Washington, D.C. 20549
(Amendment No. )
☐ Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
☒ No fee required.
☐ Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): N/A
☐ Fee paid previously with preliminary materials.
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| Sincerely, |
| /s/ Mark Emalfarb |
| Mark Emalfarb
President and Chief Executive Officer |
Jupiter, Florida
April 30, 2019May 12, 2020
NOTICE OF 20192020 VIRTUAL ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON TUESDAY,MONDAY, JUNE 25, 201929, 2020
VIRTUAL MEETING ONLY - NO PHYSICAL MEETING LOCATION
To the Shareholders of Dyadic International, Inc.:
NOTICE IS HEREBY GIVEN that the 20192020 Virtual Annual Meeting of Shareholders (“Annual Meeting”) of Dyadic International, Inc., a Delaware corporation (“Dyadic,” “we,” “us”, “our”, or the “Company”), will be held on Tuesday,Monday, June 25, 201929, 2020 at 10 a.m. local timeEastern Daylight Savings Time, via live webcast at the Wyndham Grand Jupiter at Harbourside Place, 122 Soundings Avenue, Jupiter, Florida 33477,www.virtualshareholdermeeting.com/DYAI2020 for the following purposes, as more fully described in the Proxy Statement accompanying this Notice:
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1. | To elect two Class III directors to our Board of Directors to serve until the Company’s 20221. To elect two Class I directors to our Board of Directors (the “Board”) to serve until the Company’s 2023 Annual Meeting of Shareholders or until their successors are duly elected and qualified; |
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2. | To ratify the appointment of Mayer Hoffman McCann P.C., as the Company’s independent registered public accounting firm for the year ending December 31, 2019; |
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3. | To consider an advisory vote on compensation of the Company’s Named Executive Officers; |
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4. | To consider an advisory vote on the frequency of the advisory vote on compensation of the Company’s Named Executive Officers; and |
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5. | To transact such other business as may properly come before the Annual Meeting or any adjournment or postponement thereof. |
2. To ratify the appointment of Mayer Hoffman McCann P.C., as the Company’s independent registered public accounting firm for the year ending December 31, 2020;
3. To consider an advisory vote on compensation of the Company’s Named Executive Officers; and
4. To transact such other business as may properly come before the Annual Meeting or any adjournment or postponement thereof.
All shareholders are cordially invited to virtually attend the Annual Meeting. To participate in the Annual Meeting, you will need your 16-digit control number included on your Notice Regarding the Availability of Proxy Materials (“Notice”) or on your proxy card.
Only shareholders of record at the close of business on April 29, 2019May 4, 2020 are entitled to notice of, and to vote at, the Annual Meeting and any adjournment or postponement thereof. The stock transfer books of the Company will remain open between the record date and the date of the meeting. A list of registered shareholders entitled to vote at the Annual Meeting will be available for inspection by any shareholder for any purpose germane to the Annual Meeting, during regular business hours, for a period of ten days prior to the Annual Meeting, at the Company’s principal place of business at 140 Intracoastal Pointe Drive, Suite 404, Jupiter, Florida 33477. If our headquarters are closed for health and safety reasons related to the COVID-19 pandemic during such period, the list of registered shareholders entitled to vote at the Annual Meeting and prior thereto atwill be made available for inspection upon request via email to: prawson@dyadic.com subject to our principal executive offices.
A proxy card together with our proxy statement solicited by our Boardsatisfactory verification of Directors are enclosed herewith.
All shareholders are cordially invited to attendshareholder status. During the Annual Meeting, in person. the list of registered shareholders entitled to vote at the Annual Meeting will be made available electronically at www.virtualshareholdermeeting.com/DYAI2020.
We encourage shareholders to vote in advance of the Annual Meeting. Whether or not you expect to attend the Annual Meeting, please promptly cast your vote in one of the ways described below:
•Vote by Internet: www.proxyvote.com
Use the Internet to transmit your voting instructions and for electronic delivery of information. Vote by 11:59 p.m., Eastern Daylight Savings Time, on Monday,Sunday, June 24, 2019.28, 2020. Have the 16-digit control number included in your Notice or your proxy card in hand when you access the above website and follow the instructions to obtain your records and to create an electronic voting instruction form.
•Vote by Telephone: 1-800-690-6903
UseIf you received paper copies of the proxy materials, use any touch-tone telephone to transmit your voting instruction. Vote by 11:59 p.m., Eastern Daylight Savings Time, on Monday,Sunday, June 24, 2019.28, 2020. Have your proxy card in hand when you call and follow the instruction.
Mark,If you received paper copies of the proxy materials, please mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
•Vote During the Annual Meeting.
You can vote your shares during the Annual Meeting at www.virtualshareholdermeeting.com/DYAI2020. To participate in the Annual Meeting, you will need the 16-digit control number included in your Notice or on your proxy card.
You need only vote in one way (so that, if you vote by internet or telephone, you need not return the proxy
card).
If you hold your shares through a broker, bank or other nominee, you should receive separate voting instructions from the firm holding your shares describing the procedure for voting those shares. You may complete and mail a voting instruction card to your broker or nominee or, in most cases, submit voting instructions by telephone or the Internet to your broker or nominee. If you provide specific voting instructions by mail, telephone or the Internet, your broker or nominee will vote your shares as you have directed.
Should you receive more than one proxy because your shares are registered in different names and addresses, each proxy should be signed and returned to ensure that all of your shares will be voted. You may submit your proxy and then later decide to attend the Annual Meeting to vote your shares in person. Your proxy is revocable in accordance with the procedures set forth in the attached proxy statement.
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| BY ORDER OF THE BOARD OF DIRECTORS |
| /s/ Mark Emalfarb |
| Mark Emalfarb
President and Chief Executive Officer |
April 30, 2019May 12, 2020
Jupiter, Florida
IMPORTANT NOTICE REGARDING THEINTERNET AVAILABILITY OF PROXY MATERIALS
*****IMPORTANT NOTICE*****
This Notice of Meeting, Proxy Statement and our Annual Report on Form 10-K for the fiscal year ended December 31, 2018,2019, are available online at http://www.dyadic.com/investors/proxy-statementsinvestors and can be accessed at https://materials.proxyvote.com/26745T.www.proxyvote.com.
TABLE OF CONTENTS
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| | | | |
| About the Annual Meeting | |
| Security Ownership of Beneficial Owners and Management | |
Section 16(a) Beneficial Ownership Reporting Compliance | |
| Certain Relationship and Related Party Transactions | |
| Corporate Governance and Related Matters | |
| Compensation and Other Information Concerning Officers | |
| Matters to be Considered at the Annual Meeting | |
Proposal 1: Election of Class IIII Directors | |
| Proposal 2: Ratification of Selection of Independent Registered Public Accounting Firm | |
| Proposal 3: Advisory Vote on Compensation of the Company’s Named Executive Officers | |
Proposal 4: Advisory Vote on the Frequency of Advisory Vote on Compensation of the Company’s Named Executive Officers | |
Shareholder Proposals for the 20202021 Annual Meeting | |
| Forward Looking Statement | |
| Other Matters | |
| Incorporation of Information by Reference | |
DYADIC INTERNATIONAL, INC.
140 Intracoastal Pointe Drive, Suite 404
Jupiter, Florida 33477
(561) 743-8333
PROXY STATEMENT
20192020 VIRTUAL ANNUAL MEETING OF SHAREHOLDERS
JUNE 29, 2020
JUNE 25, 2019
VIRTUAL MEETING ONLY - NO PHYSICAL MEETING LOCATION
The Board of Directors of the Company (the “Board”) is soliciting proxies for this year’sthe 2020 Virtual Annual Meeting.Meeting of Shareholders of Dyadic International, Inc. (“Annual Meeting”). This proxy statement contains important information for you to consider when deciding how to vote on the matters brought before the Annual Meeting. Please read it carefully.
