SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Rule 14a-101)
Securities Exchange Act of 1934
(Amendment No. )
| ||||
| ||||
| ||||
| ||||
| ||||
| ||||
| ||||
| ||||
|
TO BE HELD ON June 6,NOVEMBER 14, 2019
The Annual
|
|
|
|
|
April 26,
October 15, 2019
Stockholders to be Heldheld on June 6,November 14, 2019
Suite 1300
Austin, Texas 78754
(512)334-8900
FOR ANNUALSPECIAL MEETING OF STOCKHOLDERS TO BE HELD ON JUNE 6,NOVEMBER 14, 2019
If not revoked, the proxy will be voted at the Special Meeting in accordance with the stockholder’s instructions indicated on the proxy card.
1
firm for 2019.foregoing proposal, if necessary. No other business is expected to come before our AnnualSpecial Meeting. Should any other matter requiring a vote of stockholders properly arise, the persons named in the enclosed proxy card will vote such proxy in accordance with their best judgement (including the recommendation of our Board).
We intend to solicit proxies primarily
Quorum.. The required quorum for the transaction of business at our AnnualSpecial Meeting is generally the holders of a majority of the stock issued and outstanding on the Record Date and entitled to vote at our AnnualSpecial Meeting, present in person or by proxy. Shares that are voted “FOR” or “AGAINST” a matter are treated as being present at the meeting for purposes of establishing a quorum and are also treated as shares entitled to vote at our AnnualSpecial Meeting with respect to such matter. Abstentions and brokernon-votes will count towardare counted for purposes of determining the presence or absence of a quorum. An abstention isquorum for the voluntary acttransaction of business, but not voting byfor purposes of determining the number of votes cast with respect to a stockholder whoproposal.
soliciting additional proxies in favor of any proposal being submitted by us at the meeting.
BrokerProposal 2.
Shares held in “Street Name.Name.”If your shares of common stock are held by a bank, broker or other nominee, please follow the instructions you receive from your bank, broker or other nominee to have your shares of common stock voted.
2
Deadline for Receipt of Stockholder Proposals for 2020 Annual Meeting of Stockholders
Pursuant to Rule14a-8 of the Securities and Exchange Commission (“SEC”), proposals by eligible stockholders that are intended to be presented at our 2019 Annual Meeting of Stockholders must be received by our Corporate Secretary at Superconductor Technologies Inc., 9101 Wall Street, Austin, Texas 78754 not later than January 3, 2020 in order to be considered for inclusion in our proxy materials.
Stockholders intending to present a proposal at our 2020 Annual Meeting of Stockholders must comply with the requirements and provide the information set forth in our amended and restated bylaws. Under our amended and restated bylaws, a stockholder’s proposal must be timely received, which means that a proposal must be delivered to or mailed to our Secretary not less than 90 days prior to the meeting; provided that if less than 100 days’ notice or prior public disclosure of the meeting is given to stockholders, then notice by a stockholder, to be timely received, must be received by our Secretary not later than the close of business on the 10th day following the day on which such notice of the date of the meeting was mailed or such public disclosure was made.
3
PROPOSAL ONE
ELECTION OF CLASS 3 DIRECTOR
Our Board currently consists of five directors divided into three classes — Class 1 (Mr. Quiram and Mr. Kaplan), Class 2 (Mr. Davis and Ms. Johnson) and Class 3 (Mr. Vellequette) — with the directors in each class holding office for staggered terms of three years each or until their successors have been duly elected and qualified. Mr. Vellequette’s term expires at the Annual Meeting. Accordingly, one Class 3 director will be elected at the Annual Meeting. The nominee for election as the Class 3 director is Mr. Vellequette. The Class 3 director will serve until our 2022 Annual Meeting of Stockholders and until his successor is elected and qualified. Assuming the nominee is elected, wethose uninstructed shares. Brokers will have five directors serving as follows:
| ||
| ||
|
The accompanying proxy card grants the proxy holder thediscretionary voting power to vote on both proposals so we do not anticipate any broker non-votes. Because adoption and approval of the proxy forreverse stock split proposal requires a substitute nominee inmajority of the event thatoutstanding shares, a broker non-vote will have the nominee becomes unavailable to servesame effect as a Class 3 director. Management presently has no knowledge thatvote “Against” the nominee will refuse or be unable to serve as a Class 3 director for the prescribed term.
Required Vote
Directors are elected by a “plurality”reverse stock split proposal. Because approval of the shares voted. Plurality means thatadjournment proposal requires an affirmative vote of a majority of the nominee withvotes present in person or represented by proxy at the largest number of votes is elected, up to the maximum number of directors to be chosen (in this case, one director). Stockholders can either vote “for” the nominee or withhold authority to vote for the nominee. However, shares that are withheldSpecial Meeting, a broker non-vote will have no effect on the outcome of the vote with regards to the adjournment proposal.
