017 and will publish final voting results on Form 8-K, which is expected to be filed with the Securities and Exchange Commission (“SEC”) on or before June 3, 2014.8, 2017.
12. Can I have someone else cast a vote for me at the 2014 Annual Shareholders’ Meeting?
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12. | Can I have someone else cast a vote for me at the 2017 Annual Shareholders’ Meeting? |
In order to have someone else cast your vote at the meeting, you must provide the person with whom you would like to cast your vote a power of attorney form. This person is called a shareholder designee (“designee”). A valid power of attorney form must be notarized and contain the following:
the date;
the full name of the designee; | · | the full namethe number of shares you hold and to be voted by the designee; |
| · | the number of shares you holdthe nature and extent of the authority granted to be voted by the designee; |
| · | the naturethe expiration date that terminates the designee’s rights to cast your vote on your behalf; and extent of the authority granted to the designee; |
| · | the expiration date that terminates the designee’s rights to cast your vote on your behalf; and |
your signature.
The original power of attorney form must be attached to the ballot that is turned in at the meeting by the designee. If you are a beneficial owner, you must also provide the proper documentation from your broker of record to the designee, which would allow you to vote and attend the meeting. The designee should then attach all of the original form(s) to the ballot to be turned in at the 2014 Annual2017Annual Shareholders’ Meeting.
The designee must complete a separate ballot and attach the original power of attorney form and/or the proper documentation from the broker (only if the shares are held through a broker) and must sign each ballot as your designee.designee.
13. How can I vote against some or all of the nominees for the Board?
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13. | How can I vote against some or all of the nominees for the Board? |
To vote against some or all of our Board nominees, you should check the “WITHHOLD ALL” or the “FOR ALL EXCEPT” boxes next to the name of each of the applicable nominees on the proxy-voting card or ballot.
14. How can I write-in a nominee for the Board?
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14. | How can I write-in a nominee for the Board? |
You CANNOT write-in additional Board nominees on your proxy-voting card when voting by mail, telephone, or the Internet. You may ONLY write-in the names of additional nominees for whom you wish to vote in person on the ballot at the 20142017 Annual Shareholders’ Meeting.
To write-in a nominee on the ballot at the 2014 Annual2017Annual Shareholders’ Meeting, you should check the “WITHHOLD ALL” or “FOR ALL EXCEPT” box and identify the nominees for which you desire to vote against. You should then write-in your nominee(s) in the blank provided. You may only write-in as many nominees as you voted against. For example, if there were a total of threetwo nominees listed on the ballot and you withheld a vote for twoone of the threetwo nominees, twoone additional nomineesnominee may be written in.
15. How can I recommend that a person be listed on the ballot as a nominee for the Board?
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15. | How can I recommend that a person be listed on the ballot as a nominee for the Board? |
Shareholder recommendations for nominee(s) for the Board should have been submitted to our CFOGeneral Counsel by December 31, 2013,2016, in order for the Board to have considered such persons for nomination at the 2014 Annual2017Annual Shareholders’ Meeting. Nominee recommendations should include a candidate’s name, age, biographical information, and qualifications. Upon receipt, our CFOGeneral Counsel forwards the list of nominees to our Nominating/Governance and Compliance Committee. Our Nominating/Governance and Compliance Committee reviews all of the nominees and recommends a list of nominees to the Board. The Board then votes on the nominees. Only the nominees approved by the Board will be listed on our ballot, proxy-voting card, and in our proxy statement on Schedule 14A, which is expected to be filed with the SEC on or before April 15, 2014.14A. To submit recommendations for a nominee to the Board at the 20152018 Annual Shareholder Meeting, a shareholder should submit in writing the nominees information to our CFOGeneral Counsel by December 31, 2014.2017. The nomination should be either faxed to (972) 471-7342471-1571 or mailed to our CFOGeneral Counsel at Mannatech, Incorporated, 600 S. Royal Lane, Suite 200, Coppell, Texas 75019.
16. How are the votes counted?
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16. | How are the votes counted? |
Our Inspector of Elections will be responsible for tabulating all of the votes for the 20142017 Annual Shareholders’ Meeting. The presence, in person or by proxy-vote, of the holders of at least a majority of shares of our common stock outstanding, as of the record date, is necessary to have a quorum for the 20142017 Annual Shareholders’ Meeting. “ABSTAIN” votes and “broker non-votes” will be counted as present for purposes of determining a quorum. A “broker non-vote” occurs when brokers holding shares in “street name” have not received voting instructions from the beneficial owner and either chooses
not to vote those shares on a routine matter at the 20142017 Annual Shareholders’ Meeting or is not permitted to vote those shares on a non-routine matter.
In tabulating the votes, if a proxy-vote or ballot is signed by the shareholder but submitted without providing specific voting instructions, the shareholder’s vote will be counted as a vote “FOR” each of the proposals. If your shares are held in “street name” and you do not provide specific voting instructions to your broker, then your shares will not be included in the vote for Proposal 1 (Election of Director)Directors), Proposal 3 (“Say-on-Pay” Advisory Vote) or Proposal 4 (Incentive Plan Amendment)(2017 Stock Incentive Plan), but will be voted at the discretion of your broker with respect to Proposal 2 (Ratification of Auditors).
For Proposal 1 (Election of Director)Directors) — If a quorum is obtained, our Class III directors will be elected by a plurality of the shares represented, in person or by proxy, at the 20142017 Annual Shareholders’ Meeting and entitled to vote. This means that the two nominees receiving the highest number of affirmative votes at the meeting will be elected as our two Class III directors. Votes marked “FOR ALL” will be counted in favor of all nominees. Votes marked “WITHHOLD ALL” will be counted against all nominees. To specify differently, a shareholder must check the “FOR ALL EXCEPT” box and then write the names of the nominees for whom the shareholder wishes to vote against. Votes marked “WITHHOLD ALL” have no effect on the vote since a plurality of the votes is required for the election of each nominee. Shareholders may not abstain from voting with respect to the election of directors.
A shareholder cannot write-in the names of additional nominees when voting by proxy. However, at the meeting, shareholders of record will be allowed to write-in additional names of nominee(s) on the ballot. To write-in a nominee on the ballot, the shareholder will need to check the “WITHHOLD ALL” or “FOR ALL EXCEPT” box and identify each of the nominees for which the shareholder does not wish to vote in the space provided. The shareholder will then be allowed to write-in only as many nominees as the shareholder has withheld votes from. For example, if there are a total of two nominees listed on the ballot and the shareholder wishes to withhold its vote for one of the two nominees, the shareholder should list the namesname of the one nominee for whom the vote is withheld and write-in up to one additional namesname for nominees to the Board.
For Proposal 2 (Ratification of Auditors) — If a quorum is obtained, and a majority of the shares represented, in person or by proxy, at the 20142017 Annual Shareholders’ Meeting and entitled to vote, are in favor of Proposal 2, the ratification of the appointment of our independent registered public accounting firm for the year ended December 31, 2014,2017, will be approved. Votes marked “FOR” Proposal 2 will be counted in favor of the ratification of the appointment of our independent registered public accounting firm for the year ended December 31, 2014.2017. An abstention from voting on Proposal 2 will not be voted on that item, although it will be counted for purposes of determining the number of shares represented and entitled to vote. Accordingly, an “ABSTENTION” will have the same effect as a vote “AGAINST” Proposal 2.
For Proposal 3 (“Say-on-Pay”Advisory Vote) — If a quorum is obtained, and a majority of shares represented, in person or by proxy, at the 20142017 Annual Shareholders’ Meeting and entitled to vote, are in favor of Proposal 3 the current executive compensation program will be approved by shareholders on an advisory basis. Votes marked “FOR” Proposal 3 will be counted in favor of the current executive compensation program. An abstention from voting on Proposal 3 will not be voted on that item, although it will be counted for purposes of determining the number of shares represented and entitled to vote. Accordingly, an “ABSTENTION” will have the same effect as a vote “AGAINST” Proposal 3. “Broker non-votes” are not considered shares entitled to vote for purposes of Proposal 3 and thus will have no effect on the outcome of the approval, on an advisory basis, of our executive compensation program.
For Proposal 4 (Incentive Plan Amendment)(2017 Stock Incentive Plan) — - If a quorum is obtained, and a majority of the shares represented, in person or by proxy, at the 20142017 Annual Shareholders’ Meeting and entitled to vote, are voted in favor of Proposal 4 (Incentive Plan Amendment)(2017 Stock Incentive Plan), our 20082017 Stock Incentive Plan will be amended to increase the number of shares of common stock subject to the plan by 130,000.approved. Votes marked “FOR” Proposal 4 (Incentive Plan Amendment)(2017 Stock Incentive Plan) will be counted in favor of amendment of the 20082017 Stock Incentive Plan. An abstention from voting on Proposal 4 will not be voted on that proposal, although it will be counted for purposes of determining the number of shares represented and entitled to vote. Accordingly, an “ABSTENTION” will have the same effect as a vote “AGAINST” Proposal 4. “Broker non-votes” are not considered shares entitled to vote for purposes of Proposal 4 and thus will have no effect on the outcome of the approval of the amendment of the 20082017 Stock Incentive Plan.
17. What should I do if I never received my proxy materials or if the proxy materials have been lost?
You should contact your broker’s customer service department. The broker should verify that you were a shareholder on the close of business on April 4, 201413, 2017 and give you specific instructions on how to obtain new proxy materials and cast a vote. Anyone can view our 20142017 proxy statement by logging onto our corporate website, www.mannatech.comir.mannatech.com.
Appendix B
MANNATECH, INCORPORATEDMannatech, Incorporated
20082017 STOCK INCENTIVE PLAN
(As proposed to be amended at the 2014 Annual Meeting of Shareholders)TABLE OF CONTENTS |
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1. | Purpose | 1 |
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2. | Definitions | 2 |
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3. | Administration | 7 |
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4. | Shares Subject to the Plan | 9 |
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5. | Eligibility | 10 |
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6. | Stock Options | 11 |
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7. | Restricted Awards | 14 |
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8. | Performance Awards | 15 |
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9. | Stock Appreciation Rights | 18 |
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10 | Treatment of Awards on Termination of Continuous Service | 20 |
11 | Covenants of the Company | 21 |
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12 | Company Use of Proceeds from Shares | 21 |
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13 | Adjustments for Changes in Stock | 21 |
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14 | Shareholder Approval | 22 |
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15 | Amendment of the Plan and Awards | 23 |
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16 | General Provisions | 24 |
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17 | Market Standoff | 29 |
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18 | Effective Date and Term of Plan | 29 |
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19 | Choice of Law | 29 |
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20 | Limitation on Liability | 29 |
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21 | Execution | 30 |
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1.1.General Purpose. The name of this plan is the
Mannatech, Incorporated 2008
2017 Stock Incentive Plan (the “
Plan1.”)Purpose. The purpose of the Mannatech, Incorporated 2017 Stock Incentive Plan is to enable Mannatech, Incorporated, a Texas corporation (the “Company”),promote the success and any Affiliateenhance the value of the Company and its Affiliates by linking the personal interests of Employees, Directors and Consultants of the Company and its Affiliates to obtainthose of Company shareholders and by providing such individuals with an incentive for outstanding performance. The Plan is further intended to provide flexibility to the Company in its ability to motivate, attract and retain the services of the types of Employees, ConsultantsDirectors and DirectorsConsultants who will contribute to the Company’s long range success andsuccess. The Plan is intended to provide incentives that are linked directly to increases in share value which will inure to thebe an “employee benefit of all shareholdersplan” as such term is defined under Rule 405 of the Company.Securities Act.
1.2.Eligible Award Recipients. The persons eligible to receive Awards are the Employees, Consultants and Directors of the Company and its Affiliates.
1.3.Available Awards. The purpose of the Plan is to provide a means by which eligible recipients of Awards may be given an opportunity to benefit from increases in value of the Common Stock through the granting of one or more of the following Awards: (a) Incentive Stock Options; (b) Nonstatutory Stock Options; and (c) Restricted Stock.
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2. | Definitions.Definitions. |
2.1.(a)“409A Award” means an Award that is considered “nonqualified deferred compensation” within the meaning of Section 409A of the Code and Section 8 of this Plan.
2.2.“Administrator” means the Board or the Committee appointed by the Board in accordance with Section 3.53(e).
2.3.(b)“Affiliate” means any parent corporation or direct or indirect subsidiary corporation of the Company, whether now or hereafter existing, as those terms are defined in Sections 424(e) and (f), respectively, of the Code and any individual, partnership, corporation, limited liability company, association, joint stock company, trust, joint venture or unincorporated organization that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with the Company. For this purpose “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of another, whether through ownership of voting securities, by contract or otherwise.existing.
2.4.(c)“Award” means any rightOption, Restricted Award, Performance Award or SAR granted under the Plan, including an Incentive Stock Option, a Nonstatutory Stock Option, Restricted Stock, and a 409A Award.Plan.
2.5.(d)“Award Agreement” means a written agreement between the Company and a holder of an AwardParticipant evidencing the terms and conditions of an individual Award grant.Award. Each Award Agreement shallwill be subject to the terms and conditions of the Plan.Plan and need not be identical.
2.6.(e)“Beneficial Owner” has the meaning assigned to such term in Rule 13d-3 and Rule 13d-5 under the Exchange Act, except that in calculating the beneficial ownership of any particular “person” (as that term is used in Section 13(d)(3) of the Exchange Act), such “person” shall be deemed to have beneficial ownership of all securities that such “person” has the right to acquire by conversion or exercise of other securities, whether such right is currently exercisable or is exercisable only after the passage of time. The terms “Beneficially Owns” and “Beneficially Owned” have a corresponding meaning.
2.7.“Board” means the Board of Directors of the Company.
2.8.(f)“Cashless Exercise” has the meaning set forth in Section 6.4.
2.9.“Cause” means (a)(i) with respect to any Participant who is a party to an employment or service agreement or employment policy manual with the Company or its Affiliates and such agreement or policy manuala Service Agreement which provides for a definition of Cause, as defined thereintherein; and (b)(ii) with respect to allany other Participants, (i)Participant, (1) the commission of, or plea of guilty or no contest to, a felony or a crime involving moral turpitude or the commission of any other act involving willful malfeasance or material fiduciary breach with respect to the Company or an Affiliate, (ii)(2) conduct tending to bring the Company into substantial public disgrace, or disrepute, (iii)(3) gross negligence or willful misconduct with respect to the Company or an Affiliate or (iv)(4) material violation of state or federal securities laws.The Administrator, in its absolute discretion, shallwill determine the effect of all matters and questions relating to whether a Participant has been discharged for Cause.
2.10.(g)“Change in Control” shall mean:means, unless an applicable Award Agreement or Service Agreement states otherwise or contains a different definition, the first to occur of the following events:
(a)(i)The direct or indirect sale, transfer, conveyance or other disposition (other than by way of merger or consolidation), to any Person, in one or a series of related transactions occurring within a 12-month period, of all or substantially all of the properties or assets of the Company to any “person” (as that term is used in Section 13(d)(3)having a total gross fair market value of 40% or more of the Exchange Act);total gross fair market value of all of the Company’s assets immediately before such transaction or series of transactions;
(b)(ii)The Incumbent Directorsfollowing individuals cease for any reason to constitute at least a majority of the Board;number of Directors then serving: individuals who, on the Effective Date, constitute the Board and any new Director (other than a Director whose initial assumption of office is in connection with an actual or threatened election contest relating to the election of Directors or as a result of any other actual or threatened solicitation of proxies by or on behalf of any Person other than the Board) whose appointment or election by the Board or nomination for election by the Company’s shareholders was approved by a vote of at least two-thirds of the Directors then on the Board (either by a specific vote or by approval of the proxy statement of the Company in which that individual is named as a nominee for Director without objection to the nomination) who either were Directors on the Effective Date or whose appointment, election or nomination for election was previously so approved or recommended;
(c)(iii)The adoptionapproval by the Company’s shareholders of a plan relating to theof complete liquidation or dissolution of the Company; orCompany.