This proxy statement contains information related to the 2019 Annual Meeting of our shareholders to be held on Tuesday,Monday, June 25, 201929, 2020 at 10 a.m. local time at Wyndham Grand Jupiter at Harbourside Place, 122 Soundings Avenue, Jupiter, Florida 33477,Eastern Daylight Savings Time, and at any adjournments or postponements thereof. This year, in light of the rising concerns around the spread of COVID-19 in the United States and globally, in order to mitigate health risks, the Annual Meeting will be conducted in virtual format only. Shareholders can access the Annual Meeting by visiting www.virtualshareholdermeeting.com/DYAI2020. Shareholders will not be able to attend the Annual Meeting in person. The Company believes that a virtual meeting will provide meaningful shareholder access and participation and also protect the health and safety of our shareholders, employees and other stakeholders, and will also improve meeting efficiency and reduce costs.
The Board set April 29, 2019,May 4, 2020, as the record date for the Annual Meeting. Shareholders who owned the Company’s common stock on that date are entitled to vote at the Annual Meeting, with each share entitled to one vote. There were 26,763,48627,459,157 shares of the Company’s common stock outstanding as of the record date. Voting
We are furnishing proxy materials which include this proxy statement dated April 30, 2019, a proxy card,to our shareholders primarily via the Internet under the SEC’s “Notice and the Company’s Annual Report on Form 10-K, are first being mailed to shareholders onAccess” rules. On or about May 10, 2019, unless the shareholder has elected electronic delivery. If the shareholder has elected electronic delivery,12, 2020, we have providedexpect to mail to our shareholders a noticeNotice of Internet availability of proxy materials which containsAvailability (the “Notice”) containing instructions on how to access our proxy materials, viaincluding our Proxy Statement and Annual Report filed on Form 10-K with the Internet orSEC on March 30, 2020 (“Annual Report on Form 10-K”). The Notice also will instruct you on how to request aaccess and submit your proxy through the internet.
We are providing internet distribution of our proxy materials to expedite receipt by shareholders, reduce costs and conserve paper. However, if you would like to receive printed set of proxy materials.materials, please follow the instructions on the Notice. Additionally, this proxy statement and the Company’s Annual Report on Form 10-K are available at www.dyadic.com by clicking the “Investors” link. In accordance with Securities and Exchange Commission rules, our proxy materials posted on both our website and the website described below do not contain any cookies or other tracking features.
INTERNET AVAILABILITY OF PROXY MATERIALS
*****IMPORTANT NOTICE*****
The Proxy Statement and Annual Report on Form 10-K are available at www.proxyvote.com
ABOUT THE ANNUAL MEETING
What is the purpose of the Annual Meeting?
At the Annual Meeting, we are asking shareholders:
•To elect two Class IIII directors for a term ending in 2022;2023;
•To ratify the appointment of Mayer Hoffman McCann P.C., (MHM)(“MHM”), as our independent registered public accounting firm for the year ending December 31, 2019;
•To consider an advisory vote on compensation of the Company’s Named Executive Officers;2020;
•To consider an advisory vote on the frequency of the advisory vote on compensation of the Company’s Named Executive Officers; and
•To transact such other business properly brought before the meeting and any adjournment or postponement of the meeting.
Who is entitled to notice of and to vote at the Annual Meeting?
You are entitled to vote, in person or by proxy, at the Annual Meeting if you owned shares of our common stock as of the close of business (5:00 p.m. Eastern Daylight Savings Time) on April 29, 2019,May 4, 2020, the record date of the Annual Meeting. Holders of record of our common stock on the record date are entitled to one vote per share at the Annual Meeting.
Who can attend the meeting?Annual Meeting?
All shareholders as of the record date, or their duly appointed proxies, may attend. Please note that if you hold shares in street name (through a stockbroker or other nominee), youShareholders will need a control number in order to bring a copy of a brokerage statement reflecting your stock ownership as ofattend the record date. Atmeeting. For registered shareholders, the Annual Meeting registration desk, you willcontrol number can be asked to present a valid form of government-issued personal identification such as a driver’s licensefound on their Notice or passport. Cameras and other recording devices will not be permitted at the Annual Meeting.proxy card.
What shares may I vote?
You may vote all shares you owned as of the record date. These include: (1) shares owned directly in your name as the shareholder of record;record and (2) shares held for you as the beneficial owner through a stockbroker, bank or other nominee.
What is the difference between holding shares as a shareholder of record and as a beneficial owner?
Most of our shareholders hold their shares through a stockbroker, bank or other nominee rather than directly in their own name. As summarized below, there are some differences between shares held of record and those beneficially owned.
If our shares are registered directly in your name with our transfer agent, Continental Stock Transfer & Trust Company, you are considered the shareholder of record with regard to those shares. As the shareholder of record, you have the right to grant your proxy directly to us to vote your shares on your behalf at the meetingAnnual Meeting, using the control number on the Notice of Internet Availability of Proxy Materials or the right to vote in person at the meeting. We have enclosed a proxy card for you to use.log into www.virtualshareholdermeeting.com/DYAI2020.
If you hold our shares in a stock brokerage account or through a bank or other nominee, you are considered the “beneficial owner” of the shares held in “street name”, and these proxy materials have been forwarded to you by your stockbroker, bank or other nominee. As the beneficial owner, you have the right to direct your stockbroker, bank or other nominee how to vote and you are also invited to attend the Annual Meeting so long as you bringvia the Internet and vote
during the meeting. Beneficial owners who do not have a copy of a brokerage statement reflecting your ownership as of the record date. However, because you are not the shareholder of record, youcontrol number may not vote these shares in person atgain access to the meeting unless you obtain a signed proxy from your stockbroker or nominee giving youby logging into their brokerage firm’s website. Instructions should be provided on the right to vote the shares. Your stockbroker or nominee should provide a voting instruction card for you to use to directprovided by your stockbroker, bank or nominee how to vote these shares.other nominee.
How do I vote?
Shareholders at the close of business on April 29, 2019,May 4, 2020, can vote at the Annual Meeting in person or via proxy in the manner described herein.
Any shareholder who holds shares in “street name” through a broker, bank or other nominee should receive separate instructions from the firm holding his or her shares describing the procedure for voting those shares. You should follow the voting instructions provided by your broker, bank or other nominee when voting your shares. You may complete and mail a voting instruction card to your broker, bank or other nominee or, in most cases, submit voting instructions by telephone or the Internet to your broker or nominee. If you provide specific voting instructions by mail, telephone or the Internet, your broker or nominee will vote your shares as you have directed.
Shareholders of record may vote by proxy in fourthe following ways:
•Vote by Internet: www.proxyvote.com
Use the Internet to transmit your voting instructions and for electronic delivery of information. Vote by 11:59 p.m., Eastern Daylight Saving Time, on Monday,Sunday, June 24, 2019.28, 2020. Have the 16-digit control number included in our Notice or your proxy card in hand when you access the above website and follow the instructions to obtain your records and to create an electronic voting instruction form.
•Vote by Telephone: 1-800-690-6903
UseIf you received paper copies of the proxy materials, use any touch-tone telephone to transmit your voting instruction. Vote by 11:59 p.m., Eastern Daylight Savings Time, on Monday,Sunday, June 24, 2019.28, 2020. Have your proxy card in hand when you call and follow the instruction.
Mark,If you received paper copies of the proxy materials, please mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
•Vote in Person.During the Annual Meeting.
You may attendcan vote your shares during the annual meeting and castAnnual Meeting at www.virtualshareholdermeeting.com/DYAI2020. To participate in the Annual Meeting, you will need the 16-digit control number included in your vote in person.Notice or on your proxy card.
You need only vote in one way (so that, if you vote by internet or telephone, you need not return the proxy card).
