| (5) |
(10) | Includes 45,000 shares owned by Mr.Dr. Zimmerman’s wife, and 4,1609,947 shares of restricted shares.stock. |
| (6) |
(11) | Includes 202,000Mr. Leo’s ceased to be Chief Financial Officer of the Company effective June 1, 2014. Mr. Leo’s beneficial ownership is reported based on information available to the Company that may not be complete. Mr. Leo’s services were provided pursuant to an agreement between the Company and Insero & Company CPAs, P.C. (“Insero”), as more fully described below under “Certain Relationships and Related Person Transactions”. In connection with his services, Mr. Leo received a grant of 20,000 restricted shares. We were advised that at the time the shares held by a trust for which Mr. Doody and his wife are co-trusteeswere granted (all of which 30,000 arewere then restricted) Mr. Leo agreed with Insero to hold such shares for the benefit of Insero. 8,000 shares of the restricted shares. |
| (7) | Includes 17,000stock vested and the remainder were forfeited upon Mr. Leo’s departure from the Company. Mr. Leo later advised the Company that Insero, as part of Insero’s compensation arrangements with Mr. Leo, agreed that 2,000 of the vested shares would no longer be held for the benefit of Insero and would be held by Mr. Schlarbaum’s wife in her 401(k) plan, and 42,500Leo without further beneficial interest of Insero. |
| |
(12) | Includes 36,762 shares of restricted shares.stock. |
| |
(13) | Includes 50,000 shares of restricted stock. |
| |
(14) | Does not include shares owned by Mr. Leo as he was not serving as an executive officer at the end of Fiscal 2014. |
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires our directors and executive officers, and persons who own more than 10% of a registered class of our equity securities, to file with the SEC reports of ownership and changes in ownership of our common stock and our other equity securities. Officers, directors and greater than 10% stockholders are required by SEC regulation to furnish the Company with copies of all Section 16(a) forms they file.
SEC regulations require the Company to identify each person who filed a required report late during the most recent fiscal year. Based solely on review of the copies of such reports furnished to the Company and written representations that no other reports were required during the fiscal year ended September 30, 2011,2014, we believe that, during Fiscal 2011, all2014, one late report was filed by Brett E. Mancini related to 333 shares withheld to pay withholding tax in connection with vesting of our directorsrestricted stock, and executive officers complied with the reporting requirementsone report was timely filed by Michael T. Williams but later amended because it contained a typographical error reflecting a grant of Section 16(a).30,000 restricted shares rather than 50,000 restricted shares.
(PROPOSAL 1)
ELECTION OF DIRECTORS
The number of directors is established by the board and is currently fixed at seven. At this annual meeting, sixseven persons will be nominated as directors. All of the nominees for director, except Mr. Johnson, were elected at the last annual meeting.
Following the annual meeting, there will remain one Mr. Johnson was appointed on February 8, 2014 to fill a vacancy on the board. The board intends to consider potential candidates to fillterm of office of each person elected as a director will continue until the vacancynext annual meeting or until his or her successor has been elected and accordingly, has not taken any action to reducequalified, or until the size of the board.director’s earlier death, resignation or removal.
It is intended that the accompanying proxy will be voted in favor of the six persons listed below to serve as directors unless the stockholder indicates to the contrary on the proxy. All nominees have consented to serve if elected. We expect that each of the nominees will be available for election, but if any of them is not a candidate at the time the election occurs, it is intended that suchthe proxy will be voted for the election of another nominee to be designated by the board to fill any such vacancy.
Required Vote
For the election of directors, only proxies and ballots marked “FOR all nominees”, “WITHHELD for all nominees” or specifying that votes be withheld for one or more designated nominees are counted to determine the total number of votes cast; votescast. Votes that are withheld are excluded entirely from the vote and will have no effect. Abstentions will have no effect on the vote for the election of directors. Directors are elected by a plurality of the votes cast. This means that the sixseven nominees identified below will be elected if they receive more affirmative votes than any other nominees.
The term of office of each person elected It is intended that the accompanying proxy will be voted FOR the seven persons listed below to serve as a director will continue untildirectors unless the next annual meeting or until his or her successor has been elected and qualified, or untilstockholder indicates to the director’s earlier death, resignation or removal.contrary on the proxy.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE ELECTION AS DIRECTORS OF EACH OF THE NOMINEES LISTED BELOW.
Nominees for Election as Directors
The following table sets forth each director nominee and includes such person’s name, age, the year he or she first became a director and whether he or she has been determined to be an “independent director”, as that term is defined in Section 803A of the NYSE AmexMKT Company Guide. Biographies of the director nominees follow the table. Unless otherwise indicated, all directors have been employed in their current positions for at least five years.
| Name | | Age | | | Year First Elected Director | | | Term to Expire | | Independent |
| | | | | | | | | | | | |
| W. Barry Gilbert | | 65 | | | 1993 | | | | 2012 | | No |
| Eben S. Moulton | | 65 | | | 1992 | | | | 2012 | | Yes |
| James C. Rowe | | 63 | | | 2000 | | | | 2012 | | Yes |
| Carl E. Sassano | | 61 | | | 2006 | | | | 2012 | | Yes |
| Amy L. Tait | | 53 | | | 2009 | | | | 2012 | | Yes |
| Jerold L. Zimmerman | | 64 | | | 2006 | | | | 2012 | | Yes |
|
| | | | | | | | |
| Name | | Age | | Year First Elected Director | | Term to Expire | | Independent? |
| W. Barry Gilbert | | 68 | | 1993 | | 2016 | | No |
| Florence D. Hudson | | 55 | | 2012 | | 2016 | | Yes |
| John Carlton Johnson | | 67 | | 2014 | | 2016 | | Yes |
| Edward W. Kay, Jr. | | 59 | | 2012 | | 2016 | | Yes |
| Eben S. Moulton | | 68 | | 1992 | | 2016 | | Yes |
| James C. Rowe | | 66 | | 2000 | | 2016 | | Yes |
| Jerold L. Zimmerman | | 67 | | 2006 | | 2016 | | Yes |
The following paragraphs provide additional information as of the date of this proxy statement about each nominee. The information presented includes information each director has given us about all positions they hold, their principal occupation and business experience for the past five years, and the names of other publicly-held companies for which they currently serve as a director or have served as a director during the past five years. In addition, information is presented below regarding each nominee’s specific experience, qualifications, attributes and skills that led our board to the conclusion that such nominee should serve as a director. We also believe that all of our nominees have a reputation for integrity, honesty and adherence to high ethical standards. In addition, each has demonstrated business acumen and an ability to exercise sound judgment, as well as a commitment of service to the Company and our board. We believe that continuing service of qualified incumbents promotes stability and continuity in the board room, contributing to the board’s ability to work collaboratively as a collective body, while giving the Company the benefit of the familiarity and insight into the Company’s affairs that its directors have accumulated during their tenure. We have coupled this view with an understanding of the need for fresh perspectives in the board room and to that end three of the seven incumbent director nominees have joined the board since 2012.
W. Barry Gilbert has served as our chief executive officer since January 2004 and served as acting chief executive officer from June 2002 until that time. He has been a director of the Company since February 1993 and chairman of the board since February 2001. He is also an adjunct faculty member at the William E. Simon Graduate School of Business Administration at the University of Rochester. From 1991 until 1999, he was president of the Thermal Management Group of Bowthorpe Plc. (now known as Spirent Plc) of Crawley, West Sussex, England. Prior to that time he was corporate vice president and president, Analytical Products Division of Milton Roy Company, a manufacturer of analytical instrumentation. Mr. Gilbert has served on a number of charitable boards and advisory boards for privately-held companies. Mr. Gilbert received his B.S. degree in Accounting from Ohio State University and an M.B.A. degree from the University of Rochester. As our chairman of the board and chief executive officer, Mr. Gilbert provides our board with invaluable institutional knowledge of the operations of our Company, its markets, its customers and the industry in which it operates. He became our acting chief executive officer in June 2002 during a particularly challenging period for the Company. His extensive leadership, financial and management skills and his strategic initiatives contributed to the financial turnaround and growth the Company has experienced during his tenure as chief executive officer.executive. Mr. Gilbert’s service with us, as well as his prior service as a senior executive officer of other public companies, provides him with extensive knowledge of complex strategic, operational,operations and management regulatory, financial, human resources and governance issues faced by a public
the company. This experience brings to our board important knowledge, expertise and insight related to strategic planning, business development, sales and marketing, corporate finance, mergers and acquisitions, human resources and investor relations.
Florence D. Hudson has been a director since August 2012. Ms. Hudson is a Director in Corporate Strategy at International Business Machines Corporation (IBM). She leads the development of business and technical growth strategies for IBM in areas such as energy & the environment, the internet of things/machine to machine, cloud computing, analytics, emerging markets, financing, hardware, software and services. The growth strategies include defining and developing opportunities in existing business areas, as well as new opportunities involving both organic and inorganic investments. Ms. Hudson has leadership skills in strategic planning, marketing, channels, partner development, sales and diversity programs, as well as technical experience in mechanical and aerospace engineering. Ms. Hudson has held a variety of leadership positions since joining IBM in 1981 including Vice President and Director of strategy and marketing developing new businesses, developing and executing growth strategies for current businesses, and serving industrial sector clients in aerospace, defense, electronics, automotive, chemical and petroleum industries. Prior to joining IBM, Ms. Hudson worked at Hewlett Packard in 1980-1981. She worked as an Aerospace Engineer at Grumman Corporation as a Grumman Scholar during the summers while in college in 1976 through 1978 and in 1979 at the NASA Jet Propulsion Laboratory. Her projects included U.S. defense aircraft programs, solar power satellites, the space shuttle and future missions around Jupiter. Ms. Hudson graduated from Princeton University with a Bachelor of Science degree in Mechanical and Aerospace Engineering in 1980, and has attended executive education at Harvard Business School and Columbia University. She has extensive not-for-profit Board experience including Special Director for Strategic Planning on the Board of Directors for the Society of Women Engineers, Trustee for the Society of Women Engineers, President of the Juvenile Law Education Project, and Vice President for SHORE which provides homes for homeless families. She currently is a member of the Princeton University Technology Advisory Council and the Princeton University Advisory Council for the Department of Civil and Environmental Engineering. Ms. Hudson’s extensive leadership skills in strategy and business development, coupled with her leadership experience in information technology, and experience as an engineer in the aerospace and defense industry, provide the board with a unique blend of deep and broad business and technical insight in the business environment in which the Company operates.
John Carlton Johnson joined the Company’s board of directors in 2014. He is founder of Sandavista, LLC, and provides executive consulting to board members, executive officers and senior corporate leadership teams with a focus on increased profitability across businesses and programs. Mr. Johnson currently serves on the Board of Regents at Potomac Institute for Policy Studies, with involvement in critical issues affecting national security. He held a number of executive positions at Northrop Grumman Electronic Systems, including starting in 1998 as Director, SD&T Business, in 2000 as Vice President, Mission Business, in 2005 as Vice President and General Manager for Aerospace Systems division, in 2010 as Vice President and General Manager of ISR Systems division, and ultimately as Vice President, General Manager and Deputy President with a portfolio of approximately $5 billion. Mr. Johnson retired as a colonel and commander of flight operations for the 33rd Tactical Fighter Wing, United States Air Force, earned a masters degree in systems management from the University of Southern California School of Engineering, completed the General Manager Program at Harvard Business School, completed the Executive Strategy Program at UCLA and recently completed National Association of Corporate Directors (NACD) Professionalism, Governance Fellowship and Cybersecurity training. Mr. Johnson brings to the board wide and deep experience in corporate leadership, operations, increasing profitability across businesses and programs, and the defense and space industries.
Edward W. Kay, Jr., a director since November 2012, is a Certified Public Accountant who spent his 33-year career with PricewaterhouseCoopers LLP (PwC) working with companies in a wide variety of industries, including manufacturing, distribution, software and technology. During his tenure with PwC, he served in many capacities, including among others in the Accounting and SEC Services practice section of the Firm’s National Office in New York City, as leader of the firm’s technology practice in Dallas, Texas, as Managing Partner of the upstate New York practice, and, most recently, as Managing Partner, Rochester, New York Office from 1999-2012. He first joined PwC in 1979, and retired in June 2012. Mr. Kay earned a B.S. in Accounting from Duke University, and an M.B.A. in Finance degree from Northwestern University. Mr. Kay’s community involvement includes service as the Treasurer for the 2013 PGA Tournament at Oak Hill Country Club, Rochester, New York; President of Oak Hill Country Club, Rochester, New York from 2010-2012; Treasurer and Trustee of St. Bernard’s Institute, Rochester, New York; Audit Committee Chair, Roman Catholic Diocese of Rochester, Rochester, New York; and Finance Committee member, Greater Rochester YMCA, Rochester, New York. During Mr. Kay’s tenure at PwC, he accumulated a wealth of experience in financial, securities, and business matters, including significant leadership roles in dealing with accounting and auditing matters related to public companies, which enables Mr. Kay to be a valuable contributor to our board.
Eben S. Moulton, a director since November 1992, has served as managing partner of Seacoast Capital Corporation, Danvers, Massachusetts, a private investment firm, since its inception in 1994 and served as president of Signal Capital Corporation, Danvers, Massachusetts, a financial services corporation, from 1988 until 1994. Mr. Moulton is a general partner
of Seacoast Capital Corporation and a director and chair of the compensation committee of Unitil Corporation, Hampton, New Hampshire, a utility company. He is also a director of several privately-held companies and a trustee of Colorado College, Colorado Springs, Colorado. Mr. Moulton received his undergraduate degree from Colorado College, his Ph.DPh.D. degree from Vanderbilt University and his M.B.A. degree in Finance from Columbia University. As a result of these and other professional experiences, as well as his educational background, Mr. Moulton possesses particular knowledge and expertise in banking and financial services, mergers and acquisitions, capital raising, strategic planning and capital markets, and has demonstrated significant leadership skills as a managing partner in, or president of, various investment banking firms. With more than 1920 years of service on our board and its committees, Mr. Moulton also brings to our board significant institutional knowledge and perspective.
James C. Rowe, a director since January 7, 2000, has served as president of Rowe & Company LLC, Milwaukee, Wisconsin, a merchant banking firm, since April 1994. From April 1972 through March 1994, Mr. Rowe was a director and vice president of Lubar & Co., Incorporated, Milwaukee, Wisconsin, a merchant banking firm. Mr. Rowe is an advisory director of The PrivateBank-Milwaukee, Milwaukee, Wisconsin and also is a director of several privately held companies. Mr. Rowe received his Bachelor of Business Administration degree from the University of Wisconsin. As President of Rowe & Company, and as a Director and Vice President of Lubar & Co., Mr. Rowe has had more than 3940 years of experience investing in, and acquiring businesses in, diverse industries and providing leadership, expertise and experience to the management of those companies in several key business and investment areas, including developing and executing strategic plans, structuring sound capitalization, financing growth, identifying, negotiating and financing acquisitions, building shareholder value and corporate governance. His experience in overseeing and assessing the performance of companies with respect to the preparation, auditing and evaluation of financial statements and with companies that have complex financial and accounting functions are beneficial to our board and audit committee.
Carl E. Sassano a director since November 2006, has served as chairman of the board of Transcat, Inc. since October 2003 and as a director of that company since October 2000. From March 2002 until April 2007, Mr. Sassano was chief executive officer of Transcat, Inc. and from March 2002 until May 2006, Mr. Sassano was also president of Transcat, Inc., a distributor of calibrators and test and measurement instruments, and a provider of calibration and repair services located in Rochester, New York. Mr. Sassano was president and chief operating officer of Bausch & Lomb Incorporated in 1999 and 2000 and held several other marketing and sales, strategic planning and general management positions with that company commencing in 1973. Mr. Sassano is a trustee of Rochester Institute of Technology and a member of the Trustee Council of the Rochester-based broadcaster WXXI. He is also a director of several privately-held companies. Mr. Sassano received a B.A. Degree from Eisenhower College and a Masters of Business Administration Degree from the William E. Simon Graduate School of Business Administration at the University of Rochester. Mr. Sassano’s many years of experience as chairman of the board and chief executive officer of a public company and as president and chief operating officer of another public company provide him with broad understanding and extensive knowledge of the operational, financial, strategic, management, risk management and SEC reporting issues facing a public company and, together with his significant leadership skills and decision-making abilities, provide the board and its committees with valuable insight and strong leadership.
Amy L. Tait a director since August 2009, currently serves as Chief Executive Officer and as a director of Broadstone Real Estate, LLC, which she co-founded in 2006. She is also a principal in Broadstone Ventures, LLC, Broadstone Net Lease, Inc. and Broadstone Asset Management, LLC, all private commercial real estate management investment companies headquartered in Rochester, New York. Mrs. Tait has served as a director of Home Properties, Inc., a public real estate investment trust, since its inception in 1993. From 1983 until 2001, Mrs. Tait also held several positions with Home Properties and its predecessor, including Senior and Executive Vice President and Chief Operating Officer. She founded Tait Realty Advisors, LLC in 2001. Mrs. Tait currently serves on the M&T Bank Rochester Regional Advisory Board, the Simon School Executive Advisory Committee, and the Allendale Columbia School Board of Trustees. Mrs. Tait is a graduate of Princeton University and holds a Masters of Business Administration Degree from the William E. Simon Graduate School of Business Administration at the University of Rochester. Mrs. Tait’s experience in all aspects of the real estate industry, her corporate financial background and her experience in advising and serving on the boards of other public and private companies provide the board and its committees with a unique perspective of the financial and business environment in which the Company operates.
Jerold L. Zimmerman has served as a director since January 2006. Dr. Zimmerman is the Ronald L. Bittner Professor of Business Administration at the William E. Simon Graduate School of Business Administration at the University of Rochester, where he has taught finance, accounting and economics since 1974. He has published numerous books and papers, and is a founding editor of the Journal of Accounting and Economics.Economics, the most highly cited peer reviewed accounting journal in the world. As such, Dr. Zimmerman is knowledgeable of the latest findings involving financial disclosure and corporate governance. Dr. Zimmerman was a director of CPAC, Inc., Leicester, New York, from 2000 until the firm wentbecame private in 2007. Dr. Zimmerman received his B.S. Degree in Finance from the University of Colorado and a Ph.D. in AccountingBusiness Administration from the University of California, Berkeley. He has been teaching financial and managerial accounting to M.B.A., MACC, Ph.D. and DBA students for over 3639 years, and has done extensive research and consulting in the areas of financial disclosures, executive compensation, corporate governance and cost accounting, and has served as an expert witness in a variety of legal actions involving, among other things, fraudulent financial disclosures. Dr. Zimmerman brings to the board and its committees his considerable analytical skills and expertise in accounting, corporate finance, executive compensation, corporate governance and strategic planning.
Corporate Governance and Board Matters
Corporate Governance Guidelines
Our business, property and affairs are managed under the direction of our board of directors. The board is committed to sound and effective corporate governance practices and, accordingly, has adopted Corporate Governance Guidelines that provide a system of best practices with respect to board function and communication. Our Corporate Governance Guidelines address matters including board composition, director responsibilities, director independence, selection of board nominees, board membership criteria, mandatory retirement, meeting participation, executive sessions of our independent directors, evaluation of the performance of the chief executive officer, committees, succession planning, orientation and continuing education.
Director Independence
The listing requirements of the NYSE AmexMKT require that a majority of the members of a listed company’s board of directors be independent. The rules provide that no director will qualify as “independent” unless the board affirmatively determines that the director has no relationship with the Company or any of its subsidiaries that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. Based upon the NYSE AmexMKT rules and applicable SEC rules and regulations, our board has determined that each of our directors is an independent director, other than Mr. Gilbert, who serves as our chief executive officer.
Board Leadership Structure and Role in Risk Oversight
Our board is responsible for the selection of the chairman of the board and the chief executive officer. Our board does not require the separation of the offices of chairman of the board and the chief executive officer, and currently the positions of chairman and chief executive officer are held by the same person. The board believes that this is the most appropriate and suitable leadership structure for the Company at the present time because Mr. Gilbert, our chairman and chief executive officer, is the director most familiar with our business and industry and their challenges and is, therefore, best able to identify the strategic priorities to be discussed by the board. Mr. Gilbert is the direct link between senior management and the board, and provides critical insight and perceptionperspective to the board, as well as feedback to senior management through his thorough understanding of the issues at hand.