Reverse Stock Split Ratio | | | Approximate Number of Outstanding Shares of Common Stock Following the Reverse Stock Split and the Authorized Share Reduction | | | Number of Shares of Common Stock Reserved for Future Issuance Following the Reverse Stock Split and the Authorized Share Reduction | | | Number of Shares of Common Stock Authorized but Not Outstanding or Reserved Following the Reverse Stock Split and the Authorized Share Reduction | | |||||||||
1-for-2 | | | | | 2,751,305 | | | | | | 2,028,143 | | | | | | 120,220,553 | | |
1-for-3 | | | | | 1,834,203 | | | | | | 1,352,095 | | | | | | 80,147,035 | | |
1-for-4 | | | | | 1,375,652 | | | | | | 1,014,072 | | | | | | 60,110,276 | | |
1-for-5 | | | | | 1,100,522 | | | | | | 811,257 | | | | | | 48,088,221 | | |
1-for-6 | | | | | 917,102 | | | | | | 676,048 | | | | | | 40,073,517 | | |
Reverse Stock Split Ratio | | | Approximate Number of Outstanding Shares of Common Stock Following the Reverse Stock Split and the Authorized Share Reduction | | | Number of Shares of Common Stock Reserved for Future Issuance Following the Reverse Stock Split and the Authorized Share Reduction | | | Number of Shares of Common Stock Authorized but Not Outstanding or Reserved Following the Reverse Stock Split and the Authorized Share Reduction | | |||||||||
1-for-7 | | | | | 786,087 | | | | | | 579,469 | | | | | | 34,348,730 | | |
1-for-8 | | | | | 687,826 | | | | | | 507,036 | | | | | | 30,055,138 | | |
1-for-9 | | | | | 611,401 | | | | | | 450,698 | | | | | | 26,715,679 | | |
1-for-10 | | | | | 550,261 | | | | | | 405,629 | | | | | | 24,044,110 | | |
this Proposal 1.
CORPORATE GOVERNANCE AND BOARD MEETINGS AND COMMITTEES
Corporate Governance Policies and Practices
The following is a summary“FOR” Amendment of our corporate governance policiesRestated Certificate of Incorporation,
as Amended, to Effect a Reverse Stock Split as Described in this Proposal 1.
Our Board has determined that all of our directors, other than Mr. Quiram, are independent as defined by the rulesvote upon an adjournment of the SEC and The NASDAQ Stock Market (“NASDAQ”). Our Audit Committee, Compensation Committee and Governance and Nominating Committee each consists entirelySpecial Meeting, if necessary, to solicit additional proxies if there are insufficient votes in favor of independent directors under the rulesapproval of the SEC and NASDAQ.
We have a Code of Business Conduct and Ethics for all of our employees, including our Chief Executive Officer and Chief Financial Officer. If we amend any provision of our Code of Business Conduct and Ethics that appliesproposed amendment to our Chief Executive Officer or Chief Financial Officer (or any persons performing similar functions), or if we grant any waiver (including an implicit waiver) from any provisionRestated Certificate of our Code of Business ConductIncorporation to effectuate the Reverse Stock Split and Ethics to our Chief Executive Officer or Chief Financial Officer (or any persons performing similar functions), we
4
|
Our Audit Committee reviews and approves all related-party transactions.
As part of our Code of Business Conduct and Ethics, we have made a “whistleblower” hotline available to all employees for anonymous reporting of financial or other concerns. Our Audit Committee receives directly, without management participation, all hotline activity reports concerning accounting, internal controls or auditing matters.
Board Leadership Structure and Rolethe Authorized Share Reduction as described in Risk Oversight
Our Board’s current policy is to separateProposal 1.
Our Board is actively involved in overseeing our risk management through our Audit Committee. Under its charter, our Audit Committee is responsible for inquiring of management and our independent auditors about significant areas of risk or exposure and assessing the steps management has taken to minimize such risks. Our Board’s role in risk oversight has not affected our Board’s determination that the separation of roles of Chairman and Chief Executive Officer is most appropriate for our company.
Stockholder Communications with Directors
Stockholders who want to communicate with our Board or with a particular director or committee may send a letter to our Secretary at Superconductor Technologies Inc., 9101 Wall Street, Austin, Texas 78754. The mailing envelope should contain a clear notation indicating that the enclosed letter is a “Board Communication” or “Director Communication.” All such letters should state whether the intended recipients are all members of our Board or just certain specified individual directors or a specified committee. The Secretary will circulate the communications (with the exception of commercial solicitations) to the appropriate director or directors. Communications marked “Confidential” will be forwarded unopened.
Attendance at Annual Meetings of Stockholders
We expect that all of our Board members attend our annual meetings of stockholders in the absenceaffirmative vote of a showing of good cause for failure to do so. Allmajority of the members of our Board attended our 2018 annual meeting of stockholdersvotes present in person or represented by telephone.
Board Meetings and Committees
During 2018, each ofproxy at the Special Meeting is required to approve the adjournment proposal. Under our directors attended at least 75%Bylaws, no new notice need be given of the aggregate of (i) the total number of Board meetings and (ii) the total number of meetingsdate, time or place of the committeesadjourned meeting if such date, time or place is announced at the meeting before adjournment, unless the meeting is adjourned to a date more than 30 days after the date fixed for the original meeting. If we determine that an adjournment of the meeting is appropriate for the purpose of soliciting additional proxies in favor of any proposal being submitted by us at the meeting, such adjournment will be submitted for a stockholder vote under this Proposal 2.
proposal at the Special Meeting. Abstentions and broker non-votes will not be counted towards, and will have no effect on, the vote total for this Proposal 2. Proxies solicited by the Board will be voted in favor of Directors
the adjournment unless a stockholder has indicated otherwise in their proxy.
5
Audit Committee
The principal functions of our Audit CommitteeSpecial Meeting, if necessary,
to Solicit Additional Proxies if there are Insufficient Votes to hire our independent public auditors, to review the scope and results of theyear-end audit with management and the independent auditors, to review our accounting principles and our system of internal accounting controls and to review our annual and quarterly reports before filing them with the SEC. Our Audit Committee met six times during 2018. The current members of our Audit Committee are Messrs. Vellequette (Chairman), Kaplan, Davis and Ms. Johnson.