If you have any questions about how to vote or direct a vote in respect of your Dyadic common stock, you may contact either our corporate office at 140 Intracoastal Pointe Drive, Suite 404, Jupiter, Florida 33477, Attention:
Heidi Zosiak, telephone: (561) 743-8333 or Broadridge Financial Solutions, Inc., 51 Mercedes Way, Edgewood, NY 11717, telephone: (631) 257-4339.
Can I submit questions at the Annual Meeting?
Yes. During the live virtual meeting, you will be able to submit questions real-time through the meeting portal.
Can I change my vote after I return my proxy card?
Yes. Even afterIf you have submittedvoted by mail, you may revoke your proxy card,at any time before it is exercised by executing and delivering a timely and valid later-dated proxy, by voting by ballot at the meeting or by giving written notice to the Secretary. If you voted via the Internet or by phone, you may change your vote with a timely and valid later internet or telephone vote, or by voting by ballot at any timethe meeting.Attendance at the meeting will not have the effect of revoking a proxy unless (1) you give proper written notice of revocation to the Secretary before the proxy is exercised, or (2) you vote by filing with our Secretary either a notice of revocation or a duly executed proxy card bearing a later date. In such event, the later submitted vote will be recorded and the earlier vote revoked. The powers of the proxy holders will be suspended if you are a holder of record and attend the meeting in person and so request although attendanceballot at the meeting will not by itself revoke a previously granted proxy.meeting.
If your shares are held in street name, you should contact the institution that holds your shares to change your vote.
Is my vote confidential?
Yes. All votes remain confidential, unless you provide otherwise.
How are votes counted?
Before the Annual Meeting, our Board of Directors will appoint one or more inspectors of election for the meeting. The inspector(s) will determine the number of shares represented at the meeting, the existence of a quorum
and the validity and effect of proxies. The inspector(s) will also receive, count, and tabulate ballots and votes and determine the results of the voting on each matter that comes before the Annual Meeting.
Abstentions and votes withheld, and shares represented by proxies reflecting abstentions or votes withheld, will be treated as present for purposes of determining the existence of a quorum at the Annual Meeting. They will not be considered as votes for or against any matter for which the shareholder has indicated their intention to abstain or withhold their vote. Broker or nominee non-votes, which occur when shares held in street name by brokers or nominees who indicate that they do not have discretionary authority to vote on a particular matter, will not be considered as votes for or against that particular matter. Broker and nominee non-votes will be treated as present for purposes of determining the existence of a quorum, and may be entitled to vote on certain matters at the Annual Meeting.
What percentage of our outstanding common stock do our directors and executive officers own?
As of April 29, 2019,May 4, 2020, our directors and executive officers owned, or have the right to acquire within 60 days through the exercise of option, approximately 23.9%24.8% of our outstanding common stock. See the discussion under the heading Security“Security Ownership of Certain Beneficial Owners and ManagementsManagements” below for more details.
Who was our independent public accountant for the year ended December 31, 2018?2019? Will they be represented at the Annual Meeting?
Mayer Hoffman McCann P.C is the independent registered public accounting firm that audited our financial statements for the year ended December 31, 2018.2019. We expect a representative of Mayer Hoffman McCann P.C. to be virtually present at the Annual Meeting. The representative will have an opportunity to make a statement and will be available to answer your questions.
What are the board’sBoard’s recommendations?
The boardBoard recommends a vote FOR:
•The nominees for Class IIII directors;
•The proposal to ratify the appointment of Mayer Hoffman McCann P.C. (MHM), as our independent registered public accounting firm for the year ending December 31, 2019;2020; and
•The compensation of the Company’s Named Executive Officers; andOfficers.
A frequency of every year with which the Company will hold an advisory vote on compensation of the Company’s Named Executive Officers.
Unless you give other instructions on your proxy card, the person named as a proxy on the proxy card will vote FOR the proposals set forth above.
We do not expect that any other matters will be brought before the Annual Meeting. If, however, other matters are properly presented, the persons named as proxies will vote the shares represented by properly executed proxies in accordance with their judgment with respect to those matters, including any proposal to adjourn or postpone the Annual Meeting. No proxy that is voted against all of the proposals will be voted in favor of any adjournment or postponement of the Annual Meeting for the purpose of soliciting additional proxies.
What constitutes a quorum?
If a majority of the shares of our common stock outstanding on the record date is represented either in person or by proxy at the Annual Meeting, a quorum will be present at the Annual Meeting. Virtual attendance at the Annual Meeting constitutes presence in person for purposes of quorum at the Annual Meeting. Shares held by persons attending the Annual Meeting but not voting, and shares represented in person or by proxy and for which the holder has abstained from voting, will be counted as present at the Annual Meeting for purposes of determining the presence or absence of a quorum.
A stockbroker that holds shares in nominee or street name for a customer who is the beneficial owner of those shares may be prohibited from giving a proxy to vote those shares on any proposal to be voted on at the Annual Meeting without specific instructions from such customer with respect to such proposal. Accordingly, if a stockbroker receives voting instructions from a customer with respect to one or more, but not all, of the proposals to be voted on at the Annual Meeting, the shares beneficially owned by such customer will not constitute votes cast or shares entitled to vote with respect to any proposal for which the customer has not provided voting instructions to the stockbroker. These so-called broker non-votes will be counted as present at the Annual Meeting for purposes of determining whether a quorum exists.
Applicable stock exchange rules determine whether a proposal presented at a shareholder meeting is routine or non-routine. If a proposal is routine, a broker or other entity holding shares for an owner in street name may vote on the proposal without receiving voting instructions from the beneficial owner. If a proposal is non-routine, the broker or other entity may vote on the proposal only if the beneficial owner has provided voting instructions. A broker non-vote occurs when a broker or other entity is unable to vote on a particular proposal and the broker or other entity has not received voting instructions from the beneficial owner. Therefore, if you do not give your broker or other entity specific instructions, your shares will not be voted on non-routine matters. However, the broker non-votes will be counted as present at the Annual Meeting for purposes of determining whether a quorum exists. The election of directors is considered a non-routine proposal. The proposalsproposal to ratify the appointment of MHM to serve as our independent auditor and to approve reverse stock split areis considered routine proposals.
What vote is required to approve the proposals?
Proposal 1: Election of Class IIII Directors. The affirmative vote of a plurality of the votes cast, either in person or by proxy, at the Annual Meeting is required for the election of the Class IIII director nominees. You may vote for or withheld with respect to the election of either director. Only votes for or withheld are counted in determining whether a plurality has been cast in favor of a director. AbstentionsVotes withheld and broker non-votes are not counted for purposes of the election of directors, although they are counted for purposes of determining whether there is a quorum. Shareholders do not have the right to cumulate their votes for directors.
Proposal 2: Ratification of Appointment of MHM as our Independent Registered Public Accounting Firm. The affirmative vote of the holders of a majority of all shares casting votes, either in person or by proxy, at the Annual Meeting is required to ratify the appointment of MHM as our independent registered public accounting firm for the fiscal year ending December 31, 2019.2020. We are not required to submit this matter to a vote of shareholders for ratification,ratification; however, our board of directorsBoard is doing so, based upon the recommendation of its audit committee, as a matter of good corporate practice. You may vote for, against, or abstain with respect to the ratification of appointment of MHM as our independent registered public accounting firm. A properly executed proxy marked abstain with respect to this proposal will not be voted for or against the proposal, although it will be counted for purposes of determining whether there is a quorum. Abstentions and brokerBroker non-votes will have the same effectnot be considered as a votevotes cast for or against this proposal.proposal, although it will be counted for purposes of determining whether there is a quorum. Brokers have discretion to vote shares with respect to this proposal, unless a shareholder directs their broker otherwise.
Proposal 3: Advisory Vote on Named Executive Officers Compensation. The votes that shareholders cast “for” must exceed the votes that unit owners cast “against” to approve the advisory vote on compensation of our Named Executive Officers.