The board acknowledges, however, that independent board leadership is important and believes that the current structure provides independent board leadership and oversight while also benefiting from having Mr. Gilbert as chairman of the board. FiveSix of our sixseven current directors, and six of the seven nominees, qualify as independent directors, and each of the audit, compensation and nominating and governance committees is comprised solely of independent directors. Our independent directors meet regularly in an executive session, without the presence of Mr. Gilbert, or any other member of management, at the conclusion of each board meeting.management. In addition, our independent directors have the ability to participate in the agenda setting process and have direct access to management. While the Board has not formally designated a lead director, generally either the chairman of one of our committees presides at these executive sessions.
The board of directors is responsible for overseeing risks that could affect our Company and management’s processes for managing risk. This oversight is conducted primarily through the compensationboard’s committees. Our audit committee or the chairman of thefocuses on risks and exposures associated with financial matters, particularly financial reporting, tax, accounting, disclosure, internal control over financial reporting, financial policies, credit and liquidity matters and compliance with legal and regulatory matters. Our nominating and governance committee presides atfocuses on the management of risks associated with board membership and structure, as well as corporate governance. Our compensation committee focuses on the management of risks arising from our compensation policies and programs.
While our board committees are focused on these executive sessions.specific areas of risk, the full board retains responsibility for general oversight of risk. This responsibility is satisfied through reports from each committee chairman regarding the risk considerations within each committee’s area of expertise, as well as through reports from members of our senior management team responsible for oversight of material risk to the Company.
In addition, the full board focuses on the strategic, financial and execution risks associated with the annual operating plan, significant legal matters, acquisitions and senior management succession planning.
As part of its risk oversight responsibilities, our board of directors and its committees review the processes that senior management uses to manage our risk exposure. In doing so, the board and its committees monitor our overall risk function and senior management’s establishment of appropriate systems and processes for managing areas of material risk to our company, including, but not limited to, operational, financial, legal, regulatory and strategic risks.
Board Meetings and Attendance
During Fiscal 2011,2014, our board held foursix in-person regularor telephonic meetings and acted threefive times by unanimous written consent. In addition, the directors considered Company matters and had frequent communication with the chairman of the board and othersother directors apart from the formal meetings.
During Fiscal 2011,2014, each incumbent director attended at least 75% of the meetings of the board, and of those committees upon which such director served, held during the period that he or she served.
Director Attendance at Annual Meetings
We typically schedule a board of directors meeting in conjunction with our annual meeting of stockholders and all directors are expected to attend the annual meeting. Each of our incumbent directors attended the 20112014 Annual Meeting of Stockholders.
Board Committees
Our board has established four standing committees to assist in the discharge of its responsibilities: the audit committee, the compensation committee, the nominating and governance committee, and the executive committee. The following table indicates the committee(s) on which each director serves, and the identity of the chair of each such committee:
Committee Membership
Director
|
| | | | | | | | |
| Director: | | Audit | | | Compensation | | | Nominating and Governance | | | Executive | |
| W. Barry Gilbert | | - | | | - | | | - | | Chair |
| Florence D. Hudson | | - | | X | | - | | - |
| John Carlton Johnson | | - | | X | | - | | - |
| Edward W. Kay, Jr. | | Chair | | - | | X | | - |
| Eben S. Moulton | | - | | | X | | | Chair | | | X | |
| James C. Rowe | | Chair | X | | - | | | X | | | X | |
Carl E. Sassano | | - | | | Chair | | | X | | | - | |
Amy L. Tait | | X | | | - | | | - | | | - | |
| Jerold L. Zimmerman | | X | | | X | Chair | | - | | | - | |
Each committee acts pursuant to a written charter adopted by the board. The charter of each of the audit, compensation and nominating and governance committees complies with the NYSE AmexMKT corporate governance requirements. There are no NYSE AmexMKT requirements with respect to the charter of the executive committee. The committees regularly report their activities and actions to the full board at the next board meeting.
The audit committee oversees our corporate accounting and financial reporting processes. It is responsible for the appointment, dismissal, compensation and oversight of our independent auditors, including the engagement of our auditors for the next fiscal year, the review with the independent auditors and approval of the plan of the auditingaudit engagement, the review with the independent auditors of the results of their audit, the review of the scope and results of the evaluation of our procedures for internal auditing, the inquiry as to the adequacy of our internal accounting controls and our disclosure controls and procedures, the approval of audit and non-audit services to be provided to us by the independent auditors, and overseeing compliance matters for us. The audit committee reviews with management and the independent auditors our annual report on Form 10-K and the interim financial statements prior to the filing of our quarterly reports on Form 10-Q. The audit committee also monitors compliance with our Code of Business Conduct and Ethics, our conflict of interest policy, our policy concerning trading in our securities and our related person transactions policy. In Fiscal 2011,2014, the audit committee, whose current members are Mr. RoweKay (Chairman), Mrs. TaitMr. Rowe and Dr. Zimmerman, held four meetings.nine meetings and acted once by unanimous consent. The board of directors in its business judgment has determined that each member of the audit committee is “independent” as defined in Section 803A of the NYSE AmexMKT LLC Company Guide and, in addition, meets the more stringent independence standards set forth in SEC Rule 10A-3 and the independence and financial literacy standards set forth in Section 803B of the NYSE AmexMKT LLC Company Guide. The board of directors has further determined that Mr. Kay, Mr. Rowe qualifiesand Dr. Zimmerman each qualify as an “audit committee financial expert” in accordance with the applicable rules and regulations of the SEC. For the audit committee’s report relating to Fiscal 2011,2014, see “Audit Committee Report.”Report”. The audit committee’s charter, which sets forth more specifically the duties and responsibilities of the committee, is available on our website at www.iec-electronics.com under the heading of “Investors” and subheading of “Corporate Governance”.
The compensation committee oversees the development and administration of our executive compensation plans, reviews and approves the compensation for all executivesexecutive officers other than the chief executive officer, reviews and recommends to the independent members of the board the compensation of the chief executive officer, reviews and approves performance goals and objectives with respect to incentive plans for all executives,executive officers, oversees the evaluation of the chief executive officer, reviews and recommends to the board the terms of any employment, severance, change in control, termination or retirement arrangements for all executives,executive officers, and reviews and recommends to the board the compensation paid to directors. In Fiscal 2011,2014, the compensation committee held foureight meetings and acted by unanimous written consent fourthree times. The current members of the compensation committee are Mr. SassanoDr. Zimmerman (Chairman), Ms. Hudson, Mr. Johnson and Mr. Moulton, and Dr. Zimmerman, each of whom has been determined by the board to be “independent” as defined in Section 803A of the NYSE AmexMKT LLC Company Guide. The compensation committee’s charter, which sets forth more specifically the duties and responsibilities of the committee, is available on our website atwww.iec-electronics.com www.iec-electronics.comunder the heading of “Investors” and subheading of “Corporate Governance”. For more information on executive officer and director compensation and the role of the compensation committee, see “Compensation of Named Executive Officers and Directors.”Directors”.
The nominating and governance committee identifies and recommends to the board individuals to serve as directors and as nominees for election as directors of the Company and develops, recommends and reviews corporate governance principles applicable to the Company. In Fiscal 2011,2014, the nominating and governance committee met one timethree times and acted by unanimous written consent one time.three times. The current members of the committee are Messrs. Moulton (Chairman), RoweKay and Sassano,Rowe, each of whom has been determined by the board to be “independent” as defined in Section 803A of the NYSE AmexMKT LLC Company Guide. The nominating and governance committee charter, which sets forth more specifically the duties and responsibilities of the committee, is available on our website at www.iec-electronics.com under the heading of “Investors” and subheading of “Corporate Governance”.
The executive committee exercises the powers of the board in the interval between regular meetings of the full board and reviews strategic planning matters.board. The executive committee did not hold any formal meetings during Fiscal 2011.2014. The current members of the committee are Messrs. Gilbert (Chairman), Moulton and Rowe. Messrs. Moulton and Rowe each of whom, except for Mr. Gilbert, ishave been determined by the board to be “independent” as defined in Section 803A of the NYSE AmexMKT LLC Company Guide. The executive committee charter, which sets forth more specifically the duties and responsibilities of the committee, is available on our website at www.iec-electronics.com. under the heading of “Investors” and subheading of “Corporate Governance.”
Nominating Process
The process followed by the nominating and governance committee to identify and evaluate candidates includes requests to board members, the chief executive officer, and others for recommendations, meetings from time to time to evaluate biographical information and background material relating to potential candidates and their qualifications, and interviews of selected candidates. The nominating and governance committee also will consider director candidates recommended by stockholders. Nominations of persons for election to our board may be made at a meeting of stockholders only (i) by or at the direction of the board; or (ii) by any stockholder who has complied with the notice procedures set forth in our bylaws and in the section entitled “Questions and Answers About This Proxy Material and Voting – When are stockholder proposals and director nominations due for next year’s annual meeting?”. In addition, stockholders who wish to recommend a prospective nominee for the nominating and governance committee’s consideration should submit the candidate’s name and qualifications toto: Corporate Secretary, IEC Electronics Corp., 105 Norton Street, Newark, New York 14513.
In evaluating the suitability of candidates to serve on the board of directors, including stockholder nominees, the nominating and governance committee seeks candidates who are independent pursuant to the NYSE AmexMKT independence standards and meet certain selection criteria established by the committee. The specific criteria required for the selection of each board member will be determined from time to time within the context of the current member composition of the board of directors and the evolving needs of the Company based on business strategy and current senior management competencies. The committee also considers an individual’s skills, character and professional ethics, judgment, leadership experience, business experience and acumen, familiarity with relevant industry issues, and other relevant criteria that may contribute to our success. This evaluation is performed in light of the skill set and other characteristics that would most complement those of the current directors, including the diversity, maturity, skills and experience of the board as a whole.
Compensation Committee Interlocks and Insider Participation
During Fiscal 2014, Florence D. Hudson, John Carlton Johnson, Eben S. Moulton and Jerold L. Zimmerman served on our compensation committee. No member of our compensation committee: (1) was an officer or employee of the Company during Fiscal 2011;2014; (2) was formerly an officer of the Company;Company or (3) had any relationship requiring disclosure in this proxy statement as a related person transaction pursuant to SEC rules.
In addition, during Fiscal 20112014 none of our executive officers served: (1) as a member of the compensation committee (or other board committee performing equivalent functions or, in the absence of any such committee, the entire board of directors) of another entity, one of whose executive officers served on our compensation committee;committee, (2) as a director of another entity, one of whose executive officers served on our compensation committee;committee or (3) as a member of the compensation committee (or other board committee performing equivalent functions or, in the absence of any such committee, the entire board of directors) of another entity, one of whose executive officers served as a director of our Company.
Risk Oversight
The board of directors is responsible for overseeing risks that could affect our Company and management’s processes for managing risk. This oversight is conducted primarily through the board’s committees. Our audit committee focuses on risks and exposures associated with financial matters, particularly financial reporting, tax, accounting, disclosure, internal control over financial reporting, financial policies, credit and liquidity matters and compliance with legal and regulatory matters. Our nominating and governance committee focuses on the management of risks associated with board membership and structure, as well as corporate governance. Our compensation committee focuses on the management of risks arising from our compensation policies and programs.
While our board committees are focused on these specific areas of risk, the full board retains responsibility for general oversight of risk. This responsibility is satisfied through reports from each committee chairman regarding the risk considerations within each committee’s area of expertise, as well as through reports from members of our senior management team responsible for oversight of material risk to the Company.
In addition, the full board focuses on the strategic, financial and execution risks associated with the annual operating plan, major litigation, acquisitions and senior management succession planning.
As part of its risk oversight responsibilities, our board of directors and its committees review the processes that senior management uses to manage our risk exposure. In doing so, the board and its committees review our overall risk function and senior management’s establishment of appropriate systems and processes for managing areas of material risk to our company, including, but not limited to, operational, financial, legal, regulatory and strategic risks.
Stock Ownership Guidelines
The board believes that it is important for directors to maintain an equity position in IEC to further align their interests with those of our stockholders and to demonstrate their commitment to the long term success of the Company. Our board established stock ownership guidelines for the directors that became effective on October 1, 2009. The guidelines require that the directors own, at a minimum, that number of shares of common stock with a value equal to three times the director’s annual
board retainer ($24,000,32,000, for Fiscal 2011)2014) within three years from the later of October 1, 2009 or the date the director was elected to the board. At October 1, 2009,2014, the stock ownership requirement was 14,06320,824 shares. Unexercised stock options (whether or not vested) do not count toward a director’s ownership for purposes of these guidelines. Currently, all the directors are in compliance with these guidelines.
Code of Ethics and Whistleblower Policy
We have a Code of Business Conduct and Ethics, which applies to all of our directors, officers (including our chiefprincipal executive officer, chiefprincipal financial officer, principal accounting officer and other executive officers) and employees. It is a statement of the Company’s high standards for ethical behavior, legal compliance and financial disclosure. We also maintain a whistleblower policy, which encourages the Company’s employees to report illegal activities and business conduct that would damage the Company’s good name, business interests and its relationships with stockholders, suppliers, residents and the community at large. The Code of Business Conduct and Ethics and the Whistleblower Policy are distributed to all employees of the Company who in turn acknowledge, in writing, receipt of this information.
Availability of Corporate Governance Documents
We make available to the public variousa variety of corporate governance information on our website (www.iec-electronics.com) under “Investor Information –“Investors– Corporate Governance”. Information on our website includes our Code of Business Conduct and Ethics, our Corporate Governance Guidelines, the Audit Committee Charter, the Compensation Committee Charter, the Nominating and Governance Committee Charter, the Executive Committee Charter, our Related Person Transactions Policy,Policies and Procedures, and our Whistleblower Policy. Information regarding any amendmentsamendment to, or waiver from, the Code of Business Conduct and Ethics that applies to our principal executive officer, principal financial officer or principal accounting officer will also be posted onin that section of our website.
Communications with the Board of Directors
Stockholders and other parties may communicate directly with the board of directors or the relevant board member by addressing communications to:
[Name of director(s) or Board of Directors]
IEC Electronics Corp.
c/o Corporate Secretary
105 Norton Street
Newark, New York 14513
All stockholder correspondence will be compiled by our Corporate Secretary and forwarded as appropriate.
(PROPOSAL 2)
RATIFICATION OF THE SELECTION OF THE COMPANY’S
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR FISCAL 20122015
The audit committee has selected the accounting firm of EFP Rotenberg,Crowe Horwath LLP (“Crowe Horwath”) to serve as the Company’s independent registered public accounting firm for the fiscal year ending September 30, 2012.2015. Crowe Horwath was selected by the audit committee to replace EFP Rotenberg LLP (and its predecessor, Rotenberg & Co., LLP) has(“EFPR”) who served as the Company’s independent registered public accounting firm sincefrom May 2002 and is considered by the audit committee, the board and managementthrough completion of the Company to be well qualified.Company’s audited consolidated financial statements for Fiscal 2014 and filing of the Company’s Annual Report on Form 10-K in November 2014. The stockholders are being asked to ratify the audit committee’s appointment of EFP Rotenberg, LLP.Crowe Horwath. Stockholder ratification of the selection of EFP Rotenberg, LLPCrowe Horwath is not required by our by-laws or otherwise. However, the board is submitting the selection of our independent registered accounting firm to the stockholders for ratification as a matter of good corporate practice. If the stockholders fail to ratify this appointment, the audit committee may, but is not required to, reconsider whether to retain EFP Rotenberg, LLP.Crowe Horwath. Even if the appointment is ratified, the audit committee in its discretion may direct the appointment of a different accounting firm at any time during the year if it determines that such a change would be in the best interests of the Company and its stockholders. A representativeRepresentatives of EFP Rotenberg, LLPEFPR and Crowe Horwath will be present at the annual meeting, and will be given the opportunity to make a statementstatements if he or shethey so desiresdesire and will be available to respond to appropriate questions.
Fees paid to EFP Rotenberg, LLP
The following table shows the fees that were billed by EFP Rotenberg, LLPEFPR for professional services rendered inrelated to Fiscal 20112014 and the fiscal year ending September 30, 20102013 (“Fiscal 2010”2013”).
| Description of Fees | | Fiscal 2011 | | | Fiscal 2010 | |
| Audit Fees (1) | | $ | 125,900 | | | $ | 186,595 | |
| Audit-Related Fees (2) | | | 4,334 | | | | 3,480 | |
| Tax Fees (3) | | | 16,450 | | | | 7,500 | |
| All Other Fees (4) | | | 8,100 | | | | 11,230 | |
| TOTAL EFP Rotenberg, LLP Fees | | $ | 154,784 | | | $ | 208,805 | |
(1) Audit fees primarily represent amounts billed for the audit of our annual consolidated financial statements for the respective fiscal years and the reviews of financial statements included in our Form 10-Q quarterly reports for each such fiscal year. In Fiscal 2011, audit fees included the audit of our annual consolidated financial statements ($125,900); in Fiscal 2010, audit fees included the audit of our annual consolidated financial statements ($97,700), audit services related to our acquisition of General Technology Corporation ($76,959) and audit services related to our acquisition of Celmet Corporation ($11,936). |
| | | | | | | | |
| Description of Fees | | Fiscal 2014 | | Fiscal 2013 |
Audit Fees(1) | | $ | 178,000 |
| | $ | 255,895 |
|
| Audit-Related Fees | | — |
| | — |
|
Tax Fees(2) | | 900 |
| | 1,400 |
|
All Other Fees(3) | | 33,025 |
| | 8,500 |
|
| TOTAL EFPR Fees | | $ | 211,925 |
|
| $ | 265,795 |
|
| |
(1) | Audit fees primarily represent amounts billed for the audit of our annual consolidated financial statements for the respective fiscal years and the reviews of financial statements included in our Form 10-Q quarterly reports for each such fiscal year. Audit fees for Fiscal 2013 include additional billings related to the Fiscal 2013 audit that were not known as of Proxy Statement on Schedule 14A filed on December 27, 2013. |
(2) Audit-related fees represent consultations concerning financial accounting and reporting standards, as well as internal control.
| |
(2) | Tax fees consist of professional services rendered by EFPR primarily in connection with IRS audits in fiscal 2014 and 2013. |
| |
(3) | All other fees in Fiscal 2014 are for services rendered in connection with the SEC investigation and subpoena as well as audit services related to our 401(k) plan. All other fees in Fiscal 2013 are for audit services related to our 401(k) plan. |
(3) Tax fees consist of professional services rendered by EFP Rotenberg, LLP primarily in connection with our tax compliance activities and the preparation of federal and state income tax returns.
(4) All other fees in Fiscal 2011 and Fiscal 2010 are for audit services related to our 401(k) plan.
Pre-Approval of Fees by Audit Committee
In accordance with applicable laws, rules and regulations, our audit committee charter and pre-approval policies established by the audit committee require that the audit committee review in advance and pre-approve all audit and permitted non-audit fees for services provided to us by our independent registered public accounting firm. The audit committee pre-approved all services performed by, and all fees to be paid to, EFP Rotenberg, LLPEFPR in Fiscal 20112014 and Fiscal 2010.2013.
Independence Analysis by Audit Committee
The audit committee has considered whether the provision of the services described above was compatible with maintaining the independence of EFP Rotenberg, LLPEFPR and determined that it was compatible with the firm’s independence. For each of Fiscal 20112014 and Fiscal 2010, EFP Rotenberg, LLP2013, EFPR provided no services other than those services described above.
Change in Independent Registered Public Accounting Firm
The Company was notified on September 5, 2014 by its current independent registered public accounting firm, EFPR, that EFPR will not serve as the Company’s independent accounting firm for the Company’s fiscal year ended September 30, 2015 (“Fiscal 2015”). EFPR continued its engagement through completion of the audit of the Company’s financial statements for Fiscal 2014. The Company understands the basis for their decision is that EFPR has made a strategic decision to serve public companies in roles other than as independent auditor.
EFPR’s reports on the financial statements of the Company for each of the past two fiscal years have neither contained an adverse opinion or a disclaimer of opinion, nor been qualified or modified as to uncertainty, audit scope or accounting principles. During the past two fiscal years and the interim periods preceding the date on which EFPR notified the Company that it will decline to stand for re-election, there were no disagreements with EFPR on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of EFPR, would have caused it to make reference to the subject matter of the disagreements in connection with its reports.