Our Board has determined that all members of our Audit Committee are “independent” as defined under the rules of the SEC and the listing standards of NASDAQ. Our Board has determined that Mr. Vellequette is an “audit committee financial expert.”
Compensation Committee
Our Compensation Committee reviews and approves salaries, bonuses and other benefits payable to our executive officers and administers our management incentive plan. Our Compensation Committee makes all compensation decisions with respect to our Chief Executive Officer and makes recommendations to our Board regardingnon-equity compensation and equity awards to our other named executive officers (set forth below under “Executive Compensation—Summary Compensation Table”) and all other elected officers. In doing so, with respect to named executive officers other than the Chief Executive Officer, our Compensation Committee generally receives a recommendation from our Chief Executive Officer and other officers as appropriate. Our Chief Executive Officer also generally recommends the number of options or other equity awards to be granted to executive officers, within a range associated with the individual executive’s salary level, and presents this to our Compensation Committee for its review and approval.
Our Compensation Committee uses available data to review and compare our compensation levels to market compensation levels, taking into consideration the other companies’ size, the industry, and the individual executive’s level of responsibility, as well as anecdotal data regarding the compensation practices of other employers. We do not annually benchmark our executive compensation against a defined peer group, since we believe that defining such a group is difficult and would not materially affect our decisions. Our Compensation Committee does not generally hire an outside consulting firm to assist with compensation, as we believe that the value of doing so is exceeded by the costs. No compensation consultant was engaged to provide advice or recommendations on our executive or director compensation for 2018.
Our Compensation Committee also reviews the compensation of directors and recommends to our Board the amounts and types of cash to be paid and equity awards to be granted to our directors.
Our Compensation Committee met two times during 2018. The current members of our Compensation Committee are Messrs. Davis (Chairman), Kaplan, Vellequette and Ms. Johnson. Our Board has determined that all members of our Compensation Committee are “independent” as defined under the rules of the SEC and the listing standards of NASDAQ. Our Compensation Committee will only delegate its authority to the extent consistent with our certificate of incorporation and bylaws and applicable laws, regulations and listing standards.
Our Compensation Committee created the Stock Option Committee (our “Stock Option Committee”) consisting of two members—our Compensation Committee Chairman and the Chief Executive Officer. The purpose of our Stock Option Committee is to facilitate the timely granting of stock options in connection with hiring, promotions and other special situations, and therefore our Stock Option Committee meets only periodically as certain events occur. Our Stock Option Committee is empowered to grant options tonon-executive employees up to a preset annual aggregate limit. The Stock Option Committee did not meet during 2018.Our Compensation Committee supervises these grants and retains exclusive authority for all executive officer grants and the annual employee grants. The current members of our Stock Option Committee are Messrs. Davis (Chairman) and Quiram.
6
Governance and Nominating Committee
Our Nominating Committee is responsible for overseeing and, as appropriate, making recommendations to our Board regarding, membership and constitution of our Board and its role in overseeing our affairs. Our Nominating Committee is responsible for proposing a slate of directors for election by the stockholders at each annual meeting and for proposing candidates to fill any vacancies. Our Nominating Committee is also responsible for the corporate governance practices and policies of our Board and its committees. The current members of our Nominating Committee are Messrs. Kaplan (Chairman), Davis, Vellequette and Ms. Johnson. Our Nominating Committee met two times in 2018. Our Board has determined that all members of our Nominating Committee are “independent” as defined under the rules of the SEC and the listing standards of NASDAQ.
Our Nominating Committee manages the process for evaluating current Board members at the time they are considered forre-nomination. After considering the appropriate skills and characteristics required on our Board, the current makeup of our Board, the results of the evaluations, and the wishes of our Board members to be re-nominated, our Nominating Committee recommends to our Board whether those individuals should bere-nominated.
Our Nominating Committee periodically reviews with our Board whether it believes our Board would benefit from adding a new member(s), and if so, the appropriate skills and characteristics required for the new member(s). If our Board determines that a new member would be beneficial, our Nominating Committee solicits and receives recommendations for candidates and manages the process for evaluating candidates. All potential candidates, regardless of their source (including candidates recommended by security holders), are reviewed under the same process. Our Nominating Committee (or its chair) screens the available information about the potential candidates. Based on the results of the initial screening, interviews with viable candidates are scheduled with Nominating Committee members, other members of our Board and senior members of management. Upon completion of these interviews and other due diligence, our Nominating Committee may recommend to our Board the election or nomination of a candidate.
Candidates for independent Board members have typically been found through recommendations from directors or others associated with us. Our stockholders may also recommend candidates by sending the candidate’s name and resume to our Nominating Committee under the provisions set forth above for communication with our Board. No such suggestions from our stockholders were received in time for our Annual Meeting.
Our Nominating Committee has no predefined minimum criteria for selecting Board nominees, although it believes that (i) all directors should share qualities such as: an ability to make meaningful contributions to our board; independence; strong communication and analytical skills; and a reputation for honesty and ethical conduct; and (ii) independent directors should share qualities such as: experience at the corporate, rather than divisional level, in multi-national organizations as large as or larger than us; and relevant,non-competitive experience. Our Nominating Committee does not have a formal policy with respect to diversity. However, our Nominating Committee and our Board believe that it is important that we have Board members whose diversity of skills, experience and background are complementary to those of our other Board members. In considering candidates for our Board, our Nominating Committee considers the entirety of each candidate’s credentials. In any given search, our Nominating Committee may also define particular characteristics for candidates to balance the overall skills and characteristics of our Board and our perceived needs. However, during any search, our Nominating Committee reserves the right to modify its stated search criteria for exceptional candidates.