(d)(iv)The consummation of any transaction (including, without limitation, any mergerAny Person (other than (1) a trustee or consolidation) the result of which is that any “person” or “group” (as such terms are used in Section 13(d)other fiduciary holding securities under an employee benefit plan of the Company or any Affiliate or (2) any Person that is beneficially owned by the shareholders of the Company in substantially the same proportion as their beneficial ownership of Company securities immediately before the acquisition) acquires “beneficial ownership” (within the meaning of Rules 13d-3 and 13d-5 under the Exchange Act), becomes of securities of the Beneficial Owner ofCompany representing more than fifty percent (50%)50% of the combined voting power of the Company.Company’s then outstanding securities, or in the case of a merger or consolidation in which the Surviving Entity becomes a subsidiary of another entity, the then outstanding securities of such parent entity; or
TheNotwithstanding the foregoing, notwithstanding, a transaction shallwill not constitutebe a Change in Control if: (i)if (1) its sole purpose is to change the state of the Company’s incorporation or to create a holding company that will be owned in substantially the same proportions by the personsPersons who held the Company’s securities immediately before suchthe transaction; (ii)(2) it constitutes a secondary public offering that results in any security of the Company being listed (or approved for listing) on any securities exchange, or designated (or approved for designation) as a security, on an interdealer quotation system; (iii)any Established Securities Market; (3) it constitutes a change in Beneficial Ownership that results solely from a change in ownership inof an existing shareholder;shareholder.
(h)“Change in Control Value” means, (i) in the event of a Change in Control described in Section 2(g)(ii) or (iv) solely because fifty percent (50%)(iii), the Fair Market Value; and (ii) in the event of any other Change in Control or more ofother transaction described under Section 13(c), the total voting power ofprice per Share paid or payable to the Company’s then outstanding securities is acquired by (A) a trustee or other fiduciary holding securities under one or more employee benefit Plans of the Company or any Affiliate or (B) any company which, immediately prior toshareholders in such transaction, is owned directly or indirectly by the shareholders of the Company in substantially the same proportion as their ownership of stock in the Company immediately prior to such acquisition.transaction.
2.11.(i)“Code” means the Internal Revenue Code of 1986, as amended.
2.12.(j)“Committee” means a committee of one or more members of the Board appointed by the Board to administer the Plan in accordance with Section 3.53(e).
2.13.(k)“Common Stock” means the Company’s common stock, $0.0001 par value $0.0001 per share of the Company.Share.
2.14.(l)“Company” means Mannatech, Incorporated, a Texas corporation.
2.15.(m)“Consultant” means any natural person including an advisor (a) engaged by the Company or an Affiliate to render consulting or advisory services and who is compensated for such services or who provides bona fide consulting or advisory services to the Company or an Affiliate pursuant tounder a written agreement, or (b) who is a member of the Board of Directors of an Affiliate; provided that, except as otherwise permitted in Section 5.4(b) hereof, such person is a natural person and suchwhich services are not in connection with the offer or sale of securities in a capital raising transaction and do not directly or indirectly promote or maintain a market for the Company’s securities.
2.16.(n)“Continuous Service” means that the Participant’suninterrupted service of a Participant with the Company or an Affiliate whether as an Employee, Director or Consultant, is not interrupted or terminated. TheConsultant. A Participant’s Continuous Service shallwill not be deemed to haveinterrupted or terminated merely because of a change in the capacity in which the Participant renders service, to the Company or an Affiliatesuch as ana change in status from Employee to Consultant or Director, or a change in the entity for which the Participant renders service, such service, provided thatas from the Company to an Affiliate, so long as there is no interruption or termination of the Participant’s Continuous Service. For example, a change in status from an Employee of the Company to a Consultant of an Affiliate or a Director will not constitute an interruption of Continuous Service.service. The Administrator or its delegate, in its sole discretion, may determine whether Continuous Service shallwill be considered interrupted in the case of any approved leave of absence, approved by that party, including sick leave, military leave or any other personal or family leave of absence.
2.17.(o)“Covered Employee” means the chief executive officera “covered employee” as defined in Code Section 162(m)(3), as modified by regulations and the four other highest compensated officers of the Company for whom total compensation is or would be required to be reported to shareholders under the Exchange Act, as determined for purposes of Section 162(m) of the Code.interpretive guidance issued thereunder.
2.18.(p)“Date of Grant” means the first date on which all necessary corporate action has been taken by the Administrator to approve the grant of an Award to a Participant as provided under the Plan, provided the key terms and conditions of the Award are communicated to the Participant within a reasonable period of time following the Administrator’s action, thethereafter; or such later date on which the Administrator adopts a resolution, or takes other appropriate action, expressly granting an Award to a Participant that specifies the key terms and conditions of the Award and from which the Participant begins to benefit from or be adversely affected by subsequent changes in the Fair Market Value of the Company Common Stock or, if a subsequent dateas is set forth in such resolution or determineddesignated by the Administrator asand specified in the Date of Grant, then such date as is set forth in such resolution.Award Agreement. In any situation where the terms of the Award are subject to negotiation with the Participant, the Date of Grant shallwill not be earlier than the date the key terms and conditions of the Award are communicated to the Participant.
2.19.(q)“Detrimental Activity” means: (a) violationmeans any of the terms of any agreement with the Company concerning non-disclosure, confidentiality, intellectual property, privacy or exclusivity; (b)following: (i) disclosure of the Company’s confidential information to anyoneany Person outside the Company, without prior written authorization from the Company or in conflict with the interests of the Company, whether the confidential information was acquired or disclosed by the Participant during or after employment byservice to the Company; (c)(ii) failure or refusal to disclose promptly or assign to the Company all right, title, and interest in any invention, work product or idea, patentable or not, made or conceived by the Participant during employment byservice with the Company, relating in any manner to the interests of the Company or, the failure or refusal to do anything reasonably necessary to enable the
Company to secure a patent where appropriate in the United States and in other countries; (d)(iii) activity that is discovered to be grounds for or results in termination of the Participant's employmentParticipant’s Continuous Service for Cause; (e) any(iv) violation or breach of a non-disclosure, confidentiality, intellectual property, privacy, exclusivity or other restrictive covenant contained in any, employment agreement, Award Agreement, Service Agreement or other agreement between the Participant and the Company, duringCompany; (v) any period for which a restrictive covenant prohibiting Detrimental Activity,direct or other similar conduct or act, is applicable to the Participant during or after employment by the Company; (f) anyindirect attempt directly or indirectly to induce any Employee of the Company to be employed or perform services or acts in conflict with the interests of the Company; (g)(vi) any direct or indirect attempt, in conflict with the interests of the Company, directly or indirectly, to solicit the trade or business of any current or prospective customer, client, supplier or partner of the Company; (h)(vii) the conviction of, or guilty plea entered by, the Participant for any felony or a crime involving moral turpitude whether or not connected with the Company; or (i)(viii) the commission of any other act involving willful malfeasance or material fiduciary breach with respect to the Company. All references to “the Company” in this definition refer to the Company and any Affiliate.
2.20.(r)“Director” means a member of the Board.
2.21.(s)“Disability” means (i) with respect to any Participant who is a party to a Service Agreement that provides for a definition of Disability, as defined therein; and (ii) with respect to any other Participant, the Optionholder is unableParticipant’s inability to engage insubstantially perform his or her duties to the Company or any substantial gainful activityAffiliate by reason of anya medically determinable physical or mental impairment; provided, however,impairment that is expected to last for a period of six months or longer or to result in death. Notwithstanding the foregoing, for purposes of determining the term of an Incentive Stock Option pursuant to under Section 6.1010(b)(iii), “ hereof, the term Disability shall have the meaning ascribed to it under” means permanent and total disability as defined in Code Section 22(e)(3). The determination ofAdministrator will determine whether an individual has a Disability shall be determinedis Disabled under procedures established by the Administrator. Except in situations where the Administrator is determiningOther than for determinations of Disability for purposes of the term of an Incentive Stock Option pursuant to under Section 6.10 hereof within the meaning of Code Section 22(e)(3)10(b)(iii), the Administrator may rely on any determination that a Participant is disabled for purposes of benefits under any long-term disability plan maintained by the Company or any Affiliate in which a Participant participates.
2.22.(t)“Effective Date” shall mean February 21, 2008,means April 17, 2017, the date of the Board adoptedPlan’s adoption by the Plan.Board.
2.23.(u)“EmployeeEligible Director” means anya person employed bywho is both a “non-employee director” as defined in Rule 16b-3(b)(3) under the Exchange Act and an “outside director” as defined in Treasury Regulation section 1.162-27(e)(3).
(v)“Employee” means a common law or statutory employee of the Company or an Affiliate. Mere service as a Director or payment of a director’sDirector’s fee by the Company or an Affiliate shallis not be sufficient by itself to constitute “employment”being an Employee.
(w)“Established Securities Market” means a national securities exchange that is registered under Section 6 of the Exchange Act, a foreign national securities exchange that is officially recognized, sanctioned or supervised by governmental authority or any over-the-counter market that is reflected by the Company orexistence of an Affiliate.interdealer quotation system.
2.24.(x)“Exchange Act” means the Securities Exchange Act of 1934, as amended.
2.25.(y)“Existing PlanExercise Price” means the Mannatech, Incorporated 2000 Stockprice per Share at which the holder of an Option Plan.may buy an underlying Share on exercise of the Option.
2.26.(z)“Fair Market Value” means, as of the date of any date,valuation event, the value of the Common Stockper Share determined using a presumptively reasonable valuation method under Treasury Regulation section 1.409A-1(b)(5)(iv), as determined below. The Fair Market Value onfollows:
(i)On any date on which the Company’s shares of Common Stock areis readily tradable on an established securities market shall be: (a)Established Securities Market, if the Common Stock is admitted to trading on a national securitiesan exchange or recognized market for which closing prices are reported on any date, the Fair Market Value may be determined based on (1) the last sale before or the first sale after the Date of Grant of an Award or any given date shall not be less thanother valuation event; (2) the closing price reportedon the last trading day before the Date of Grant of an Award or any other valuation event; (3) the closing price on the Date of Grant or any other valuation event; or (4) an average selling price during a specified period that is within 30 days before or 30 days after the Date of Grant of an Award, on condition that the commitment to grant an Award based on an average selling price during a specified period must be irrevocable before the beginning of the specified period, and the valuation method must be used consistently for grants of Awards under the Plan and substantially similar programs.
(ii)If the Common Stock is readily tradable on the principal national securities exchange or recognized market on which the Company’s Common Stock is listed or admitted to trading for such date or, if no sales were reported for such date, for the last date preceding the date on which such a sale was reported; or (b) ifan Established Securities Market but closing prices are not reported, the Fair Market Value may be determined based on any given date shall not be less than(1) the average of the highest bid and lowest asked prices of the Common Stock reported for such dateon the last trading day before the Date of Grant of an Award or if noany other valuation event or on the Date of Grant of an Award or any other valuation event; or (2) an average of the highest bid and lowest asked prices were reported for such date, forduring a specified period that is within 30 days before or 30 days after the last day preceding such date for which such prices were reported. In the absenceDate of Grant of an established marketAward, on condition that the commitment to grant an Award based on an average selling price during a specified period must be irrevocable before the beginning of the specified period, and the valuation method must be used consistently for grants of Awards under the same and substantially similar programs.
(iii)At any time the Common Stock is not readily tradable on an Established Securities Market, the Administrator will determine the Fair Market Value determined in good faith by the Administrator through the reasonable application of a reasonable valuation method based on the facts and circumstances as of the valuation date, including, at the election of the Administrator, by an independent appraisal that meets the requirements of Code Section 401(a)(28)(C) and the regulations promulgatedissued thereunder as of a date that is no more than twelve (12)12 months before the relevant transaction to which the valuation is applied (for example, the grant datean Option’s Date of a stock option)Grant), and suchthat determination shallwill be conclusive and binding on all persons.Persons.
2.27.(aa)“Form S-8” has the meaning set forth in Section 5.4(b).
2.28.“Incentive Stock Option” means an Option intended to qualify as an incentive stock option within the meaning ofunder Section 422 of the Code and the regulations promulgatedissued thereunder.
2.29.(ab)“Incumbent Directors” means individuals who, on the Effective Date, constitute the Board, provided that any individual becoming a Director subsequent to the Effective Date whose election or nomination for election to the Board was approved by a vote of at least two-thirds of the Incumbent Directors then on the Board (either by a specific vote or by approval of the proxy statement of the Company in which such person is named as a nominee for Director without objection to such nomination) shall be an Incumbent Director. No individual initially elected or nominated as a Director of the Company as a result of an actual or threatened election contest with respect to Directors or as a result of any other actual or threatened solicitation of proxies by or on behalf of any person other than the Board shall be an Incumbent Director.
2.30.“Listing Date” means the first date upon which any security of the Company is required to be registered under Section 12 of the Exchange Act and is listed (or approved for listing) upon notice of issuance on any securities exchange or designated (or approved for designation) upon notice of issuance as a national market security on an interdealer quotation system.
2.31.“Market Stand-Off” has the meaning set forth in Section 15.
2.32.“Non-Employee Director” means a Director who is a “non-employee director” within the meaning of Rule 16b-3.
2.33.“NonstatutoryNonqualified Stock Option” means an Option not intended to qualify as an Incentive Stock Option.
2.34.(ac)“Officer” means (a) before the Listing Date, any person designated by the Company as an officer and (b) on and after the Listing Date, a personindividual who is an officer of the Company within the meaning of Section 16 ofas defined in Rule 16a-1(f) under the Exchange Act and the rules and regulations promulgated thereunder.Act.
2.35.(ad)“Option” means an Incentive Stock Option or a NonstatutoryNonqualified Stock Option granted pursuant tounder the Plan.
2.36.(ae)“Option AgreementParticipant” means a written agreement between the Company and an Optionholder evidencing the terms and conditions of an individual Option grant. Each Option Agreement shall be subject to the terms and conditions of the Plan and need not be identical.
2.37.“Optionholder” means a person to whom an OptionAward is granted pursuant tounder the Plan or, if applicable, such other person who holds an outstanding Option.
2.38.“Outside Director” means a Director who is an “outside director” within the meaning of Section 162(m) of the Code and Treasury Regulations § 1.162-27(e)(3).
2.39.“Participant” means a person to whom an Award is granted pursuant to the Plan or, if applicable, such other personPerson who holds an outstanding Award.
2.40.(af)“Performance Award” means an Award granted under Section 8.
(ag)“Performance Stock” means Restricted Stock granted under a Performance Award.
(ah)“Performance Stock Unit” means a Restricted Stock Unit granted under a Performance Award.
(ai)“Permitted Transferee” means: (a)means a Participant’s child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law (including adoptive relationships), any spouse, parents, siblings (by blood, marriage or adoption) or lineal descendants (by blood, marriage or adoption) of a Participant; (b) any trust or other similar entity for the benefit of a Participant orindividual sharing the Participant’s spouse, parents, siblingshousehold (other than a tenant or lineal descendants; provided, however, thatemployee), a trust in which these individuals (or the Participant) have more than 50% of the beneficial interest, a foundation in which these individuals (or the Participant) control the management of assets, any transfer made by a Participant to a Permitted Transfereeother entity in which these individuals (or the Participant) own more than 50% of the voting interests, or such other transferee as may only be made if the Permitted Transferee, prior to the time of transfer of stock, agrees in writing to be boundpermitted by the terms of this Plan and provides written notice to the Company of such transfer.Administrator in its sole discretion.
2.41.(aj)“Person” means an individual, partnership, limited liability company, corporation, association, joint stock company, trust, joint venture, labor organization, unincorporated organization, governmental entity or political subdivision thereof or any other entity, and includes a syndicate or group as those terms are used in Section 13(d)(3) or 14(d)(2) of the Exchange Act.
(ak)“Plan” means this Mannatech, Incorporated 20082017 Stock Incentive Plan.Plan, as amended from time to time.
2.42.(al)“Restricted Award” means an Award of Restricted Stock or Restricted Stock Units granted under Section 7.
(am)“Restricted Period” has the meaning set forth in Section 7.1.7.
2.43.(an)“Restricted Stock” has the meaning set forth in Section 7.1.means Shares granted under an Award that are subject to certain restrictions and risk of forfeiture.
2.44.(ao)“Restricted Stock Unit” “Rightmeans a hypothetical unit granted under an Award evidencing the right to receive one Share or an equivalent value in cash equal to the Fair Market Value (as determined by the Administrator) in the future, which right is subject to certain restrictions and risk of Repurchaseforfeiture.
(ap)“SAR” or “Stock Appreciation Right” means the Company’s optionright under an Award to repurchase unvested Common Stock acquiredreceive an amount equal to the difference between the Fair Market Value as of the date of exercise and the Strike Price, multiplied by the number of Shares for which the Award is exercised, all as determined under the Plan upon the Participant’s termination of Continuous Service pursuant to Section 11.7.9.
2.45.(aq)“Rule 16b-3” means Rule 16b-3 promulgated under the Exchange Act or any successor to Rule 16b-3, as in effect from time to time.