The Company provided EFPR with a copy of the foregoing disclosures and requested that EFPR furnish a letter addressed to the SEC stating whether or not it agrees with the disclosures. A copy of such letter, dated September 10, 2014, was filed as Exhibit 16.1 to the Company’s Current Report on Form 8-K, filed with the SEC on September 11, 2014.
On November 18, 2014, the Audit Committee of the Board of Directors engaged Crowe Horwath as the Company’s independent registered public accounting firm for Fiscal 2015.
During the past two fiscal years, the Company did not consult with Crowe Horwath regarding (1) the application of accounting principles to a specified transaction, (2) the type of audit opinion that might be rendered on the Company’s financial statements, (3) written or oral advice provided that would be an important factor considered by the Company in reaching a decision as to an accounting, auditing or financial reporting issue, or (4) any matter that was the subject of a disagreement between the Company and EFPR as described in Item 304(a)(1)(iv) or a reportable event as described in Item 304(a)(1)(v) of Regulation S-K.
Required Vote
The affirmative vote of the holders of a majority of the shares of common stock present in person or represented by proxy at the annual meeting and entitled to vote on the matter is needed to ratify the appointment of EFP Rotenberg, LLPCrowe Horwath as our independent registered public accounting firm for the fiscal year ending September 30, 2012.2015. Under Delaware law, an abstention will have the same legal effect as a vote against the ratification of EFP Rotenberg, LLP,Crowe Horwath, and broker non-votes will have no effect on the outcome of the ratification of the independent registered public accounting firm.
Unless authority to so vote is withheld, the persons named in the proxy card intend to vote shares as to which proxies are received IN FAVOR OF approval of ratification of the appointment of Crowe Horwath as our independent registered public accounting firm for the fiscal year ending September 30, 2015.
THE AUDIT COMMITTEE AND OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMEND THAT THE STOCKHOLDERS VOTE FOR RATIFICATION OF THE APPOINTMENT OF EFP ROTENBERG, LLPCROWE HORWATH AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING SEPTEMBER 30, 2012.2015.
AUDIT COMMITTEE REPORT1[1]
Membership and Role of Audit Committee
The audit committee of ourthe Company's board is responsible for providing independent, objective oversight and review of ourits accounting functions, internal controls and financial reporting process. Currently, the audit committee is comprised of Mr. Kay, Mr. Rowe Mrs. Tait and Dr. Zimmerman. The audit committee operates pursuant to a written charter adopted by the board of directors which was amended and restated in February 2009 and further amended in November 2013, and may be found on our publicthe Company's website www.iec-electronics.com under the heading of “Investor Information”“Investors” and subheading of “Corporate Governance.” We believeGovernance”. The audit committee believes that each of theits members of the audit committee is independent as defined by NYSE AmexMKT rules and applicable SEC rules and regulations. During Fiscal 2014, the committee met nine times and acted once by written consent. The committee’s meetings include, no less frequently than quarterly, executive sessions with the Company’s independent registered public accounting firm without the presence of the Company’s management.
Management has the primary responsibility for the financial statements and the reporting process, including ourthe Company's system of internal controls, and for the preparation of the consolidated financial statements in accordance with generally accepted accounting principles. OurThe Company's independent accountants are responsible for performing an independent audit of those financial statements in accordance with generally accepted auditing standards and for issuing a report thereon. The audit committee’s responsibility is to monitor and oversee these processes on behalf of the board. The members of the audit committee are not professional accountants or auditors and their functions are not intended to duplicate or certify the activities of management or the independent auditors.
Review of ourthe Company's Audited Financial Statements
In fulfilling its oversight responsibilities, the audit committee reviewed the audited financial statements in ourthe Company's Annual Report on Form 10-K for Fiscal 20112014 with management and discussed the quality and acceptability of ourthe Company's accounting principles, the reasonableness of significant judgments, and the clarity of disclosures in ourthe Company's financial statements.
The audit committee reviewed with the independent auditors, who are responsible for expressing an opinion on the conformity of those audited financial statements with generally accepted accounting principles, their judgments as to the quality and acceptability of the Company's accounting principles and such other matters as are required to be discussed with the committee under generally accepted auditing standards, including PCAOB Auditing Standard No. 16 Communication with Audit Committees, as adopted by the Public Company Accounting Oversight Board. In addition, the audit committee has received the written disclosures and the letter from the independent auditors required by the applicable requirements of the Public Company Accounting Oversight Board regarding the independent auditors’ communications with the audit committee concerning independence, discussed with the independent auditors the auditors’ independence, and considered the compatibility of non-audit services with the auditors’ independence.
The audit committee discussed with the Company's independent auditors the overall scope and plans for their audit. The audit committee met with the independent auditors, with and without management present, to discuss the results of their examination, their evaluation of the Company's internal controls, and the overall quality of the Company's financial reporting.
In reliance on these reviews and discussions, the audit committee recommended to the Company's board of directors (and the board has approved) the inclusion of the Company's audited financial statements for the fiscal year ended September 30, 2014 in the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2014 for filing with the SEC.
1 The material in this audit committee report is not deemed to be “soliciting material,” or to be “filed” with the Securities and Exchange Commission and is not to be incorporated by reference in any of our filings under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date hereof and irrespective of any general incorporation language in any such filings.
The audit committee reviewed with the independent auditors, who are responsible for expressing an opinion on the conformity of those audited financial statements with generally accepted accounting principles, their judgments as to the quality and acceptability of our accounting principles and such other matters as are required to be discussed with the committee under generally accepted auditing standards, including the Statement on Auditing Standards No. 61 (Communications with Audit Committees), as amended, as adopted by the Public Company Accounting Oversight Board in Rule 3200T. In addition, the audit committee has received the written disclosures and the letter from the independent auditors required by the applicable requirements of the Public Company Accounting Oversight Board regarding the independent auditors’ communications with the audit committee concerning independence, discussed with the independent auditors the auditors’ independence, and considered the compatibility of non-audit services with the auditors’ independence.
The audit committee discussed with our independent auditors the overall scope and plans for their audit. The audit committee met with the independent auditors, with and without management present, to discuss the results of their examination, their evaluation of our internal controls, and the overall quality of our financial reporting.
In reliance on these reviews and discussions, the audit committee recommended to our board of directors (and our board has approved) that our audited financial statements for the fiscal year ended September 30, 2011 be included in our Annual Report on Form 10-K for the fiscal year ended September 30, 2011 for filing with the SEC.
The audit committee selects the Company’s independent registered public accounting firm annually and has submitted such selection for the fiscal year ending September 30, 20122015 for ratification by stockholders at the Company’s annual meeting.
|
| |
| Audit Committee:Committee |
| | |
| | James C. Rowe,Edward W. Kay, Jr., Chairman |
| | Amy L. TaitJames C. Rowe, |
| | Jerold L. Zimmerman |
(PROPOSAL 3)
APPROVAL AND ADOPTION
CONSIDERATION OF AN ADVISORY VOTE ON THE IEC ELECTRONICS CORP. 2011 EMPLOYEE STOCK PURCHASE PLANCOMPENSATION PAID TO THE COMPANY’S NAMED EXECUTIVE OFFICERS
General
On August 23, 2011,In accordance with Section 14A of the Securities Exchange Act of 1934, as amended, we are requesting stockholder approval of a non-binding advisory resolution approving the compensation paid to our named executive officers as disclosed pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the compensation tables and narrative discussion in this proxy statement under the caption “Compensation of Named Executive Officers and Directors” beginning on page 21 of this proxy statement. At our 2013 annual meeting of stockholders, we recommended, and our stockholders approved, that we hold this non-binding, advisory vote on executive compensation on an annual basis.
The board of directors requests that stockholders approve the following advisory resolution:
RESOLVED, that the compensation paid to the Company’s named executive officers, as disclosed pursuant to Item 402 of Regulation S-K, including the compensation tables and narrative discussion, is hereby APPROVED.
We believe that our compensation policies and procedures are effective in achieving IEC’s goals of rewarding sustained financial and operating performance and leadership excellence, aligning the executives’ long-term interests with those of our stockholders and motivating the executives to remain with the Company for long and productive careers. These policies and procedures are described below under the section “Compensation of Named Executive Officers and Directors”. The compensation committee of our board of directors, composed entirely of independent directors, in consultation with consultants from time to time, oversees our compensation programs and monitors policies to ensure that those policies are appropriate.
We urge stockholders to read the section entitled “Compensation of Named Executive Officers and Directors” beginning on page 21 of this proxy statement, including the 2014 Summary Compensation table and related tables and narrative included within that section, which provide detailed information on IEC’s compensation policies and practices and the compensation of our named executive officers. As discussed in greater detail in that section, our executive compensation program consists of four principal components: (1) base salary, (2) annual cash incentive compensation, (3) long-term equity compensation, and (4) perquisites and personal benefits. We believe that we have established reasonable base salaries as well as total compensation for our executive officers based on internal comparability and external market data, as well as individual responsibilities and performance. We believe that the cash bonuses paid under our annual incentive plan should and do reward the named executive officers for business and individual performance, encourage effective short-term performance while balancing that approach with a long-term focus, and put a significant portion of total compensation opportunity at risk. We believe that awards granted under our long-term equity incentive plan give our named executive officers a meaningful equity stake in our business and encourage performance by our named executive officers that increases long-term stockholder return, and also serve as an effective tool in attracting and retaining experienced and skilled executive officers. The perquisites and personal benefits paid to our named executive officers are minimal.
Non-Binding Resolution
This advisory resolution, commonly referred to as a “say-on-pay” resolution, is not binding on the Company, the board of directors unanimously approved, and is submitting for stockholder approval,or the IEC Electronics Corp. 2011 Employee Stock Purchase Plan (the “2011 ESPP”). Our 2001 Employee Stock Purchase Plan (the “Prior Plan”) expired September 30, 2011, and no further shares will be purchased under the Prior Plan.
Set forth below is a summary of the 2011 ESPP, which is qualified in its entirety by the specific language of the 2011 ESPP, a copy of which is attached to this proxy statement as Appendix A. Capitalized terms not defined herein shall have the same meanings ascribed to such terms in the 2011 ESPP.
Description of the ESPP
The purpose of the ESPP is to provide employees with an opportunity to acquire a proprietary interest in the economic interest of the Company and thereby to have an additional incentive to promote the Company’s interest and to remain in its employ.
Shares Available
The 2011 ESPP permits the Company to offer up to 150,000 shares of common stock. The shares may be authorized and unissued shares, treasury shares or shares available for issuance under Section 6.9 of the Company’s 2010 Omnibus Incentive Compensation Plan. The number of shares available for issuance under the 2011 ESPP is subject to adjustment in the event of certain changes to our capital structure involving our common stock. The maximum number of shares of common stock that may be purchased by all participants in any purchase period may not exceed 25,000 shares.
Eligibility and Participation
All employees of the Company or its designated subsidiaries who have been employed for a period of time established by the Committee, not to exceed 90 days, are eligible to participate in the 2011 ESPP. However, an employee may not be granted an option to participate in the 2011 ESPP if: (1) immediately after the grant, the employee would own stock or options possessing 5% or more of the total combined voting power or value of the Company’s stock, or (2) the employee’s rights to buy stock under the 2011 ESPP or any other employee stock purchase plans of the Company and its subsidiaries would exceed $25,000 in fair market value of the Company’s common stock for each calendar year in which the option is outstanding. Eligible employees become participants in the 2011 ESPP by completing a subscription agreement authorizing payroll deductions under the 2011 ESPP.
Plan Administration
The 2011 ESPP is administered by the Compensation Committeecompensation committee of the board of directors. The Committeedirectors, and may delegate all or part of its responsibilities or powers to one or more employees or officersnot be construed as it considers appropriate. Subject to the provisions of the 2011 ESPP, the Committee has the full authority to construe and interpret the 2011 ESPP, to adopt rules and regulations for administering the 2011 ESPP, and to make all other determinations deemed necessary or advisable for administering the 2011 ESPP. The Committee’s determination on all such matters will be final and conclusive.
The costs and expenses incurred in administering the 2011 ESPP and maintaining participant accounts will be paidoverruling any decision made by the Company.
Operation of the 2011 ESPP
The Company grants options on October 1 and April 1 of each year. Each purchase period lasts for six months. The Committee may change the timing and duration of purchase periods without stockholder approval upon prior notice as provided in the 2011 ESPP.
Payment for shares of common stock purchased under the 2011 ESPP will be made by authorized payroll deductions from a participant’s compensation, credited to an account maintained by the Company for each participant. An eligible employee who elects to participate in the 2011 ESPP designates a stated whole percentage (e.g. 1%, 2% etc.) of his or her compensation to be deducted from his or her payroll. Compensation generally means a participant’s regular base pay (including commissions, overtime pay and shift premiums, but excluding incentive compensation, incentive payments, bonuses and other similar compensation), as determined as of each pay day. The maximum amount of payroll deductions may not exceed the greater of (1) a specified percentage designated by the Committee (initially 10%, but subject to change by the Committee) and (2) $22,500 for each calendar year. Participants may, upon written notice to the Company, change their payroll deduction rates applicable to future purchase periods, but may not change the rate applicable to the current purchase period.
Each eligible employee who has elected to participate in the 2011 ESPP is entitled on the purchase termination date (the last trading day of the purchase period) to purchase shares of Common Stock at an option price equal to 90% of the fair market value of the Company’s common stock on the last trading day of the purchase period, subject to adjustment byboard. However, the board of directors (but not below 85% of such fair market value).
On the purchase commencement date for each purchase period, a participant is granted an option to purchase such number of shares as is determined by dividing the amount of the participant’s payroll deductions which had accumulated on the purchase termination date by the applicable purchase price. Unless a participant withdraws or suspends participation in the 2011 ESPP or terminates employment before the purchase date in accordance with the terms of the 2011 ESPP, the option will be exercised automatically for the purchase of the full number of shares subject to the option.
No fractional shares will be issued under the 2011 ESPP; any payroll deductions remaining in a participant’s account which are less than the amount required to purchase one share of common stock will be used to purchase shares in the next purchase period (unless the participant has withdrawn as to future periods). During a participant’s lifetime, options to purchase shares may be exercised only by the participant.
A participant may withdraw all (but not less than all) of the payroll deductions credited to his or her account and not yet used to purchase shares under the 2011 ESPP at any time upon notice to the Company as provided in the 2011 ESPP. Upon termination of a participant’s employment with the Company and all designated subsidiaries for any reason (including the participant’s death) during a purchase period, the participant’s participation in the plan and his or her option to purchase shares will terminate automatically, and all of the payroll deductions credited to his or her account and not yet used to purchase shares under the 2011 ESPP will be returned to the participant (or his or her beneficiary designated under the 2011 ESPP). The Committee may establish additional rules related to termination of employment as it relates to the 2011 ESPP.
Additional restrictions may apply to the purchase of shares based on the terms of the 2011 ESPP and Section 423 of the Internal Revenue Code (the “Code”).
The Company or any designated subsidiary may withhold from any payment to be made to a participant under the 2011 ESPP applicable withholding amounts and other taxes due in connection with any disposition of shares purchased under the 2011 ESPP. The Company may use funds received from the sale of common stock under the 2011 ESPP for any corporate purpose.
Participants’ Interest in Option Stock
A participant will have no interest or voting rights in shares of common stock covered by his or her purchase option, or in any dividends declared by the Company in respect of its outstanding common stock, until the option has been exercised.
Designation of Beneficiary; Transferability
A participant may designate a beneficiary to receive any shares and cash from the participant’s account in the event of his or her death in accordance with the terms of the 2011 ESPP. Neither payroll deductions credited to a participant’s account nor any right to exercise an option under the 2011 ESPP may be assigned, transferred, pledged or otherwise disposed of by the participant except by will or by the laws of descent and distribution.
Adjustments for Certain Events; Dissolution or Liquidation; Merger or Sale of the Company
The Committee will make proportional adjustments to the maximum number of shares of common stock that may be delivered under the 2011 ESPP and to outstanding awards to reflect a stock split, reverse stock split, stock dividend, combination or reclassification of the common stock or other extraordinary corporate event which affects the common stock in order to prevent dilution or enlargement of the rights of participants. In the event of a proposed dissolution or liquidation of the Company during a purchase period, or the proposed sale of substantially all of the Company’s assets or merger of the Company with or into another entity, the Committee will establish a new purchase termination date to occur immediately before such dissolution, liquidation, sale or merger. The Committee will notify participants that their purchase options will be exercised automatically on such new purchase termination date unless they withdraw from the purchase period before such date.
Amendment and Termination of the 2011 ESPP
Subject to any applicable law or government regulation, to any requirement that must be satisfied for purposes of Section 423 of the Code and to the rules of the NYSE Amex, the 2011 ESPP may be amended, modified or terminated by our board of directors without the approval of our stockholders, except that stockholder approval would be required for any amendment that would (1) increase the maximum number of shares that may be issued under the 2011 ESPP other than in connection with certain extraordinary corporate events as described above, or (2) change the class of employees eligible to participate in the 2011 ESPP. No modification, amendment or termination of the 2011 ESPP that would materially adversely affect a participant will be effective without the consent of the affected participant.
Term of the 2011 ESPP
The 2011 ESPP was adopted by the board of directors on August 23, 2011 and will become effective as of October 1, 2011, subject to approval by the Company’s stockholders. The 2011 ESPP will continue for a term of 10 years after the effective date unless sooner terminated by the board of directors in accordance with the terms of the 2011 ESPP.
Certain Federal Tax Aspects of the 2011 ESPP
The following summary describes the federal income tax treatment associated with options awarded under the 2011 ESPP. The summary is based on the law as in effect on December 1, 2011. The summary does not discuss state, local or non-U.S. tax consequences. The Company does not intend for the summary to constitute tax advice to any recipient of an award under the 2011 ESPP or to any other person. Each individual should seek tax advice with respect to the consequences of participating in the 2011 ESPP from his or her personal tax advisor.
The 2011 ESPP is not qualified under Section 401 of the Code but is intended to be a qualified employee stock purchase plan under Section 423 of the Code. An employee pays no tax when the employee enrolls in the 2011 ESPP, when the employee purchases shares of common stock pursuant to the 2011 ESPP or when the employee receives shares of common stock.
Employees will, however, have a taxable gain or loss when they sell or dispose of shares purchased through the 2011 ESPP. If an employee disposes of such shares within two years from the date of grant of the option or within one year from the date the purchase of such shares (a “disqualifying disposition”), then the excess of the fair market value of the shares on the purchase date over the purchase price will be taxed as ordinary income. The amount of such difference will be added to the basis of the shares for the purpose of determining the amount of gain or loss upon such disposition, and such gain or loss will be long or short-term capital gain or loss for income tax purposes depending upon how long such shares were held. The Company will be entitled to a deduction from income in an amount equal to the ordinary income reported by the employee arising from a disqualifying disposition.
If an employee sells the stock after the holding period described above, then the lesser of (i) the excess of the fair market value of the shares on the first day of the offering period over the purchase price and (ii) the excess of the amount realized over the purchase price will be treated as ordinary income and the balance ofcompensation committee will take the employee’s gain, if any, will be long term capital gain. The Company will not be entitled to a deduction from income in an amount equal to the ordinary income reported by the employee.
The discussion above is only a summary of federal (and not statevoting results into account when evaluating our executive compensation program and local) income consequences to the Company and participating employees. The summary is general in nature and is not intended to cover all the tax consequences that may apply to a particular employee or to the Company. The provisions of the Code and regulations thereunder relating to these matters are complicated, and their impact in any one case may depend upon the particular circumstances.
Registration with the SEC
If the 2011 ESPP is approved by the stockholders, pursuant to the Securities Act of 1933, IEC will file a Registration Statement with the SEC covering the shares of common stock authorized for issuance under the 2011 ESPP. The Company will not be obligated to issue shares of common stock under the 2011 ESPP unless the exercise of the option and issuance and delivery of shares pursuant thereto comply with applicable law, including without limitation the federal securities laws and the requirements of the NYSE Amex.