7
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires our directors, executive officers and significant stockholders (defined by statute as stockholders beneficially owning more than 10% of our common stock) to file with the SEC initial reports of beneficial ownership, and reports of changes in beneficial ownership, of our common stock. Directors, executive officers and significant stockholders are required by SEC regulations to furnish us with copies of all Section 16(a) forms they file. Based solely on a review of the copies of Forms 3, 4 and 5 (and amendments thereto) filed with the SEC and submitted to us, and on written representations by certain directors and executive officers received by us, we believe that all of our executive officers, directors and significant stockholders complied with all applicable filing requirements under Section 16(a) during 2018.
8
NON-EMPLOYEE DIRECTOR COMPENSATION
Summary of Compensation
Our directors who are also employees do not receive additional compensation for their service on our Board. Our Board maintains a written compensation policy for ournon-employee directors. Each director other than our Chairman of the Board receives an annual cash retainer of $20,000, and our Chairman of the Board receives an annual cash retainer of $40,000. The annual cash retainer is paidbi-annually and requires that the director attend at least 75% of our Board meetings. Each director receives a $5,000 annual retainer for service as a member of our three standing committees. In 2018, each director (including our Chairman of the Board) received an equity grant of 2,500 shares of our common stock. The grants vest in two equal installments, on each anniversary of the grant date. Our Board provides an additional $15,000 annual retainer (which is paidbi-annually) as compensation for service as chairman of our Audit Committee and an additional $10,000 annual retainer for service as chairman of each of our Compensation Committee and Nominating Committee.
Non-employee directors do not receive compensation from us other than as a director or as committee member. There are no family relationships among our directors and executive officers.
Non-employee Director Compensation Table
The following table summarizes the compensation paid to ournon-employee directors for 2018:
Name | Fees earned or paid in cash ($) | Stock Awards ($) (1) | Option Awards ($) (1) | Total ($) | ||||||||||||
Martin A. Kaplan | 60,000 | — | 3,625 | 63,625 | ||||||||||||
Lynn J. Davis | 40,000 | — | 3,625 | 43,625 | ||||||||||||
David W. Vellequette | 45,000 | — | 3,625 | 48,625 | ||||||||||||
Julia S. Johnson (2) | 7,288 | — | 3,625 | 10,913 |
|
|
9
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information regarding those individuals currently serving as our directors (or nominated to serve as a director) and executive officers as of April 17, 2019:
|
| |||||
|
| |||||
|
| |||||
|
| |||||
|
| |||||
|
| |||||
|
| |||||
|
| |||||
|
| |||||
|
|
|
|
|
|
|
Each of our directors, including our current nominee, was nominated based on the assessment of our Nominating Committee and our Board that he has demonstrated: an ability to make meaningful contributions to our Board; independence; strong communication and analytical skills; and a reputation for honesty and ethical conduct. Our Board consists of, and seeks to continue to include, persons whose diversity of skills, experience and background are complementary to those of our other directors.
Martin A. Kaplanhas served on our board since 2002 and was named Chairman of the Board in October 2010. From 2000 through 2012, Mr. Kaplan was Chairman of the Board of JDS Uniphase, Inc. (“JDSU”), a telecommunications equipment company, where he remained a director until August 2015. In August 2015, JDSU spun off its communications and commercial optical products business into the publicly-traded company Lumentum Holdings Inc., at which time Mr. Kaplan resigned from the JDSU Board and became Chairman of the Board of Lumentum Holdings Inc. In a career spanning 40 years, Mr. Kaplan last served as Executive Vice-President of the Pacific Telesis Group, which became a subsidiary of SBC Communications in 1997. Mr. Kaplan has served as a director of a number of other public and private companies and has served for 11 years as a director of Sentinels of Freedom, anon-profit foundation which assists severely wounded veterans transition to civilian life. Mr. Kaplan earned a B.S. in engineering from California Institute of Technology. Our Board has determined that Mr. Kaplan is qualified to serve as a director because he has extensive business leadership and board experience.
Lynn J. Davishas served on our Board since 2005. He served as President, Chief Operating Officer and director of August Technology, a manufacturer of inspection equipment for the semiconductor fabrication industry from 2005 to 2006. From 2002 to 2004, he was a partner at Tate Capital Partners Fund, LLC, a private investment firm heco-founded. Prior to Tate, Mr. Davis was an employee of ADC Telecommunications for 28 years, serving in 14 management positions, including Corporate President, Group President and Chief Operating Officer. In December 2016, he retired as Chairman of the Board of Directors of Flexsteel Industries Inc., a furniture manufacturer. Mr. Davis holds a B.S. in electrical engineering from Iowa State University and an M.B.A. from the University of Minnesota. Our Board has determined that Mr. Davis is qualified to serve as a director because he has extensive knowledge in various management roles in the telecommunications industry, including manufacturing, sales and marketing. In addition, as a venture capitalist, Mr. Davis has worked with smaller companies and brings a valuable entrepreneurial approach to management and compensation issues.