2.46.“Rule 701” has the meaning set forth in Section 5.4(a).
2.47.“Securities Act” means the Securities Act of 1933, as amended.
2.48.(ar)“Stock for Stock ExchangeService Agreement” hasmeans a written employment agreement, consulting or other service agreement or an employment policy manual, the meaningterms of which have been approved by the Administrator, applicable to a Participant’s employment or service with the Company or an Affiliate.
(as)“Share” means one share of Common Stock.
(at)“Strike Price” means the base value per Share of a SAR, as determined by the Administrator and as set forth in Section 6.4.the Award Agreement.
2.49.(au)“Surviving Entity” means the Company, if immediately following any merger, consolidation or similar transaction, the holders of outstanding voting securities of the Company immediately prior tobefore the merger or consolidation own equity securities possessing more than fifty percent (50%)50% of the voting power of the entity existing following the merger, consolidation or similar transaction. In all other cases, the other entity to the transaction and not the Company shallwill be the Surviving Entity. In making the determination of ownership by the shareholders of an entity immediately after the merger, consolidation or similar transaction, equity securities whichthat the shareholders owned immediately before the merger, consolidation or similar transaction as shareholders of another party to the transaction shallwill be disregarded. Further, outstanding voting securities of an entity shallwill be calculated by assuming the conversion of all equity securities convertible (immediately or at some future time)time whether or not contingent on the satisfaction of performance goals) into sharessecurities entitled to vote.
2.50.3.“Ten Percent Shareholder” means a person who owns (or is deemed to own pursuant to Section 424(d) of the Code) stock possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or of any of its Affiliates.Administration
3.1.(a)Administration by Board. The Plan shall be administered byBoard will administer the BoardPlan unless and until the Board delegates administration to a Committee, as provided in Section 3.53(e).
3.2.(b)PowersAuthority of Administrator. The Administrator shallwill have the power and authority to select Participants and grant to Participants, Awards pursuant tounder the terms of the Plan.
3.3.(c)Specific PowersAuthority. In particular, the Administrator shallwill have the authority: (a)authority to (i) construe and interpret the Plan and apply its provisions; (b) to(ii) promulgate, amend, and rescind rules and regulations relating to the administration of the Plan; (c) to(iii) authorize any personPerson to execute, on behalf of the Company, any instrument required to carry out the purposes of the Plan; (d) to(iv) delegate its authority to one or more Officers of the Company with respect to Awards that do not involve Covered Employees or “insiders” within the meaning ofany individual who is subject to Section 16 of the Exchange Act provided suchor who is a Covered Employee or is reasonably anticipated to become a Covered Employee during the term of an Award, which delegation is pursuant towill be by a resolution that specifies the total number of shares of Common StockShares that may be subject to Awards by suchthe Officer and suchthe Officer may not make an Award to himself or herself; (e) to(v) determine when Awards are to be granted under the Plan; (f) from time to time to(vi) select, subject to the limitations set forth in thisthe Plan, those Participants to whom Awards shallwill be granted; (g) to(vii) determine the number of shares of Common StockShares to be made subject to each Award; (h) to(viii) determine whether each Option is to be an Incentive Stock Option or a NonstatutoryNonqualified Stock Option; (i) to(ix) prescribe the terms and conditions of each Award, including, without limitation, the exercise priceStrike Price or Exercise Price and medium of payment, vesting provisions and Right of Repurchase provisions, and to specify the provisions of the Award Agreement relating to suchthe grant or sale; (j)(x) subject to the restrictions applicable under Sections 8(c) and 15, amend any outstanding Awards, including for the purpose of modifying the time or manner of vesting, the purchase price, Exercise Price or exercise price,Strike Price or the term of any outstanding Award; provided, however, that if any such amendment impairs a Participant’s rights or increases a Participant’s obligations under his or her Award, such amendment shall also be subject to the Participant’s consent (provided, however, a cancellation of an Award where the Participant receives a payment equal in value to the Fair Market Value of the vested Award or, in the case of vested Options, the difference between the Fair Market Value of the Common Stock subject to an Option and the exercise price, shall not constitute an impairment of the Participant’s rights that requires consent); (k) to(xi) determine the duration and purpose of leaves of absences whichthat may be granted to a Participant without constituting termination of their Continuous Service for purposes of the Plan, which periods shallwill be no shorter than the periods generally applicable to Employees under the
Company’s employment policies; (l) topolicies or as required under applicable law; (xii) make decisions with respect to outstanding Awards that may become necessary uponon a Change in Control or an event that triggers anti-dilutioncapital adjustments; and (m) to(xiii) exercise discretion to make any and all other determinations whichthat it determinesmay determine to be necessary or advisable for administration of the Plan.
3.4.(d)Decisions Final. All decisions made by the Administrator pursuant tounder the provisions of the Plan shallwill be final and binding on the Company and the Participants, unless such decisions area decision is determined by a court having jurisdiction to be arbitrary and capricious.
3.5.(e)CommitteeThe Committee.
(a)(i)In GeneralGeneral. The Board may delegate administration of the Plan to a Committee or Committees of one or more members of the Board, and the term “Committee” shall applyapplies to any personPerson or personsPersons to whom suchthat authority has been delegated. If administration is delegated to a Committee, the Committee shallwill have, in connection with the administration of the Plan, the powers theretofore possessed by the Board, including the power to delegate to a subcommittee any of the administrative powers the Committee is authorized to exercise (and references in thisthe Plan to the Board or the Administrator shallwill thereafter be to the Committee or subcommittee), subject, however, to such resolutions, not inconsistentconsistent with the provisions of the Plan, as the Board may be adopted from time to time by the Board.adopt. The Board may abolish the Committee at any time and revestre-vest in the Board the administration of the Plan. The members of the Committee shallwill be appointed by and serve at the pleasure of the Board. From time to time, theThe Board may increase or decrease the size of the Committee, add additional members to, remove members (with or without cause)Cause) from, appoint new members in substitution therefor, and fill vacancies, however caused, in the Committee. The Committee shallwill act pursuant toby a vote of the majority of its members or, in the case of a committeeCommittee comprised of only two members, the unanimous consent of its members, whether present or not, or by the written consent of the majority of its members and will keep minutes shall be kept of all of its meetings and copies thereof shall be provided to the Board.meetings. Subject to the limitations prescribed by the Plan and the Board, the Committee may establish and follow such rules and regulations for the conduct of its business as it may determine to be advisable.
(b)(ii)Committee Composition when Common StockRegistration is RegisteredRequired. At such time asWhenever any class of the Common StockCompany’s common equity securities is required to be registered under Section 12 of the Exchange Act, in the discretion of the Board, a Committee may consist solely of two or more Non-Employee Directors who are also OutsideEligible Directors. The Board shall havehas sole discretion to determine whether or not it intends to comply with the exemption requirements of either Rule 16b-3 and/under the Exchange Act or Code Section 162(m) of the Code.. However, if the Board intends to satisfy such exemption requirements, with respect to Awards to any Participant who is a Covered Employee and with respector is reasonably anticipated to become a Covered Employee during the term of the Award, or to any insider subject to Section 16 of the Exchange Act,Officer or Director, the Committee shall be a compensation committee of the Board thatwill at all times consistsconsist solely of two or more Non-Employee Directors who are also OutsideEligible Directors. Within the scope of suchthat authority, the Board or the Committee may (i)(1) delegate to a committee of one or more members of the Board who are not Outside Directors“outside directors” within the meaning of Code Section 162(m) the authority to grant Awards to eligible personsindividuals who are either (A) not then Covered Employees and are not expected to be Covered Employees at the time of recognition of income resulting from suchthe Award or (B) not persons with respect to whom the Company wishesdoes not wish to comply with Code Section 162(m) of the Code, or (ii)(2) delegate to a committee of one or more members of the Board who are not Non-Employee Directors“non-employee directors” within the meaning of Rule 16b-3 under the Exchange Act the authority to grant Awards to eligible personsindividuals who are not thenOfficers, Directors, “beneficial owners” (as defined in Rule 16a‑1(a)(1) under the Exchange Act) of more than 10% of any class of equity securities of the Company registered under Section 12 of the Exchange Act or otherwise subject to Section 16 of the Exchange Act. Nothing herein shallin this Section 3(e) is intended to create an inference that an optionAward granted other than by a committee of the Board consisting at all times solely of two or more Eligible Directors is not validly granted under the Plan in the event Awards are granted under the Plan by a compensation committee of the Board that does not at all times consist solely of two or more Non-Employee Directors who are also Outside Directors.Plan.
3.6.(f)IndemnificationIndemnification. In addition to such other rights of indemnification as they may have as Directors or members of the Committee, and to the extent allowed by applicable law, the Administrator shall be indemnified byCompany will indemnify the CompanyAdministrator against the reasonable expenses, including attorney’s fees, actually incurred in connection with any action, suit or proceeding or in connection with any appeal therein,thereof, to which the Administrator may be party by reason of any action taken or failure to act under or in connection with the Plan or any optionAward granted under the Plan, and against all amounts paid by the Administrator in settlement thereof (provided,(subject, however, thatto the Company’s approval of the settlement, has been approved bywhich approval the Company which approval shallwill not be unreasonably withheld)withhold) or paid by the Administrator in satisfaction of a judgment in any such action, suit or proceeding, except in relation to matters as to which it shall beis adjudged in suchthe action, suit or proceeding that suchthe Administrator did not act in good faith and in a manner which such personthat the Person reasonably believed to be in the best interests of the Company, and in the case of a criminal proceeding, had no reason to believe that the conduct complained of was unlawful; provided, however,lawful. Notwithstanding the foregoing, it is a condition precedent to the Company’s obligations in this Section 3(f) that within sixty (60)60 days after institution of any such action, suit or proceeding, suchthe Administrator shall, in writing,or Committee member offer the Company in writing the opportunity at its own expense to handle and defend suchthe action, suit or proceeding.
3.7.4.Option Exchange Program. The Board shall have the authority to institute one, and only one, Option Exchange Program. Such Option Exchange Program must commence no more than six months after the date of approval by the shareholders of the Company, and shall be subjectShares Subject to the requirements of Section 6 hereof and to the conditions set forth in this Section 3.7.Plan
(a)Each eligible Optionholder will be permitted to exchange all, or none, of the Options deemed eligible for exchange for replacement Options (the “Eligible Options”) on a grant-by-grant basis.
(b)The Board shall determine, before the commencement of the Option Exchange Program, the exchange ratio of shares of Common Stock subject to each Eligible Option surrendered in exchange for replacement Options granted, which ratio will depend on the original exercise price of the Eligible Option and the then-current fair value of the Option (calculated using the Black-Scholes option pricing model). The Board shall determine the exchange ratio or ratios in a manner intended to result in the grant of replacement Options that have a fair value approximately equal to the fair value of the Eligible Options they replace.
(c)In any event, the number of shares of Common Stock subject to Options under the Option Exchange Program shall be reduced, such that each replacement Option will provide for the purchase of fewer shares of Common Stock than were subject to the Eligible Option surrendered in exchange for the replacement Option.
(d)Replacement Options exchanged for Eligible Options will be unvested and non-exercisable on the Date of Grant. The replacement Options will vest and become exercisable in three equal annual installments beginning 12 months after their Date of Grant.
(e)Such other terms as have been approved by the Company’s shareholders.
| 4. | Shares Subject to the Plan. |
4.1.Share Reserve. Subject to adjustment under Section 13(a), the provisionsmaximum aggregate number of Section 12.1 relating to adjustments upon changes in Common Stock, the sharesShares that may be issued pursuant to Awards shall consist of the Company’s authorized but unissued Common Stock, and the maximum aggregate amount of such Common Stock which may be issued uponon exercise of all Awards under the Plan shall not exceed 200,000330,000 sharesis 250,000 Shares, all of Common Stock plus any shares of Common Stock that were reserved under the Existing Plan but not yet subject to issued awards and any shares of Common Stock underlying awards granted to Employees prior to the Effective Date under the Existing Plan that have been issued and are outstanding on the Effective Date that expire, are forfeited or terminatewhich may be used for any reason without having been exercised in full. AsAwards. This limitation consists of April 18, 2008, there are 2,339 shares reservedthe sum of (i) 68,326 Shares available for issuance under the ExistingMannatech, Incorporated 2008 Stock Incentive Plan that are not subjectas of the date of the shareholders’ approval of the Plan, and (ii) an additional 181,674 Shares to issuedbe approved by the Company’s shareholders. No awards and 71,551 shares that are reserved for issuance under outstanding but unexercised awards, as adjusted for the 1-for-10 reverse stock split effected January 13, 2012. All shares reserved for issuance under this Plan may be used for Incentive Stock Options or any other Award. Awards for fractional shares of Common Stock may not be issuedgranted under the terms2008 Stock Incentive Plan on or after the date of the shareholders’ approval of the Plan.
4.2.(b)ReversionReturn of Shares to the Share Reserve. If any Award shallOption or SAR for any reason expireis forfeited, cancelled, expires or otherwise terminate,terminates, in whole or in part, the unexercised Shares left under the Option or is surrendered pursuant to an Option Exchange Program, the shares of Common Stock not acquired under such Award shallSAR will revert to and again become available for issuance under the Plan. If sharesNotwithstanding anything in the Plan to the contrary, Shares used to pay the required Exercise Price or tax obligations or Shares not issued in connection with settlement of Commonan Option or SAR or that are used or withheld to satisfy tax obligations of the Participant, will not be available again for other Awards under the Plan. Awards or portions thereof that are settled in cash and not in Shares will be counted against the foregoing maximum Share limitations. Notwithstanding anything in this Section 4 to the contrary and subject to adjustment under Section 13(a), the maximum number of Shares that may be issued on the exercise of Incentive Stock issuedOptions will equal the aggregate number of Shares stated in Section 4(a) plus, to the extent permitted under Section 422 of the Code and the Treasury regulations thereunder, any Shares that become available for issuance under the Plan are reacquiredunder this Section 4(b).
(c)Source of Shares. Shares issued under an Award may consist of authorized and unissued Shares, Shares held by the Company pursuantas treasury shares or Shares purchased on the open market, and may be subject to restrictions deemed appropriate by the terms ofAdministrator.
5.Eligibility
(a)For Awards other than Options and SARs. Restricted Awards and Performance Awards may be granted to any forfeiture provision, including the Right of Repurchase of unvested Common Stock under Section 11.7, such shares shall again be available for purposesEmployee, Director or Consultant of the Plan.Company or any Affiliate.
4.3.(b)For Nonqualified Stock Options and SARsSource of Shares. The shares of CommonNonqualified Stock subject to the PlanOptions and SARs may be authorized but unissued Common Stockgranted to any Employee, Director or reacquired Common Stock, boughtConsultant of the Company or of a direct or indirect majority-owned subsidiary of the Company with respect to which the Company, on the market, pursuant to any forfeiture provision or otherwise.Date of Grant, is an “eligible issuer” under Treasury Regulation section 1.409A-1(b)(5)(iii)(E)(1).
5.1.(c)For Incentive Stock OptionsEligibility for Specific Awards. Incentive Stock Options may be granted only to Employees. Awards other than Incentive Stock Options may be granted to Employees, Directors and Consultants.
5.2.Ten Percent Shareholders. A Ten Percent Shareholder shall not be granted an Incentive Stock Option unless the exercise price of such Option is at least 110%Employee of the Fair Market Value of the Common Stock atCompany or a corporation that, on the Date of Grant, is a “parent corporation” or “subsidiary corporation” of the Company, as those terms are defined in Code Sections 424(e) and the Option is not exercisable after the expiration of five (5) years from the Date of Grant.424(f), respectively.
5.3.(d)Code Section 162(m) Limitation. Subject to the provisions of capitalization adjustment under Section 12.1 relating to adjustments upon changes in the shares of Common Stock,13(a), no individual Employee shall be eligible tomay be granted Options, SARs or Performance Awards covering, individually or in combination, more than 50,000 sharesShares in the aggregate during any fiscal year. This Section 5.3 shall not apply prior to the Listing Date and, following the Listing Date, this Section 5.3 shall not apply until: (a) the earliest of: (i) the first material modification of the Plan (including any increase in the number of shares of Common Stock reserved for issuance under the Plan in accordance with Section 4.1); (ii) the issuance of all of the shares of Common Stock reserved for issuance under the Plan; (iii) the expiration of the Plan; or (iv) the first meeting of shareholders at which Directors are to be elected that occurs after the close of the third (3rd) calendar year following the calendar year in which occurred the first registration of an equity security under Section 12 of the Exchange Act; or (b) such other date required by Section 162(m) of the Code and the rules and regulations promulgated thereunder.