Proposal 4: Advisory Vote on Frequency of the Advisory Vote on Compensation of the Company’s Named Executive Officers. The frequency of You may vote for, against, or abstain with respect to the advisory vote on compensation of ourthe Company’s Named Executive Officers receivingOfficers. A properly executed proxy marked abstain with respect to this
proposal will not be voted for or against the greatest number of votes - every one year, every two years or every three years -proposal, although it will be the frequency that shareholders approve.counted for purposes of determining whether there is a quorum. Broker non-votes will not be considered as votes cast for or against this proposal, although it will be counted for purposes of determining whether there is a quorum.
Other Items. In the event other items are properly brought before the Annual Meeting, the affirmative vote of a majority of the votes cast, either in person or by proxy, at the meeting will be required for approval. A properly executed proxy marked abstain with respect to any such matter will not be voted for or against such items, although it will be counted for purposes of determining whether there is a quorum. Accordingly, an abstention will have the effect of a negative vote.
Because your votes are advisory on ProposalsProposal 3, and 4, they will not be binding on the Board of Directors or the Company. However, the Board of Directors and the Compensation Committee will review the voting results and take them into consideration when making future decisions regarding the Named Executive Officers’ compensation or regarding the frequency of the advisory vote on the Named Executive Officers’ compensation.
Who pays for the preparation of the proxy and soliciting proxies?
We will pay the cost of preparing, assembling and mailing the proxy statement and the accompanying Notice of Annual Meeting and proxy card. In addition to the use of mail, our directors, officers and employees may solicit proxies by telephone or other electronic means or in person. These persons will not receive additional compensation for soliciting proxies. Arrangements also will be made with brokerage houses and other custodians, nominees and fiduciaries for the forwarding of solicitation materials to the beneficial owners of stock held of record by these persons, and we will reimburse them for reasonable out-of-pocket expenses.
What should I have received to enable me to vote?
In additionWe are furnishing proxy materials to this proxy statement, you should have receivedour shareholders primarily via the accompanying Notice of Annual Meetinginternet under the SEC’s “Notice and proxy card. The mailing date of these materials is onAccess” rules. On or about May 10, 2019.12, 2020, we expect to mail to our shareholders a Notice of Internet Availability (the “Notice”) containing instructions on how to access our proxy materials, including our Proxy Statement and Annual Report on Form 10-K. The Notice also will instruct you on how to access and submit your proxy through the internet.
We are providing internet distribution of our proxy materials to expedite receipt by shareholders, reduce costs and conserve paper. However, if you would like to receive printed proxy materials, please follow the instructions on the Notice.
How can I obtain additional copies?
The Notice of Meeting, Proxy Statement and our Annual Report for the fiscal year ended December 31, 2018,on Form 10-K are available online at http://www.dyadic.com/investors/proxy-statementsinvestors and may be accessed at https://materials.proxyvote.com/26745T.
For additional copies of this proxy statement and the enclosed proxy card, please contact either our corporate office at 140 Intracoastal Pointe Drive, Suite 404, Jupiter, Florida 33477, Attention: Heidi Zosiak, telephone: (561) 743-8333 or Broadridge Financial Solutions, Inc., 51 Mercedes Way, Edgewood, NY 11717, telephone: (631) 257-4339.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information presented below regarding the beneficial ownership of Dyadicour common stock is based upon representations madeas of May 4, 2020 (except as noted below), by:
•each person known by us to us bybe the beneficial owner of more than 5% of the outstanding shares of our common stock;
•each of our directors, named executive officers; and
•all of our directors and executive officers as a group.
The amounts and other key personnel, and is not necessarily indicativepercentages of common stock beneficially owned are reported on the basis of regulations of the SEC governing the determination of beneficial ownership for any other purpose. Inof securities. Under the table below, we have deemedrules of the SEC, a person is deemed to be a “beneficial owner” of a security if that person has or shares voting power, which includes the power to vote or direct the voting of thea security, or investment power, which includes the power to dispose of or to direct the disposition of a security. A person is also deemed to be a beneficial owner of any securities of which that person has a right to acquire beneficial ownership within sixty (60) days of May 4, 2020. Securities that can be so acquired are deemed to be outstanding for purposes of computing such person’s ownership percentage, but not for purposes of computing any other person’s percentage. Under these rules, more than one person may be deemed a beneficial owner of the security. Beneficial ownership includes any securitysame securities and a person may be deemed to be a beneficial owner of securities as to which such person has no economic interest. Except as otherwise indicated in these footnotes, each of the beneficial owners listed has, to our knowledge, sole voting and investment power with respect to which a person has the right to acquire sole or shared voting or investment power within 60 days through the conversion or exercise of any convertible security, warrant, option or other right. The table sets forth as to each director, executive officer, key personnel and beneficial holder of 5% or more of the outstanding Dyadic common stock as of April 29, 2019 and includes (1) the number ofindicated shares of Dyadic common stock beneficially owned and (2) the percent of total shares of Dyadic common stock outstanding that are beneficially owned.stock.
As of April 29, 2019,May 4, 2020, the Company has 39,016,98839,712,659 shares of common stock issued and 26,763,48627,459,157 shares of common stock outstanding with the remaining 12,253,502 shares held in treasury. The beneficial ownership table below includes those shares of common stock underlying options that are currently exercisable or exercisable within sixty (60) days of April 29, 2019,May 4, 2020, but excludes those shares issued or repurchased subsequent to April 29, 2019:May 4, 2020:
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| | | | | | | | | | |
Name and Address of Beneficial Owner (1) | Number of Common Shares Held | | Options Exercisable within 60 Days | | Number of Common Share Equivalents Beneficially Owned | | Percentage of Common Share Equivalents Beneficially Owned (%) (2) |
| 5% Shareholders: | | | | | | | |
Mark A. Emalfarb (3) | 4,166,987 |
| | 1,220,000 |
| | 5,386,987 |
| | 19.3% |
The Francisco Trust U/A/D February 28, 1996 (4) | 3,781,849 |
| | | | 3,781,849 |
| | 14.1% |
Bandera Master Fund L.P. (5) | 2,490,271 |
| | | | 2,490,271 |
| | 9.3% |
Pinnacle Family Office Investments, L.P. (6) | 1,749,267 |
| | | | 1,749,267 |
| | 6.5% |
| | | | | |
|
| | |
| Named Executive Officers and Directors: | | | | |
|
| | |
Mark A. Emalfarb (3) | 4,166,987 |
| | 1,220,000 |
| | 5,386,987 |
| | 19.3% |
| Michael P. Tarnok | 188,929 |
| | 161,251 |
| | 350,180 |
| | 1.3% |
| Jack L. Kaye | 72,707 |
| | 142,501 |
| | 215,208 |
| | * |
| Seth J, Herbst, M.D. | 30,000 |
| | 256,251 |
| | 286,251 |
| | 1.1% |
| Arindam Bose, Ph.D. | — |
| | 112,500 |
| | 112,500 |
| | * |
| Barry C. Buckland, Ph.D. | — |
| | 34,375 |
| | 34,375 |
| | * |
| Ping W. Rawson | 18,500 |
| | 94,695 |
| | 113,195 |
| | * |
| Ronen Tchelet, Ph.D. | — |
| | 360,000 |
| | 360,000 |
| | 1.3% |
| Matthew S. Jones | — |
| | 140,000 |
| | 140,000 |
| | * |
| All current executive officers and directors as a group | 4,477,123 |
| | 2,521,573 |
| | 6,998,696 |
| | 23.9% |
| (9 persons) | | | | | | | |
______________
Notes:
(*) Less than 1%
| |
(1)
| Except as otherwise noted, the address for each shareholder is c/o Dyadic International, Inc., 140 Intracoastal Pointe Drive, Suite 404, Jupiter, FL 33477. |
| | | | | | | | | | | | | | | | | | | | | | | |