10
David W. Vellequette rejoined our Board in December 2017. Mr. Vellequette previously served on our Board from January 2007 until March 2014. Mr. Vellequette most recently served as senior vice president of finance of Avaya, a global provider of business collaboration and communications solutions, which emerged in December 2017 from a nearly year-long financial restructuring under Chapter 11. Previously, Mr. Vellequette served as Avaya’s senior vice president and chief financial officer from October 1, 2012 through October 23, 2017. From 2005 to 2012, he was chief financial officer of JDS Uniphase, Inc., a telecommunications equipment company. He joined JDS Uniphase as vice president and operations controller in 2004. From 2002 to 2004, Mr. Vellequette served as vice president of Worldwide Sales and Service Operations at Openwave Systems, Inc., an independent provider of software solutions for the mobile communications and media industries. Mr. Vellequette began his finance career as an auditor with Ernst & Young. He holds a B.S. in Accounting from the University of California, Berkeley, and is a CPA. Our Board has determined that Mr. Vellequette is qualified to serve as a director because he has extensive knowledge about public and financial accounting matters.
Julia S. Johnsonhas served on our Board since October 2018. She is also a board member of Lumentum Inc. (NASDAQ: LITE). Ms. Johnson has been a global technology business leader for 29 years, creating growth and value in product lines and new market segments for the consumer electronics, enterprise, and Fintech/payment markets. Ms. Johnson was the Senior Vice President Product Management and Marketing at Verifone, a global provider of technology that enables electronic payment transactions. Prior to Verifone, Ms. Johnson was Corporate Vice President Product Management at Lenovo, Corporate Vice President Product Management at Google, and Vice President of Product Management at Motorola. She holds a M.S. in Business Administration and a M.S. in Materials Science & Engineering from the Massachusetts Institute of Technology. She also has a B.S. in Math and Physics from Albion College.
Jeffrey A. Quiramhas served on our Board, and has been our President and Chief Executive Officer, since 2005. From 1991 to 2004, Mr. Quiram served ADC Telecommunications in a variety of management roles, including Vice President of its wireless business unit. Mr. Quiram has a B.S. in Quantitative Methods and Computer Science from College of St. Thomas, and an M.B.A. from University of Minnesota. Our Board has determined that Mr. Quiram is qualified to serve as a director because he has extensive knowledge about product development, business planning, and complex manufacturing. In addition, he has extensive knowledge about our corporate operations and market activities from serving as our Chief Executive Officer.
William J. Buchanan has been our Chief Financial Officer since May 2010. Mr. Buchanan joined us in 1998 and served as our Controller from 2000 to May 2010. For 16 years prior to joining us, he was a self-employed private investor and investment advisor. For the nine years prior to that, he served in various executive and accounting positions with Applied Magnetics Corp and Raytheon Co. Mr. Buchanan holds a B.A. in Economics from California State University, Fresno.
Kenneth E. Pfeiffer has been our Vice President, Engineering since 2012. From 2009 to 2011, Mr. Pfeiffer was Vice President, Engineering at Veeco Instruments Inc. From 2006 to 2009, Mr. Pfeiffer was the Director of Equipment Engineering for HelioVolt Corporation. Prior to that, Mr. Pfeiffer held various engineering and management positions at Active Power, Inc. and Applied Materials, Inc. Mr. Pfeiffer obtained a B.S. Mechanical Engineering degree from Texas A&M University in 1990 and a M.S. Mechanical Engineering from the University of Texas in 1994. He also holds a Master’s in Business Administration degree from the University of Texas at Austin.
Robert L. Johnsonhas been our Senior Vice President, Operations since 2004. Mr. Johnson joined us in 2000 as Vice President of Wireless Manufacturing. From 1996 to 2000, Mr. Johnson was the Director and General Manager of Schlumberger ATE. From 1990 to 1996, he served as Vice President and General Manager of Harman International Industries. Mr. Johnson studied industrial engineering at Arizona State University.
11
Adam L. Shelton has been our Vice President, Product Management and Marketing since 2006. From 2005 to 2006, Mr. Shelton was the Senior Director of Marketing for Motorola. From 2003 to 2005, he was the Senior Director of Marketing for Advanced Fibre Communications (AFC), now Tellabs. Mr. Shelton also held various management and executive management positions with Mahi Networks, ATU Communications and Bell Canada. Mr. Shelton graduated with dean’s honors as a Civil Engineering Technologist from Seneca College in Toronto, Canada.