5.4.(e)Director AwardsConsultants.
(a)(i)Prior to the Listing Date, a Consultant shall not be eligible for the grant of an Award if, at the time of grant, either the offer or the sale of the Company’s securities to such Consultant is not exempt under Rule 701 of the Securities Act (“Rule 701”) because of the nature of the services that the Consultant is providing to the Company, or because the Consultant is not a natural person, or as otherwise provided by Rule 701, unless the Company determines that such grant need not comply with the requirements of Rule 701 and will satisfy another exemption under the Securities Act as well as comply with the securities laws of all other relevant jurisdictions.
(b)From and after the Listing Date, a Consultant shall not be eligible for the grant of an Award if, at the time of grant, a Form S-8 Registration Statement under the Securities Act (“Form S-8”) is not available to register either the offer or the sale of the Company’s securities to such Consultant because of the nature of the services that the Consultant is providing to the Company (i.e., capital raising), or because the Consultant is not a natural person, or as otherwise provided by the rules governing the use of Form S-8, unless the Company determines both (i) that such grant (A) shall be registered in another manner under the Securities Act (e.g., on a Form S-3 Registration Statement) or (B) does not require registration under the Securities Act in order to comply with the requirements of the Securities Act, if applicable, and (ii) that such grant complies with the securities laws of all other relevant jurisdictions.
5.5.Directors. Each Director of the Company shall be eligible to receive discretionary grants of Awards under the Plan. If the Board or the compensation committee of the Board separately has adopted or in the future adopts a compensation policy covering some or all directorsnon-employee Directors that provides for a predetermined formula grant that specifies the type of Award, the timing of the Date of Grant and the number of sharesShares to be awarded under the terms of thisthe Plan, suchthat formula grant shallwill be incorporated herein by reference and will be administered as if such terms were provided under the terms of the Plan without any requirement that the Administrator separately take action to determine the terms of suchthose Awards.
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Awards (calculated as the Date of Grant fair value of such Awards for financial reporting purposes) and cash compensation granted under this Plan or otherwise during any calendar year to any non-employee Director will not exceed $500,000, rounded up to the nearest full Share.
6.Stock Options. Each Option shallwill be in such form and shallwill contain such terms and conditions as the Administrator shall deemdeems appropriate. All Options shallwill be separately designated Incentive Stock Options or NonstatutoryNonqualified Stock Options at the time of grant, and, if certificates are issued, a separate certificate or certificates will be issued for shares of Common StockShares purchased on exercise of each type of Option. Notwithstanding the foregoing, the Company shallwill have no liability to any Participant or any other personPerson if an Option designated as an Incentive Stock Option fails to qualify as suchan Incentive Stock Option at any time or if an Option is determined to constitute “nonqualified deferred compensation” within the meaning of Section 409A of the Code and the terms of such Option do not satisfy the additional conditions applicable to nonqualified deferred compensation under Section 409A of the Code and Section 8 of the Plan.time. The provisions of separate Options need not be identical, but each Option shallwill include (through incorporation of provisions hereof by reference in the Option or otherwise) the substance of each of the following provisions:
6.1.(a)Term and ExpirationTerm. Subject toThe term during which an Option is exercisable will be that period determined by the provisions of Section 5.2 regarding Ten Percent Shareholders,Administrator as set forth in the applicable Option Agreement, provided that no Incentive Stock Option shallmay be exercisable later than 10 years after the expirationDate of ten (10) years from the date it was granted.Grant.
6.2.(b)Exercise Price. The Exercise Price of an Incentive Stockfor each Option. Subject will be equal to the provisions of Section 5.2 regarding Ten Percent Shareholders, the exercise price of each Incentive Stock Option shall be not lessor greater than 100% of the Fair Market Value of the Common Stock subject to the Option on the date theDate of Grant; provided that an Option is granted. Notwithstanding the foregoing, an Incentive Stock Option may be granted with an exercise price lower than that set forth in the preceding sentence if such Option is granted pursuant tounder an assumption or substitution for another option in a manner satisfying the provisions of Section 424(a) of the Code.
6.3.Exercise Price of a Nonstatutory Stock Option. The exercise price of each Nonstatutory Stock Option shall be not less than 100% of the Fair Market Value of the Common Stock subject to the Option on the date the Option is granted; provided, however, any Nonstatutory Stock Option granted with an exercise price less than 100% of the Fair Market Value of the Common Stock subject to the Option on the date the Option is granted shall satisfy the additional conditions applicable to nonqualified deferred compensation under Section 409A of the Code, in accordance with Section 6.15 and Section 8 hereof. Notwithstanding the foregoing, a Nonstatutory Stock Option may be granted with an exercise price lower than that set forth in the preceding sentence if such Option is granted pursuant to an assumption or substitution for anotherstock option in a manner satisfying the provisions of Section 424(a) of the Code, as if the Option was a statutory option.stock option, may be granted with an Exercise Price lower than the Fair Market Value on the Date of Grant. No dividends or dividend equivalents will be paid on any outstanding Option.
6.4.(c)Term and Exercise Price of Incentive Stock Options Granted to Ten Percent Shareholders. Notwithstanding the foregoing, no Incentive Stock Option granted to an Employee who owns (or is deemed to own under Section 424(d) of the Code) more than 10% of the total combined voting power of all classes of stock of the Company or of any “parent corporation” or “subsidiary corporation” of the Company, as those terms are defined in Code Sections 424(e) and 424(f), respectively, may be exercisable later than five years after the Date of Grant or have an exercise price that is less than 110% of the Fair Market Value on the Date of Grant.
(d)Repricing Prohibited. Except as otherwise provided in Section 13, without the prior approval of the Company’s shareholders: (i) the Exercise Price of an Option may not be directly or indirectly reduced; (ii) an Option may not be cancelled in exchange for cash, an Option or SAR with an Exercise Price or Strike Price that is less than the Exercise Price of the original Option, any other Award or otherwise; and (iii) the Company may not purchase an Option for value from a Participant if the current Fair Market Value of the Shares underlying the Option is lower than the Option’s Exercise Price.
(e)Consideration. The exercise price of Common Stock acquired pursuant toExercise Price for Shares purchased under an Option shallwill be paid to the extent permitted by applicable statutes and regulations, either (a) in cash wire, or by certified or bank check at the time the Option is exercised, or, (b)to the extent permitted by applicable laws and regulations, in the Administrator’s sole discretion of the Administrator, uponand on such terms as the Administrator shall approve, the exercise price may be paid:approves: (i) by delivery (by actual delivery or by attestation) to the Company of Company Common Stock held by the Optionholder,previously-acquired Shares, duly endorsed for transfer to the Company, with a Fair Market Value on the date of delivery equal to the aggregate exercise price (or portion thereof)Exercise Price due for the number of sharesShares being acquired, or by means of attestation whereby the Participant identifies for delivery specific shares of Common Stock that have been held for more than six (6) months (or such longer or shorter period of time required to avoid a charge to earnings for financial accounting purposes) that have a Fair Market Value on the date of attestation equal to the exercise price (or portion thereof) and receives a number of shares of Common Stock equal to the difference between the number of shares thereby purchased and the number of identified attestation shares of Common Stock (a “Stock for Stock Exchange”);purchased; (ii) during any period for whichif the Common Stock is readily tradable on an established securities market (i.e., the Common Stock is listed on any national securities exchange or traded in any recognized securities market system),Established Securities Market, by a copy of instructions todirecting a broker directing such broker to sell the Common StockShares for which suchthe Option is exercised and to remit to the Company the aggregate Exercise Price due for the number of Shares being purchased; (iii) by directing the Company to withhold from transfer the number of Shares that otherwise would have been delivered by the Company on exercise of the Option having a Fair Market Value equal to all or part of the aggregate Exercise Price due on exercise (provided that to the extent such Options (a “Cashlessdirection would result in the Company withholding fractional Shares, the number of Shares to be withheld will be rounded down to the nearest whole and the Participant must pay the remainder of the Exercise”); Price in cash or (iii)by certified or bank check), in which case the Option will be surrendered and cancelled with respect to the Shares retained as well as the Shares delivered; or (iv) in any other form of legal consideration that may be acceptable to the Administrator; provided, however, ifAdministrator, including without limitation with a full-recourse promissory note, subject to any requirements of applicable law requires,that the par value (if any) of Common Stock,Shares, if newly issued, shall be paid in cash or cash equivalents. If the Administrator determines that the exercise price may be paid by a promissory note, any Common Stock acquired upon exercise with a promissory note shall be pledged as security for payment of the principal amount of the promissory note and interest thereon.
The interest rate payable under the terms of sucha promissory note shallwill not be less than the minimum rate (if any) required to avoid the imputation of additional interest under the Code. Subject to the foregoing, the Administrator (in its sole discretion) will specify the term, interest rate, amortization requirements (if any) and other provisions of the note. Unless the Administrator determines otherwise, shares of Common Stockthe holder will be required to pledge to the Company Shares having aan aggregate Fair Market Value at least equal to or greater than the principal amount of anythe loan shall be pledged by the holder to the Company as security for payment of the unpaid balance of the loan, and suchwhich pledge shallmust be evidenced by a pledge agreement, the terms of which shall be determined by the Administrator will determine, in its discretion; provided, however,except that each loan shallmust comply with all applicable laws, regulations and rules of the Board of Governors of the Federal Reserve System and any other governmental agency having jurisdiction. Unless otherwise specifically provided in the Option,Administrator determines otherwise, the purchase price of Common StockShares acquired pursuant tounder an Option that is paid by delivery (or attestation) to the Company of other Common Stock Shares
acquired, directly or indirectly, from the Company, shallwill be paid only by sharesShares that satisfy any requirements necessary to avoid liability award accounting treatment.
Notwithstanding the foregoing, at any time that the Company is an “issuer” as defined in Section 2 of the Common StockSarbanes-Oxley Act of 2002, no Director or executive officer (or equivalent thereof) of the Company that have been held for more than six (6) months (or such longer or shorter periodits Affiliates will be permitted to pay any part of time required to avoid a charge to earnings for financial accounting purposes). Notwithstanding the foregoing, during any period for which the Common Stock is publicly traded (i.e., the Common Stock is listed on any national securities exchange or traded in any recognized securities market system), an exerciseExercise Price with a promissory note or in any other transaction byform that could be deemed a Director or executive officer that involves or may involve a direct or indirect extension of credit or arrangement of an extension of credit by the Company, or an Affiliate in violation of Section 402(a) of the Sarbanes-Oxley Act (codified asprohibited personal loan under Section 13(k) of the Exchange Act) shall be prohibited with respect to any Award under this Plan.Act. Unless otherwise provided in the terms of an OptionAward Agreement, payment of the exercise priceExercise Price by a Participant who is an officer, directorOfficer, a Director or other “insider”otherwise subject to Section 16(b)16 of the Exchange Act, inby delivery or attestation to the formCompany of a Stock for Stock Exchangeother Shares acquired, directly or indirectly, from the Company is subject to pre-approval by the Administrator, in its sole discretion. AnyThe Administrator will document any such pre-approval shall be documented in a manner that complies with the specificity requirements of Rule 16b-3, including16b‑3 under the name of the Participant involved in the transaction, the nature of the transaction, the number of shares to be acquired or disposed of by the Participant and the material terms of the Options involved in the transaction.Exchange Act.
6.5.(f)VestingTransferability of an Incentive Stock Option. An Incentive Stock Option shall not be transferable except by will or by the laws of descent and distribution and shall be exercisable during the lifetime of the Optionholder only by the Optionholder. Notwithstanding the foregoing, the Optionholder may, by delivering written notice to the Company, in a form satisfactory to the Company, designate a third party who, in the event of the death of the Optionholder, shall thereafter be entitled to exercise the Option.
6.6.Transferability of a Nonstatutory Stock Option. A Nonstatutory Stock Option may, in the sole discretion of the Administrator, be transferable to a Permitted Transferee upon written approval by the Administrator to the extent provided in the Option Agreement. A Permitted Transferee includes: (a) a transfer by gift or domestic relations order to a member of the Optionholder’s immediate family (child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, including adoptive relationships), any person sharing the Optionholder’s household (other than a tenant or employee), a trust in which these persons have more than fifty percent (50%) of the beneficial interest, a foundation in which these persons (or the Optionholder) control the management of assets, and any other entity in which these persons (or the Optionholder) own more than fifty percent (50%) of the voting interests; (b) third parties designated by the Administrator in connection with a program established and approved by the Administrator pursuant to which Participants may receive a cash payment or other consideration in consideration for the transfer of such Nonstatutory Stock Option; and (c) such other transferees as may be permitted by the Administrator in its sole discretion. If the Nonstatutory Stock Option does not provide for transferability, then the Nonstatutory Stock Option shall not be transferable except by will or by the laws of descent and distribution and shall be exercisable during the lifetime of the Optionholder only by the Optionholder. Notwithstanding the foregoing, the Optionholder may, by delivering written notice to the Company, in a form satisfactory to the Company, designate a third party who, in the event of the death of the Optionholder, shall thereafter be entitled to exercise the Option.
6.7.Vesting. The Option may, but need not, vest and thereforethereby become exercisable in periodic installments that may, but need not, be equal. The Option may be subject to such other terms and conditions on the time or times when it may be exercised (which may be based on performance or other criteria) as the Administrator may deemdetermines to be appropriate. The vesting provisions of individual Options may vary. The Administrator may, but shallwill not be required to, provide that no Option may be exercised for a fraction of a share of Common Stock.Share. The Administrator may, but shallwill not be required to, provide for an acceleration of vesting and exercisability in the terms of the Award Agreement for any Option Agreement uponon the occurrence of the death or Disability of a Participant or the occurrence of a specified event.
6.8.Termination of Continuous Service. Unless otherwise providedChange in an Option AgreementControl that does not provide for the continuation, assumption or in an employment agreement the terms of which have been approved by the Administrator, in the event an Optionholder’s Continuous Service terminates (other than upon the Optionholder’s death or Disability or termination by the Company for Cause), the Optionholder may exercise his or her Option (to the extent that the Optionholder was entitled to exercise such Option as of the date of termination) but only within such period of time ending on the earlier of (a) the date three (3) months following the termination of the Optionholder’s Continuous Service, or (b) the expiration of the termsubstitution of the Option as set forth in the Option Agreement. If, after termination, the Optionholder does not exercise his or her Option within the time specified in the Option Agreement, the Option shall terminate. Unless otherwise provided in an Option Agreement or in an employment agreement the terms of which have been approved by the Administrator, or as otherwise provided in Sections 6.10 and 6.11 of this Plan, outstanding Options that are not exercisable at the time an Optionholder’s Continuous Service terminates for any reason other than for Cause (including an Optionholder’s death or Disability) shall be forfeited and expire at the close of business on the date of such termination. If the Optionholder’s Continuous Service terminates for Cause, all outstanding Options shall be forfeited (whether or not vested) and expire as of the beginning of business on the date of such termination for Cause.Surviving Entity.
6.9.(g)Extension of Termination Date. An Optionholder’s Option Agreement may also provide that if the exercise of the Option following the termination of the Optionholder’s Continuous Service for any reason other than Cause (other than upon the Optionholder’s death or Disability) would be prohibited at any time because the issuance of shares of Common Stock would violate the registration requirements under the Securities Act or any other state or federal securities law or the rules of any securities exchange or interdealer quotation system, then the Option shall terminate on the earlier of (a) the expiration of the term of the Option in accordance with Section 6.1 or (b) the expiration of a period after termination of the Participant’s Continuous Service that is three (3) months after the end of the period during which the exercise of the Option would be in violation of such registration or other securities law requirements.
6.10.Disability of Optionholder. Unless otherwise provided in an Option Agreement, in the event that an Optionholder’s Continuous Service terminates as a result of the Optionholder’s Disability, the Optionholder may exercise his or her Option (to the extent that the Optionholder was entitled to exercise such Option as of the date of termination), but only within such period of time ending on the earlier of (a) the date that is twelve (12) months following such termination or (b) the expiration of the term of the Option as set forth in the Option Agreement. If, after termination, the Optionholder does not exercise his or her Option within the time specified herein, the Option shall terminate.
6.11.Death of Optionholder. Unless otherwise provided in an Option Agreement, in the event an Optionholder’s Continuous Service terminates as a result of the Optionholder’s death, then the Option may be exercised (to the extent the Optionholder was entitled to exercise such Option as of the date of death) by the Optionholder’s estate, by a person who acquired the right to exercise the Option by bequest or inheritance or by a person designated to exercise the Option upon the Optionholder’s death, but only within the period ending on the earlier of (a) the date that is (12) months following the date of death or (b) the expiration of the term of such Option as set forth in the Option Agreement. If, after death, the Option is not exercised within the time specified herein, the Option shall terminate.