Name and Address of Beneficial Owner (1) | Number of Common Shares Held | | Options Exercisable within 60 Days | | Number of Common Share Equivalents Beneficially Owned | | Percentage of Common Share Equivalents Beneficially Owned (%) (2) |
| 5% Shareholders: | | | | | | | |
Mark A. Emalfarb (3) | 4,166,987 | | | 1,220,000 | | | 5,386,987 | | | 18.8% |
The Francisco Trust U/A/D February 28, 1996 (4) | 3,781,849 | | | — | | | 3,781,849 | | | 13.8% |
| | | | | | | |
| Named Executive Officers and Directors: | | | | | | | |
Mark A. Emalfarb (3) | 4,166,987 | | | 1,220,000 | | | 5,386,987 | | | 18.8% |
| Michael P. Tarnok | 188,929 | | | 223,750 | | | 412,679 | | | 1.5% |
| Jack L. Kaye | 72,707 | | | 209,688 | | | 282,395 | | | * |
| Seth J, Herbst, M.D. | 30,000 | | | 293,750 | | | 323,750 | | | 1.2% |
| Arindam Bose, Ph.D. | — | | | 185,313 | | | 185,313 | | | * |
| Barry C. Buckland, Ph.D. | — | | | 38,125 | | | 38,125 | | | * |
| Ping W. Rawson | 18,500 | | | 298,918 | | | 317,418 | | | 1.1% |
| Ronen Tchelet, Ph.D. | — | | | 410,000 | | | 410,000 | | | 1.5% |
| Matthew S. Jones | — | | | 240,000 | | | 240,000 | | | * |
| All current executive officers and directors as a group | 4,477,123 | | | 3,119,544 | | | 7,596,667 | | | 24.8% |
| (9 persons) | | | | | | | |
______________
| |
(2)
| Based on 26,763,486 shares of common stock outstanding as of April 29, 2019.Notes: (*) Less than 1%. (1)Except as otherwise noted, the address for each shareholder is c/o Dyadic International, Inc., 140 Intracoastal Pointe Drive, Suite 404, Jupiter, FL 33477. (2)Based on 27,459,157 shares of common stock outstanding as of May 4, 2020. Shares of common stock subject to options that are currently exercisable or exercisable within 60 days are deemed outstanding for purposes of computing the percentage of the person holding such options but are not deemed outstanding for purposes of computing the percentage of any other person. |
| |
(3)
| Includes 4,166,987 shares held by Mark A. Emalfarb beneficially through the MAE Trust U/A/D October 1, 1987, of which Mr. Emalfarb is the sole beneficiary and serves as sole trustee. In addition, Mr. Emalfarb holds 1,220,000 shares of common stock underlying options that are presently exercisable. Based on the information available to us, the address of the MAE Trust U/A/D October 1, 1987 is 193 Spyglass Court, Jupiter, 33477. |
| |
(4)
| The trustee of the Francisco Trust is Adam Morgan, and the beneficiaries thereof are the spouse and descendants of Mark A. Emalfarb. The address of the Francisco Trust is 3128 San Michele Drive, Palm Beach Gardens, Florida 33418. Mr. Emalfarb disclaims beneficial ownership of such shares. |
| |
(5)
| Based on the information available to us, the address is c/o Bandera Master Fund L.P., 50 Broad Street #1820, New York, NY 10004. |
| |
(6)
| Based on the information available to us, the address is c/o Pinnacle Family Office Investments, L.P., 5910 North Central Expressway, Suite 1475, Dallas, TX 75206. |
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires our executive officersperson holding such options but are not deemed outstanding for purposes of computing the percentage of any other person.
(3)Includes 4,166,987 shares held by Mark A. Emalfarb beneficially through the MAE Trust U/A/D October 1, 1987, of which Mr. Emalfarb is the sole beneficiary and directors,serves as sole trustee. In addition, Mr. Emalfarb holds 1,220,000 shares of common stock underlying options that are presently exercisable. Based on the information available to us, the address of the MAE Trust U/A/D October 1, 1987 is 193 Spyglass Court, Jupiter, 33477.
(4)The trustee of the Francisco Trust is Adam Morgan, and persons who beneficially own more than 10%the beneficiaries thereof are the spouse and descendants of our equity securities, to file reportsMark A. Emalfarb. The address of ownership and changes in ownership with the SEC. Such officers, directors and 10% stockholders are also required by the SEC rules to furnish us with copies of all Section 16(a) forms they file. Based solely on our review of copiesFrancisco Trust is 3128 San Michele Drive, Palm Beach Gardens, Florida 33418. Mr. Emalfarb disclaims beneficial ownership of such reports, or written representations from certain reporting persons that no filings were required for such persons, we believe that our executive officers and directors complied with all Section 16(a) filing requirements since the Company's registration statement on Form 10-12G became effective on February 12, 2019.shares.
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Our Board of Directors has determined that the Audit Committeeaudit committee of the Board (the “Audit Committee”) is best suited to review and approve transactions with related persons. Prior to entering into a transaction with a related person, (a) the director, executive officer, nominee or significant holder who has a material interest (or whose immediate family member has a material interest) in the transaction or (b) the business unit or function/department leader responsible for the potential transaction with a related person is required to provide notice to the Chairman of the Audit Committee of the Company (Committee Chairman)(“Audit Committee Chairman”) of the material facts and circumstances of the potential transaction with a related person and such information concerning the transaction as the Audit Committee Chairman may reasonably request. If the Audit Committee Chairman determines that the proposed transaction is a related person transaction, the proposed related person transaction must be submitted to the Audit Committee for consideration at the next Audit Committee meeting or, in those instances in which the Audit Committee Chairman determines that it is not practicable or desirable for the Company to wait until the next Audit Committee meeting, the Audit Committee Chairman possesses delegated authority to act between Committee meetings.
The Audit Committee will consider all of the relevant facts and circumstances available to the Audit Committee, including (if applicable) but not limited to: (a) the benefits to the Company; (b) the availability of other sources for comparable products or services; (c) the terms of the transaction; and (d) the terms available to unrelated third parties or to employees generally. No member of the Audit Committee will participate in any review, consideration or approval of any related person transaction if such member, or any of his or her immediate family members, is the related person. The Audit Committee or Chairperson,Audit Committee Chairman, as applicable, will convey the approval or disapproval of the transaction to the Chief Executive Officer or Secretary, who will convey the decision to the appropriate persons within the Company. The Chairperson of the Audit Committee Chairman will report to the Audit Committee at the next Audit Committee meeting any approval under this policy made by the chairperson pursuant to delegated authority.
In the event we become aware of a related person transaction that has not been previously approved or previously ratified under this procedure, and such transaction is pending or ongoing, it will be submitted to the Audit Committee
or Chairperson,Audit Committee Chairman, as applicable, promptly, and the Audit Committee or ChairpersonAudit Committee Chairman will consider all of the relevant facts and circumstances available to the Audit Committee or the ChairpersonAudit Committee Chairman as provided above. Based on the conclusions reached, the Audit Committee or Chairperson,Audit Committee Chairman, as applicable, will evaluate all options, including but not limited to, ratification, amendment or termination of the related person transaction.
CORPORATE GOVERNANCE AND RELATED MATTERS
General
The following discussion summarizes certain corporate governance matters relating to the Company, including information about director independence, Board and Committee structure, function and composition, charters, policies and procedures. For additional information on the Company’s corporate governance, including copies of the charters approved by the Board for the Audit Committee, the compensation committee of the Board (“Compensation Committee,Committee”), the nominating and governance committee of the Board (“Nominating Committee,Committee”), the sciences and technology committee of the Board (“Science and Technology Committee,Committee”), and the Company’s Code of Conduct and Ethics, please visit the “Investors” section of the Company’s web site at http://www.dyadic.com/investors under Corporate Governance.