12
VOTING SECURITIES OF PRINCIPAL STOCKHOLDERS AND MANAGEMENT
Name | Number of Shares (1) | Percentage Ownership | ||||||
Intracoastal Capital, LLC | 399,197 | (2) | 9.99 | |||||
245 Palm Trail | ||||||||
Delray, Beach, FL 33483 | ||||||||
Sabby Management, LLC | 256,470 | (3) | 6.42 | |||||
10 Mountainview Rd Suite 2015 | ||||||||
Upper Saddle River, NJ 07458 | ||||||||
Jeffrey A. Quiram | 5,017 | * | ||||||
William J. Buchanan | 2,416 | * | ||||||
Robert L. Johnson | 2,804 | * | ||||||
Adam L. Shelton | 2,809 | * | ||||||
Kenneth E. Pfeiffer | 2,614 | * | ||||||
Lynn J. Davis | 1,861 | * | ||||||
Martin A. Kaplan | 2,716 | * | ||||||
David W. Vellequette | — | * | ||||||
Julia S. Johnson | — | * | ||||||
|
|
|
| |||||
All executive officers and directors as a group (9 persons) | 20,237 | * |
|
* Less than 1%. (1) Includes shares issuable upon the exercise of stock options that are exercisable within 60 days of September 25, 2019 as follows: Mr. Quiram, 18,297 shares; Mr. Buchanan 10,118 shares; Mr. Johnson 10,325 shares; Mr. Shelton, 10,325 shares; Mr. Pfeiffer, 10,276 shares; Mr. Davis, 2,933 shares; Mr. Vellequette and Ms. Johnson, 1,250 shares each; and all |
|
|
13
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth for 2018, 2017 and 2016 the base salary and other compensation of our (i) President and Chief Executive Officer and (ii) our other two most highly compensated officers for 2018 (our “named executive officers”):
Name and Principal Position | Year | Salary ($) | Stock Awards ($)(1) | Option Awards ($)(1) | Non-equity Incentive Plan Compensation ($) | All Other Compensation ($)(2) | Total ($) | |||||||||||||||||||||
Jeffrey A. Quiram | 2018 | 324,450 | — | 43,431 | — | 45,461 | 413,342 | |||||||||||||||||||||
President, Chief | 2017 | 324,450 | — | — | — | 39,003 | 363,453 | |||||||||||||||||||||
Executive Officer, Director | 2016 | 324,450 | — | — | — | 30,092 | 354,542 | |||||||||||||||||||||
Robert L. Johnson | 2018 | 242,462 | — | 24,611 | — | 57,046 | 324,119 | |||||||||||||||||||||
Senior Vice President, | 2017 | 242,462 | — | — | — | 49,755 | 292,217 | |||||||||||||||||||||
Operations | 2016 | 242,462 | — | — | — | 18,508 | 260,970 | |||||||||||||||||||||
Adam L. Shelton | 2018 | 247,200 | — | 24,611 | — | 6,375 | 278,186 | |||||||||||||||||||||
Vice President Product | 2017 | 247,200 | — | — | — | 6,315 | 253,515 | |||||||||||||||||||||
Management and Marketing | 2016 | 247,200 | — | — | — | 6,977 | 254,177 |
|
|
Narrative Disclosure To Summary Compensation Table
Employment Agreement
We entered into an employment agreement with Mr. Quiram in 2005, which was amended in 2007. The employment agreement provides for the following:
Appointment as our President, Chief Executive Officer and a member of our Board;
A base salary, which was $315,000 per year for 2008-2009 and increased to $324,450 during 2010;
A bonus of up to 100% of his base salary based upon achievement of annual performance goals to be developed by our Compensation Committee and Mr. Quiram;
Accelerated vesting of all his equity grants in the event of an “Involuntary Termination” or “Change of Control” (both as defined in his employment agreement);
A severance payment equal to one year’s salary and continued benefits for one year in the event of “Involuntary Termination”;
14
In the event of a “Change of Control,” whether or not he is terminated, Mr. Quiram is entitled to (i) payment of two times his annual base salary, (ii) 24 months of benefits coverage, and (iii) accelerated vesting of all of his outstanding equity grants;
Payment or reimbursement of travel expenses from his present home in Minnesota and the lease of an apartment for Mr. Quiram near our Santa Barbara headquarters; and a special indemnity payment for any taxes resulting from the payment or reimbursement of such expenses; and
Lease of an automobile.
Change of Control Agreements
We also have “change of control” agreements with Mr. Shelton. The change of control agreement generally provides that, if the employee’s employment is terminated within twenty-four months of a “Change of Control” (as defined in the change of control agreements) either (i) by us for any reason other than death, “Cause” or “Disability” (as both terms are defined in the change of control agreements) or (ii) by the employee for “Good Reason” (as defined in the change of control agreements), then the terminated employee will be entitled to severance benefits salary continuation payments and continuation of health/life insurance benefits for 18 months and accelerated vesting for all outstanding unvested stock options and other equity securities held by the employee. Any payments or distributions made to or for the benefit of the named employees under these change of control agreements will be reduced, if necessary, to an amount that would result in no excise taxes being imposed under Internal Revenue Code Section 4999.
Non-Equity Incentive Compensation
We maintain a bonus plan for executive officers and selected other membersdirectors as a group, 63,523 shares.