6.12.Incentive Stock Option $100,000 Limitation. To the extent that the aggregate Fair Market Value (determined atof Shares on the timeDate of grant) of Common StockGrant with respect to which Incentive Stock Options are exercisable for the first time by any OptionholderParticipant during any calendar year (under all plans of the Company and its Affiliates)any “parent corporation” or “subsidiary corporation” of the Company, as those terms are defined in Code Sections 424(e) and 424(f), respectively) exceeds $100,000, the Options or portions thereof which exceed suchthat limit (according to the order in which they were granted) shallwill be treated as NonstatutoryNonqualified Stock Options.
6.13.(h)Early Exercise. The Option may, but need not, include a provision whereby the OptionholderParticipant may elect at any time before the Optionholder’sParticipant’s Continuous Service terminates to exercise the Option as to any part or all of the shares of Common StockShares subject to the Option prior tobefore the full vesting of the Option. In suchthat case, the shares of Common StockShares acquired on exercise shallwill be subject to the vesting schedule that otherwise would apply to determine the exercisability of the Option. Any unvested shares of Common StockShares so purchased may be subject to any other restriction the Administrator determines to be appropriate.
6.14.(i)Employee Transfer, Approved Leave of AbsenceReload Options. AtFor purposes of Incentive Stock Options, no termination of employment by an Employee will be deemed to result from either (i) a transfer to the discretionemployment of the Administrator, the Option may includeCompany from a “reloadparent corporation” feature pursuantor “subsidiary corporation” of the Company, as those terms are defined in Code Sections 424(e) and 424(f), respectively, from the Company to whicha parent corporation or subsidiary corporation or from one parent corporation or subsidiary corporation to another; or (ii) an Optionholder exercising an optionapproved leave of absence for military service or sickness or for any other purpose approved by the deliveryCompany, if the period of leave does not exceed three months or, if longer, the Employee’s right to re-employment is guaranteed either by a statute or by contract.
(j)Disqualifying Dispositions. Each Participant awarded an Incentive Stock Option will be required to immediately notify the Company in writing as to the occurrence of a numberdisqualifying disposition of sharesany Shares acquired by exercise of Commonthe Incentive Stock Option, and the price realized on the disqualifying disposition of those Shares. A “disqualifying disposition” is any disposition (including, without limitation, any sale or transfer) before the later of (i) two years after the Date of Grant of the Incentive Stock Option or (ii) one year after the issuance of the Shares acquired by exercise of the Incentive Stock Option. The Company may, if determined by the Administrator and in accordance with Section 6.4(b)(i) hereof would automatically be grantedprocedures established by the Administrator, retain possession of any Shares acquired by exercise of an additionalIncentive Stock Option (with an exercise price equal toas agent for the Fair Market Valueapplicable Participant until the end of the Common Stock on the date the additional Option is granted and with the same expiration date as the original Option being exercised, and with such other terms as the Administrator may provide) to purchase that number of shares of Common Stock equal to the number delivered in a Stock for Stock Exchange of the original Option.
6.15.Additional Requirements Under Section 409A. Each Option Agreement shall include a provision whereby, notwithstanding any provision of the Plan or the Option Agreement to the contrary, the Option shall satisfy the additional conditions applicable to nonqualified deferred compensation under Section 409A of the Code, in accordance with Section 8 hereof,period described in the event any Option under this Plan is granted with an exercise price less than Fair Market Value of the Common Stock subject to the Option on the date the Option is granted (regardless of whether or not such exercise price is intentionally or unintentionally priced at less than Fair Market Value, or is materially modified at a time when the Fair Market Value exceeds the exercise price), or is otherwise determined to constitute “nonqualified deferred compensation” within the meaning of Section 409A of the Code.preceding sentence.
| 7. | Provisions of Awards Other Than Options. |
7.1.7.Restricted Stock AwardAwards. A Restricted Stock Award is an Award of actual shares of CommonRestricted Stock (“or Restricted Stock”), Units, which may, but need not, provideprovides that, suchexcept as otherwise provided in Section 16(d)(i) with respect to Permitted Transferees, the Restricted Award of Restricted Stock may not be sold, assigned, transferred or otherwise disposed of, pledged or hypothecated as collateral for a loan or as securityotherwise encumbered for the performance of any obligation or for any other purpose for such period (the “Restricted Period”) asdetermined by the Administrator shall determine.Administrator. Each Restricted Award of Restricted Stock shallwill be evidenced by an Award Agreement in such form and shallwill contain such terms, conditions, and Restricted Periods as the Administrator shall deemdetermines to be appropriate, including the treatment of dividends or dividend equivalents, as the case may be. The Administrator in its discretion may provide for anthe acceleration of the end of the Restricted
Period in the terms of any Restricted Award upon the death or Disability of Restricted Stock, at any time, includinga Participant or in the event of a Change in Control occurs.that does not provide for the continuation, assumption or substitution of the Award by the Surviving Entity. The terms and conditions of the Award of Restricted StockAward may change from time to time, and the terms and conditions of separate Award of Restricted StockAwards need not be identical, but each Restricted Award of Restricted Stock shallmust include (through incorporation of provisions hereof by reference in the agreementAward Agreement or otherwise) the substance of each of the following provisions:
(a)Payment for Restricted AwardsPurchase Price. The purchase price of Shares acquired under a Restricted Stock,Award, if any, shallwill be determined by the Administrator, and may be stated as cash, property or prior services.
(b)Consideration. Theservices rendered or to be rendered to the Company for its benefit or an Affiliate or for its benefit. Shares acquired in connection with a Restricted Award may be issued for such consideration, having a value not less than the par value thereof, as may be determined by the Administrator. Required consideration for theShares acquired in connection with a Restricted Stock shallAward may be paid either:paid: (i) in cash at the time of purchase; or (ii) in any other form of legal consideration that may be acceptable to the Administrator in its discretion including, without limitation, a recourse promissory note, property or a Stock for Stock Exchange, or prior services that the Administrator determines have a value at least equal to the Fair Market Valuepurchase price of such Common Stock.the Restricted Award. Notwithstanding the foregoing, at any time that the Company is an “issuer” as defined in Section 2 of the Sarbanes-Oxley Act of 2002, no Director or executive officer (or equivalent thereof) of the Company or an Affiliate will be permitted to pay any portion of the purchase price for Shares acquired under a Restricted Award with a promissory note or in any other form that could be deemed prohibited personal loan under Section 13(k) of the Exchange Act.
(c)(b)VestingVesting. The Restricted Award, of Restricted Stock may, but need not,and any Shares acquired thereunder, will be subject to a Restricted Period that specifies a Rightright of Repurchaserepurchase in favor of the Company, or forfeiture where the consideration was in the form of services, in accordance with a vesting schedule to be determined by the Administrator, or forfeiture in the event the consideration was in the form of services. The Administrator in its discretion may provide for an acceleration of vesting in the terms of any Restricted Stock Award, at any time, including in the event a Change in Control occurs.Administrator.
(d)(c)Lapse of RestrictionsTermination of. Subject to the Participant’s Continuous Service,. Unless otherwise provided in an Award Agreement or in an employment agreement the terms of which have been approved by the Administrator, in the event a Participant’s Continuous Service terminates for any reason, the Company may exercise its Right of Repurchase or otherwise reacquire, or the Participant shall forfeit the unvested portion of an Award of Restricted Stock acquired in consideration of prior or future services, and any or all of the shares of Restricted Stock held by the Participant which have not vested as of the date of termination under the terms of the Restricted Stock Award shall be forfeited and the Participant shall have no rights with respect to the Award.
(e)Transferability. Restricted Stock shall be transferable by the Participant only upon such terms and conditions as are set forth in the Award Agreement, as the Administrator shall determine in its discretion, so long as Common Stock awarded under the Award of Restricted Stock remains subject to the terms of the Award Agreement.
(f)Concurrent Tax Payment. The Administrator, in its sole discretion, may (but shall not be required to) provide for payment of a concurrent cash award in an amount equal, in whole or in part, to the estimated after tax amount required to satisfy applicable federal, state or local tax withholding obligations arising from the receipt and deemed vesting of restricted stock for which an election under Section 83(b) of the Code may be required.
(g)Lapse of Restrictions. Upon on the expiration or termination of the Restricted Period and the satisfaction of any other conditions prescribed by the Administrator (including, without limitation, the Participant’s satisfaction of applicable tax withholding obligations attributable to the Award), the restrictions applicable to the Restricted Stock shallAward will lapse and a stock certificate for the number of shares of Common StockShares with respect to which the restrictions have lapsed shallwill be delivered,issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), free of any restrictions except those that may be imposed by law, the terms of the Plan or the terms of ana Restricted Award, of Restricted Stock, to the Participant or the Participant’s beneficiary or estate, as the case may be, unless suchthe Restricted StockAward is subject to a deferral condition that complies with Section 409A of the 409A Award requirements thatCode and the regulations thereunder as may be allowed or required by the Administrator in its sole discretion. The Company shallwill not be required to deliver any fractional share of Common StockShare but will pay, in lieu thereof, the Fair Market Value of suchthe fractional shareShare in cash to the Participant or the Participant’s beneficiary or estate, as the case may be. UnlessWith respect only to Restricted Stock Units, unless otherwise subject to a deferral condition that complies with Section 409A of the 409A Award requirements,Code, the Common Stock certificate shallShares (or cash, as applicable) will be issued and delivered and the Participant shallwill be entitled to the beneficial ownership rights of such Common Stockthe Shares not later than (i) the date that is two and one-half (2-1/2)2½ months after the end of the Participant’s taxable year (or the end of the Company’s taxable year, if later) for which the Restricted Period ends and the Participant hasRestricted Stock Unit is no longer subject to a legally binding right to such amounts;substantial risk of forfeiture, or (ii) the date that is two and one-half (2-1/2) months after the end of the Company’s taxable year for which the Restricted Period ends and the Participant has a legally binding right to such amounts, whichever is later; or (iii) such earlier date as may be necessary to avoid application of Section 409A of the Code to the Award.
(d)Shareholder Rights. Unless otherwise provided by the Administrator in an Award Agreement, the holder of Shares of Restricted Stock will be entitled to vote such Shares. Dividends, if any, paid on Shares of Restricted Stock will be held in escrow, without interest, until such time as the restrictions lapse on the related Shares of Restricted Stock. Dividends for Shares of Restricted Stock that are forfeited will also be forfeited to the Company.
(e)Dividends on Restricted Stock Units. In the case of Restricted Stock Units, the Participant will not be entitled to receive dividends or dividend equivalents unless the Award Agreement specifically provides for such dividends or dividend equivalents.
(f)Delivery of Restricted Stock. Shares of Restricted Stock will be delivered to the Participant at the Date of Grant either by book-entry registration or by delivering to the Participant, or a custodian or escrow agent (including, without limitation, the Company or one or more of its Employees) designated by the Administrator, a stock certificate or certificates registered in the name of the Participant. If physical certificates representing Shares of the Restricted Stock are registered in the name of the Participant, such certificates must bear an appropriate legend referring to the terms, conditions and restrictions applicable to such Shares.
8.Performance Awards. A Performance Award is an Award that will vest only on the attainment of specified performance goals, and may consist of Performance Stock or Performance Stock Units. The Administrator may make Performance Awards independent of or in connection with the granting of any other Award under the Plan. A Performance Award may be granted under the Plan to any Participant, including a Participant who qualifies for awards under other performance plans of the Company. The Administrator in its sole discretion will determine whether and to whom Performance Awards will be made, the performance goals applicable under each Performance Award, the period or periods during which performance is to be measured, and all other limitations and conditions applicable to Performance Awards. The Administrator, in its discretion, may rely on the performance goals and other standards applicable to other performance plans of the Company in setting the standards for Performance Awards under the Plan.
(a)Performance Goals.
(i)A performance goal will be based on a pre-established objective formula or standard that specifies the manner of determining the number of Shares under the Performance Award that will be granted or will vest if the performance goal is attained. The Administrator will determine the performance goal before the time that 25% of the service period has elapsed, but not later than 90 days after the commencement of the service period to which the performance goal relates.
(ii)Performance goals may be based on one or more of the following business criteria, which may be applied to a Participant, a business unit or the Company and its Affiliates:
(1)[revenue (net or gross);
(2)revenue growth;
(3)sales (net or gross), including growth in sales measured by product line, territory, facility, customer or customers or other category;
(4)earnings (net or gross), including earnings before all or any of interest expense, taxes, depreciation and amortization (“EBIT,” “EBITA,” or “EBITDA”), earnings per share or earnings from continuous operations;
(5)profits, including profits before or after taxes or other expenses or adjustments, maintenance or improvement of profit margins, or profitability of an identifiable business unit, product line or facility;
(6)operating income, including operating income per share, pre-tax or after-tax income, net cash provided by operating activities, funds from operations or funds from operations per share;
(7)operating expenses;
(8)cash flow, including cash available for distribution, cash available for distribution per share, improvement in cash-flow (before or after tax) or free cash flow;
(9)working capital and components thereof, including improvement in capital structure;
(10)credit rating, independent industry rating or assessments;
(11)stock price or share price performance, return on shareholders’ equity or average shareholders’ equity or total shareholders’ return;
(12)return on assets, return on capital, return on invested capital, changes in net assets, enterprise value or economic value added, net worth, or return on investment before or after the cost of capital;
(13)costs, improvement in the attainment of expense levels, expense management, capital expenditures, and levels of expense, cost or liability by category, operating unit, facility or any other delineation;
(14)implementation or completion of critical projects; or
(15)strategic plan development and implementation, closing of corporate transactions.] TBD. Mannatech to confirm, revise or add business criteria as needed or desired.
(iii)A performance goal may be measured over a performance period on a periodic, annual, cumulative or average basis and may be established on a corporate-wide basis or with respect to one or more operating units, divisions, subsidiaries, acquired businesses, minority investments, facilities, partnerships or joint ventures. More than one performance goal may be incorporated in a performance objective, in which case achievement with respect to each performance goal may be assessed individually or in combination with each other. The Administrator may, in connection with the establishment of performance goals for a performance period, establish a matrix setting forth the relationship between performance on two or more performance goals and the amount of the Performance Award payable for that performance period. The level or levels of performance specified with respect to a performance goal may be established in absolute terms, as objectives relative to performance in prior periods, as an objective compared to the performance of one or more comparable companies or an index covering multiple companies on a per Share basis, against the performance of the Company as a whole or against particular entities, segments, operating units or products of the Company, on a pre-tax or after-tax basis, in tandem with any other
performance goal, or otherwise as the Administrator may determine. The Administrator may, in connection with the establishment of performance goals for a performance period, specify one or more adjustments to any of the business criteria specified in Section 8(a)(ii).
(iv)Performance goals will be objective and will otherwise meet the requirements of Section 162(m) of the Code. Performance goals may differ for Performance Awards granted to any one Participant or to different Participants. A Performance Award to a Participant who is a Covered Employee or is reasonably anticipated to become a Covered Employee during the term of the Performance Award will (unless the Administrator determines otherwise) provide that if the Participant’s Continuous Service ceases before the end of the performance period for any reason, the Performance Award will be payable only if the applicable performance objectives are achieved and to the extent, if any, determined by the Administrator. These objective performance goals are not required to be based on increases in a specific business criterion, but may be based on maintaining the status quo or limiting economic losses. With respect to any Participant who is not a Covered Employee or expected to become a Covered Employee during the term of the Performance Award, the Administrator may establish additional objective or subjective performance goals.
(v)The Administrator may provide in any Performance Award that any evaluation of performance may include or exclude the effect, if any, on reported financial results of any of the following events that occurs during a performance period: (1) asset write-downs, (2) litigation or claim judgments or settlements, (3) changes in tax laws, accounting principles or other laws or provisions, (4) reorganization or restructuring programs, including share repurchasing programs, (5) acquisitions or divestitures, (6) foreign currency exchange translations gains and losses, (7) revenue or earnings attributable to minority ownership in another entity or (8) gains and losses that are treated as extraordinary items under Accounting Standards Codification Topic 225. To the extent such inclusions or exclusions affect a Performance Award to a Participant who is a Covered Employee or is reasonably anticipated to become a Covered Employee during the term of the Performance Award, they will be prescribed in a form that meets the requirements of Code Section 162(m) for deductibility.