New Plan Benefits
Because benefits under the 2011 ESPP depend on participants’ elections to participate and the fair market value of the common stock at variousconsidering future dates, it is not possible as of the date of this proxy statement to determine future benefits that will be received by executive officers and other employees if the 2011 ESPP is approved by the stockholders. Non-employee directors are not eligible to participate in the 2011 ESPP. The closing price of the Company’s common stock on the NYSE Amex on December 8, 2011 was $4.95 per share.compensation arrangements.
Required Vote
The affirmative vote of the holders of a majority of the shares of common stock present in person or represented by proxy at the annual meeting and entitled to vote on the matter is needed to approve the 2011 ESPP.non-binding resolution approving the compensation paid to our named executive officers. Under Delaware law, an abstention will have the same legal effect as a vote against approval of the 2011 ESPP,this non-binding resolution, and broker non-votes will have no effect on the outcome of the vote.
Unless authority to so vote is withheld, the persons named in the proxy card intend to vote shares as to which proxies are received in favor of approval of the 2011 ESPP.non-binding resolution approving the compensation paid to our named executive officers.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE APPROVAL OF THE 2011 EMPLOYEE STOCK PURCHASE PLAN.COMPENSATION PAID TO OUR NAMED EXECUTIVE OFFICERS.
COMPENSATION OF NAMED EXECUTIVE OFFICERS AND DIRECTORS
Named Executive Officers
This proxy statement contains information about the compensation paid to our chief executive officer, and our two other most highly compensated executive officers serving at the end of Fiscal 2014, and one former executive officer, who would have been one of our most highly compensated executive officers during Fiscal 2014 but for the fact that he was no longer serving as an executive officer at the end of Fiscal 2014 (collectively, the “named executive officers”) during Fiscal 2011..
| · | W. Barry Gilbert – Chairman and Chief Executive Officer |
W. Barry Gilbert - Chairman and Chief Executive Officer (“CEO”) | · | Jeffrey T. Schlarbaum – President |
Michael T. Williams - Vice President, Finance and Chief Financial Officer (“CFO”) | · | Donald S. Doody – Executive Vice President of Operations |
Brett E. Mancini - Vice President, Business Development and Engineering Solutions (“VP”)Vincent A. Leo - Former Chief Financial Officer (“former CFO”)
General Information
The following discussion provides a summary of our compensation policies and the compensation decisions made with respect to our named executive officers.
Objective of Our Compensation Program
The goal of our executive compensation program is to support the attainment of our long and short-term strategic and financial objectives, thereby aligning the interests of the Company’s executives with the interests of stockholders. Our executive compensation program is intended to provide a competitive program that enables us to attract, motivate, and retain the key executives required to enhance stockholder value.
The Company’s Approval and Decision Making Process
The compensation committee (“Committee”of our board of directors (the “Committee”) of the board approvesreviews and recommends to the full board all compensation decisions regarding our directors and chief executive officer, and reviews and approves all compensation decisions regarding our other named executive officers. The Committee generally approves equity awards for the Company’s other employees, although the Committee from time to time has delegatedincluding by delegation to the Company’s chief executive officerCEO the authority to award at his discretion up to a specified number of stock options or restricted shares to non-executive employees for special performance or recruitment to the Company. In Fiscal 2011,2014, an aggregate of 78,00050,500 options werewas granted to keynon-executive employees and new hires andpursuant to key employees andsuch delegated authority. Additionally, an aggregate of 184,958225,703 shares of restricted stock werewas issued by the Committee to key employees, including members of the senior management team.
In order to maintain market competitiveness the Committee periodically reviews relevant competitive data provided by third party compensation professionals for the purpose of ensuring theunderstanding current compensation structure is designed to achieve the stated objectives. In Fiscal 2010, the Companypractices. The Committee last engaged a compensation consultant, Grahall Partners LLC, (“Grahall”), a leading provider of compensation consulting services and survey data, to assist the Committee in reviewing total compensation for our named executive officers and other key employees. Services included andirectors in the fiscal year ended September 30, 2012 ("Fiscal 2012"). The Committee does not have a formal policy of “benchmarking” named executive officer compensation review and presentation of an overview of executive compensation trends and developments to the Committee (the “2010 Report”). During Fiscal 2010, the Committee also reviewed with Grahall certain data regarding director compensation. No further assessment regarding executive or director compensation was conducted by Grahallagainst a certain percentile of the market data or using the market data to establish the level or mix of compensation. Rather, it uses market data as one
reference point among a number of factors in evaluating compensation. The Committee also considers factors described in more detail below in “Compensation of Our Named Executive Officers – Elements”.
Starting in Fiscal 2011.2013, the Committee considered the results of the stockholder advisory vote on executive compensation at the most recent annual meeting of stockholders. Approximately 86% of stockholders who voted on the say-on-pay proposal at the 2014 Annual Meeting voted to approve the Company’s executive compensation.
Compensation of the ExecutivesOur Named Executive Officers – Elements
The compensation program for the named executive officers consists of the following elements:
| · | Base salary compensation; |
Annual cash incentive compensation;
| · | Annual cash incentive compensation; |
Long-term equity incentive compensation; and | · | Long-term equity incentive compensation; and |
| · | Perquisites and other personal benefits. |
Our named executive officers are also entitled to participate in a deferred compensation plan and a 401(k) savings plan, both described below.
The Committee has designed an executive compensation program consisting of these elements, which are intended to work together to provide a total compensation package that is reasonable, competitive and related to both the Company’s performance and the individual performance of Company employees, including our named executive officers. The philosophy guiding the Committee in establishing the Company’s compensation policies and practices is to establish a program that:
is competitive with the market in order to help attract, motivate and retain highly qualified employees and executives;
creates a performance-based link between executive compensation and the attainment of financial, operational and strategic goals that we believe are critical drivers of sustained value creation over the long term;
aligns our executives’ interests with the interests of our stockholders;
does not create excessive risk taking behavior by our employees and executives; and
fosters a long-term commitment by executives.
Mr. Leo, our former CFO, did not participate in any of the compensation programs described above. He was not an employee of the Company, but rather performed his services under an engagement letter between the Company and Insero more particularly described in “Certain Relationships and Related Person Transactions – Policies and Procedures for Review, Approval and Ratification of Related Person Transactions” on page 34.
Base Salary Compensation
Base salaries are used to provide a fixed amount of compensation for the named executive officer’s regular work. The salaries of the named executive officers are reviewed on an annual basis, as well as at the time of promotion or other change in responsibilities. Salary ranges have beenSalaries are developed for each position using internal comparability, and external market data collected through Grahall. The ranges are based onGrahall, affordability, the responsibilities and scope of each position, and experience, skills and leadership capabilities required to perform each position.
For the named executive officers, other than the chief executive officer,CEO, the chief executive officerCEO prepares a salary recommendation following a review of individual performance competitive market data, and affordability for the Company.factors described above. The recommendation is presented to the Committee. The Committee relies in part on the chief executive officer’sCEO’s evaluation of each other named executive officer’s performance in deciding whether to make an adjustment to each executive’s salary in a given year. In the case of a change in role, careful consideration is given to the new responsibilities, externalinternal pay practices and internal peer comparisons,external market data, in addition to past performance and experience. With respect to the base salary of the CEO, the board considers individual and Company performance, as well as affordability for the Company and external market practices prior to recommending any changes.
AllChanges in the CEO’s compensation are generally effective on November 1 of each year, and compensation changes for other executives are typically effective on January 1 of each year. With respect to executive officers serving at the baseend of Fiscal 2014, for Fiscal 2013, the Committee recommended, and the board approved, a 7% increase in Mr. Gilbert’s salary, from $326,000 to $350,000, and for Fiscal 2014 no change was made to his salary. In Fiscal 2014 Mr. Mancini’s salary of the chief executive officer, the board considers individual$183,000, and Company performance, as well as external market practices, prior to recommending any changes. In Fiscal 2011, the CEO’sMr. Williams’s salary was increased from $280,000 to $296,800, or 6%. Base salary increases for our other named executive officers varied from 2.9% to 5%. The increasesof $185,000, were determinedapproved by the Committee based uponin connection with their appointments as executive officers on January 29, 2014 and February 8, 2014 respectively.
Our former executive officer, Mr. Leo, served as our chief financial officer during Fiscal 2013 and until June 1, 2014, remained a principal and shareholder of Insero during the factors discussed above, competitive conditions,entire period of his service, and the Committee’s view of each officer’s duties, responsibilitieswas compensated by Insero, as more fully described below under “Certain Relationships and performance.Related Person Transactions”. The Company did not pay any base salary directly to Mr. Leo.
Annual Cash Incentive Awards
Our employed named executive officers may be awardedare eligible for awards of annual cash bonuses under our annual management incentive plan (“MIP”). The MIP rewardsincentive plan for Fiscal 2014 (the “2014 MIP”) was designed to reward executives and management for overall Company performance with respect to increases in revenue and net income before taxtaxes and incentive,incentives and improved cash flow.sales. The incentive bonuses under the MIP are generally granted based on a percentage of each named executive officer’s base salary earned during the fiscal year. We believe this variable performance plan aligns the interests of our named executive officers with our stockholders’ interest in improving the financial strength of the Company as it continues to grow.
The 2014 MIP linked awards to performance results and was designed to provide cash incentive awards to the participating executive officers of the Company (“Participants”). For Fiscal 2014, the Participants consisted of our CEO, our CFO and our VP. Because Mr. Leo, our former CFO, was not an employee of the Company, he was not eligible to receive awards under the 2014 MIP. The 2014 MIP was finalized by the Committee on November 13, 2013.
Each Participant was eligible to receive an award, if any, determined on the basis of the degree of achievement of certain specified fiscal year performance objectives (“Goals”). For Fiscal 2014, Goals were based upon the following measurements:
| |
| (i) | Net Income Before Taxes and Incentives -- Adjustments are made for gains or losses from non-operating events such as acquisition escrow clawbacks, and calculations exclude the impact of unbudgeted legal and accounting fees and director’s and officer’s insurance payments arising from the restatement of the Company’s earnings described in its Annual Report on Form 10-K/A and Quarterly Report on Form 10-Q/A, each filed with the Securities and Exchange Commission on July 3, 2013 |
(ii) Sales
The Committee assigned a weighting factor of 50%, to each Goal for each Participant, with the total of the weighting factors for each Participant being 100%.
The Compensation Committee established:
| |
| (i) | as a precondition for payment of any awards, the Company had to have positive net income for Fiscal 2014 ("Plan Threshold"), |
| |
| (ii) | minimum plan entry performance levels for each Goal for each Participant (“Minimum(s)”), set at a level in excess of prior fiscal year achievement to assure that stockholders receive the first portion of the benefit of increased value, |
(iii) a target goal (the “Target”) for each Goal for each Participant based on the Company budget, and
(iv) a maximum cap ("Maximum") of 200% of the Target percentage of base salary.
If all Targets were achieved, Awards would be earned by Participants equal to the following percentages of base salary: (i) for the CEO - 60%, (ii) for the CFO- 45%, pro rated for the portion of the year worked, with a minimum of $50,000 provided he remains employed on the date of filing of the Company’s Annual Report of Form 10-K for Fiscal 2014, and (iii) for the VP- 50%. If performance was less than Target but at least the Minimum the Participants would receive a prorated Award
between the Minimum and the Target based upon actual performance. If achievement was in excess of Target, the Award would be prorated between the Target and the Maximum. At the Minimum, entry is at 5% of base salary for each Goal. For performance from Minimum to Target, and from Target to Maximum, Awards are measured prorated linearly. The Compensation Committee retained the right to review and consider performance above the 200% cap. No Award would be made with respect to a Goal if the applicable Minimum was not achieved.
After the end of the fiscal year, the Compensation Committee determines the extent to which the Goals have been achieved by each respective Participant and calculates the amount of the Award to be paid to each (the “Calculated Award”). However, the Compensation Committee with approval of the independent members of the Board of Directors in the case of the CEO, and the Compensation Committee in consultation with the CEO in the case of other Participants, may modify the Calculated Award by plus or minus up to 25%.
The Compensation Committee reserved the right in its discretion to modify or waive categories or goals. Among others, the Goals set forth in the 2014 MIP are based upon the organic growth of the Company and do not reflect the impact of any acquisitions, the impact of which, if any, would be separately reviewed by the Compensation Committee.
Payment of any Award to a Participant is made within fifteen (15) days after receipt by the Company of the audited financial statements for the applicable fiscal year. In order to receive an Award, a Participant must be an employee of the Company on the date such Award is to be paid.
The following table setstables set forth the Fiscal 2011 performance targets and payout amounts (as2014 Targets (weighted as a percentage of targeted bonus) and potential payout amounts for each of the named executive officers, at the threshold, targeted and maximum performance levels. The threshold award level must behave been exceeded after taking into consideration the impact of the payment of any bonus under the MIP before there can be any payout.
| | | | | | Entry Threshold | | | Target | | | Maximum | |
| Component | | Weight | | | Goal | | | Payout | | | Goal | | | Payout | | | Goal | | | Payout | |
| Revenue (in millions) | | | 40 | % | | $ | 105,000 | | | | 4.0 | % | | $ | 117,400 | | | | 40 | % | | $ | 127,000 | | | | 80 | % |
| NIBT & Incentive | | | 35 | % | | $ | 7,490 | | | | 3.5 | % | | $ | 9,719 | | | | 35 | % | | $ | 11,745 | | | | 70 | % |
| Cash Flow (repayment of funded debt) | | | 25 | % | | $ | 8,000 | | | | 2.5 | % | | $ | 8,000 | | | | 25 | % | | $ | 9,500 | | | | 50 | % |
| Total Potential | | | 100 | % | | | | | | | 10 | % | | | | | | | 100 | % | | | | | | | 200 | % |
The actual cash incentive award is determined by the Committee by comparing each named executive officer’s level of achievement against his individual financial and strategic performance objectives and as a result may be less than or greater than the target bonus amount.W. Barry Gilbert, Chairman & CEO:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Entry Threshold | | Target | | Maximum |
| Component | | Weight | | Goal | | Payout | | Goal | | Payout | | Goal | | Payout |
| | | |
| | (in thousands) | | |
| | (in thousands) | | |
| | (in thousands) | | |
|
| NIBT & Incentive | | 50 | % | | $ | 1,118 |
| | $ | 17,500 |
| | $ | 9,463 |
| | $ | 105,000 |
| | $ | 15,853 |
| | $ | 210,000 |
|
| Sales | | 50 | % | | 148,694 |
| | 17,500 |
| | 159,026 |
| | 105,000 |
| | 166,775 |
| | 210,000 |
|
| Total Potential: | | 100 | % | | |
| | $ | 35,000 |
| | |
| | $ | 210,000 |
| | |
| | $ | 420,000 |
|
Michael T. Williams, Vice President, Finance and Chief Financial Officer:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Entry Threshold | | Target | | Maximum |
| Component | | Weight | | Goal | | Payout(1) | | Goal | | Payout | | Goal | | Payout |
| | | |
| | (in thousands) | | |
| | (in thousands) | | |
| | (in thousands) | | |
|
| NIBT & Incentive | | 50 | % | | $ | 1,118 |
| | $ | 9,250 |
| | $ | 9,463 |
| | $ | 41,625 |
| | $ | 15,853 |
| | $ | 83,250 |
|
| Sales | | 50 | % | | 148,694 |
| | 9,250 |
| | 159,026 |
| | 41,625 |
| | 166,775 |
| | 83,250 |
|
| Total Potential: | | 100 | % | | |
| | $ | 18,500 |
| | |
| | $ | 83,250 |
| | |
| | $ | 166,500 |
|
(1)For Fiscal 2014 only, subject to proration for portion of year worked and a minimum payout of $25,000 if employed on July 15, 2014 and additional $25,000 if employed at time of filing of Annual Report on Form 10-K ("2014 10-K")
Brett E. Mancini, Vice President, Business Development and Engineering Solutions:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Entry Threshold | | Target | | Maximum |
| Component | | Weight | | Goal | | Payout | | Goal | | Payout | | Goal | | Payout |
| | | |
| | (in thousands) | | |
| | (in thousands) | | |
| | (in thousands) | | |
|
| NIBT & Incentive | | 50 | % | | $ | 1,118 |
| | $ | 9,150 |
| | $ | 9,463 |
| | $ | 45,750 |
| | $ | 15,853 |
| | $ | 91,500 |
|
| Sales | | 50 | % | | 148,694 |
| | 9,150 |
| | 159,026 |
| | 45,750 |
| | 166,775 |
| | 91,500 |
|
| Total Potential: | | 100 | % | | |
| | $ | 18,300 |
| | |
| | $ | 91,500 |
| | |
| | $ | 183,000 |
|
No MIP awards were earned related to Fiscal 2014 with the exception of the guaranteed minimum of $50,000 for Mr. Williams described above, $25,000 of which was earned on filing the Company's 10-K for fiscal 2014 during fiscal 2015. The actual cash incentive awards paid to our named executive officers for Fiscal
20102013 and Fiscal
20112014 performance are shown in the “Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table on page
25.28.
Long-Term Equity Incentive Awards
The purpose of the Company’s Long-Term Incentive Plan (“LTIP”) is to motivate the Company’s executives and certain designated key employees to enhance the long-term value of the Company by aligning their interests with those of the stockholders. Because Mr. Leo, our former chief financial officer, was not an employee of the Company, he was not eligible to participate in the LTIP during Fiscal 2014. However, in Fiscal 2012, Mr. Leo received an award of 20,000 shares of restricted stock in connection with his appointment as our chief financial officer. 2,000 of these shares vested in Fiscal 2013 and an additional 6,000 shares vested in Fiscal 2014. The remaining unvested shares were forfeited when Mr. Williams replaced Mr. Leo as our CFO. We have been advised that originally Mr. Leo held the restricted such shares for the benefit of Insero, but as part of Insero’s compensation arrangements with Mr. Leo, Insero agreed that 2,000 of the vested shares would no longer be held for the benefit of Insero and instead would be held by Mr. Leo without further beneficial interest of Insero.
Equity-based compensation and ownership is intended to ensure that our named executive officers and other key employees have a continuing investment in the long-term success of the Company. The Committee believes that stock options and other methods of equity-based incentive compensation, such as restricted stock, are critical in motivating the long-term creation of stockholder value and in attracting and retaining key employees.employees with outstanding abilities and skills. For Fiscal 2011, all2014, equity-based compensation awarded to our named executive officers was awarded under the Company’s 2001 Stock Option and Incentive Plan (the “2001 Plan”), which is a stockholder approved plan.
At the Company’s 2011 annual meeting of stockholders, the Company’s stockholders approved thestockholder-approved 2010 Omnibus Incentive Compensation Plan (the “2010 Plan”). All
The LTIP for Fiscal 2014 (the “2014 LTIP”) provided for awards of equity-based incentive compensation awarded after December 12, 2011 willrestricted stock to be awardedmade under the 2010 Plan.
In Fiscal 2009,Plan, to enable and encourage participants to increase their ownership in the Company by rewarding achievement of a high level of corporate financial performance through providing opportunities to participate in stockholder gains. The 2014 LTIP was approved by the Committee and Board approved a new long-term incentive strategy pursuant to which the named executive officers and certain other executives and key employees will be eligible to receive restricted shares and/or stock options, at the discretion of the Committee, based upon the achievement of certain pre-established performance goals. Prior to Fiscal 2009, long-term incentive compensation consisted of stock options only.
The following table sets forth the Fiscal 2011 performance targets at the threshold, target and maximum levels. Each performance target is weighted equally.
| Component | | Threshold | | | Target | | | Maximum | |
| Net Income Before Tax (in millions) | | $ | 7,400,000 | | | $ | 9,221,000 | | | $ | 9,500,000 | |
| Return on Sales | | | 6.75 | % | | | 7.50 | % | | | 8.25 | % |
ToThe LTIP measures Company performance over a one-year fiscal period and the extentaward is paid out at the end of the fiscal period based on the attainment of annual performance targets aregoals, measured company-wide and pre-established by the Committee. The Committee established a single performance goal (“Performance Goal”) for Fiscal 2014, revenue growth, which is the metric that the Committee believes is key to building long-term stockholder value. Revenue growth was chosen as an objective measure of building long-term stockholder value because it best captures the nature of the Company’s business strategy. The Company’s customers seek contract manufacturing partners that provide high quality, long-term stable capabilities that enhance their supply chain. Establishing and growing these relationships requires several years to build trust, and once that trust is established, these relationships can extend over several years. Moreover, potential customers often rely on the Company’s current customers as tangible signals of the Company’s capabilities. Growing revenues today generates future revenues and hence future value for the shareholders.