Equity Grants
For 2018, we madeMitchell P. Kopin are the following grantsbeneficial owners of restricted stock awards and options to our named executive officers:
Name | Grant Date | Stock Awards: Number of Shares (#) | Option Awards: Number of Shares underlying options (#)(1) | Exercise price of option awards ($/Share) | Grant date Fair Value of Stock & Option Awards ($)(1) | |||||||||||||||
Jeffrey A Quiram | 10/16/2018 | — | 30,000 | 1.92 | 43,431 | |||||||||||||||
Robert L Johnson | 10/16/2018 | — | 17,000 | 1.92 | 24,611 | |||||||||||||||
Adam L Shelton | 10/16/2018 | — | 17,000 | 1.92 | 24,611 |
|
15
Outstanding Equity Awards at FiscalYear-End
The following table sets forth certain informationhave shared voting authority with respect to outstanding options and unvestedthese shares. Includes, as of the date of such Schedule 13G/A, 205,839 shares of restrictedour common stock and an additional 357,143 shares of common stock which such holder may be deemed to beneficially own under unexercised warrants. Excludes additional shares of common stock under unexercised warrants in excess of a beneficial ownership limitation on December 31, 2018:
Option Awards | Stock Awards | |||||||||||||||||||||||
Name | Number of Securities Underlying Unexercised Options(#) Exercisable (1) | Number of Securities Underlying Unexercised Options(#) Unexercisable | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested | Market Value of Shares or Units of Stock That Have Not Vested ($) | ||||||||||||||||||
Jeffrey A Quiram | 18 | — | 4,716.00 | 5/6/2020 | — | — | ||||||||||||||||||
59 | — | 2,844.00 | 1/25/2021 | — | — | |||||||||||||||||||
25 | — | 2628.00 | 2/9/2022 | — | — | |||||||||||||||||||
62 | — | 378.00 | 3/7/2023 | — | — | |||||||||||||||||||
1,800 | — | 318.00 | 12/5/2023 | — | — | |||||||||||||||||||
1,333 | — | 33.00 | 11/9/2025 | — | — | |||||||||||||||||||
— | 30,000 | 1.92 | 10/16/2028 | — | — | |||||||||||||||||||
Robert L Johnson | 10 | — | 4,716.00 | 5/6/2020 | — | — | ||||||||||||||||||
33 | — | 2,844.00 | 1/25/2021 | — | — | |||||||||||||||||||
14 | — | 2628.00 | 2/9/2022 | — | — | |||||||||||||||||||
35 | — | 378.00 | 3/7/2023 | — | — | |||||||||||||||||||
1,000 | — | 318.00 | 12/5/2023 | — | — | |||||||||||||||||||
733 | — | 33.00 | 11/9/2025 | — | — | |||||||||||||||||||
— | 17,000 | 1.92 | 10/16/2028 | — | — | |||||||||||||||||||
Adam L Shelton | 10 | — | 4,716.00 | 5/6/2020 | — | — | ||||||||||||||||||
33 | — | 2,844.00 | 1/25/2021 | — | — | |||||||||||||||||||
14 | — | 2628.00 | 2/9/2022 | — | — | |||||||||||||||||||
35 | — | 378.00 | 3/7/2023 | — | — | |||||||||||||||||||
1,000 | — | 318.00 | 12/5/2023 | — | — | |||||||||||||||||||
733 | — | 33.00 | 11/9/2025 | — | — | |||||||||||||||||||
— | 17,000 | 1.92 | 10/16/2028 | — | — |
|
16
PROPOSAL TWO
ADVISORY VOTE ON EXECUTIVE COMPENSATION
Our executive compensation is described under the heading “Executive Compensation”. Our Compensation Committee reviews and approves salaries, bonuses, and other benefits payable to the executive officers. We maintain a bonus plan for executive officers and selected other members of senior management. In 2018, our Compensation Committee decided, based on economic conditions, and taking into consideration the company’s performance, to not award cash bonuses to executive officers based on financial objectives in 2018.
We will ask our stockholders to vote “FOR” the following resolution at the Annual Meeting:
“RESOLVED, that the stockholders of Superconductor Technologies Inc. hereby approve, on an advisory basis, the compensation of the named executive officers, as disclosed in Superconductor Technologies Inc.’s Proxy Statement for the 20192020 Annual Meeting of Stockholders pursuantmust be received by our Corporate Secretary at Superconductor Technologies Inc., 9101 Wall Street, Suite 1300, Austin, Texas 78754 not later than January 3, 2020 in order to Item 402be considered for inclusion in our proxy materials.
This vote is advisory,Stockholders must comply with the requirements and thereforeprovide the information set forth in our Bylaws. Under our Bylaws, a stockholder’s proposal must be timely received, which means that a proposal must be delivered to or mailed to our Secretary not binding on us, our Boardless than 90 days prior to the meeting; provided that if less than 100 days’ notice or our Compensation Committee. However, our Board and Compensation Committee value the opinions that our stockholders express in their votes and will consider the outcome of this vote when considering future executive compensation arrangements as they deem appropriate. Abstentions and brokernon-votes will result in the above resolution receiving fewer votes.
Unless otherwise instructed, the proxies will vote “For” the above resolution.
Board Recommendation
Our Board recommends that you vote “For” the Approval, on an Advisory Basis of our Executive Compensation.
17
PROPOSAL THREE
ADVISORY VOTE ON THE FREQUENCY OF AN ADVISORY VOTE ON EXECUTIVE COMPENSATION
As required pursuant to Section 14Aprior public disclosure of the Securities Exchange Act of 1934 we are also giving our stockholders the opportunity to indicate on an advisory(non-binding) basis, how frequently we should seek an advisory vote on our executive compensation commonly known as a“say-on-pay”. By voting on this proposal, stockholders may indicate whether they would prefer the advisory vote on executive compensation to occur once every one, two, or three years.
You may cast your vote on your preferred voting frequency of thenon-binding advisory votedate of the stockholders of Superconductor Technologies Inc. to approve the company’s executive compensation at the Company’s annual meeting of stockholders every year, every two years,is given or every three years or you may choose to abstain from a vote.
This vote is advisory, and therefore not binding on us or our Board. Our Board values the opinions that our stockholders express in their votes and will consider the outcome of this vote when considering how frequently we should conduct an advisory vote on our executive compensation as it deems appropriate. The Board expects to make its final determination and disclose its decisionmade to stockholders, within 150 daysthen notice by a stockholder, to be timely received, must be received by our Secretary not later than the close of business on the 10th day following the day on which such notice of the Annual Meeting.
For this Proposal Three, the frequency (every year, every two years or every three years) of future advisory votes on executive compensation that receives the highest number of votes cast will be considered the frequency that is recommended by our stockholders. Abstentions and brokernon-votes will result in the alternatives receiving fewer votes.
Unless the Board decides to hold an earliersay-on-pay frequency vote, we will not be required to hold another such vote on the frequency ofsay-on-pay vote until 2025.