(b)Satisfaction of Performance Goals. A Participant will be entitled to receive Shares (as evidenced either by a stock certificate or by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company) or cash under a Performance Award only on satisfaction of all conditions specified in the written instrument evidencing the Performance Award (or in a performance plan adopted by the Administrator), including, without limitation, the Participant’s satisfaction of applicable tax withholding obligations attributable to the Performance Award. With respect only to a Performance Stock Unit Award, a stock certificate or cash, as applicable, will be issued and delivered, and the Participant will be entitled to the beneficial ownership rights of the Shares (if any), not later than (i) the date that is 2½ months after the end of the Participant’s taxable year (or the end of the Company’s taxable year, if later) for which the Administrator certifies that the Performance Stock Unit Award conditions have been satisfied and the Performance Stock Unit Award is no longer subject to a substantial risk of forfeiture, and (ii) such earlier date as may be necessary to avoid application of Section 409A of the Code to suchthe Performance Stock Unit Award.
| 8. | Additional Conditions Applicable to Nonqualified Deferred Compensation Under Section 409A of the Code. |
Inthe Performance Award) a Covered Employee, at any time before the Participant’s termination of Continuous Service, the Administrator may in its sole discretion, and subject to Section 15, amend or modify any or all of the goals, restrictions or conditions imposed under a Performance Award. For any Participant who is, or is expected to become during the term of a Performance Award, a Covered Employee, no amendment or waiver of the performance goal will be permitted and no cash payment to be made in respect of a Performance Award may be accelerated unless the performance goal has been attained and the amount of the payment is discounted to reasonably reflect the time value of money. Notwithstanding the foregoing, the Administrator in its discretion may provide for an acceleration of vesting in the terms of any Performance Award upon the death or Disability of a Participant or in the event anyof a Change in Control that does not provide for the continuation, assumption or substitution of the Award by the Surviving Entity.
(d)Certification. Following the completion of each performance period, the Administrator will certify in writing, in accordance with the requirements of Section 162(m) of the Code, whether the performance objectives and other material terms of a Performance Award have been achieved or met. Unless the Administrator determines otherwise, Performance Awards will not be settled until the Administrator has made the certification specified under this Plan isSection 8(d).]
9.Stock Appreciation Rights.
(a)Grant Requirements. A SAR may be granted with an exercise priceonly if it does not provide for the deferral of compensation within the meaning of Section 409A of the Code. A SAR does not provide for a deferral of compensation if: (i) the Strike Price may never be less than the Fair Market Value of the Common Stock subject to the Award on the Date of Grant, (regardless of whether or not such exercise price is intentionally or unintentionally priced at less(ii) the compensation payable under the SAR can never be greater than the difference between the Fair Market Value on the date of exercise and the Strike Price, (iii) the number of Shares subject to the SAR is fixed on the Date of Grant, and (iv) the SAR does not include any feature for the deferral of compensation other than the deferral of recognition of income until the exercise of the right. No dividends or dividend equivalents may be paid on any outstanding SAR.
(b)Strike Price. The Administrator will determine the Strike Price of a SAR, which in the case of a SAR granted independent of any Option, will not be less than the Fair Market Value on the Date of Grant. The Strike Price of a SAR granted in tandem with an Option will be the Exercise Price of the related Option. A SAR granted in tandem with an Option will be exercisable only to the same extent as the related Option, provided that by its terms, such Award is materially modified and deemed a new Award at a timeSAR will be exercisable only when the Fair Market Value exceeds the exercise price),Strike Price of the SAR.
(c)Repricing Prohibited. Except as otherwise provided in Section 13, without the prior approval of the Company’s shareholders: (i) the Strike Price of a SAR may not be directly or indirectly reduced; (ii) a SAR may not be cancelled in exchange for cash, an Option or SAR with an Exercise Price or Strike Price that is otherwiseless than the Strike Price of the original SAR, any other Award or otherwise; and (iii) the Company may not purchase a SAR for value from a Participant if the current Fair Market Value is less than the SAR’s Strike Price.
(d)Vesting. The SAR will be subject to a Restricted Period that specifies a forfeiture in accordance with a vesting schedule to be determined to constitute a 409A Award,by the following additional conditions shall apply and shall supersede any contraryAdministrator. The Administrator in its discretion may provide for an acceleration of vesting or exercise provisions of this Plan orin the terms of any 409ASAR upon the death or Disability of a Participant or in the event of a Change in Control that does not provide for the continuation, assumption or substitution of the Award agreement.by the Surviving Entity. The Administrator may not grant a SAR that is, in whole or in part, vested on the Date of Grant and not subject to a Restricted Period.
8.1.(e)Exercise and DistributionSettlement. Notwithstanding any vesting or exercise provisionsOn delivery to the contrary, no 409AAdministrator of a written request to exercise a SAR, the holder will be entitled to receive from the Company, an amount equal to the product of (i) the excess of the Fair Market Value on the date of exercise over the Strike Price specified in the Award shallAgreement, multiplied by (ii) the number of Shares for which the SAR is being exercised. Settlement with respect to the exercise of a SAR will be on the date of exercise and may be made in the form of Shares valued at Fair Market Value on the date of exercise (with or without restrictions as to substantial risk of forfeiture and transferability, as determined by the Administrator in its sole discretion), cash or a combination of Shares and cash, as determined by the Administrator in its sole discretion.
(f)Reduction in the Underlying Option Shares. On the exercise of a SAR granted in tandem with an Option, the number of Shares for which the related Option is exercisable will be reduced by the number of Shares for which the SAR has been exercised. The number of Shares for which a tandem SAR is exercisable will be reduced on any exercise of any related Option by the number of Shares for which the Option has been exercised.
(g)Written Request. Unless otherwise determined by the Administrator in its sole discretion, SARs will be settled in Shares. If permitted in the Award Agreement, a Participant may request that any exercise of a SAR be settled for cash, but a Participant will not have any right to demand a cash settlement. A request for a cash settlement may be made only by a written request filed with the Corporate Secretary of the Company during the period beginning on the third business day following the date of release for publication by the Company of quarterly or annual summary statements of earnings and ending on the twelfth business day following that date. Within 30 days of the receipt by the Company of a written request to receive cash in full or partial settlement of a SAR or to exercise the SAR for cash, the Administrator will, in its sole discretion, either consent to or disapprove, in whole or in part, the written request. A written request to receive cash in full or partial settlement of a SAR or to exercise a SAR for cash may provide that, if the Administrator disapproves the written request, the written request will be treated as an exercise of the SAR for Shares.
(h)Disapproval by Administrator. If the Administrator disapproves in whole or in part any request by a Participant to receive cash in full or partial settlement of a SAR or to exercise such Award for cash, the disapproval will not affect the Participant’s right to exercise the SAR at a later date, to the extent that it would be otherwise exercisable, or distributable earlier than upon oneto
request a cash form of payment at a later date, in each case subject to the approval of the following:Administrator. Additionally, the disapproval will not affect the Participant’s right to exercise any related Option.
10.Treatment of Awards on Termination of Continuous Service.
(a)Unvested Awards GenerallySpecified Time. A specified timeUnless otherwise provided in an Award Agreement or Service Agreement, if a fixed scheduleParticipant’s Continuous Service terminates for any reason, the Participant will forfeit the unvested portion of any Award acquired in consideration of services, all unvested Shares held by the Participant as of the date of termination under the terms of any Award will be forfeited or, if applicable, may be repurchased by the Company at the lesser of the purchase price paid by the Participant or the current Fair Market Value, and the Participant will have no rights with respect to any Award or Shares so forfeited or repurchased.
(b)Options and SARs.
(i)Other than for Cause, death or Disability. Unless otherwise provided in an Award Agreement or Service Agreement, if a Participant’s Continuous Service is terminated for any reason other than due to the Participant’s death or Disability or by the Company for Cause, the Participant may exercise his or her Option or SAR (to the extent vested and exercisable as of the date of termination) during the period ending on the earlier of (1) the date that is three months after the termination of the Participant’s Continuous Service or (2) the expiration of the original term of the Award as set forth in the written instrument evidencingAward Agreement. Any unexercised Option or SAR held by the 409A Award, butParticipant will automatically terminate at the close of business on the last day of such period and will thereafter not later than after the expiration of ten (10) years from the Date of Grant.be exercisable.
(ii)For Cause. If the written grant instrument doesParticipant’s Continuous Service is terminated by the Company or an Affiliate for Cause, all outstanding Options and SARs (whether or not specify a fixed time or schedule, such time shallvested) will be the date that is the fifth anniversaryforfeited and expire as of the Datebeginning of Grant.
(b)Separation from Service. Separation from service (within the meaning of Section 409A of the Code) by the 409A Award recipient; provided, however, if the 409A Award recipient is a “specified employee” (as defined in Section 1.409A-1(i) of the Treasury Regulations) and any of the Company’s stock is publicly tradedbusiness on an established securities market or otherwise, exercise or distribution under this Section 8.1(b) may not be made before the date which is six (6) months after the date of separation from service. Nothing herein shall be deemed to extend the date thattermination.
(iii)Participant Death or Disability. Unless otherwise provided in an Award would otherwise expire under the terms of the Award Agreement and this Plan.
(c)Death. The date of death of the 409A Award recipient.
(d)Disability. The date the 409A Award recipient becomes disabled (within the meaning of Section 8.4(b) hereof).
(e)Unforeseeable Emergency. The occurrence of an unforeseeable emergency (within the meaning of Section 8.4(c) hereof), but onlyor Service Agreement, if the net value (after payment of the exercise price) of the number of shares of Common Stock that become issuable does not exceed the amounts necessary to satisfy such emergency plus amounts necessary to pay taxes reasonably anticipateda Participant’s Continuous Service is terminated as a result of the exercise, after taking into accountParticipant’s death or Disability, the extent to which the emergency isParticipant’s Option or SAR may be relieved through reimbursement or compensation by insurance or otherwise or by liquidation of the Participant’s other assetsexercised (to the extent the Option or SAR was vested and exercisable as of the date of termination) by the Participant or the Participant’s estate, designated beneficiary or such liquidation would not itself cause severe financial hardship).
(f)Change in Control Event. The occurrence of a Change in Control Event (within the meaning of Section 8.4(a) hereof), including the Company’s discretionary exercise ofother Person who acquired the right to accelerate vestingexercise the Option or SAR by bequest or inheritance, but only during the period ending on the earlier of such Award upon a Change in Control Event or to terminate the Plan or any 409A Award granted hereunder within twelve (12) months of the Change in Control Event.
8.2.Term. Notwithstanding anything to the contrary in this Plan or the terms of any 409A Award agreement, the term of any 409A Award shall expire and such Award shall no longer be exercisable on the date that is 12 months following the later of: (a) two and one-half (2-1/2) months afterdate of termination or the expiration of the original term of the Option or SAR as set forth in the Award Agreement. Any unexercised Option or SAR held by the Participant or such other Person will terminate at the end of such period.
(iv)Extension of Option or SAR Termination Date. An Award Agreement may provide that if the Company’s taxable year in whichexercise of an Option or SAR following the 409A Award first becomes exercisable or distributable pursuant to Section 8 hereof and is not subject to a substantial risk of forfeiture; or (b) two and one-half (2-1/2) months after the endtermination of the 409A Award recipient’s taxable year in whichParticipant’s Continuous Service for any reason (other than on the 409A Award first becomes exercisableParticipant’s death or distributable pursuant to Section 8 hereof and is not subject to a substantial risk of forfeiture, but not later thanDisability or termination by the earlier of (i) the expiration of ten (10) years from the date the 409A Award was granted or (ii) the term specified in the 409A Award agreement.
8.3.No Acceleration. A 409A Award may not be accelerated or exercised prior to the time specified in Section 8 hereof, except in the case of one of the following events:
(a)Domestic Relations Order. The 409A Award may permit the acceleration of the exercise or distribution time or schedule to an individual other than the Participant as may be necessary to comply with the terms of a domestic relations order (as defined in Section 414(p)(1)(B) of the Code).
(b)Conflicts of Interest. The 409A Award may permit the acceleration of the exercise or distribution time or schedule to the extent reasonably necessary to avoid the violation of anCompany for Cause) would violate any applicable federal, state or local ethics law, the Option or conflictsSAR will terminate only on the earlier of interest law (as provided by Treasury Regulations § 1.409A-3(j)(4)(iii))the expiration of the original term of the Award or the date that is 30 days after the exercise of the Option or SAR would no longer violate any applicable federal, state or local law.
11.Covenants of the Company.
(c)Change in Control Event. The Administrator may exercise the discretionary right to accelerate the vesting of such 409A Award upon a Change in Control Event or to terminate the Plan or any 409A Award granted thereunder within twelve (12) months of the Change in Control Event and cancel the 409A Award for compensation. In addition, the Administrator may exercise the discretionary right to accelerate the vesting of such 409A Award provided that such acceleration does not change the time or schedule of payment of such Award and otherwise satisfies the requirements of this Section 8 and the requirements of Section 409A of the Code.
8.4.Definitions. Solely for purposes of this Section 8 and not for other purposes of the Plan, the following terms shall be defined as set forth below:
(a)“Change in Control Event” means the occurrence of a change in the ownership of the Company, a change in effective control of the Company, or a change in the ownership of a substantial portion of the assets of the Company (as defined in Treasury Regulations § 1.409A-3(i)(5)). For example, a Change in Control Event will occur if:
(i)a person or more than one person acting as a group:
(A)acquires ownership of stock that brings such person’s or group’s total ownership in excess of fifty percent (50%) of the outstanding stock of the Company; or
(B)acquires ownership of thirty-five percent (35%) or more of the total voting power of the Company within a twelve (12) month period; or
(ii)acquires ownership of assets from the Company equal to forty percent (40%) or more of the total value of the Company within a twelve (12) month period.
(b)“Disabled” means a Participant (i) is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, or (ii) is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, receiving income replacement benefits for a period of not less than three (3) months under an accident and health plan covering Employees.
(c)“Unforeseeable Emergency” means a severe financial hardship to the Participant resulting from an illness or accident of the Participant, the Participant’s spouse, or a dependent (as defined in Section 152(a) of the Code) of the Participant, loss of the Participant’s property due to casualty, or similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant.
| 9. | Covenants of the Company. |
9.1.Availability of Shares. During the terms of the Awards, the Company shallwill keep available at all times the number of shares of Common StockShares required to satisfy suchthe Awards.
9.2.(b)Securities Law Compliance. Each Award Agreement shallwill provide that no shares of Common Stock shallShares may be purchased or sold thereunder unless and until (a) any then applicable requirements of state, federal or federalapplicable foreign laws and regulatory agencies shall have been fully complied with to the satisfaction of the Company and its counsel and (b) if required to do so by the Company, the Participant shall have executed and delivered to the Company a letter of investment intent in such form and containing such provisions as the Administrator may require.counsel. The Company shallwill use reasonable efforts to seek to obtain from each regulatory commission or agency having jurisdiction over the Plan such authority as may be required to grant Awards and to issue and sell shares of Common Stock uponShares on exercise of the Awards; provided, however, that this undertaking shallwill not require the Company to register under the Securities Act the Plan, any Award or any Common StockShares issued or issuable pursuant tounder any such Award. If, after reasonable efforts, the Company is unable to obtain from any such regulatory commission or agency the authority whichthat counsel for the Company deemsdetermines to be necessary for the lawful issuance and sale of Common StockShares under the Plan, the Company shallwill be relieved from any liability for failure to issue and sell Common Stock uponShares on exercise of suchany Awards unless and until suchthat authority is obtained.
| 10. | Use of Proceeds from Stock. |
12.Company Use of Proceeds from Shares.
Proceeds from the sale of Common Stock pursuant to Awards shall constituteShares under the Plan will be general funds of the Company.
| 11. |
13. | Miscellaneous.Adjustments for Changes in Stock. |
11.1.(a)Capitalization Adjustments. If any change is made in the Common Stock without the receipt of consideration by the Company (through merger, consolidation, reorganization, recapitalization, reincorporation, stock dividend, dividend in property other than cash, stock split, liquidating dividend, combination of Shares, exchange of Shares, change in corporate structure or other transaction not involving the receipt of consideration by the Company), then (i) the aggregate number of Shares or class of securities that may be purchased under Awards granted hereunder, (ii) the aggregate number of Shares or class of securities that may be purchased under Incentive Stock Options granted hereunder, (iii) the number or class of securities covered by outstanding Awards, (iv) the maximum number of Shares with respect to which Options, SARs and Performance Awards may be granted to any single Employee during any calendar year, and (v) the Exercise Price of any Option and the Strike Price of any SAR in effect before the change will be proportionately adjusted by the Administrator to reflect any increase or decrease in the number of issued Shares or change in the Fair Market Value resulting from the transaction; provided, that any fractional Shares resulting from the adjustment will be eliminated by a cash payment. The Administrator will make these adjustments in a manner that will provide an appropriate adjustment that neither increases nor decreases the value of the Award as in effect immediately before the corporate change, and its determination will be final, binding and conclusive. The conversion of any securities of the Company that are by their terms convertible will not be treated as a transaction “without receipt of consideration” by the Company.