The Committee also establishes:
| |
| (i) | a minimum entry performance level for the Performance Goal (“Performance Goal Minimum”), set at a level in excess of prior fiscal year achievement to assure that stockholders receive the first portion of the benefit of increased value, and |
| |
| (ii) | a target goal (the “Target”) for the Performance Goal based on the Company budget. |
If the Performance Goal was achieved at Target, the respective Participants would earn awards with a value equal to the following percentages of base salary: (i) for the CEO - 60%, (ii) for the VP - 30% and (iii) for other Participants - 20%. For Fiscal 2014 the CFO, Mr. Williams, was not eligible to participate in the LTIP, and instead received a grant of 50,000 shares of restricted stock vesting 10%, 20%, 30% and 40%, respectively, on the second through fifth anniversary dates of his employment.
If performance was less than the Target, but at least the Performance Goal Minimum, the award would be pro rated, using a calculation base of 50% of the award at Target for achievement at exactly the Performance Goal Minimum. If the Target was surpassed, the award at Target would increase pro rata up to a cap of 200% of the Target level award. The Compensation
Committee reserved the right to review and consider performance above the 200% cap. No award would be made if the Performance Goal Minimum was not achieved.
The equivalent dollar value of aneach award, equal to a predeterminedas calculated based on the applicable percentage of the recipient’s base salary, willis the “Calculated Value”. For Fiscal 2014, each award would be calculated for each recipient.in the following way. The number of shares of restricted shares orstock awarded is equal to the number of options to be awarded to a recipient will be based upon the value of a recipient’s awardCalculated Value divided by the average closing price of the Company’s common stock on the NYSE AmexMKT for all trading days falling within the period beginning July 1, 2014 and ending September 30, 2014.
After the end of the fiscal year, the Committee determines the extent to which the Performance Goal has been achieved and approves the amount of the award to be paid to each participant. However, (i) based on his evaluation of a Participant’s performance, the CEO may recommend that the Calculated Value for that Participant be modified by plus or minus up to 25%, and (ii) the Committee may recommend that the Calculated Value for the 90 days priorCEO be modified by plus or minus up to September 30, 2011.25%. All modifications to a Calculated Value for any participant must be approved by the Committee. Additionally, any modification to the Calculated Value for the CEO must be approved by the independent members of the board of directors. Use of the modification factor is not expected to be an annual event, but is to be used sparingly, when the actual results achieved, whether positive or negative, are not appropriately reflected in the Calculated Value.
Any restricted shareAll LTIP awards granted prior to October 2011 are evidenced by a Restricted Stock Award Agreement in the manner set forth in 2010 Plan. Each award would be subject to a four-yearfive-year period of restriction, during which period the unvested restricted sharesstock may not be sold or otherwise transferred. TheAs to one half (1/2) of the restricted shares, the restrictions willwould lapse as follows: 50%and the shares would vest on the date four (4) years after the date the award is granted. As to the other one half (1/2) of the shares, after threethe restrictions would lapse and the shares would vest on the date five (5) years fromafter the date the restricted shares are awarded and 50%Award is granted. If a Participant’s employment with the Company is terminated for any reason whatsoever, other than death, disability, retirement or change in control, before the lapse of the sharesrestrictions, the unvested restricted stock would be deemed forfeited by the participant and would be returned to or cancelled by the Company. The Restricted Stock Award Agreements may contain such other terms and conditions deemed appropriate by the Compensation Committee. Such provisions need not be uniform among all grants of Awards among all Participants.
Awards earned as provided above generally are made within 15 days after four years fromreceipt by the Company of the audited financial statements for the applicable fiscal year. In order to receive an award, a participant must be an employee of the Company on the date the restricted shares are awarded. Any restricted share awards granted after October 1, 2011 will be subject to a five-year period of restriction, and those restrictions will lapse with respect to 50%such award is granted. For purposes of the shares after four years fromLTIP, the grant date is the date on which the restricted shares are awardedCommittee approves the awards for all Participants except the CEO, for whom the grant date is the date on which the board approves the award.
The Committee reserves the right in its discretion to modify categories or goals. In addition, (i) the Committee may adjust the plan for non-operating events that affect goals, and 50%(ii) the Performance Goal set forth in the 2014 LTIP is based upon the organic growth of the shares after five years fromCompany. The impact of acquisitions would be reviewed separately by the dateCommittee.
The following table sets forth the restricted shares are awarded.2014 LTIP Performance Goal at the threshold, Target and maximum level.
|
| | | | | | | | | | | | |
| Component | | Threshold | | Target | | Maximum |
| Revenue (in thousands) | | $ | 148,694 |
| | $ | 159,026 |
| | $ | 166,775 |
|
To the extent the Performance Goal was achieved, the Calculated Value would be determined for each Participant.
Because equity awards under the 2001 Plan and the 2010 PlanLTIP are based on the prior fiscal year’s performance, they are not granted until after the end of the fiscal year and the completion of our audited financial statements. Therefore, theyawards related to performance in one fiscal year are not reflected in any of the compensation tables in this proxy statement andfor that fiscal year. Instead, they will beare included in the compensation tables for the following fiscal year. Thus, awards for Fiscal 2012. 2013 performance would be reflected in Fiscal 2014 and awards for Fiscal 2014 performance would be reflected in Fiscal 2015; provided, however, no awards were earned for either Fiscal 2013 or Fiscal 2014 performance.
The restricted share awards included in the Executive Officer Compensation Tables section that follows this section reflect awards for performancegranted to the CFO and VP in Fiscal 2010 and granted2014 outside the 2014 LTIP in November 2010connection with their appointments as well as shares awarded to Mr. Schlarbaum and Mr. Doody inexecutive officers. In recognition of their respective October 2010 promotions.
Named Executive Officer | | Restricted Share Award | |
W. Barry Gilbert | | 27,800 | |
Jeffrey T. Schlarbaum | | 32,500 | |
Donald S. Doody | | 21,250 | |
Other than the restricted share awards described above, no options or other equity-based awards were granted to any of the namedhis appointment as an executive officersofficer in Fiscal 2011.2014, Mr. Mancini, the VP, received a grant of 30,000 restricted shares vesting 10%, 20%, 30% and 40%, respectively, on the first through fourth anniversary dates of such appointment. Mr. Williams also received a grant of 50,000 restricted shares in connection with his employment by the Company as its Vice President, Finance, vesting on the same schedule.
Perquisites and Personal Benefits
TheIn Fiscal 2014, the Company paid $17,373$17,941 in premiums in lieu of salary for long term care insurance contracts for Mr. Gilbert and his wife, and $10,149$9,177 in premiums with respect to life insurance policies maintained for his benefit. Although the Company pays only a portion of medical insurance premiums for all employees, the Company paid the full premium for a family plan for Mr. Gilbert, resulting in payments over and above the Company plan of $5,022.
In Fiscal 2014, the Company paid $1,109 in premiums in lieu of salary for life insurance policies maintained for the benefit of Mr. Mancini.
Deferred Compensation
Effective January 1, 2009, the Company established the IEC Electronics Corp. Management Deferred Compensation Plan (the “Deferred Compensation Plan”) which allows certain designated employees, including the named executive officers, to defer up to 100% of their base salary and up to 100% of any performance-based incentive bonus on a tax-deferred basis. On the last day of each fiscal quarter, the Company credits the deferred account with interest which is based on the average interest rate paid by the Company during the quarter to its senior lender. Deferred compensation will be paid to a participant upon separation from service on the date and in the manner elected by the participant in his/her deferred compensation agreement. If no election is made, the deferred account will be paid out in quarterly installments over ten years beginning January 1 of the year following separation from service. Deferred amounts may not be withdrawn prior to their payment start date, except to meet an “unforeseeable financial emergency” (in the Committee’s discretion) or in the event of a change in control of the Company. Payments to “key employees” as defined under the Federal tax laws are delayed at least six months after termination of employment. During Fiscal 2011,2014, only Mr. Gilbert elected to defer a portion of his compensation. Amounts deferred by Mr. Gilbert are included in the Summary Compensation Table but were deducted from the Company’s cash salary payments to him and deferred by him pursuant to the Deferred Compensation Plan. In Fiscal 2014 and 2013 the average interest rate paid by the Company to its senior lender exceeded 120% of the applicable federal rate of interest (“AFR”). The amount of interest in excess of 120% of AFR was $1,313 and $275, for Fiscal 2014 and 2013, respectively. The excess interest is reflected in the Summary Compensation Table.
Retirement Benefits
All employees, including our named executive officers, are eligible to participate in the Company’s 401(k) Employee Savings Plan (“Savings Plan”). The Savings Plan is a defined contribution tax-qualified retirement savings plan pursuant to which employees are able to contribute a portion of their eligible cash compensation to the Savings Plan. The Company matches up to 1.5% of contributions made by participating employees of our IEC Electronics Corp – Albuquerque subsidiary (formerly known as General Technology Corporation).and beginning June 28, 2014, 2014, up to 1.5% of contributions made by other participating Company employees. None of our named executive officers is covered by a pension plan.
Executive Officer Compensation Tables
SUMMARY COMPENSATION TABLE
The following table sets forth information concerning total compensation earned or paid to our named executive officers for Fiscal 20112014 and Fiscal 2010.2013. A description of the material factors necessary to understand the information in the table is contained above in the “Base Salary Compensation,” “Annual Cash Incentive Awards,” and “Long-Term Equity Incentive Awards” subsections of “Compensation of Named Executive Officers and Directors - General Information. More detailed information also is presented in the other tables and in the footnotes to the tables.
Name & Principal Position | | Year | | Salary(1) | | | Stock Awards (2) | | | Non-Equity Incentive Plan Compensation (3) | | | All Other Compensation (4) | | | Total ($) | |
| W. Barry Gilbert, | | 2011 | | $ | 298,455 | | | $ | 161,240 | | | $ | 530,577 | | | $ | 29,085 | | | $ | 1,019,357 | |
| Chairman & CEO | | 2010 | | $ | 280,664 | | | $ | 108,579 | | | $ | 163,855 | | | $ | 29,815 | | | $ | 582,913 | |
| Jeffrey T. Schlarbaum, | | 2011 | | $ | 239,721 | | | $ | 182,500 | | | $ | 182,018 | | | $ | 6,000 | | | $ | 610,239 | |
| President | | 2010 | | $ | 228,808 | | | $ | 43,200 | | | $ | 81,791 | | | $ | 6,000 | | | $ | 359,799 | |
| Donald S. Doody, | | 2011 | | $ | 194,869 | | | $ | 120,200 | | | $ | 152,086 | | | | | | | $ | 467,155 | |
| Executive VP of Operations | | 2010 | | $ | 185,846 | | | $ | 36,720 | | | $ | 61,168 | | | | | | | $ | 283,734 | |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Name and Principal Position | | Year | | Salary (1) | | Stock Awards (2) (3) | | Option Awards | | Non-Equity Incentive Plan Compensation (4) | | All Other Compensation (5) (6) | | Total |
| W. Barry Gilbert, | | 2014 | | $ | 359,093 |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | 33,453 |
| | $ | 392,546 |
|
| Chairman & CEO | | 2013 | | $ | 348,154 |
| | $ | 135,547 |
| | $ | — |
| | $ | — |
| | $ | 31,903 |
| | $ | 515,604 |
|
| Michael T. Williams | | 2014 | | $ | 111,742 |
| | $ | 206,000 |
| | $ | — |
| | $ | 25,000 |
| | $ | — |
| | $ | 342,742 |
|
| VP and CFO | | 2013 | | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
|
| Brett E. Mancini | | 2014 | | $ | 187,374 |
| | $ | 122,400 |
| | $ | — |
| | $ | — |
| | $ | 1,109 |
| | $ | 310,883 |
|
| VP | | 2013 | | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
|
| Vincent A. Leo, | | 2014 | | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | 237,500 |
| | $ | 237,500 |
|
| Former CFO | | 2013 | | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | 329,000 |
| | $ | 329,000 |
|
| |
(1) | The “Salary” column reflects the base salary foractually paid to each of our named executive officers during the applicable fiscal year, which may differ from the salary described in “Compensation of Named Executive Officers - Base Salary Compensation” due to effective dates for increases that do not fall on the first day of the fiscal year.year and pay periods that may overlap fiscal years. The amounts shown for Mr. Gilbert include any portion of base salary deferred and contributed by the named executive officerhim to our Deferred Compensation Plan. |
| |
(2) | Pursuant to the 2010 Plan, restrictedRestricted share awards were granted to the named executive officers in Fiscal 20112013 based upon the achievement of certain performance targets in Fiscal 2010.2012. In Fiscal 2013 for Fiscal 2012 performance, Mr. Gilbert was awarded 27,800 restricted shares; Mr. Schlarbaum was awarded 22,50019,616 restricted shares, and Mr. DoodyMancini was awarded 14,0003,012 restricted shares. Also includedAll awards were made under the LTIP for Fiscal 2013 as described in this column are 10,000 restricted shares awarded to Mr. Schlarbaum and 7,500 restricted shares awarded to Mr. Doody in recognition of their respective October 2010 promotions. Awards related to Fiscal 2011 have not yet been determinedthe Company’s definitive proxy statement on Schedule 14/A filed with the SEC on December 27, 2013. Provided that the executive officer remains employed by the Compensation Committee. Company, 50% of awards granted in Fiscal 2013 will vest on each of November 26, 2016 and 2017. |
Restricted share awards granted in Fiscal 2014 were granted outside the 2014 LTIP, and were granted in connection with the appointments of Mr. Williams and Mr. Mancini as executive officers of the Company.
| |
(3) | The amounts shown reflect the aggregate grant date fair value computed in accordance with FASB ASC 718. Under ASC 718, the fair value of such stock awards is determined as of the date of grant using the closing market price of common stock on the date of grant. The assumptions used for the valuations are set forth in Note 1 (Our Business and Significant Accounting Policies) and in Note 10 (Stock-Based Compensation) to our audited consolidated financial statements in our Annual Report on Form 10-K for the fiscal year ended September 30, 2011. These amounts reflect our accounting for these awards and do not correspond to the actual values that may be realized by the named executive officers and do not represent actual cash compensation paid to the recipient. Pursuant to SEC rules, we disregarded the estimates of forfeitures related to service-based vesting conditions. |
| (3) |
(4) | The amounts shown reflect cash amounts paid under our MIP for services performed in Fiscal 20102014 under our 2014 MIP, described on page 23, “Annual Cash Incentive Awards,” and for services performed in Fiscal 2011.2013 under our MIP for fiscal 2013 as described in the Company’s definitive proxy statement on Schedule 14/A filed with the SEC on December 27, 2013. Payouts were determined by our board, in the case of Mr. Gilbert, and by the compensation committee,Committee, in the case of the other named executive officers, in November 20102014 for Fiscal 2014 performance, and December 2011, respectively,in November 2013 for Fiscal 2013 performance. No awards were earned in Fiscal 2014 or Fiscal 2013 except by Mr. Williams. As a condition to his employment by the Company, Mr. Williams was guaranteed a minimum $25,000 payout under the 2014 MIP if he remained employed on July 15, 2014, and paid shortly thereafter. The amounts shown include any portionsan additional $25,000 payout if he remained employed at the time the 2014 10-K was filed. He was employed on each of such payments deferreddates. Thus, the first $25,000 payout was earned in Fiscal 2014 and contributed by our named executive officers to our Management Deferred Compensation Plan. For Fiscal 2011, the amount shown for Mr. Gilbert includes $281,250remaining payout was earned under the Stock Performance Incentive payment provisions of his Employment Agreement for the listing of IEC shares on the NYSE Amex and achievement of certain price thresholds thereafter. For additional information about our MIP, see “Compensation of Named Executive Officers and Directors – General Information”, and for additional information about Mr. Gilbert’s Employment Agreement, see “Employment Agreements and Changewill be reported in Control Agreements” on page 27.fiscal 2015. |
| (4) |
(5) | Amounts shown for Fiscal 20112014 include $17,373$17,941 in premiums paid in lieu of salary on a long-term care insurance contractcontracts for Mr. Gilbert and his wife, in accordance with Section 7702B of the Internal Revenue Code, $9,177 in insurance premiums paid with respect to policies of life insurance maintained for the benefit of Mr. Gilbert, and $12,967 being the full medical insurance premiums paid for Mr. Gilbert and his wife (of which $5,022 would otherwise be paid by the Company in connection with its non-discriminatory contribution to health insurance plans covering all employees). Amounts shown for Fiscal 2013 include $17,373 in premiums paid on long-term care insurance contracts for Mr. Gilbert and his wife, in accordance with Section 7702B of the Internal Revenue Code, $10,149 in insurance premiums paid with respect to policies of life insurance maintained for the benefit of Mr. Gilbert.Gilbert, and $11,430 being the full medical insurance premiums paid for Mr. Gilbert and his wife (of which $4,106 would otherwise be paid by the Company in connection with its non-discriminatory contribution to health insurance plans covering all employees). Amounts shown in Fiscal 2014 include $1,109 in insurance premiums paid with respect to policies of life insurance maintained for the benefit of Mr. Mancini. |
| |
(6) | In the case of Mr. Leo, “All Other Compensation” for Fiscal 2014 and Fiscal 2013, respectively, reflects fees paid to Insero under the agreement between IEC and Insero pursuant to which Mr. Leo served as our chief financial officer. As a principal in and shareholder of Insero, Mr. Leo received a set distribution that was not affected by the arrangements in the engagement letter between the Company and Insero, provided, however, after the end of each year he was eligible for a bonus determined by a committee of Insero, of which he is not a member. The bonus was dependent upon performance of Insero as a whole as well as his individual contributions. Therefore, Mr. Leo’s compensation was not directly tied to the dollar value of the transactions between Insero and IEC. In addition, the Company also reimbursed Insero for Mr. Leo’s business expenses in accordance with the same policy applicable to all Company employees. |
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END
The following table sets forth information concerning stock options and stock awards held by the named executive officers at September 30, 2011.2014.