Unless otherwise instructed, the proxies will vote for the every “THREE YEARS” alternative.
18
PROPOSAL FOUR
RATIFICATION OF APPOINTMENT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Our Audit Committee has selected Marcum LLP, an independent registered public accounting firm, to audit our financial statements for 2019. Our Audit Committee is submitting its selection to our stockholders for ratification. Marcum LLP has served as our auditor since October 2010 and has no financial interest of any kind in us except the professional relationship between auditor and client. A representative of Marcum LLP is expected to attend our Annual Meeting, and will be afforded an opportunity to make a statement if he or she desires to do so, and will be available to respond to appropriate questions by stockholders.
Required Vote
This proposal requires the affirmative vote of a majoritydate of the votes cast on the proposal. Stockholders may vote “for”meeting was mailed or “against” the proposal, or they may abstain from voting on the proposal. Abstentions will count as a vote against and brokernon-votes will not have any effect on the outcome of this proposal. In the event the stockholders do not approve this proposal, our Audit Committee will reconsider the appointment of Marcum LLP as our independent registeredsuch public accounting firm.
Board Recommendation
Our Board Recommends a Vote “For” the Ratification of the Appointment of our Independent Registered Public Accounting Firm.
19
AUDIT COMMITTEE REPORT
FORM 10-K
Our Audit Committee reviews our financial reporting process on behalf of our Board. Management has the primary responsibility for the financial statements and the reporting process, including the system of internal controls. Our Audit Committee has reviewed and discussed the audited financial statements with management. In addition, our Audit Committee has discussed with our independent registered public accounting firm the matters required to be discussed by Statements on Public Company Accounting Oversight Board Auditing Standard No. 16 “Communications with Audit Committees”.
Our Audit Committee has also received the written disclosures and the letter from our independent registered public accounting firm required by applicable requirements of the Public Company Accounting Oversight Board regarding their communications with the audit committee concerning independence, and has discussed with them their independence, including whether their provision of othernon-audit services to us is compatible with maintaining their independence.
Our Audit Committee discussed with our independent registered public accounting firm the overall scope and plans for the audit. Our Audit Committee meets with them, with and without management present to discuss the results of their examinations, the evaluation of our internal controls and the overall quality of our reporting.
Based upon the review and discussions referred to in the foregoing paragraphs, our Audit Committee recommended to our Board that the audited financial statements be included in our Annual Report onForm 10-K for 2018 for filing with the Securities and Exchange Commission.
20
FEES PAID TO INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Our Audit Committee regularly reviews and determines whether specificnon-audit projects or expenditures with our independent registered public accounting firm, Marcum LLP, potentially affectsfiled its independence. Our Audit Committee’s policy is topre-approve all audit and permissiblenon-audit services provided by Marcum LLP.Pre-approval is generally provided by our Audit Committee for up to one year, as detailed as to the particular service or category of services to be rendered, and is generally subject to a specific budget. Our Audit Committee may alsopre-approve additional services of specific engagements on acase-by-case basis.
The following table sets forth the aggregate fees billed to us by Marcum LLP for 2018 and 2017, all of which werepre-approved by our Audit Committee:
Year Ended December 31, | ||||||||
2018 | 2017 | |||||||
Audit fees (1) | $ | 199,000 | $ | 190,000 | ||||
All other fees (2) | 62,000 | — | ||||||
|
|
|
| |||||
Total | $ | 261,000 | $ | 190,000 | ||||
|
|
|
|
|
|
TRANSACTIONS WITH RELATED PERSONS
None.
ANNUAL REPORT TO STOCKHOLDERS
Our Annual Report on Form10-K for the fiscal year ended December 31, 2018 is being mailed towith the SEC on March 29, 2019. Shareholders may obtain a copy of our stockholders alonglatest Form 10-K, including financial statements and schedules thereto, and other filings we make with this Proxy Statement.
the SEC, without charge, on our Internet website at the “SEC Filings” section under the “Investors” tab on our corporate website at http://www.suptech.com, or by writing or telephoning us at:
Austin, Texas
April 26, 2019
21
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
SUPERCONDUCTOR TECHNOLOGIES INC.
ANNUAL
SPECIAL MEETING OF STOCKHOLDERS
June 6, NOVEMBER 14, 2019
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
| 1. PROPOSAL TO APPROVE AMENDMENT OF THE RESTATED CERTIFICATE OF INCORPORATION, AS AMENDED, OF THE COMPANY TO EFFECT A REVERSE STOCK SPLIT AND THE AUTHORIZED SHARE REDUCTION OF OUR COMMON STOCK. | | | FOR ☐ |
|
1. TO ELECT ONE CLASS 3 DIRECTOR
Nominee: (1) David W. Vellequette
| | AGAINST ☐ | | | ABSTAIN ☐ | |
| 2. PROPOSAL TO APPROVE ANY ADJOURNMENTS OF OUR SPECIAL MEETING TO ANOTHER TIME OR PLACE, IF NECESSARY, FOR | |
| FOR ☐ |
| | AGAINST ☐ | | | ABSTAIN ☐ | | ||
|
|
| ||||||
|
|
|
| |||||
|
|
|
As to any other matters that may properly come before the meeting or any adjournments thereof, the proxy holders are authorized to vote in accordance with their best judgment.
MARK HERE FOR ADDRESS CHANGE AND NOTE AT | | | ☐ | | | | |||||
| |||||||||||
PLEASE CHECK HERE IF YOU PLAN TO ATTEND THE MEETING. | | | ☐ | | | |