(b)Dissolution or Liquidation. In the event of a dissolution or liquidation of the Company, then, subject to Section 13(c), all outstanding Awards will terminate immediately before the dissolution or liquidation.
(c)Change in Control - Asset Sale, Merger, Consolidation or Reverse Merger. Unless otherwise provided in an Award Agreement or Service Agreement and to the extent permitted by applicable law, in the event of a Change in Control, a dissolution or liquidation of the Company, an exchange of securities or any corporate separation or division, including, but not limited to, a split-up, a split-off or a spin-off or a sale, in one or a series of related transactions, of all or substantially all of the assets of the Company, a merger or consolidation in which the Company is not the Surviving Entity, or a reverse merger in which the Company is the Surviving Entity but the Shares outstanding immediately preceding the merger are converted by virtue of the merger into other property, whether in the form of securities, cash or otherwise, then the Company, to the extent permitted by applicable law, but otherwise in the sole discretion of the Administrator, may provide for: (i) the continuation of outstanding Awards by the Company (if the Company is the Surviving Entity); (ii) the assumption of the Plan and the outstanding Awards by the Surviving Entity or its parent; (iii) the substitution by the Surviving Entity or its parent of awards with substantially the same terms (including an award to acquire the same consideration paid to the shareholders in the transaction described in this Section 13(c)) for the outstanding Awards and, if appropriate, subject to the equitable adjustment provisions of Section 13(a); (iv) the cancellation of the outstanding Awards in consideration for a payment (in the form of securities, cash or such other consideration and under the same terms and conditions as is paid to the shareholders in the transaction) equal in value to the Change in Control Value of vested Awards, or in the case of an outstanding Option or SAR, the difference between the Change in Control Value and the Exercise Price or Strike Price for all Shares subject to exercise (i.e., to the extent vested) under the Option or SAR (subject in each case to withholding as required by applicable law); or (v) the cancellation of the outstanding Awards without payment of any consideration. If the Awards would be canceled without consideration for vested Options or SARs, the Participant will have the right, exercisable during the 10-day period ending on the later of the fifth day before the merger or consolidation or 10 days after the Administrator provides the Participant a notice of cancellation, to exercise the Option or SAR in whole or in part without regard to any installment exercise provisions in the applicable Award Agreement.
14.Shareholder Approval.
The Plan will become effective only if, within 12 months from the date the Plan is adopted by the Board, the Plan is approved by the affirmative vote of the Company’s shareholders in accordance with the applicable provisions of the Certificate of Incorporation and Bylaws of the Company and applicable state law. The Board may, in its sole discretion, submit any other amendment to the Plan for shareholder approval, including, but not limited to, amendments to the Plan intended to satisfy the requirements of Section 162(m) of the Code and the regulations thereunder regarding the exclusion
of performance-based compensation from the limit on corporate deductibility of compensation paid to certain executive officers.
| |
15. | Amendment of the Plan and Awards. |
(a)Plan Amendment. The Board at any time may amend or terminate the Plan. However, except as provided in Section 13(a) relating to adjustments on changes in the Common Stock, no amendment will be effective unless approved by the shareholders of the Company to the extent shareholder approval is necessary to satisfy any applicable law or any securities exchange listing requirements. At the time of any amendment, the Board will determine, on advice from counsel, whether the amendment will be contingent on shareholder approval.
(b)Contemplated Amendments. It is expressly contemplated that the Board may amend the Plan in any respect the Board determines necessary or advisable to provide eligible Employees with the maximum benefits provided or to be provided under the provisions of the Code and the regulations issued thereunder relating to Incentive Stock Options or to the nonqualified deferred compensation provisions of Section 409A of the Code and to bring the Plan and Awards granted hereunder into compliance therewith. Notwithstanding the foregoing, neither the Board nor the Company nor any Affiliate will have any liability to any Participant or any other Person as to (i) any tax consequences expected, but not realized, by a Participant or any other Person due to the receipt, exercise or settlement of any Award granted hereunder; or (ii) the failure of any Award to comply with Section 409A of the Code.
(c)Award Amendment. The Administrator at any time may amend the terms of any one or more Awards. Except as otherwise permitted under Section 13, unless shareholder approval is obtained: (i) no amendment or modification may reduce the Exercise Price of any Option or the Strike Price of any SAR; (ii) the Administrator may not cancel any outstanding Option or SAR and replace it with a new Option or SAR, another Award or cash, if doing so would be considered a “repricing” for purposes of the shareholder approval rules of the applicable securities exchange or inter-dealer quotation system on which the Common Stock is listed or quoted; and (iii) the Administrator may not take any other action that is considered a repricing for purposes of the shareholder approval rules of the applicable securities exchange or inter-dealer quotation system on which the Common Stock is listed or quoted.
(d)No Impairment of Rights. No amendment of the Plan or an Award may impair rights or increase a Participant’s obligations under any Award granted before the amendment unless (i) the Company requests the consent of the Participant and (ii) the Participant consents in writing. For the avoidance of doubt, a cancellation of an Award where the Participant receives a payment equal in value to the Fair Market Value or the Change in Control Value of the vested Award or, in the case of a vested Option or SAR, the difference between the Fair Market Value or the Change in Control Value of the Shares subject to the Award and the Exercise Price or Strike Price, is not an impairment of the Participant’s rights or increase in the Participant’s obligations that requires consent of the Participant.
(e)Acceleration of Exercisability and Vesting. The Administrator shallwill have the power to accelerate the time at which an Award may first be exercised or the time during which an Award or any part thereof will vest solely upon the death or Disability of the Participant or in accordance with the Plan,event of a Change in Control that does not provide for the continuation, assumption or substitution of the Award by the Surviving Entity, notwithstanding the provisions in the Award stating the time at which it may first be exercised or the time during which it will vest. The Administrator shall inform
16.General Provisions.
(a)Shareholder Rights. Except as provided in Section 13(a) of the Company’s accounting department of any such changes toPlan or as otherwise provided in an Award.
11.2.Shareholder Rights. NoAward Agreement, no Participant shallwill be deemed to beconsidered the holder of, or to have any of the rights of a holder with respect to, any shares of Common StockShares subject to suchan Award unless and until suchthe Participant has satisfied all requirements for exercise, payment or delivery of the Award, pursuant toas applicable, under its terms, and no adjustment shallwill be made for dividends (ordinary or extraordinary, whether in cash, securities or other property) or distributions of other rights for which the record date is prior tobefore the date such Common Stock certificate is issued, except as provided in Section 12.1 hereof.of issue of the Shares (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company).
11.3.(b)No Employment or OtherParticipation not a Guarantee of Service RightsRight. Nothing in the Plan or any instrument executed or Award granted pursuant thereto shallwill confer uponon any Participant any right to continue to serve the Company or an Affiliate in the capacity in effect at the time the Award was granted or shallwill affect the right of the Company or an Affiliate to terminate (a)(i) the
employment of an Employee with or without notice and with or without Cause, (b)Cause; (ii) the service of a Consultant pursuant tounder the terms of suchthe Consultant’s agreement with the Company or an AffiliateAffiliate; or (c)(iii) the service of a Director pursuant tounder the Bylaws of the Company or an Affiliate, and any applicable provisions of the corporate law of the state in which the Company or the Affiliate is incorporated, as the case may be.
(c)Effect of Plan. Neither the adoption of the Plan nor any action of the Board or the Administrator may be deemed to give any Employee, Director or Consultant any right to be granted an Award or any other rights, except as may be evidenced by an Award Agreement or a Service Agreement, or any amendment thereto, duly authorized by the Administrator and executed on behalf of the Company, and then only to the extent and on the terms and conditions expressly set forth in such Award Agreement or Service Agreement. The existence of the Plan and the Awards granted hereunder do not affect in any way the right of the Board or the shareholders of the Company to make or authorize any adjustment, recapitalization, reorganization or other change in the Company’s capital structure or its business, any merger or consolidation of the Company, any issue of bonds, debentures, or shares of preferred stock ahead of or affecting the Common Stock or the rights thereof, the dissolution or liquidation of the Company or any sale or transfer of all or any part of its assets or business, or any other corporate act or proceeding.
11.4.(d)Limits on TransferTransfer, Approved Leave. Each Award will be exercisable during the Participant’s lifetime only by the Participant, or, if permissible under applicable law, by the Participant’s legal guardian or representative. No Award may be assigned, alienated, pledged, attached, sold or otherwise transferred or encumbered by a Participant other than by will or by the laws of Absencedescent and distribution and any such purported assignment, alienation, pledge, attachment, sale, transfer or encumbrance will be void and unenforceable against the Company or any Affiliate; provided that the designation of a beneficiary will not constitute an assignment, alienation, pledge, attachment, sale, transfer or encumbrance.. For
(i)Notwithstanding the foregoing, the Administrator may, in its sole discretion, permit a Participant to transfer an Award (other than an Incentive Stock Option) by gift or domestic relations order, without consideration, to a Permitted Transferee, subject to such rules as the Administrator may adopt consistent with any applicable Award Agreement to preserve the purposes of the Plan, no terminationon condition that the Participant first gives the Administrator advance written notice describing the terms and conditions of employment bythe proposed transfer and the Administrator notifies the Participant in writing that the transfer would comply with the requirements of the Plan. If the Award Agreement does not provide for transferability, then the Award will be transferable and exercisable only as provided in the preceding Section 16(d).
(ii)The terms of an Employee shall be deemed to result from either (a) a transferAward transferred in accordance with Section 16(d)(i) will apply to the employmentPermitted Transferee, and any reference to a Participant in the Plan or in the Award Agreement will refer to the Permitted Transferee, except that (1) the Permitted Transferee will not be entitled to transfer the Award other than by will or the laws of descent and distribution, (2) the Permitted Transferee is not entitled to exercise a transferred Option unless there is in effect a registration statement on an appropriate form covering the Shares to be acquired by the exercise of the Company from an Affiliate or from the Company to an Affiliate, or from one Affiliate to another; or (b) an approved leave of absence for military service or sickness, or for any other purpose approved by the Company, if the Employee’s right to re-employment is guaranteed either by a statute or by contract or under the policy pursuant to which the leave of absence was granted orOption if the Administrator determines, consistent with the Award Agreement, that a registration statement is necessary or appropriate, (3) neither the Administrator nor the Company is required to provide any notice to a Permitted Transferee, whether or not notice is or would otherwise so provideshave been required to be given to the Participant, and (4) the consequences of the termination of the Participant’s Continuous Service under the Plan and the Award Agreement will continue to be applied with respect to the Participant, including, without limitation, that an Option will be exercisable by the Permitted Transferee only to the extent, and for such period, specified in writing.the Plan and the Award Agreement.
11.5.(e)Investment Assurances. The Company may require a Participant, as a condition of exercising or acquiring Common StockShares under any Award, (a)(i) to give written assurances satisfactory to the Company as to the Participant’s knowledge and experience in financial and business matters and/or to employ a purchaser representative reasonably satisfactory to the Company who is knowledgeable and experienced in financial and business matters and that he or she is capable of evaluating, alone or together with the purchaser representative, the merits and risks of exercising the Award; and (b)(ii) to give written assurances satisfactory to the Company stating that the Participant is acquiring Common StockShares subject to the Award for the Participant’s own account and not with any present intention of selling or otherwise distributing the Common Stock.Shares. The foregoing requirements, and any assurances given pursuant to suchunder those requirements, shallwill be inoperative if (i)(x) the issuance of the shares of Common Stock uponShares on the exercise or acquisition of Common StockShares under the Award has been registered under a then currently effective registration statement under the Securities ActAct; or (ii)(y) as to any particular requirement, a determination is made by counsel for the Company that suchthat requirement need not be met in the circumstances under the then applicable securities laws. The Company may, uponon advice of counsel to the Company, place legends on stock certificates, if any, issued under the Plan as suchthat counsel deemsconsiders necessary
or appropriate in order to comply with applicable securities laws, including, but not limited to, legends restricting the transfer of the Common Stock.Shares.
11.6.(f) �� Withholding Obligations. To the extent provided by the terms of an Award Agreement and subject to the discretion of the Administrator, the Participant may satisfy any federal, state or local tax withholding obligation relating to the exercise or acquisition of Common StockShares under an Award by any one or combination of the following means (in addition to the Company’s right to withhold from any compensation paid to the Participant by the Company) or by a combination of such means: (a) tendering a: (i) cash payment; (b)(ii) authorizing the Company to withhold sharesa number of Common StockShares from the shares of Common StockShares otherwise issuable to the Participant as a result of the exercise or acquisition of Common StockShares under the Award, provided, however, that no sharesthe Fair Market Value of Common Stock are withheld with a value exceedingwhich does not exceed either the minimummaximum statutory tax rates in the Participant’s applicable jurisdictions or the amount of tax required to be withheld by law; (c)law, and in which case the Award will be surrendered and cancelled with respect to the number of Shares retained by the Company (provided that to the extent such direction would result in the Company withholding fractional Shares, the number of Shares to be withheld will be rounded down to the nearest whole and the Participant must pay the remainder of the Exercise Price in cash or by certified or bank check); (iii) delivering to the Company previously owned and unencumbered shares of Common Stock of the Company;Shares; or (d)(iv) by execution of a recourse promissory note by a Participant whoParticipant. Notwithstanding the foregoing, at any time that the Company is not aan “issuer” as defined in Section 2 of the Sarbanes-Oxley Act of 2002, no Director or executive officer.officer (or equivalent thereof) of the Company or an Affiliate will be permitted to pay any portion of the tax withholding with respect to any Award with a promissory note or in any other form that could be deemed prohibited personal loan under Section 13(k) of the Exchange Act. Unless otherwise provided in the terms of an OptionAward Agreement, payment of the tax withholding by a Participant who is an officer, directorOfficer, a Director or other “insider”otherwise subject to Section 16(b)16 of the Exchange Act, by delivering previously owned and unencumbered shares of Common Stock of the CompanyShares or in the form of shareShare withholding is subject to pre-approval by the Administrator, in its sole discretion. Any suchThe Administrator will document any pre-approval shall be documentedin the case of a Participant who is an Officer or Director in a manner that complies with the specificity requirements of Rule 16b-3 under the Exchange Act, including the name of the Participant involved in the transaction, the nature of the transaction, the number of sharesShares to be acquired or disposed of by the Participant and the material terms of the Award involved in the transaction.
11.7.(g)Right of Repurchase. Each Award Agreement may provide that, following a termination of the Participant’s Continuous Service, the Company may repurchase the Participant’s unvested Common Stock acquired under the Plan as provided in this Section 11.7 (the “Right of Repurchase”). The Right of Repurchase for unvested Common Stock shall be exercisable at a price equal to the lesser of the purchase price at which such Common Stock was acquired under the Plan or the Fair Market Value of such Common Stock (if an Award is granted solely in consideration of past services without payment of any additional consideration, the unvested Common Stock shall be forfeited without any repurchase). The Award Agreement may specify the period of time following a termination of the Participant’s Continuous Service during which the Right of Repurchase may be exercised.
| 12. | Adjustments Upon Changes in Stock. |
12.1.Capitalization Adjustments. If any change is made in the Common Stock subject to the Plan, or subject to any Award, without the receipt of consideration by the Company (through merger, consolidation, reorganization, recapitalization, reincorporation, stock dividend, dividend in property other than cash, stock split, liquidating dividend, combination of shares, exchange of shares, change in corporate structure or other transaction not involving the receipt of consideration by the Company), then (a) the aggregate number of shares of Common Stock or class of shares which may be purchased pursuant to Awards granted hereunder; (b) the aggregate number of shares of Common Stock or class of shares which may be purchased pursuant to Incentive Stock Options granted hereunder; (c) the number and/or class of shares of Common Stock covered by outstanding Options and Awards; (d) the maximum number of shares of Common Stock with respect to which Options may be granted to any single Optionholder during any calendar year; and (e) the exercise price of any Option in effect prior to such change shall be proportionately adjusted by the Administrator to reflect any increase or decrease in the number of issued shares of Common Stock or change in the Fair Market Value of such Common Stock resulting from such transaction; provided, however, that any fractional shares resulting from the adjustment may be eliminated by a cash payment. The Administrator shall make such adjustments in a manner that is intended to provide an appropriate adjustment that neither increases nor decreases the value of such Award as in effect immediately prior to such corporate change, and its determination shall be final, binding and conclusive. The conversion of any securities of the Company that are by their terms convertible shall not be treated as a transaction “without receipt of consideration” by the Company.