Board of Directors and Committees
Board of Directors
The Board is responsible for directing and overseeing the business and affairs of the Company. The Board represents the Company’s shareholders and its primary purpose is to build long-term shareholder value. The Board meets on a regularly scheduled basis during the year to review significant developments affecting the Company and to act on matters that, in accordance with good corporate governance, require Board approval. It also holds annual meetings and acts by unanimous written consent when an important matter requires Board action between scheduled meetings. The board of directorsBoard held five (5) meetings during 20182019 and each of our directors attended all of those meetings in person or by teleconference.
We have a classified board of directorsBoard currently fixed at six members. The boardBoard has four committees: Audit Committee, Compensation Committee, Nominating Committee, and Science and Technology.Technology Committee. Currently, Mr. Michael P. Tarnok serves as Chairman of the Board of Directors and Mark A. Emalfarb as President and Chief Executive OfficerChairman of the Company.Compensation Committee. Mr. Jack Kaye serves as Audit Committee Chairman, Dr. Seth Herbst serves as Chairman of the Nominating Committee, and Dr. Arindam Bose serves as Chairman of the Science and Technology Committee.
The Board’s Role in Risk Oversight
Our Board, as a whole and also at the committee level, has an active role in overseeing management of the Company’s risks. The Board regularly reviews information regarding the Company’s business and operations, including with respect to liquidity, financial reporting, governance and compliance, as well as the risks associated with these activities.
Independence of Directors
We are currently listed on NASDAQ Capital Market stock exchangeIn evaluating the independence of its members and the composition of the committees of the Board, the Board utilizes the definition of independence as that has a requirement for independent board of directors. We also used the term that is defined under the published listing requirements of NASDAQ. The NASDAQ independence definition includes a series of objective tests. For example, an independent director may not be employed by us and may not engage in certain types of business dealings with the Company. In addition, as further required by NASDAQ rules, the Board has made a subjective determination as to each independent director that no relation exists which, in the opinion of the Board, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. In making these determinations, the Board reviewed and discussed information provided by the SEC for audit committee members.directors and by the Company with regard to each director’s business and personal activities as they may relate to the Company and the Company’s management. We believe that Drs. Herbst, Bose and Buckland, as well as Messrs. Kaye and Tarnok qualify as independent directors, asdirectors. In addition, our Board has determined that termeach member of our Audit Committee is defined by NASDAQindependent and is otherwise qualified to be a member of the Audit Committee in accordance with the rules and as defined byof the SEC rules for audit committee membership.and NASDAQ.
As part of each regularly scheduled Board meeting, our independent directors have the opportunity to meet without our management or the other directors. Our independent Chairman leads such discussions.
Committees of the Board
The Board has established an Audit Committee, a Compensation Committee, a Nominating Committee and a Science and Technology committeeCommittee to devote attention to specific subjects and to assist the Board in the discharge
of its responsibilities. The following table provides membership and meeting information for each of the Board committees:
|
| | | | | | | | | | | | | |
| Name | Audit | Compensation | Nominating | Science and Technology |
| Michael P. Tarnok | X | X* | X | — |
| Seth J. Herbst, M.D. | — | X | X* | X |
| Arindam Bose, Ph.D. | X | — | — | X* |
| Jack L. Kaye | X* | X | — | — |
| Barry C. Buckland, Ph.D. | — | — | X | X |
| Mark A. Emalfarb | — | — | — | X |
* Committee ChairpersonChairman
Audit Committee. The Audit Committee held four (4) meetings during the year ended December 31, 2018.2019. The Audit Committee has oversight responsibility for quality and integrity of our consolidated financial statements. A copy of the Charter of the Audit Committee is available on our website, located at www.dyadic.com. The Audit Committee meets privately with members of our independent registered public accounting firm, has the sole authority to retain and dismiss the independent registered public accounting firm and reviews its performance and independence from management. The independent registered public accounting firm has unrestricted access and reports directly to the committee.Audit Committee. The primary functions of the Audit Committee are to oversee (i) the audit of our consolidated financial statements and (ii) our internal financial and accounting processes.
The SEC and NASDAQ have established rules and regulations regarding the composition of audit committees and the qualifications of audit committee members. We believeOur Board has examined the composition of our Audit Committee and the qualification of our Audit Committee members in light of the current rules and regulations governing audit committee. Based upon this examination, our Board has determined that each member of our Audit Committee is independent and is otherwise qualified to be a member of our Audit Committee in accordance with the rules of the SEC and NASDAQ.
Additionally, the SEC requires that at least one member of the audit committee have a heightened level of financial and accounting sophistication. Such a person is known as the audit“audit committee financial expertexpert” under the SEC’s rules. Our Board of Directors has determined that Mr. Kaye is an audit“audit committee financial expert,expert”, as the SEC defines that term,defined in Item 407(d)(5) of Regulation S-K and is an independent member of our Board of Directors and our Audit Committee. Please see Mr. Kaye’s biography included in this proxy statement for a description of his relevant experience.
Compensation Committee. The Compensation Committee held three (3) meetings during the year ended December 31, 2018.2019. The duties and responsibilities of the Compensation Committee are set forth in the Charter of the Compensation Committee. A copy of the Charter of the Compensation Committee is available on our website, located at www.dyadic.com. As discussed in its charter, among other things, the duties and responsibilities of the Compensation Committee include evaluating the performance of the Chief Executive Officer, Chief Financial and Accounting Officer and other key personnel of the Company, including, but not limited to, our incentive and equity-based plans. The Compensation Committee evaluates the performance of the Chief Executive Officer, Chief Financial and Accounting Officer and other key personnel of the Company on an annual basis and reviews and approves on an annual basis all compensation programs and awards relating to such officers and key personnel. The Compensation Committee applies discretion in the determination of individual executive compensation packages to ensure compliance with the Company’s compensation philosophy. The Chief Executive Officer makes recommendations to the Compensation Committee with respect to the compensation packages for officers other than himself.
Nominating Committee. The Nominating Committee held one (1)two (2) meeting during the year ended December 31, 2018.2019. The Nominating Committee’s functions include: establishing criteria for the selection of new directors to serve on the board of directors;Board; identifying individuals believed to be qualified as candidates to serve on the board of directors;Board; recommending for selection by the board of directors the candidates for all directorships to be filled by the board of
directorsBoard or by the shareholders at an annual or special meeting; reviewing the board of directors’Board’s committee structure and recommending to the board of directorsBoard the directors to serve on the committees of the board;Board; recommending members of the board of directorsBoard to serve as the respective chairs of the committees of the board of directors;Board; developing and recommending to the board of directors,Board, for its approval, an annual self-evaluation process of the board of directorsBoard and its committees and, based on those results, making recommendations to the board of directorsBoard regarding those board processes; and performing any other activities consistent with the committee’s charter, our bylaws and applicable law as the committee or the board of directorsBoard deems appropriate. A copy of the Charter of the Nominating Committee is available on our website, located at www.dyadic.com.
The Nominating Committee does not currently have any formal minimum qualification requirements that must be met by a nominee to serve as a member of the board of directors.Board. The Nominating Committee will take into account all factors it considers appropriate, which may include experience, accomplishments, education, understanding of the business and the industries in which we operate, specific skills, general business acumen and the highest personal and professional integrity. The Nominating Committee generally seeks individuals with broad experience at the policy-making level in business, or with particular industry expertise. While we do not have a formal diversity policy for boardBoard membership, we look for potential candidates that help ensure that the board of directorsBoard has the benefit of a wide range of attributes. We believe that all of our directors should be committed to enhancing shareholder value and should have sufficient time to carry out their duties and to provide insight and practical wisdom based on experience. Each director must also represent the interests of all shareholders.