| | | | | Stock Awards | | | Option Awards | | Stock Awards |
| Name | | Equity incentive plan awards: number of unearned shares, units or other rights that have not vested (#) (1) | | | Equity incentive plan awards: market or payout value of unearned shares, units or other rights that have not vested (#)(2) | | | Number of securities underlying unexercised options (#) exercisable | | Number of securities underlying unexercised options (#) unexercisable | | Option exercise price ($) | | Option expiration date | | Number of Shares or Units of Stock That Have Not Vested (#)(1)(2)(3) | | Market Value of Shares or Units of Stock That Have Not Vested ($)(4) |
| W. Barry Gilbert | | | 50,902 | | | $ | 269,819 | | | — |
| | — |
| | $ | — |
| | — |
| | 36,231 |
| | $ | 163,402 |
|
| Jeffrey T. Schlarbaum | | | 42,500 | | | $ | 225,700 | | |
| Donald S. Doody | | | 30,000 | | | $ | 156,920 | | |
| Michael T. Williams | | | — |
| | — |
| | — |
| | — |
| | 50,000 |
| | $ | 225,500 |
|
| Brett E. Mancini | | | 40,000 |
| | — |
| | $ | 1.88 |
| | 1/21/2015 |
| | 36,012 |
| | $ | 162,414 |
|
| Vincent A. Leo | | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
|
| (i) |
(1) | Stock awards included in the above table to W. Barry Gilbert reflect restricted share awards granted to the named executive officers in Fiscal 20112013 and 2012 and were based upon the achievement of certain performance targets in Fiscal 20102012 and 2011, respectively. Stock awards included in the promotionsabove table to Brett E. Mancini reflect restricted share awards granted in Fiscal 2014, 2013 and 2012, some of Messrs. Schlarbaumwhich were based upon the achievement of certain performance targets in Fiscal 2012 and Doody to their new roles as President and Executive Vice President of Operations, respectively, and2011. All unvested restricted share awards were granted under the 20012010 Plan. The awards |
| |
(2) | In connection with termination of Insero’s arrangement to provide Mr. Leo’s services as CFO in June 2014, all of Mr. Leo’s unvested restricted stock was forfeited under the terms of the applicable award agreement. As a result, Mr. Leo did not hold any unvested restricted stock at September 30, 2014. |
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(3) | Awards shown in the table are subject to a four-yearthe following vesting periods: |
| |
| a. | Awards to Mr. Gilbert not fully vested on September 30, 2014 were granted on the dates below, and the unvested portions vest on the dates shown below: |
|
| | |
| Grant Date | Remaining Vesting Dates/Amounts |
| February 1, 2012 | February 1, 2016 | 8,308 shares |
| February 1, 2017 | 8,307 shares |
| November 26, 2012 | November 26, 2016 | 9,808 shares |
| November 26, 2017 | 9,808 shares |
| |
| b. | Awards to Mr. Williams not fully vested on September 30, 2014 were granted on the dates below, and the unvested portions vest on the dates shown below: |
|
| | |
| Grant Date | Remaining Vesting Dates/Amounts |
| February 11, 2014 | February 11, 2016 | 5,000 shares |
| February 11, 2017 | 10,000 shares |
| February 11, 2018 | 15,000 shares |
| February 11, 2019 | 20,000 shares |
| |
| c. | Awards to Mr. Mancini not fully vested on September 30, 2014 were granted on the dates below, and the unvested portions vest on the dates shown below: |
|
| | |
| Grant Date | Remaining Vesting Dates/Amounts |
| January 6, 2012 | January 6, 2016 | 1,500 shares |
| January 6, 2017 | 1,500 shares |
| November 26, 2012 | November 26, 2016 | 1,506 shares |
| November 26, 2017 | 1,506 shares |
| January 29, 2014 | January 29, 2015 | 3,000 shares |
| January 29, 2016 | 6,000 shares |
| January 29, 2017 | 9,000 shares |
| January 29, 2018 | 12,000 shares |
| |
| d. | During the applicable restriction period, during which time the unvested restricted shares cannot be sold or otherwise transferred in any manner. The shares will vest as follows: 50% each on November 15, 2013 and November 15, 2014, with the exception of 10,000 shares granted to Mr. Schlarbaum and 7,500 shares granted to Mr. Doody, which will vest 50% each on October 1, 2013 and October 1, 2014. Vesting of all restricted share grants is generally subject to each such named executive officer continuing to be employed by us on the vesting date.date, and shares vest upon specified events such as a change in control of the Company. |
| (ii) |
(4) | The market value shown was determined by multiplying the number of restricted shares that have not vested by the $5.08$4.51 closing market price per share of IEC common stock on the NYSE MKT on September 30, 2011,2014, the last trading day of our fiscal year. |
Employment Agreements and Change in Control Agreements
Employment Agreement – W. Barry Gilbert
In April 2009, theThe Company entered into an Amended and Restated Employment Agreement with Mr. Gilbert.Gilbert dated December 16, 2013 (the “2013 Agreement”). The agreement, as amended on October 1, 2010,2013 Agreement provides for Mr. Gilbert’s continued employment as IEC’s Chief Executive Officer until December 31, 2013, or such datethe Board terminates his status as may be mutually agreed between the parties, unless earlier terminatedCEO (the “CEO Term”). In addition, the employment agreement2013 Agreement provides that upon the expiration of the CEO Term, the Company will employ Mr. Gilbert as an advisorfor a twelve-month period to assist with transition matters, unless earlier terminated (the “Transition Term”). It further provides that Mr. Gilbert will render advisory services to the Board for a period terminating on December 31, 2020, unless earlier terminatedseven years following the CEO Term (the “Advisory Term”).
During the CEO Term, Mr. Gilbert wasis entitled to receive an annual initial base salary of $275,000,$350,000, which wasis subject to annual review for increases, and he was eligible to receive such equity awards as may be determined in the sole discretion of the Board.increases. In Fiscal 2011,2014, Mr. Gilbert’s base salary was $296,800.$350,000. During the AdvisoryTransition Term, Mr. Gilbert
will be entitledcontinue to receive an annual compensationbase salary at the rate in effect at the end of $89,286.
At any time during both the CEO Term andTerm. During the Advisory Term, Mr. Gilbert is entitled to earn and receive up to three additional cash incentive paymentsannual compensation of $125,000 (the “Stock Performance Incentive”), each one payable in$89,286, adjusted annually by the manner described in the employment agreement upon the achievement of certain performance conditions:
| (i) | the listing of IEC’s shares on any National Exchange (as defined in the employment agreement); |
| (ii) | if and when IEC’s Daily Stock Price (as defined in the employment agreement) closes at $2.00 or more greater than the Listing Price (as defined in the employment agreement) for any 20 trading days during any 30 consecutive trading day period; and |
| (iii) | if and when IEC’s Daily Stock Price (as defined in the employment agreement) closes at $4.00 or more greater than the Listing Price (as defined in the employment agreement) for any 20 trading days during any 30 consecutive trading day period. |
Mr. Gilbert has earned the Stock Performance Incentive payment in (i) above, since the Company’s shares have been listed on the NYSE Amex and, accordingly, 25% of the payment ($31,250) was paid to him in each of Fiscal 2009, Fiscal 2010 and Fiscal 2011. The Fiscal 2010 and Fiscal 2011 payments are included in Mr. Gilbert’s compensation as set forth in the Summary Compensation Table. The Stock Performance Incentive payments provided for in (ii) and (iii) above were earned in Fiscal 2011, and accordingly included in Mr. Gilbert’s compensation as set forth in the Summary Compensation Table.Consumer Price Index.
During the CEO Term, Mr. Gilbert is eligible to participate in IEC’s cash and equity incentive plans and programs on the same basis as other senior executives. If the CEO Term ends other than at the end of a fiscal year, Mr. Gilbert will receive half the incentives he would have received at budget and half the incentives he would have received based on actual results, payable after the end of the fiscal year at the same time as payments to other Company executives.
DuringUnder the 2013 Agreement, during both the CEO Term and the Advisory Term,Transition Terms, Mr. Gilbert is eligible to participate in such health and other group insurance and other employee benefit plans on the same basis as other senior executives, and the Company will pay the full cost of medical insurance for Mr. Gilbert and his wife.wife, or past age 65 the cost of Medicare supplemental insurance. In addition, subject to certain limitations and conditions, including increase and reductions in face amounts, as set forth inthrough the employment agreement, during both the CEO Term andend of the Advisory Term (or if earlier, policy expiration) the Company will maintain certaina life insurance policiespolicy in the amount of $400,000 expiring in 2019, and an additional policy in the amount of $750,000 expiring in 2024, each payable to Mr. Gilbert’s estate or designated beneficiary. At September 30, 2011, the aggregate face value of these policies was $2,150,000, of which $1,400,000 is payable to Mr. Gilbert’s estate or his designated beneficiary. The remaining $750,000 is payable to the Company.estate.
In addition toIf the above terms, the employment agreement provides for severance compensation upon termination ofBoard terminates Mr. Gilbert’s employment. Circumstances that would trigger payments or the provision of other benefits include (a) termination during CEO Term by the CompanyGilbert without Cause (as defined in the employment agreement)2013 Agreement, Cause being deemed not to include death or bydisability) or Mr. Gilbert terminates his employment for Good Reason (as defined in the employment agreement)2013 Agreement) prior to the end of the Transition Term, Mr. Gilbert is entitled to continue to receive the salary and benefits to which he otherwise would have been entitled through the end of the Transition Term. Additionally, if Mr. Gilbert is terminated without Cause or due toterminates for Good Reason after a Change in Control (as defined in the employment agreement); (b) termination by2013 Agreement), Mr. Gilbert will continue to receive the Company during Advisory Term without Cause or bypayments to which he otherwise would have been entitled. Any provisions in Mr. GilbertGilbert’s restricted stock agreements providing for Good Reason; (c)forfeiture upon termination upon death; (d)of employment also are waived and to the extent not yet vested, 50% of the remaining restricted stock will vest on each of the first and second anniversaries of his termination for Disability (as defined in the employment agreement) during CEO Term; and (e) termination for Disability during Advisory Term.
The employment agreement also2013 Agreement contains provisions which are customary for an executive employment agreement of this type. These include covenants relating to confidentiality, non-competition, non-solicitation of employees, and non-interference with business relationships and apply during the CEO, Transition and Advisory Terms and for a period of 36 months thereafter.
Employment Agreements - Mr. Williams
On February 8, 2014, the Company and Mr. Williams entered into a letter agreement, dated February 11, 2014, and an Employment Agreement, dated February 11, 2014 (collectively, the “Williams Agreements”). Pursuant to the Williams Agreements, Mr. Williams receives a base salary of $185,000 per year, subject to adjustment in the discretion of the Compensation Committee. He participates in Company benefit plans generally applicable to other employees and executives.
Mr. Williams participates in the MIP, generally on the terms established by the Compensation Committee for the applicable fiscal year. In Fiscal 2014, however, contingent upon his being employed on the applicable payment dates, he earned $25,000 payable in the first payroll period after July 15, 2014 and $25,000 payable upon filing of the Company’s Annual Report on Form 10-K for fiscal 2014, or if greater, a payout under terms of the MIP (45% of his base salary at target) pro rated for the portion of fiscal 2014 during which he is employed.
Mr. Williams will not participate in the Company’s LTIP until fiscal 2015, at which time he will participate in the LTIP on the terms established by the Compensation Committee for the applicable fiscal year. In connection with his appointment as an executive officer, Mr. Williams received a grant of 50,000 shares of restricted stock on February 11, 2014, vesting 0%/10%/20%/30%/40% over five years.
If Mr. Gilbert’sWilliams’s employment is terminated during the CEO Term (i) by the Company without Cause;Cause (as defined in the Williams Agreements) in the first year of his employment he will receive severance in the form of salary continuation for a period of six months, and if his employment is terminated by the Company without cause thereafter, he will receive severance in the form of salary continuation for a period of twelve months. He also will receive twelve months of severance in the form of salary continuation if he or (ii) by Mr. Gilbertthe Company terminates his employment other than for Good Reason; or (iii) due toCause after a Change in Control; or (iv) asControl (as defined in the Williams Agreements). Mr. Williams’s rights to payments are contingent on confidentiality obligations, and for a resultperiod ending eighteen months after his employment terminates on his non-competition and non-solicitation of Disability,customers and employees.
Employment Arrangements - Mr. Gilbert would be entitled to receive (a) two times his annualMancini
The Company has the following arrangements with Brett E. Mancini, Vice President, Business Development and Engineering Solutions.
Mr. Mancini’s base salary payableis $183,000 per year. He participates in 24 equal monthly installments; (b)the MIP and the LTIP on the terms established by the Compensation Committee for the applicable fiscal year. Additionally, Mr. Mancini received an award of 30,000 restricted shares on January 29, 2014 in connection with his annual incentive bonus, payable within 60 days of termination; and (c) the valuepromotion as an executive officer of the lost opportunityCompany. The shares vest over four years (10%, 20%, 30%, and 40%). The Company maintains an $800,000 life insurance policy on Mr. Mancini’s life, payable to earn the Stock Performance Incentives provided for in his employment agreement payable within 60 days of termination. In addition, designee.
Mr. Gilbert would be entitled to the continuation of medical benefits until age 65 (or until he becomes eligible to receive medical benefits from subsequent employer)Mancini and any accrued amounts owing to him.
Messrs. Schlarbaum and Doody
Effective October 1, 2010, the Company entered into a Salary Continuation and Non-Competition Agreements with eachAgreement effective as of Messrs. Schlarbaum and Doody. EachJanuary 29, 2014 (“Mancini Agreement”). The Mancini Agreement provides for at-will employment, and provides for salary continuation payments for a period of one (1) year upon certain terminations of employment. Circumstances that would trigger payments include:include termination: (a) termination by the Company without Cause (as defined in the Mancini Agreement);, except upon death or (b)disability, prior to or within twelve months following a Change in Control (as defined in the Mancini Agreement) either; or (b) by the Company without Cause or by the executive forMr. Mancini with Good Reason (as defined in the Mancini Agreement).
Under each at any time prior to a Change in Control or for any reason within the twelve months following a Change in Control. The Mancini Agreement the executive has agreedprovides that he will not to (a) disclose confidential information of the Company during or after his employment with the Company; (b) solicit Companythe Company’s customers andfor fifteen months after termination; (c) solicit the Company’s employees for 18twelve months after termination; or (c)(d) directly or indirectly compete with the Company during the term of his employment and for 18fifteen months after termination.
Change in Control
Our 2001 Stock Option and Incentive Plan and our 2010 Omnibus Incentive Compensation Plan, and the stock option and restricted stock award agreements executed thereunder, provide that upon a change in control (as defined in the 2010 Plan), unless the board otherwise determines, all outstanding options and restricted stock will immediately become fully vested and exercisable.
Director Compensation
Cash Compensation Paid to Non-Employee Directors
During Fiscal 2010, the Committee, in conjunction with Grahall, conducted a comprehensive analysis of the compensation package provided to the Company’s non-employee directors.
The following table shows non-employee director compensation as determined by the board upon the recommendation of the compensation committee, effective as of October 1, 2010:for Fiscal 2014:
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| | |
Annual Board Retainer (1) | | $24,000,32,000, payable in cash or stock(5) |
Annual Committee Chair Retainer (1)(2) | | $8,000, payable in quarterly installments in cash |
Board Meeting Fee (3) | | $4,000 payable in quarterly installments at the end of each quarter in cash or stock (5) |
Board MeetingSupplemental Fee(4) | | $1,000, payable in stockcash at the end of the fiscal year |
| Reimbursement for expenses incurred in attending board meetings | | |
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(1) | Payable in quarterly afterinstallments at the beginning of each quarter. |
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(2) | Payable in $2,000 installments at the beginning of each quarter. |
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(3) | Payable in $1,000 installments in connection with each regular quarterly meeting actually attended. |
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(4) | The supplemental payment will be paid in cash, at the end of the quarter.fourth quarter of each fiscal year. |
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(5) | Non-employee directors may elect to receive payment of their annual board retainer and quarterly meeting fees in cash or in shares of the Company’s common stock. |
As indicated in the above table, non-employee directors may elect to receive payment of their annual board retainer and board meeting fees in cash or in shares of the Company’s common stock.
Equity Compensation Paid to Non-Employee Directors
Both our 2001 Plan and ourIn Fiscal 2014, each non-employee director was entitled to an annual grant of restricted stock, issued under the 2010 Plan, authorize the grantingwith a grant-date fair value of non-statutory stock options or restricted shares to non-employee directors in such amounts and at such times as may be determined by the board. Historically, the compensation committee granted stock options to the non-employee directors$25,000, awarded at the time of the annual meeting of stockholders. Effectiveshareholders. The restrictions will lapse and the shares will vest in Fiscal 2010,three (3) equal installments as follows: 1/3 on the board determined to award restricted shares tofirst anniversary of the non-employee directors. date of grant, 1/3 on the second anniversary of the date of grant, and the balance on the third anniversary of the date of grant.
At the time of the 20112014 annual meeting of stockholders (January 19, 2011)29, 2014), a restricted share award for 2,342 shares was granted to each of the non-employee directors received the annual restricted share award of 6,127 shares at a market value of $8.54$4.08 per share (the closing price of the Company’s common stock on the grant date as reported on the NYSE Amex)MKT).
Upon his appointment as a director on February 11, 2014, John Carlton Johnson received a grant of 6,068 shares of restricted stock issued under the 2010 Plan, with a market value of $4.12 per share (the closing price of the Company’s common stock on the grant date as reported on the NYSE MKT). The restrictions will lapse and the shares will vest in three (3) equal installments as follows: 1/3 on the first anniversary of the date of grant, 1/3 on the second anniversary of the date of grant, and the balance on the third anniversary of the date of grant.
Director Compensation Table
The following table summarizes the cash and equity compensation forearned by non-employee directors during Fiscal 2011.2014.
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| | | | | | | | | | | | | | | | |
Director (1) | | Fees Earned or Paid in Cash ($) or Stock (2) | | Stock Awards ($) (3)(4) | | All Other Compensation ($)(5) | | Total ($) |
| Florence D. Hudson | | $ | 37,000 |
| | $ | 24,998 |
| | $ | 72 |
| | $ | 62,070 |
|
| John Carlton Johnson | | $ | 18,000 |
| | $ | 25,000 |
| | $ | 72 |
| | $ | 43,072 |
|
| Edward W. Kay, Jr. | | $ | 42,333 |
| | $ | 24,998 |
| | $ | 72 |
| | $ | 67,403 |
|
| Eben S. Moulton | | $ | 45,000 |
| | $ | 24,998 |
| | $ | 72 |
| | $ | 70,070 |
|
| James C. Rowe | | $ | 39,667 |
| | $ | 24,998 |
| | $ | 72 |
| | $ | 64,737 |
|
| Jerold L. Zimmerman | | $ | 45,000 |
| | $ | 24,998 |
| | $ | 72 |
| | $ | 70,070 |
|
| Director (1) | | Fees Earned or Paid In Cash ($) or Stock (2) | | | Stock Awards (3)($) | | | All Other Compensation(4) | | | Total ($) | |
| Eben S. Moulton (5) | | $ | 32,000 | | | $ | 20,000 | | | $ | 72 | | | $ | 52,072 | |
| James C. Rowe (5) | | $ | 31,000 | | | $ | 20,000 | | | $ | 72 | | | $ | 51,072 | |
| Carl E. Sassano (5) | | $ | 32,000 | | | $ | 20,000 | | | $ | 72 | | | $ | 52,072 | |
| Jerold L. Zimmerman | | $ | 28,000 | | | $ | 20,000 | | | $ | 72 | | | $ | 48,072 | |
| Amy L. Tait | | $ | 28,000 | | | $ | 20,000 | | | $ | 72 | | | $ | 48,072 | |
| |
| (1) | W. Barry Gilbert, the Company’s Chairman of the Board, is not included in this table as he is an employee of the Company and receives no compensation for his services as a director. Compensation earned by Mr. Gilbert during Fiscal 2014 is reflected in the Summary Compensation Table on page 28 of this proxy statement. |
| |
| (2) | The fees set forth in this column reflect compensation paid in cash or in stock to each director in respect of Fiscal 20112014 for board retainers, committee chair retainers, supplemental fees and meeting fees. Dr. Zimmerman hasEach director elected to receive histhe board and committee chair retainer payments in cash. Payments for board meetings were paid in cash in Fiscal 2014. Each of Messrs. Moulton and Kay and Dr. Zimmerman received an annual board retainer for serving as a committee chair during Fiscal 2014. |
| |
| (3) | The amounts shown reflect the aggregate grant date fair value computed in stock; all directors have elected to receive their board meeting fees in stock. The numberaccordance with FASB ASC 718. Under ASC 718, the fair value of shares awarded to a director in paymentsuch stock awards is determined as of the board meeting fee is determined by dividing $1,000 bydate of grant using the closing market price of the Company’s common stock on the date of grant. These amounts reflect our accounting for these awards and do not correspond to the board meeting. The number of shares awarded to a director in payment of the quarterly retainer fee is determined by dividing $6,000actual values that may be realized by the closing price of the Company’s common stock on the first trading day after the close of the fiscal quarter. |
| (3) | The amounts disclosed in this column represent the fair market value of the restricted shares on the grant date ($8.54 per share)directors and do not represent actual cash compensation paid to the directors. Pursuant to SEC rules, we disregarded the estimates of forfeitures related to service-based vesting conditions. The closing market price on the grant date was $4.08 per share on January 29, 2014 and $4.12 per share on February 11, 2014. |
| |
| (4) | The aggregate number of unvested stock awards at the end of Fiscal 2014 for each non-employee director was: Florence D. Hudson - 8,635 shares, John Carlton Johnson - 6,068 shares, Edward D. Kay, Jr. - 8,635 shares, Eben S. Moulton - 9,947 shares, James C. Rowe - 9,947 shares, and Jerold L. Zimmerman - 9,947 shares. |
| |
| (5) | Reflects the dollar value of insurance premiums paid by the Company during Fiscal 20112014 in connection with the policy of term life insurance provided to each non-employee director in the amount of $50,000. |
| (5) | Messrs. Moulton, Rowe and Sassano each receive an annual retainer for serving as Committee Chairs throughout the fiscal year. |
Deferred Compensation Plan
Effective January 1, 2009, the board established the IEC Electronics Corp. Board of Directors Deferred Compensation Plan (“Directors Deferred Plan”) which allows the non-employee directors of the Company the opportunity to defer all or part of their cash compensation. No director elected to participate in the Directors Deferred Plan in Fiscal 2011.2014.
CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS
Policies and Procedures for Review, Approval or Ratification of Related Person Transactions
Our board has adopted a written policy addressing the Company’s procedures with respect to the review, approval and ratification of transactions with related persons that are required to be disclosed pursuant to SEC rules. The policy provides that any transaction, arrangement or relationship with a “related person” (as defined in the policy) in which the Company participates and in which the related person has or will have a direct or indirect material interest and in which the amount involved is expected to exceed $90,000 in any fiscal year, will be subject to the prior review and approval or ratification by the audit committee.
In Fiscal 2012, IEC entered into an engagement letter with Insero pursuant to which Vincent A. Leo, a principal and shareholder of Insero, served as IEC’s interim chief financial officer from January 2012 through May 2012, and as IEC’s chief financial officer from May 2012 through February 2014. During Fiscal 20112014 and Fiscal 2010,2013, IEC compensated Insero for Mr. Leo’s services at a monthly rate of $25,000, resulting in fees paid to Insero of $329,000 in Fiscal 2013 and $237,500 in Fiscal 2014. During Fiscal 2013, IEC also paid Insero $16,500 of additional compensation due to Mr. Leo’s incremental time related to the restatement of the Company’s financial statements, and IEC paid Insero $4,122 in reimbursement of legal fees incurred by Insero in connection with IEC’s ongoing SEC investigation and stockholder litigation.
Other than the restricted share award granted to Mr. Leo in May 2012 as described above under “Compensation of Named Executive Officers and Directors”, Mr. Leo did not receive any compensation directly from IEC and throughout his service for IEC he continued to be a principal and shareholder of, and was compensated by, Insero. Further, as a principal in and shareholder of Insero, Mr. Leo receives a set distribution from Insero that is not affected by the arrangements in the Insero Agreement, provided, however, after the end of each year he is eligible for a bonus determined by a committee (of which he is not a member) of Insero. The bonus is dependent upon performance of Insero as a whole as well as his individual contributions. Therefore, Mr. Leo’s compensation is not directly tied to the dollar value of the transactions between Insero and IEC, and the approximate dollar amount of his interest in the transaction cannot be determined.
As described above under “Compensation of Named Executive Officers and Directors”, we were advised when the restricted shares were granted to Mr. Leo in Fiscal 2012 that Mr. Leo had agreed with Insero to hold such shares for the benefit of Insero. Of the 20,000 restricted shares granted to him, 8,000 shares vested during Fiscal 2013 and 2014 and the remainder were forfeited upon Mr. Leo’s departure from the Company in February 2014. Mr. Leo later advised the Company that Insero, as part of Insero’s compensation arrangements with Mr. Leo, agreed that 2,000 of the vested shares would no related personlonger be held for the benefit of Insero and would be held by Mr. Leo without further beneficial interest of Insero.
In addition to the services under the engagement letter described above, Insero has provided various services to the Company, including acquisition support, out-sourced accounting services, Sarbanes-Oxley/internal audit support, tax services, and accounting research services. During Fiscal 2013 and 2014, IEC incurred fees payable to Insero of approximately $87,024 and $59,675 in connection with such services.
Except as described above, during Fiscal 2013 and Fiscal 2014, no other transactions were entered into or proposed that required disclosure pursuant to SEC rules.rules regarding related person transactions.
OTHER MATTERS
TheOther than the Vintage Nomination for directors described above, the board of directors knows of no other matters that will be presented for consideration at the annual meeting, but if other matters properly come before the meeting, the persons named as proxies in the enclosed proxy will vote according to their best judgment. Stockholders are requestedurged to date and sign the enclosed WHITE proxy and to mail it promptly in the enclosed postage-paid envelope. If you attend the annual meeting, you may revoke your proxy at that time and vote in person, if you wish. Otherwise your proxy will be voted for you.
| By Order of the Board of Directors |
| |
| Martin S. Weingarten, |
| Corporate Secretary |
DATED: | December 16, 2011 |
| Newark, New York |
Beth Ela Wilkens,Corporate Secretary
Dated: December [__], 2014
Newark, New York
|
|
We will make available at no cost, upon your written request, a copy of our annual report on Form 10-K for the Fiscal Yearfiscal year ended September 30, 20112014 (without exhibits) as filed with the Securities and Exchange Commission. Copies of exhibits to our Form 10-K will be made available, upon your written request and payment to us of the reasonable costs of reproduction and mailing, if any. Written requests should be made to: Susan E. Topel-Samek, Vice President andMichael T. Williams, Chief Financial Officer, IEC Electronics Corp., 105 Norton Street, Newark, New York 14513. |
APPENDIX A
SUPPLEMENTAL INFORMATION REGARDING PARTICIPANTS
The following tables (“Directors and Nominees” and “Executive Officers”) set forth the name, present principal occupation and business address of our directors and nominees, and our officers, who, under the rules of the SEC, may be considered to be participants (“Participants”) in our solicitation of proxies from our stockholders in connection with our 2015 annual meeting.
Directors and Nominees
The names of our directors, and the name and address of any corporation or organization in which any of them is employed, are set forth below
|
| |
| W. Barry Gilbert | IEC Electronics Corp. 105 Norton Street, Newark, NY 14513 |
| Florence D. Hudson | IBM Corporation One New Orchard Road, Armonk, NY 10504 |
| John Carlton Johnson | Sandavista, LLC PO Box 1093, Clark, CO 80428 |
| Edward W. Kay, Jr. | Retired |
| Eben S. Moulton | Seacoast Capital Corporation 55 Ferncroft Road, Danvers, MA 01923 |
| James C. Rowe | Rowe & Company 3510 N. Lake Drive, Milwaukee, WI 53211 |
| Jerold L. Zimmerman | Simon School of Business, University of Rochester 500 Joseph C. Wilson Blvd., Rochester, NY 14627 |
Our directors' respective principal occupations are set forth in Proposal 1 of this proxy statement under the caption “Election of Directors”. The business address for all of our directors is c/o IEC Electronics Corp., 105 Norton Street, Newark, New York 14513.
APPENDIX AExecutive Officers
IEC ELECTRONICS CORP.
2011 EMPLOYEE STOCK PURCHASE PLAN
ARTICLE I
PURPOSE
1.01 Purpose.
The purposenames and principal occupations of thisour executive officers are set forth below
W. Barry Gilbert, Chairman and Chief Executive Officer
Michael T. Williams, Vice President, Finance and Chief Financial Officer
Brett E. Mancini, Vice President, Business Development and Engineering Solutions
The principal occupations refer to each person’s position with the Company, and the address at which they are carried on and business address for each of them is c/o IEC Electronics Corp., 105 Norton Street, Newark, New York 14513.
Information Regarding Ownership of Company Securities by the Participants
The number of shares of the Company’s common stock beneficially owned by each of the Participants, each person who was an executive officer during the last fiscal year and each associate of each Participant is set forth in the “Security Ownership of Certain Beneficial Owners and Management” section of this proxy statement. Except as noted in that section, to our knowledge each Participant has sole voting and investment power with respect to the securities they hold, other than any property rights of spouses.
Information Regarding Transactions in IEC Securities by Participants
The following table sets forth information regarding purchases and sales of IEC securities by each Participant during the past two years. Unless otherwise indicated, all transactions were in the public market. None of the purchase price or market value of these securities is represented by funds borrowed or otherwise obtained for the purpose of acquiring or holding such securities, and none of the Participants is or was within the past year a party to any contract or understanding with any person with respect to securities of the Company except pursuant to the Company’s equity incentive plans.
|
| | |
| Participant | Date | Purchase (Sale) |
| W. Barry Gilbert | 11/18/2013 | (4,891) (1) |
| 11/15/2013 | (5,469) (1) |
| 4/17/2013 | 1,517 (2) |
| 11/29/2012 | (500) (3) |
| 11/27/2012 | (4,000) (3) |
| 11/26/2012 | 19,616 (4) |
| Florence D. Hudson | 1/29/2014 | 6,127 (4) |
| 1/30/2013 | 3,743 (4) |
| 1/30/2013 | 150 (5) |
| 12/17/2012 | 3,000 (6) |
| John Carlton Johnson | 2/11/2014 | 6,068 (4) |
| 10/22/2013 | 3,700 |
| Edward W. Kay, Jr. | 1/29/2014 | 6,127 (4) |
| 1/30/2013 | 3,743 (4) |
| 1/30/2013 | 150 (5) |
| 1/3/2013 | 2,000 (6) |
| Eben S. Moulton | 1/29/2014 | 6,127 (4) |
| 1/30/2013 | 3,743 (4) |
| 1/30/2013 | 150 (5) |
| James C. Rowe | 1/29/2014 | 6,127 (4) |
| 1/30/2013 | 3,743 (4) |
| 1/30/2013 | 150 (5) |
| Jerold L. Zimmerman | 1/29/2014 | 6,127 (4) |
| 1/30/2013 | 3,743 (4) |
| 1/30/2013 | 150 (5) |
| Michael T. Williams | 2/11/2014 | 50,000 (4) |
| Brett E. Mancini | 4/12/2014 | 333 (1) |
| 1/29/2014 | 30,000 (4) |
| 11/26/2012 | 3,012 (4) |
(1) Shares withheld to cover withholding tax obligations in connection with vesting of restricted shares
(2) Shares purchased under Employee Stock Purchase Plan is
(3) Open market transaction to provide employeescover withholding tax obligation for November 26, 2012 grant
(4) Grant of IEC Electronics Corp. and its Designated Subsidiaries with an opportunity to purchaserestricted shares of common stock of IEC Electronics Corp. through voluntary systematic payroll deductions under a plan that satisfies the requirements of an "employee stock purchase plan" under Section 423 of the Internal Revenue Code. It is the purpose and policy of thisCompany’s 2010 Omnibus Incentive Compensation Plan to provide employees with an opportunity to acquire a proprietary interest in the economic interest of the Company and thereby to have an additional incentive to promote its best interests and to remain in its employ.
ARTICLE II
DEFINITIONS
2.01 (5) Account means the account maintained on behalfGrant of each Participant by the Company for the purpose of investing in Stock and engaging in other transactions permittedunrestricted shares under the Plan.Company’s 2010 Omnibus Incentive Compensation Plan
2.02 (6)Board means the Board of Directors of the Company.
2.03 Code means the Internal Revenue Code of 1986, as amended from time to time, including regulations issued thereunder and successor provisions and regulations thereto.
2.04 Committee means the Compensation Committee of the Board, or such other committee of the Board as may be designated by the Board to administer the Plan.
2.05 Company means IEC Electronics Corp., a corporation organized under the laws of the State of Delaware.
2.06 Compensation includes, and is limited to, base salary, overtime and commissions received by an Employee from the Company or a Designated Subsidiary and includible in the Employee's gross income for federal income tax purposes. Compensation does not include bonuses, incentive awards, profit-sharing contributions, Company or Designated Subsidiary contributions to Social Security, Company or Designated Subsidiary contributions to the Company's 401(k) Plan, Company or Designated Subsidiary contributions to any other retirement plan or program, expense reimbursements, relocation reimbursements, tuition reimbursements or any other reimbursements, income realized as a result of participation in any stock option, stock Private transaction purchase or similar plan of the Company or Designated Subsidiary, the value of any other fringe benefits provided at the expense of the Company or Designated Subsidiary, or any other type of compensation not specifically included above. The Committee shall have the authority to determine and approve all forms of pay to be included in the definition of Compensation and may change the definition on a prospective basis.
Information Regarding Related Party Transactions and Understandings 2.07 Designated Subsidiary means any SubsidiaryNone of the CompanyParticipants or their associates is a party to any related party transaction requiring disclosure under Item 404(a) of a Subsidiary that is designated by the Committee from time to time in its sole discretion to be eligible to participateSEC’s Regulation S-K, and except for officer employment arrangements described in the Plan. The group from among which such designations are permitted without additional stockholder approval may include corporationsproxy statement none of them have any arrangement or other entities having become Subsidiaries after the adoption and approval of the Plan. Only Designated Subsidiaries may participate in of the Plan. A Designated Subsidiary will cease to be a Designated Subsidiary on the earlier of (i) the date the Committee determines that such entity is no longer a Designated Subsidiary;understanding regarding future employment or (ii) when such Designated Subsidiary ceases for any reason to be a Subsidiary.
2.08 Employee means an individual, including an officer, who is an employee of the Company or one of its Designated Subsidiaries for tax purposes. Individuals classified as independent contractors, consultants, advisors or members of the Board are not considered "Employees".
2.09 Enrollment Period means,transactions with respect to a given Offering Period, that period beginning on the first day of March and September and ending on the last day of March or September during which Employees may elect to participate in order to purchase Stock at the end of that Offering Period in accordance with the terms of this Plan. The duration and timing of Enrollment Periods may be changed or modified by the Committee.
2.10 Fair Market Value means the value of a share of Stock, determined as follows: if on the determination date the Stock is listed on the NYSE Amex, or on any other established national or regional stock exchange, or is publicly traded on an established securities market, the Fair Market Value of a share of Stock shall be the closing price of the Stock on such exchange or in such market (the closing price on the principal such exchange or market if there is more than one such exchange or market) on the determination date (or lowest asked prices or between the high and low sale prices on such trading date), or, if no sale of Stock is reported for such trading day, on the last preceding day on which any sale shall have been reported. If the Stock is not listed on such an exchange, or traded on such a market, Fair Market Value shall be the value of the Stock as determined by the Committee in good faith.
2.11 Offering Period means the approximately six-month period beginning on the first Trading Day on or after April 1 and October 1 of a calendar year and ending on the last Trading Day in September and March, respectively; provided, however, that the initial six-month period shall begin on the first Trading Day in October, 2011 and end on the last Trading Day in March, 2012. The duration and timing of Offering Periods may be changed or modified by the Committee.
2.12 Participant means an eligible Employee who has elected to participate in the Plan.
2.13 Plan means this IEC Electronics Corp. 2011 Employee Stock Purchase Plan.
2.14 Purchase Commencement Date means the first Trading Day of each Offering Period.
2.15 Purchase Termination Date means the last Trading Day of each Offering Period.IEC.
2.16 Purchase Price means an amount equal to ninety percent (90%) of the Fair Market Value of a share of Stock on the Purchase Termination Date, provided, however, that the Board may change the designated percentage with respect to any future Offering Period, but not to below eighty-five percent (85%).
2.17 Reserves means the number of shares of Stock covered by all options under the Plan which have not yet been exercised and the number of shares of Stock which have been authorized for issuance under the Plan but which have not yet become subject to options.
2.18 Stock means the Company's common stock $.01 par value, and such other securities as may be substituted (or resubstituted) for Stock pursuant to Section 11.06.
2.19 Subsidiary means any corporation or other entity (other than the Company) in an unbroken chain of corporations beginning with the Company that satisfies the requirements of Section 424(f) of the Code and applicable regulations and other guidance issued thereunder whether or not such Corporation now exists or hereafter organized or acquired by the Company or a Subsidiary.
2.20 Trading Day means a day on which U.S. national stock exchanges and the NASDAQ System are open for trading and the Stock is being publicly traded on one or more of such markets.
ARTICLE III
ELIGIBILITY AND PARTICIPATION
3.01 Initial Eligibility.
Any Employee employed by the Company or a Designated Subsidiary on a Purchase Commencement Date shall be eligible to participate in the Plan. All Employees working for the Company or a Designated Subsidiary may participate in the Plan except as otherwise provided herein.
3.02 Restrictions on Participation.
Notwithstanding any provisions of the Plan to the contrary, no Employee shall be granted an option to participate in the Plan to the extent that:
(a) immediately after the grant, such Employee would own stock, and/or hold outstanding options to purchase stock, possessing 5% or more of the total combined voting power or value of all classes of stock of the Company (determined under the rules of Section 424(d) of the Code); or
(b) his or her rights to purchase stock under this Plan and any other employee stock purchase plans of the Company and its Subsidiaries would accrue at a rate which exceeds Twenty-Five Thousand Dollars ($25,000) in Fair Market Value of the Stock (determined at the time such option is granted) in the aggregate for each calendar year in which such option is outstanding.
ARTICLE IV
OFFERING PERIODS
4.01 Semi-Annual Offerings.
The Plan shall be implemented by consecutive Offering Periods of six (6) months duration with a new Offering Period commencing on the first Trading Day on or after April 1 and October 1 of each calendar year and terminating on the last Trading Day of September and March, respectively; provided, however, that the first Offering Period shall begin on the first Trading Day of October, 2011 and end on the last Trading Day of March, 2012. The Committee shall have the power to change the beginning date, ending date, and duration of Offering Periods with respect to future offerings without stockholder approval if such change is announced at least fifteen (15) days prior to the scheduled beginning of the first Offering Period to be affected thereafter, provided that Offering Periods will in all cases comply with applicable limitations under Section 423(b)(7) of the Code.
ARTICLE V
PARTICIPATION
5.01 An eligible Employee may become a Participant in the Plan by completing a subscription agreement authorizing payroll deductions in the form provided by the Company and filing it with the designated human resources person of the Company during the Enrollment Period before the applicable Purchase Commencement Date.
5.02 Payroll deductions for a Participant shall commence on the first payroll date occurring on or after the applicable Purchase Commencement Date and shall end on the last payroll date occurring on or before the Purchase Termination Date of the Offering Period to which such authorization is applicable, unless sooner terminated by the Participant as provided in Section 8.01 hereof.
5.03 Upon becoming a Participant in the Plan, the Employee shall be bound by the terms of this Plan, including any amendments hereto.
ARTICLE VI
PAYROLL DEDUCTIONS
6.01 Amount of Deduction.
A participant may elect to have deductions made for each payroll period during an Offering Period in an amount equal to any whole percentage of his or her Compensation received for the payroll period (e.g. 1%, 2%, etc.), subject to the limitations of Section 3.02, provided that the maximum amount of payroll deductions may not exceed the greater of (i) a specified maximum percentage of his or her Compensation for each payroll period as may be designated from time to time by the Committee (which shall initially be ten percent (10%)); and (ii) $22,500 for each calendar year. The Committee in its discretion, may increase and decrease the maximum percentage amount (but not the maximum dollar amount) contemplated under the immediately preceding sentence without formally amending the Plan; provided, however, that the maximum percentage amount shall be a uniform percentage of Compensation for all Participants.
6.02 Participant's Account.
An individual Account shall be maintained by the Company for each Participant in the Plan. All payroll deductions made for a Participant shall be credited to his or her Account. A Participant may not make any separate cash payment into such Account. A Participant's Account shall be only a bookkeeping account maintained by the Company, and neither the Company nor any Designated Subsidiary shall be obligated to segregate or hold in trust or escrow any funds in a Participant's Account. Except for amounts not expended because of the Plan rule that fractional shares shall not be purchased, no amount of accumulated payroll deductions shall be carried over with respect to any Participant from the end of one Offering Period to the beginning of another. No interest shall accrue or be paid on any payroll deductions or any other amounts credited to a Participant's Account.
6.03 Changes in Payroll Deductions.
(a) During an Offering Period, a Participant may not make any increases or decreases to the rate of his or her payroll deductions. A Participant may change the payroll deduction rate for subsequent Offering Periods by providing new written instructions to the Company.
(b) Notwithstanding subsection (a) above, a Participant may elect to withdraw from his or her participation in the Plan at any time. An election to withdraw from participation shall become effective as soon as administratively feasible following the date such written election is received by the Company and shall remain in effect for successive Offering Periods until the participant provides new written instructions to the Company. A Participant who withdraws from participation during an Offering Period may not participate in the Plan until the next Offering Period.
(c) Notwithstanding subsection (a) above, to the extent necessary to comply with the limitations of Section 423(b)(8) of the Code and Section 3.02 hereof, a Participant's payroll deductions may be decreased to zero percent (0%) at any time during an Offering Period. In such event, payroll deductions shall recommence at the rate provided in such Participant's subscription agreement at the beginning of the first Offering Period scheduled to end in the following calendar year, unless terminated by the Participant, as provided in Section 8.01 hereof.