12.2.Dissolution or Liquidation. In the event of a dissolution or liquidation of the Company, then all outstanding Awards shall terminate immediately prior to such event.
12.3.Change in Control – Asset Sale, Merger, Consolidation or Reverse Merger. In the event of a Change in Control, a dissolution or liquidation of the Company, or any corporate separation or division, including, but not limited to, a split-up, a split-off or a spin-off, or a sale, in one or a series of related transactions, of all or substantially all of the assets of the Company; a merger or consolidation in which the Company is not the Surviving Entity; or a reverse merger in which the Company is the Surviving Entity, but the shares of Common Stock outstanding immediately preceding the merger are converted by virtue of the merger into other property, whether in the form of securities, cash or otherwise, then the Company, to the extent permitted by applicable law, but otherwise in the sole discretion of the Administrator may provide for: (a) the continuation of outstanding Awards by the Company (if the Company is the Surviving Entity); (b) the assumption of the Plan and such outstanding Awards by the Surviving Entity or its parent; (c) the substitution by the Surviving Entity or its parent of Awards with substantially the same terms (including an award to acquire the same consideration paid to the shareholders in the transaction described in this Section 12.3) for such outstanding Awards and, if appropriate, subject to the equitable adjustment provisions of Section 12.1 hereof; (d) the cancellation of such outstanding Awards in consideration for a payment (in the form of stock or cash) equal in value to the Fair Market Value of vested Awards, or in the case of an Option, the difference between the Fair Market Value and the exercise price for all shares of Common Stock subject to exercise (i.e., to the extent vested) under any outstanding Option; or (e) the cancellation of such outstanding Awards without payment of any consideration. If such Awards would be canceled without consideration for vested Awards, the Participant shall have the right, exercisable during the later of the ten (10) day period ending on the fifth day prior to such merger or consolidation or ten (10) days after the Administrator provides the Award holder a notice of cancellation, to exercise such Awards in whole or in part without regard to any installment exercise provisions in the Option Agreement.
| 13. | Amendment of the Plan and Awards. |
13.1.Amendment of Plan. The Board at any time, and from time to time, may amend or terminate the Plan. However, except as provided in Section 12.1 relating to adjustments upon changes in Common Stock, no amendment shall be effective unless approved by the shareholders of the Company to the extent shareholder approval is necessary to satisfy any applicable law or any securities exchange listing requirements. At the time of such amendment, the Board shall determine, upon advice from counsel, whether such amendment will be contingent on shareholder approval.
13.2.Shareholder Approval. The Board may, in its sole discretion, submit any other amendment to the Plan for shareholder approval, including, but not limited to, amendments to the Plan intended to satisfy the requirements of Section 162(m) of the Code and the regulations thereunder regarding the exclusion of performance-based compensation from the limit on corporate deductibility of compensation paid to certain executive officers.
13.3.Contemplated Amendments. It is expressly contemplated that the Board may amend the Plan in any respect the Board deems necessary or advisable to provide eligible Employees with the maximum benefits provided or to be provided under the provisions of the Code and the regulations promulgated thereunder relating to Incentive Stock Options or to the nonqualified deferred compensation provisions of Section 409A of the Code and/or to bring the Plan and/or Awards granted under it into compliance therewith.
13.4.No Impairment of Rights. Rights under any Award granted before amendment of the Plan shall not be impaired by any amendment of the Plan unless (a) the Company requests the consent of the Participant and (b) the Participant consents in writing. However, a cancellation of an Award where the Participant receives a payment equal in value to the Fair Market Value of the vested Award or, in the case of vested Options, the difference between the Fair Market Value and the exercise price, shall not be an impairment of the Participant’s rights that requires consent of the Participant.
13.5.Amendment of Awards. The Administrator at any time, and from time to time, may amend the terms of any one or more Awards; provided, however, that the Administrator may not effect any amendment which would otherwise constitute an impairment of the rights under any Award unless (a) the Company requests the consent of the Participant and (b) the Participant consents in writing. For the avoidance of doubt, the cancellation of a vested Award where the Participant receives a payment equal in value to the Fair Market Value of the vested Award or, in the case of vested Options, the difference between the Fair Market Value of the Common Stock underlying the Option and the aggregate exercise price, shall not be an impairment of the Participant’s rights that requires consent of the Participant.
14.1.Other Compensation Arrangements. Nothing contained in thisthe Plan shallwill prevent the Board from adopting other or additional compensation arrangements, subject to shareholder approval if suchshareholder approval is required; and suchthose arrangements may be either generally applicable or applicable only in specific cases.
14.2.(h)RecapitalizationsRecapitalizations. Each Award Agreement shallwill contain provisions required to reflect the provisions of Section 12.113(a).
14.3.(i)DeliveryDelivery. UponSubject to Section 16(j), on exercise of a right granted pursuant tounder an Award under thisthe Plan, the Company shallwill issue Common StockShares or pay any amounts due within a reasonable period of time thereafter. Subject to any statutory or regulatory obligations the Company may otherwise have, for purposes of thisthe Plan, thirty (30)30 days shallwill be considered a reasonable periodperiod.
(j)Government and Other Regulations.
(i)The Company’s obligation to settle Awards in Shares or other consideration is subject to all applicable laws, rules and regulations, and to such approvals by governmental agencies as may be required. Notwithstanding any terms or conditions of time.any Award to the contrary, the Company will be under no obligation to offer to sell or to sell, and is prohibited from offering to sell or selling, any Shares under an Award unless the Shares have been properly registered for sale under the Securities Act or unless the Company has received an opinion of counsel, satisfactory to the Company, that the Shares may be offered or sold without registration pursuant to an available exemption therefrom and the terms and conditions of that exemption and of all applicable state securities laws have been fully complied with. The Company will be under no obligation to register for sale under the Securities Act any of the Shares to be offered or sold under the Plan. The Administrator is authorized to provide that all certificates or book entries for Shares or other securities of the Company or any Affiliate delivered under the Plan will be subject to such stop transfer orders and other restrictions as the Administrator may consider advisable under the Plan, the applicable Award Agreement, the federal securities laws, or the rules, regulations and other requirements of the Securities and Exchange Commission, any securities exchange or inter-dealer quotation system on which the Shares or other securities are then listed or quoted and any other applicable federal, state, local or non-U.S. laws. Notwithstanding any provision in the Plan to the contrary, the Administrator reserves the right to add any additional terms or provisions to any Award granted under the Plan that it in its sole discretion considers necessary or advisable in order that the Award complies with the legal requirements of any governmental entity to whose jurisdiction the Award is subject.
14.4.(ii)The Administrator may cancel an Award or any portion thereof if it determines, in its sole discretion, that legal or contractual restrictions, blockage or other market considerations would make the Company’s acquisition of Shares from the public markets, the Company’s issuance of Shares to the Participant, the Participant’s acquisition of Shares from the Company or the Participant’s sale of Shares to the public markets, illegal, impracticable or inadvisable. If the Administrator determines to cancel all or any portion of an Award in accordance with the foregoing, the Company will pay to the Participant an amount equal to the excess of (1) the aggregate Fair Market Value of the Shares subject to the Award or portion thereof canceled (determined as of the applicable exercise date, or the date that the Shares would have been vested or delivered, as applicable), over (2) the aggregate Exercise Price or Strike Price (in the case of an Option or SAR, respectively) or any amount payable as a condition of delivery of Shares (in the case of any other Award). The amount payable will be delivered to the Participant as soon as practicable following the cancellation of the Award or portion thereof.
(k)Clawback or Recoupment. Notwithstanding any provision in this Plan or any Award Agreement or Service Agreement to the contrary, Awards granted hereunder will be subject, to the extent applicable, (i) to any clawback policy adopted by the Company, and (ii) to the Dodd-Frank Wall Street Reform and Consumer Protection Act and the Sarbanes-Oxley Act of 2002, each as amended, and rules, regulations and binding, published guidance thereunder. If the Company would not be eligible for continued listing, if applicable, under Section 10D(a) of the Exchange Act unless it adopted policies consistent with Section 10D(b) of the Exchange Act, then, in accordance with those policies that are so required, any incentive-based compensation payable to a Participant under this Plan will be subject to clawback in the circumstances, to the extent, and in the manner, required by Section 10D(b)(2) of the Exchange Act, as interpreted by rules of the Securities Exchange Commission. By accepting an Award under this Plan, the Participant consents to any clawback described under this Section 16(k).
(l)Reliance on Reports. Each member of the Administrator and each member of the Board will be fully justified in acting or failing to act, as the case may be, and will not be liable for having so acted or failed to act in good faith, in reliance on any report made by the independent public accountant of the Company and its Affiliates or any other information furnished in connection with the Plan by any agent of the Company or the Administrator or the Board, other than himself.
(m)Foreign Participants. Without amending the Plan, the Administrator may grant Awards to eligible individuals who are foreign nationals on such terms and conditions different from those specified in the Plan as may, in the judgment of the Administrator, be necessary or desirable to foster and promote achievement of the purposes of the Plan and, in furtherance of such purposes, the Administrator may make such modifications, amendments, procedures, subplans and the like as may be necessary or advisable to comply with the provisions of laws and regulations in other countries or jurisdictions in which the Company or its Affiliates operate.
(n)Other Provisions. The Award Agreements authorized under the Plan may contain such other provisions not inconsistent with thisthe Plan, including, without limitation, restrictions uponon the exercise of the Awards, as the Administrator may deemconsider advisable.
14.5.(o)Cancellation and Rescission of Awards for Detrimental Activity.
(a)(i)UponOn exercise, payment or delivery pursuant tounder an Award, the Administrator will require a Participant shallto certify in a manner acceptable to the Company that the Participant has not engaged in any Detrimental Activity described in Section 2.19.Activity.
(b)(ii)Unless the Award Agreement specifies otherwise, the Administrator maywill cancel, rescind, suspend, withhold or otherwise limit or restrict any unexpired, unpaid or deferred Awards at any time if the Participant engages in any Detrimental Activity described in Section 2.19.Activity.
(c)(iii)In the eventIf a Participant engages in Detrimental Activity described in Section 2.19after any exercise, payment or delivery pursuant tounder an Award, during any period for which any restrictive covenant prohibiting suchthe activity is applicable to the Participant, suchthat exercise, payment or delivery maywill be rescinded within one (1) year thereafter. In the event of any such rescission, the Participant shallwill be required to pay to the Company the amount of any gain realized or payment received as a result of the exercise, payment or delivery, in such manner and on such terms and conditions as may be required by the Company. The Company shallwill be entitled to set-off against the amount of any suchthat gain any amount owed to the Participant by the Company.
14.6.(p)Unfunded PlanDisqualifying Dispositions. AnyThe Plan is intended to constitute an “unfunded” plan for incentive compensation. With respect to any cash payments not yet made to a Participant who shall makepursuant to an Award, nothing contained in the Plan or any Award gives any such Participant any rights that are greater than those of a “disposition” (as defined in Section 424general creditor of the Code) of all or any portion of shares of Common Stock acquired upon exercise of an Incentive Stock Option within two (2) years from the Date of Grant of such Incentive Stock Option or within one (1) year after the issuance of the shares of Common Stock acquired upon exercise of such Incentive Stock Option shall be required to immediately advise the Company in writing as to the occurrence of the sale and the price realized upon the sale of such shares of Common Stock.Company.
17.Market Standoff. Each Option Agreement and Award Agreement shallwill provide that, in connection with any underwritten public offering by the Company of its equity securities, pursuant to an effective registration statement filed under the Securities Act, the Participant shall agreeagrees not to sell, make any short sale of, loan, hypothecate, pledge, grant any option for the repurchase of, transfer the economic consequences of ownership or otherwise dispose or transfer for value or otherwise agree to engage in any of the foregoing transactions with respect to any Common StockShares without the prior written consent of the Company or its underwriters, for suchthe period of time from and after the effective date of suchthe registration statement as may be requested by the Company or suchthe underwriters (the “Market Stand-OffStandoff”). In order to enforce the Market Stand-Off,Standoff, the Company may impose stop-transfer instructions with respect to the shares of Common StockShares acquired under thisthe Plan until the end of the applicable stand-offstandoff period. If there is any change in the number of outstanding shares of Common StockShares by reason of a stock split, reverse stock split, stock dividend, recapitalization, combination, reclassification, dissolution or liquidation of the Company, any corporate separation or division (including, but not limited to, a split-up, a split-off or a spin-off), a merger or consolidation; a reverse merger or similar transaction, then any new, substituted or additional securities whichthat are by reason of suchthe transaction distributed with respect to any shares of Common StockShares subject to the Market Stand-Off,Standoff or into which such shares of Common Stockthe Shares thereby become convertible, shallwill immediately be subject to the Market Stand-Off.Standoff.
| 16. |
18. | Effective Date and Term of Plan.Plan. |
(a)Effective Date. The Plan becameis effective as of the Effective Date. No Award granted on or afterDate, subject to the Effective Date may be exercised (or, inapproval of the case of a stock Award, may be granted) unless and until the Plan has been approved by the shareholders of the Company, which approval shallmust be within twelve (12)12 months before or after the date the Plan is adopted by the Board.
| 17. | Termination or Suspension of the Plan. |
The (b)Plan shallTermination or Suspension. Unless otherwise terminated as provided herein, the Plan will continue in effect until, and automatically terminate automatically on, the day before the tenth (10th) 10th anniversary of the Effective Date. No Award shall be granted pursuantDate or, if the shareholders approve an amendment to the Plan that increases the number of Shares available under the Plan, the day before the 10th anniversary of the date of such shareholder approval. No Award may be granted under the Plan after suchthat date, but Awards theretofore granted may extend beyond that date.date and will continue to be governed by the terms and conditions of the Plan. The Board may suspend or terminate the Plan at any earlier date pursuant to under Section 13.1 hereof.15. No Awards may be granted under the Plan while the Plan is suspended or after it is terminated.
19.Choice of Law. The lawlaws of the State of Texas shallwill govern all questions concerning the construction, validity and interpretation of thisthe Plan, without regard to suchthat state’s conflict of law rules.
20.Limitation on Liability. The Company and any Affiliate that is in existence or that hereafter comes into existence will have no liability to any Participant or to any other Person as to (a) the non-issuance or sale of Shares due to the Company’s inability to obtain from any regulatory body having jurisdiction the authority considered by the Company’s counsel necessary for the lawful issuance and sale of any Shares hereunder; (b) any tax consequences expected, but not realized, by a Participant or any other Person due to the receipt, exercise or settlement of any Award granted hereunder; or (c) the failure of any Award that is determined to be “nonqualified deferred compensation” to comply with Section 409A of the Code and the regulations thereunder.
21.Execution. To record the adoption of the Plan by the Board, the Company has caused its authorized officer to execute the Plan as of the date specified below.
B-19Signature page follows
IN WITNESS WHEREOF, on authorization of the Board, the undersigned has executed the Mannatech, Incorporated 2017 Stock Incentive Plan, on _____________, 2017.
MANNATECH, INCORPORATED
By:
[Name and Title]
600 S. ROYAL LANE
SUITE 200
COPPELL, TX 75019
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Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Shareholders:
The Proxy Statement and Annual Report are available at www.proxyvote.com.
| MANNATECH, INCORPORATED
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING OF SHAREHOLDERS
MAY 28, 2014
The shareholder(s) hereby appoint(s) Larry A. Jobe as proxy, with the power to appoint his substitute, and hereby authorize(s) him to represent and to vote, as designated on the reverse side of this ballot, all of the shares of Common Stock of Mannatech, Incorporated that the shareholder(s) is/are entitled to vote at the Annual Meeting of Shareholders to be held at 9:00 a.m., Central Daylight Time, on Wednesday, May 28, 2014, at the Grapevine Convention Center, and any adjournment or postponement thereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED BY THE SHAREHOLDER(S). IF NO SUCH DIRECTIONS ARE MADE, THIS PROXY WILL BE VOTED "FOR" PROPOSALS 1, 2, 3 AND 4.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED REPLY ENVELOPE
(Continued and to be signed on reverse side)
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