The Nominating Committee currently has no fixed process for identifying new nominees for election as a director, thereby retaining the flexibility to adapt its process to the circumstances. The Nominating Committee has the ability, if it deems it necessary or appropriate, to retain the services of an independent search firm to identify new director candidates. The Nominating Committee has determined that it will give consideration toconsider any potential candidate proposed by a member of our boardBoard or senior management. Any director candidate so proposed will be personally interviewed by at least one member of the Nominating Committee and our Chief Executive Officer and their assessment of his or her qualifications will be provided to the full Nominating Committee. For the 2019 Annual Meeting, the nominating committee received no proposals for new director candidates, and considered and nominated the incumbent Class IIII directors to serve as the nominees for re-election.
Our policy and procedures regarding director candidates recommended by shareholders are contained in the Nominating Committee’s charter. The Nominating Committee may consider for inclusion in its nominations for new directors any candidates recommended by shareholders, but must consider any candidate for director recommended by (i) any shareholder beneficially owning more than 5% of our outstanding common stock for at least one year as of the date the recommendation was made or (ii) a group of shareholders that beneficially owned, in the aggregate, more than 5% of our outstanding common stock, with each of the shares used to calculate that ownership held for at least one year as of the date the recommendation was made. The Nominating Committee will consider the candidate based on the same criteria established for selection of director nominees generally. The Nominating Committee reserves the right to reject any candidate in its discretion, including, without limitation, rejection of a candidate who has a special interest agenda other than the best interests of the Company and the shareholders, generally. Any shareholder who wishes to recommend for the Nominating Committee’s consideration a director candidate should abide by the following procedures:
•Submit the following written information about the candidate by mail to the Nominating Committee, c/o Dyadic International, Inc., 140 Intracoastal Pointe Drive, Suite 404, Jupiter, Florida 33477, Attention: Chair of Nominating Committee, the name, mailing address, telephone number, e-mail address, resume, business history, listing of other past and present directorships and director committees, any biotech industry experience and other relevant information;
•Explain in the submission why the shareholder believes the candidate would be an appropriate member of our board of directorsBoard and the benefits and attributes that the candidate will provide to us in serving as a director;
•Provide evidence of the submitting party’s requisite ownership of our common stock along with the recommendation; and
•Indicate whether we may identify the shareholder in any public disclosures that we make regarding the consideration of the director candidate.
For a director candidate to be considered by the Nominating Committee for nomination at the 2019 Annual Meeting, of Shareholders, the submission must have been received by us no later than March 9, 2019.2020. No such submissions were received.
Science and Technology Committee. On March 14, 2018, our board of directors approved the formation of Science and Technology Committee to periodically examine management’s strategic direction and investments in the Company’s biopharmaceutical research and development and technology initiatives. The Science and Technology Committee held two (2) meetings during the year ended December 31, 2018.2019. The duties and responsibilities of the Science and Technology Committee are set forth in the Charter of the Science and Technology Committee. A copy of the Charter of the Science and Technology Committee is available on our website located at www.dyadic.com. As discussed in its charter, among other things, the duties and responsibilities of the Science and Technology Committee are following:
| |
1) | Review, evaluate and report to the Board regarding the performance of the Vice-President, Research and Development (and, his or her team), the contract research organizations being considered or working on behalf of the Company in achieving the strategic goals and objectives and the quality and direction of the Company’s biopharmaceutical research and development programs. |
| |
2) | Identify and discuss significant emerging science and technology issues and trends. |
| |
3) | Review the Company’s approaches to acquiring and maintaining a range of distinct technology positions (including but not limited to contracts, grants, collaborative efforts, alliances and capital investments). |
| |
4) | Evaluate the soundness/risks associated with the technologies in which the Company is investing its research and development efforts. |
| |
5) | Periodically review the Company’s overall patent strategies. |
1)Review, evaluate and report to the Board regarding the performance of the Vice-President, Research and Development (and, his or her team), the contract research organizations being considered or working on behalf of the Company in achieving the strategic goals and objectives and the quality and direction of the Company’s biopharmaceutical research and development programs.
2)Identify and discuss significant emerging science and technology issues and trends.
3)Review the Company’s approaches to acquiring and maintaining a range of distinct technology positions (including but not limited to contracts, grants, collaborative efforts, alliances and capital investments).
4)Evaluate the soundness/risks associated with the technologies in which the Company is investing its research and development efforts.
5)Periodically review the Company’s overall patent strategies.
Shareholder Communications
Our board of directorsBoard believes that it is important for our shareholders to have a process to send communications to the board.Board. Accordingly, shareholders desiring to send a communication to the board of directors,Board, or to a specific director, may do so by delivering a letter to the Secretary of the Company at 140 Intracoastal Pointe Drive, Suite 404, Jupiter, Florida 33477. The mailing envelope must contain a clear notation indicating that the enclosed letter is a “shareholder-director communication.” All such letters must identify the author as the shareholder and clearly state whether the intended recipients of the letter are all of the members of our board of directorsBoard or certain specified individual directors. The Secretary will open such communications, make copies, and then circulate them to the appropriate director or directors.
Policy Concerning Director Attendance at Annual Meetings of Shareholders
While we encourage all members of our board of directorsBoard to attend our Annual Meeting of our shareholders, there is no formal policy as to their attendance at such meetings. All members of the board of directorsBoard attended the 20182019 Annual Meeting of Shareholders.
Code of Conduct and Ethics
We have adopted a Code of Conduct and Ethics, or the Code, whichas amended, that applies to all employees, key consultants, officers, and directors of our directors, employees and key consultants,company, including our principal executive officer, principal financial officer and principal financial officer. Theaccounting officer, or persons performing similar functions. Our Code includes guidelines dealing withof Conduct and Ethics is available on the ethical handling of conflicts of interest, compliance with federal and state laws, financial reporting, and our proprietary information. The Code also contains procedures for dealing with and reporting violations“Corporate Governance” page of the Code. We have posted“Investors” section of our website at www.dyadic.com. A copy of our Code of Conduct and Ethics can also be obtained free of charge by contacting our Secretary, c/o Dyadic
International, Inc, 140 Intracoastal Pointe Drive, Suite 404, Jupiter, FL 33477. We intend to satisfy the disclosure requirement under Item 5.05 of Form 8-K regarding any amendment to, or waiver from, a provision of our Code of Conduct and Ethics by posting such information on our website, located at www.dyadic.com.website.
Compensation of Directors
Non-employee directors receive an annual retainer for board service of $60,000, paid in equal monthly installments. A director serving as Chairman of the Board shall also receive an additional annual retainer of $12,000, paid in equal monthly installments. An independent director who serves as Chair of the Company’s Audit Committee shall also receive an additional annual retainer of $9,600, paid in equal monthly installments. The annual stock option award for non-employee directors is 50,000 options. Newly appointed directors are issued 30,000 stock options in the first year. Directors who are also employees or officers of the Company or any of its subsidiaries do not receive any separate compensation as a director.