ARTICLE VII
GRANT AND EXERCISE OF OPTION
7.01 Number of Option Shares.
On the Purchase Commencement Date of each Offering Period, each Employee participating in such Offering Period shall be deemed to have been granted an option to purchase on the Purchase Termination Date of such Offering Period, at the applicable Purchase Price, up to a number of shares of Stock determined by dividing such Employee's payroll deductions credited to his or her Account as of the Purchase Termination Date by the applicable Purchase Price; provided that such purchase shall be subject to the limitations set forth in Sections 3.02 and 9.01. Exercise of the option shall occur as provided in Section 7.02, unless the Participant has withdrawn the amount credited to his or her Account .upon withdrawal from the Plan pursuant to Section 8.01 or such amount has been distributed to the participant upon termination of employment pursuant to Section 8.02. To the extent not exercised, the option shall expire on the last day of the Offering Period.7.02 Automatic Purchase.
A Participant's option for the purchase of shares shall be exercised automatically on the Purchase Termination Date, and the maximum number of whole shares of Stock subject to the option shall be purchased for such Participant at the applicable Purchase Price with the accumulated payroll deductions credited to his or her Account.
7.03 Fractional Shares.
No fractional shares of Stock shall be purchased. Any payroll deductions remaining in a Participant's Account which are not sufficient to purchase a full share of Stock on a Purchase Termination Date shall be retained in the Participant's Account for the subsequent Offering Period unless the Participant has withdrawn as to future Offering Periods, in which case such cash shall be returned to said Participant. Any other amounts left over in a Participant's Account after a Purchase Termination Date shall be returned to the Participant.
7.04 Transferability of Option.
During a Participant's lifetime, a Participant's option to purchase shares of Stock hereunder shall be exercisable only by that Participant.
7.05 Delivery of Shares.
As promptly as practicable after each Purchase Termination Date of each Offering Period, the Company shall cause the number of shares of Stock purchased by each Participant to be registered on the stock transfer records of the Company in the name of the Participant (or in the name of his or her spouse, as designated by the Participant in his or her subscription agreement) and shall arrange for the delivery to each Participant of a certificate representing the number of full shares of Stock purchased upon exercise of his or her option. The Committee may permit or require that the shares of Stock be deposited directly with a broker designated by the Committee or to a designated agent of the Company, and the Committee may utilize electronic or automated methods of share transfer. The Committee may require that shares be retained with such broker or agent for a designated period of time and/or may establish other procedures to permit tracking of disqualifying disposition of such shares of Stock.
ARTICLE VIII
WITHDRAWAL FROM PLAN AND TERMINATION OF EMPLOYMENT
8.01 Withdrawal from Plan Participation.
(a) A Participant may withdraw all, but not less than all, of the payroll deductions credited to his or her Account and not yet used to exercise his or her option under the Plan at any time on or before thirty (30) calendar days before the Purchase Termination Date by giving written notice to the designated human resources representative of the Company in the form provided by the Company. All of the Participant's payroll deductions credited to his or her Account shall be paid to such Participant promptly after receipt of notice of withdrawal, such Participant's option for the Offering Period shall automatically be terminated, and no further payroll deductions for the purchase of shares of Stock shall be made for such Offering Period. If a Participant withdraws from an Offering Period, payroll deductions shall not resume at the beginning of the succeeding Offering Period or any Offering Period thereafter unless the Participant delivers to the Company a new subscription agreement.
(b) A Participant's withdrawal from an Offering Period shall not have any effect upon his or her eligibility to participate in any succeeding Offering Period commencing after the termination of the Offering Period from which the Participant withdraws.
8.02 Termination of Employment.
Upon a Participant's termination of employment with the Company and all Designated Subsidiaries for any reason (including termination because of the Participant's death), prior to the expiration of the Offering Period, the Participant's participation in the Plan and his or her option shall be automatically terminated and all payroll deductions credited to such participant's Account during the Offering Period but not yet used to exercise the option shall be returned to such Participant or, in the case of his or her death, to the person or persons entitled thereto under Section 11.01. Whether a termination of employment has occurred shall be determined by the Committee. The Committee may also establish rules regarding when leaves of absence or changes of employment status will be considered to be a termination of employment, including rules regarding transfer of employment among Designated Subsidiaries and the Company, and the Committee may establish termination-of-employment procedures for this Plan that are independent of similar rules established under other benefit plans of the Company and its Subsidiaries; provided that such procedures are not in conflict with the requirements of Section 423 of the Code.
ARTICLE IX
STOCK
9.01 Maximum Number of Shares.
The maximum number of shares of Stock which may be issued under the Plan shall be 150,000 shares, subject to adjustment upon changes in capitalization of the Company as provided in Section 11.06.
Notwithstanding the foregoing sentence and subject to adjustment as set forth in Section 11.06, the maximum number of shares of Stock that may be purchased by all Participants in any Offering Period shall not exceed 25,000 shares. If, on a given Purchase Termination Date, the number of shares with respect to which options are to be exercised exceeds either maximum, the Committee shall make, as applicable, such adjustment or pro rate allocation of the shares of Stock remaining available for purchase in as uniform a manner as shall be practicable and as it shall determine to be equitable.
9.02 Participant's Interest in Option Stock.
The Participant will have no interest or voting rights in shares of Stock covered by his or her option or in any dividends declared by the Company in respect of its outstanding common stock until such option has been exercised.
9.03 Shares of Stock to be delivered to a Participant under the Plan shall be registered in the name of the Participant or in the name of the Participant and his or her spouse, as designated by the Participant.
ARTICLE X
ADMINISTRATION
10.01 Authority of the Committee.
(a) The Plan shall be administered by the Compensation Committee of the Board. Subject to the express provisions of the Plan, the Committee shall have full and discretionary authority to interpret and construe all provisions of the Plan, to adopt rules and regulations for administering the Plan, and to make all other determinations deemed necessary or advisable for administering the Plan. The Committee's determination on the foregoing matters shall be final and conclusive. The Committee may, in its discretion, delegate some or all of its authority to one or more employees or officers of the Company in which case any references in this Plan to the Committee shall also refer to such delegate.
(b) The provisions of the Plan intended to be subject to Code Section 423 shall be construed in a manner consistent with the requirements of that Code Section. The Committee shall have the discretion to determine whether a Subsidiary shall be a Designated Subsidiary participating in the Plan. Additionally, the Committee shall have discretion to adopt rules regarding Plan administration to conform to local laws or to enable eligible employees of the Company and Designated Subsidiaries to participate in the Plan.
10.02 Rules Governing the Administration of the Committee.
The Committee shall hold its meetings at such times and places as it shall deem advisable and may hold telephonic meetings. A majority of its members shall constitute a quorum. All determinations of the Committee shall be made by a majority of its members. The Committee may correct any defect or omission or reconcile any inconsistency in the Plan, in the manner and to the extent it shall deem desirable. Any decision or determination reduced to writing and signed by a majority of the members of the Committee shall be as fully effective as if it had been made by a majority vote at a meeting duly called and held.
10.03 Indemnification.
Members of the Committee, and any officer or employee of the Company acting at the direction, or on behalf, of the Committee shall not be personally liable for any action or determination taken or made in good faith with respect to the Plan, and shall, to the extent permitted by law, be fully indemnified and protected by the Company with respect to any such action or determination.
10.04 Administrative Costs.
The costs and expenses incurred in the administration of the Plan and maintenance of Accounts will be paid by the Company.
ARTICLE XI
MISCELLANEOUS
11.01 Designation of Beneficiary.
(a) A Participant may file a written designation of a beneficiary who is to receive any shares and cash, if any, from the Participant's account under the Plan in the event of such Participant's death subsequent to a Purchase Termination Date on which the option is exercised, but before delivery to such Participant of such shares and cash. In addition, a Participant may file a written designation of a beneficiary who is to receive any cash from the Participant's account under the Plan in the event of such Participant's death before exercise of the option. If a Participant is married and the designated beneficiary is not the spouse, spousal consent shall be required for such designation to be effective.
(b) Such designation of beneficiary may be changed by the Participant at any time by written notice. In the event of the death of a Participant and in the absence of a beneficiary validly designated under the Plan who is living at the time of such Participant's death, the Company shall deliver such shares and/or cash to the estate of the Participant.
11.02 Transferability.
Neither payroll deductions credited to a Participant's Account nor any rights with regard to the exercise of an option or to receive Stock under the Plan may be assigned, transferred, pledged, or otherwise disposed of in any way by the Participant other than by will or the laws of descent and distribution as provided in Section 11.01. Any such attempted assignment, transfer, pledge or other disposition shall be without effect.
11.03 Withholding.
The Company or any Designated Subsidiary is authorized to withhold from any payment to be made to a Participant withholding amounts and other taxes due in connection with any transaction under the Plan, including any disposition of shares acquired under the Plan, and a Participant's enrollment in the Plan will be deemed to constitute his or her consent to such withholding. At the time of a Participant's exercise of an option or disposition of shares acquired under the Plan, the Company may require the Participant to make other arrangements to meet tax withholding obligations as a condition to exercise of rights or distribution of shares or cash from the Participant's Account. In addition, a Participant may be required to advise the Company of sales and other dispositions of Stock acquired under the Plan in order to permit the Company to comply with tax laws and to claim any tax deductions to which the Company may he entitled with respect to the Plan.11.04 Use of Funds.
All payroll deductions received or held by the Company under this Plan may be used by the Company for any corporate purpose, and the Company shall not be obligated to segregate such payroll deductions or pay interest thereon.
11.05 Reports.
Statements of Account shall be given to each Participant at least semi-annually, which statements shall set forth the amounts of payroll deductions, the Purchase Price, the number of shares purchased, any remaining cash balance, and other information deemed relevant by the Committee.
11.06 |
| Adjustments Upon Changes in Capitalization, Dissolution, Liquidation, Merger or Asset Sale. | |
(a) Changes in Capitalization. The Committee shall proportionately adjust the Reserves and the price per share and the number of shares of Stock covered by each option under the Plan which has not yet been exercised for any increase or decrease in the number of issued shares of Stock resulting from a stock split, reverse stock split, stock dividend, combination or reclassification of the Stock, or other extraordinary corporate event which affects the Stock in order to prevent dilution or enlargement of the rights of participants. The determination of the Committee with respect to any such adjustment shall be final, binding and conclusive on all parties.
(b) Dissolution or Liquidation. In the event of the proposed dissolution or liquidation of the Company, the Offering Period then in progress shall be shortened by setting a new Purchase Termination Date (the "New Purchase Termination Date"), and shall terminate immediately before the consummation of such proposed dissolution or liquidation, unless provided otherwise by the Committee. The New Purchase Termination Date shall be before the date of the Company's proposed dissolution or liquidation. The Committee shall notify each Participant in writing at least ten (10) business days before the New Purchase Termination Date, that the Purchase Termination Date for the Participant's option has been changed to the New Purchase Termination Date and that the Participant's option shall be exercised automatically on the New Purchase Termination Date, unless before such date the Participant has withdrawn from the Offering Period as provided in Section 8.01 hereof.
(c) Asset Sale or Merger. In the event of a proposed sale of all or substantially all of the assets of the Company, or the merger of the Company with or into another corporation, the Committee shall shorten the Offering Period then in progress by setting a new Purchase Termination Date (the "New Purchase Termination Date"). The New Purchase Termination Date shall be before the date of the Company's proposed asset sale or merger. The Committee shall notify each participant in writing, at least ten (10) business days prior to the New Purchase Termination Date, that the Purchase Termination Date for the Participant's purchase has been changed to the New Purchase Termination Date and that the Participant's option shall be exercised automatically on the New Purchase Termination Date, unless prior to such date the Participant has withdrawn the amount credited to his or her Account upon withdrawal from the Plan pursuant to Section 8.01 or such amount has been distributed to the participant upon termination of employment pursuant to Section 8.02.11.07 Amendment and Termination.
Subject to any applicable law or government regulation, to any requirement that must be satisfied for purposes of Section 423 of the Code and to the rules of the NYSE Amex or any successor exchange or quotation system on which the Stock may be listed or quoted, the Plan may be amended, modified or terminated by the Board without the approval of the stockholders of the Company, except that stockholder approval shall be required for any amendment that would (i) increase the maximum number of shares of Stock that may be issued under the Plan; provided, however, that any adjustment under Section 11.06(a) shall not constitute an increase for purposes of this Section 11.07; or (ii) change the class of employees eligible to participate in the Plan. Any other amendment to the Plan may be made by either the Board or the Committee. No amendment, modification or termination of the Plan may, without the consent of the Participant then having an option under the Plan to purchase Stock, materially and adversely affect the rights of such Participant under such option.
11.08 No Employment.
The Plan does not, directly or indirectly, create any right for the benefit of any employee or class of employees to purchase any shares of Stock under the Plan, or create in any employee or class of employees any right with respect to continuation of employment by the Company or any Designated Subsidiary, and it shall not be deemed to interfere in any way with the Company's or Designated Subsidiary's right to terminate, or otherwise modify, an employee's employment at any time.
11.09 Notices.
All notices or other communications by a Participant to the Company shall be deemed to have been duly given when received in the manner and form specified by the Company at the location, or by the person, designated by the Company for the receipt thereof.
11.10 Elections.
All elections and notices made by a participant to the Company may be made telephonically or electronically in accordance with procedures established by the Committee and the Company.
11.11 Conditions Upon Issuance of Shares.
The Company shall not be obligated to issue shares of Stock with respect to an option unless the exercise of such option and the issuance and delivery of such shares pursuant thereto shall comply with all applicable provisions of law, domestic or foreign, including, without limitation, the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as amended, the rules and regulations promulgated thereunder, and the requirements of any stock exchange or automated quotation system upon which the shares may then be listed or quoted.11.12 Effect of Plan.
The provisions of the Plan shall, in accordance with its terms, be binding upon, and inure to the benefit of, all successors of each Participant, including, without limitation, such Participant's estate and the executors, administrators or trustees thereof, heirs and legatees, and any receiver, trustee in bankruptcy or representative of creditors of such Participant.
11.13 Effective Date; Term.
The Plan was adopted by the Board of Directors on August 23, 2011 and shall become effective as of October 1, 2011, subject to approval by the Company's stockholders, provided that such approval is received within twelve (12) months after its adoption by the Board. Once effective, the Plan shall continue for a term of ten (10) years after the Effective Date unless sooner terminated by the Board pursuant to Section 11.07 hereof. If the Plan is not so approved, the Plan shall not become effective.
11.14 Governing Law.
The laws of the State of New York will govern all matters relating to this Plan except to the extent it is superseded by the laws of the United States.
□ xPLEASE MARK VOTES
AS IN THIS EXAMPLE | REVOCABLE PROXY IEC ELECTRONICS CORP | |
| ANNUAL MEETING OF STOCKHOLDERS | IEC ELECTRONICS CORP.. | |
WEDNESDAY, FEBRUARY 1, 2012JANUARY 28, 2015 | | |
| 1. Election of six (6) directors | For | Withhold | For All Except |
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The undersigned, revoking all prior proxies, hereby appoints W. Barry Gilbert and Eben S. Moulton, and either one of them with full power of substitution, as proxy or proxies to vote for the undersigned, in the name of the undersigned, all of the Common Stock of IEC Electronics Corp. (the “Company”) of the undersigned, as if the undersigned were personally present and voting at the Company’s Annual Meeting of Stockholders to be held at the office of the Company, 105 Norton Street, Newark, New York 14513, on Wednesday, January 28, 2015 at 9:00 a.m. (the “Annual Meeting”), and at any and all adjournments and postponements thereof, upon the matters specified below and, in their discretion, upon such other matters as may properly come before the meeting.
| | The Board of Directors recommends a vote FOR the election of the following nominees for director. |
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| | 1. Election of seven (7) directors |
| | | | For | Withhold | For All Except |
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| | 01 | W. Barry Gilbert | 02 | Florence D. Hudson |
| | 03 | John Carlton Johnson | 04 | Edward W. Kay, Jr. |
| | 05 | Eben S. Moulton | 06 | James C. Rowe |
| | 07 | Jerold L. Zimmerman | | | |
| | INSTRUCTION: To withhold authority to vote for any individual nominees, mark “For All Except” and write the name or number of the nominee(s) in the space provided below. |
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Authorized Signature: This Section must be completed for your vote to be counted. Please sign and date below. | | The Board of Directors recommends a vote FOR proposals 2 and 3. |
| | | Date: | | | | | For | Against | Abstain |
| | | | | | 2. | Ratification of the selection of Crowe Horwath LLP as the Company’s independent registered public accounting firm FOR FISCAL 2015. | ¨ | ¨ | ¨ |
| Sign Above | | Co-holder (if any) sign above | |
Please sign exactly as your name appears hereon. Joint owners should each sign. When signing as an attorney, administrator, executor, corporate officer, trustee, guardian or custodian, please give full title.
| | 3. | Advisory vote on named executive officer compensation (say-on-pay vote). | ¨ | ¨ | ¨ |
| | 4. | In their discretion, transaction of such other business as may properly come before the Annual Meeting or any adjournment or postponement thereof. |
| | | | | | THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF IEC ELECTRONICS CORP. |
The undersigned, revoking all prior proxies, hereby appoints W. Barry Gilbert and Eben S. Moulton, and either one of them with full power of substitution, as proxy or proxies to vote for the undersigned, in the name of the undersigned, all of the Common Stock of IEC Electronics Corp. (the “Company”) of the undersigned, as if the undersigned were personally present and voting at the Company’s Annual Meeting of Stockholders to be held at the office of the Company, 105 Norton Street, Newark, New York on February 1, 2012 at 9:00 a.m. (the “Annual Meeting”), and at any and all adjournments and postponements thereof, upon the matters specified below and, in their discretion, upon such other matters as may properly come before the meeting.
The Board of Directors recommends a vote FOR the election of nominees for director, and FOR proposals 2 and 3.
| 01 W. Barry Gilbert | 02 Eben S. Moulton |
03 James C. Rowe | 04 Carl E. Sassano |
05 Amy L. Tait | 06 Jerold L. Zimmerman |
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INSTRUCTION: To withhold authority to vote for any individual nominees, mark “For All Except”Detach above card, sign, date and write the name or number of the nominee(s)mail in the space provided below. |
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2. Proposal to ratify the selection of EFP Rotenberg, LLP as the Company’s independent registered public accounting firm. | For Against Abstain
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3. Proposal to approve 2011 Employee Stock Purchase Plan. | For Against Abstain
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| postage paid envelope provided. |
4. In their discretion, transaction of such other business as may properly come before the Annual Meeting or any adjournment thereof.IEC ELECTRONICS CORP.
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PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY IS SOLICITED ON BEHALF OFCARD PROMPTLY IN THE BOARD OF DIRECTORS.ENCLOSED POSTAGE-PAID ENVELOPE
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNEDSIGNING STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR ELECTION OF THE NOMINEES FOR DIRECTORSDIRECTOR SPECIFIED IN THE PROXY STATEMENT, FOR THE PROPOSAL TO RATIFY RATIFICATION OF THE SELECTION OF EFP ROTENBERG,CROWE HORWATH, LLP AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR FISCAL 2015, AND FOR APPROVAL OF THE PROPOSAL TO APPROVE THE 2011 EMPLOYEE STOCK PURCHASE PLAN.ADVISORY VOTE ON NAMED EXECUTIVE OFFICER COMPENSATION. |
Please be sure to sign and date
this Proxy in the box below:
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Date: | |
Signature:
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Detach above card, sign, date and mail in postage paid envelope provided.
IEC ELECTRONICS CORP.
IF YOUR ADDRESS HAS CHANGED, PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY CARD PROMPTLYCORRECT THE ADDRESS IN THE ENCLOSED POSTAGE-PAID ENVELOPE. IMPORTANT: Sign the Proxy exactly as your name or names appear on your Common Stock certificate; in the case of Common Stock held in joint tenancy, each joint tenant must sign. Fiduciaries should indicate their full titles and the capacity in which they sign. Please complete, sign, date and return this Proxy promptly in the enclosed envelope.SPACE PROVIDED BELOW AND RETURN THIS PORTION WITH THE PROXY IN THE ENVELOPE PROVIDED. ____________________________ ____________________________ ____________________________ |