The following table sets forth the total compensation earned byfor our non-employee directors for the fiscal year ended December 31, 2018:2019:
| | | Name | | Fees earned or paid in cash (1) | | Stock awards ($) | | Options awards ($) (1)(2)(3) | | Non-equity incentive plan compensation ($) | | Nonqualified deferred compensation earnings ($) | | All other compensation ($) | | Total ($) | Name | | Fees earned or paid in cash (1) | | Stock awards ($) | | Options awards ($) (1)(2)(3) | | Non-equity incentive plan compensation ($) | | Nonqualified deferred compensation earnings ($) | | All other compensation ($) | | Total ($) |
| Michael P. Tarnok | | $ | 72,000 |
| | $ | — |
| | $ | 20,000 |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | 92,000 |
| Michael P. Tarnok | | $ | 73,500 | | | $ | — | | | $ | 80,500 | | | $ | — | | | $ | — | | | $ | — | | | $ | 154,000 | |
| Jack L. Kaye | | $ | 69,600 |
| | $ | — |
| | $ | 20,000 |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | 89,600 |
| |
Jack L. Kaye (4) | | Jack L. Kaye (4) | | $ | 72,300 | | | $ | — | | | $ | 94,000 | | | $ | — | | | $ | — | | | $ | — | | | $ | 166,300 | |
| Seth J. Herbst, MD | | $ | 60,000 |
| | $ | — |
| | $ | 20,000 |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | 80,000 |
| Seth J. Herbst, MD | | $ | 60,000 | | | $ | — | | | $ | 27,000 | | | $ | — | | | $ | — | | | $ | — | | | $ | 87,000 | |
| Arindam Bose, Ph.D. | | $ | 60,000 |
| | $ | — |
| | $ | 20,000 |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | 80,000 |
| |
Barry C. Buckland, Ph.D.(4) | | $ | 59,667 |
| | $ | — |
| | $ | 20,000 |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | 79,667 |
| |
Arindam Bose, Ph.D.(4) | | Arindam Bose, Ph.D.(4) | | $ | 67,500 | | | $ | — | | | $ | 94,000 | | | $ | — | | | $ | — | | | $ | — | | | $ | 161,500 | |
| Barry C. Buckland, Ph.D. | | Barry C. Buckland, Ph.D. | | $ | 60,000 | | | $ | — | | | $ | 27,000 | | | $ | — | | | $ | — | | | $ | — | | | $ | 87,000 | |
___________________
Notes:
(1) Effective January 1, 2016, directorsDirectors who are also employees or officers of the Company or any of its subsidiaries do not receive any separate compensation as a director. Non-employee directors receive an annual retainer for boardBoard service of $60,000, paid in equal monthly installments. A director serving as Chairman of the Board shall also receive an additional annual retainer of $12,000, paid in equal monthly installments. An independent director who serves as Chair of the Company’s Audit Committee shall also receive an additional annual retainer of $9,600, paid in equal monthly installments. The annual stock option award for non-employee directors is 50,000 options. Newly appointed directors are issued 30,000 stock optionsPrior to June 25, 2019, a director who served as Chairman of the Board also received an additional annual retainer of $12,000 paid in equal monthly installments and a director who served as Chair of the first year.Audit Committee also received an additional annual retainer of $9,600 paid in equal monthly installments. All options granted to directors prior to June 25, 2019 vest 25% upon grant and the remaining 75% will vest annually in equal installments over four years. Effective June 25, 2019, the following changes were made: (1) a director who serves as Chairman of the Board, Chair of the Audit Committee, and Chair of the Science and Technology Committee shall each receive an additional annual retainer of $15,000 and 25,000 stock options, and (2) all options granted to directors will vest upon the one-year anniversary subsequent to the grant date. Accordingly, additional 25,000 options were granted to Mr. Tarnok, Mr. Kaye and Dr. Bose on June 25, 2019, and monthly installments based on the new annual retainer rate were applied starting from July 2019.
(2) The Stock Option Awards represented the grant date fair market value of each option granted in 2018,2019, computed in accordance with FASB ASC Topic 718. These amounts do not correspond to the actual value that will be recognized by the named directors. The assumptions used in the valuation of these awards are consistent with the valuation methodologies specified in the notes to our consolidated financial statements.
(3) Options to purchase 205,000280,000 shares (Mr. Tarnok), 180,000280,000 shares (Mr. Kaye), 300,000350,000 shares (Mr. Herbst), 180,000280,000 shares (Mr. Bose), and 50,00085,000 shares (Mr. Buckland) were outstanding at December 31, 2018.2019.
(4) In January 2019, the following special awards were granted: (1) additional 25,000 options were granted to Mr. Kaye in recognition of the level of effort required of him in his role as the Chair of the Audit Committee and member of the Compensation Committee, and (2) additional 25,000 options were granted to Dr. Bose in recognition of his contributions to the Company’s R&D strategies and accomplishments.
(4) Mr. Buckland was appointed to Dyadic’s Board of Directors on January 3, 2018, and his annual fees were prorated.
COMPENSATION AND OTHER INFORMATION CONCERNING OFFICERS
Philosophy and Objectives
The philosophy underlying our executive compensation program is to provide an attractive, flexible and market-based total compensation program tied to performance and aligned with the interests of our shareholders. Our objective is to recruit and retain the caliber of executive officers and other key employees necessary to deliver sustained high performance to our shareholders, customers, and communities where we have a strong presence. Our executive compensation program is an important component of these overall human resources policies. Equally important, we view compensation practices as a means for communicating our goals and standards of conduct and
performance and for motivating and rewarding employees in relation to their achievements. The organization’s executive compensation program is designed to:
•Encourage the attraction and retention of high-caliber executives.
•Provide a competitive total compensation package, including benefits.
•Reinforce the goals of the organization by supporting teamwork and collaboration.
•Ensure that pay is perceived to be fair and equitable.
•Be flexible to potentially reward individual accomplishments as well as organizational success.
•Ensure that the program is easy to explain, understand, and administer.
•Balance the needs of the both the Company and employees to be competitive with the limits of available financial resources.
•Ensure that the program complies with state and federal legislation.
From time to time, the Company will consult with a compensation specialist to determine whether its overall compensation practices and policies are appropriate for the specific market conditions for the Company and the industries in which it operates.
Summary Compensation Table
The following table summarizes the compensation paid or accrued to our “named executive officers” (as defined by the SEC’s disclosure requirements) during the fiscal years 20172019 and 2018:
| | | Name and Principal Position | | Year | | Salary ($) | | Bonus ($)(1) | | Stock Awards ($) | | Option Awards ($)(2)(3) | | Nonequity incentive plan compensation ($) | | Nonqualified deferred compensation earnings ($) | | All other payments ($) (4) | | Total ($) | Name and Principal Position | | Year | | Salary ($) | | Bonus ($)(1) | | Stock Awards ($) | | Option Awards ($)(2)(3) | | Nonequity incentive plan compensation ($) | | Nonqualified deferred compensation earnings ($) | | All other payments ($) (4) | | Total ($) |
Mark A. Emalfarb (*) | | 2018 | | $ | 393,012 |
| | $ | 200,000 |
| | $ | — |
| | $ | 99,900 |
| | $ | — |
| | $ | — |
| | $ | 468,891 |
| | $ | 1,161,803 |
| Mark A. Emalfarb (*) | | 2019 | | $ | 440,000 | | | $ | 250,000 | | | $ | — | | | $ | 156,000 | | | $ | — | | | $ | — | | | $ | 228,049 | | | $ | 1,074,049 | |
| President, CEO and Director | | 2017 | | $ | 382,044 |
| | $ | — |
| | $ | — |
| | $ | 120,000 |
| | $ | — |
| | $ | — |
| | $ | 655,026 |
| | $ | 1,157,070 |
| President, CEO and Director | | 2018 | | $ | 393,012 | | | $ | 200,000 | | | $ | — | | | $ | 99,900 | | | $ | — | | | $ | — | | | $ | 468,891 | | | $ | 1,161,803 | |
Ping W. Rawson (5) | | 2018 | | $ | 199,755 |
| | $ | — |
| | $ | — |
| | $ | 34,600 |
| | $ | — |
| | $ | — |
| | $ | 7,996 |
| | $ | 242,351 |
| Ping W. Rawson (5) | | 2019 | | $ | 220,000 | | | $ | 56,250 | | | $ | — | | | $ | 114,250 | | | $ | — | | | $ | — | | | $ | 8,807 | | | $ | 399,307 | |
| Chief Accounting Officer | | | | | | | | | | | | | | | | | |
| Chief Financial Officer | | Chief Financial Officer | | 2018 | | $ | 199,755 | | | $ | — | | | $ | — | | | $ | 34,600 | | | $ | — | | | $ | — | | | $ | 7,996 | | | $ | 242,351 | |
Ronen Tchelet, Ph.D. (6) | | 2018 | | $ | 212,320 |
| | $ | — |
| | $ | — |
| | $ | 23,400 |
| | $ | — |
| | $ | — |
| | $ | 11,759 |
| | $ | 247,479 |
| Ronen Tchelet, Ph.D. (6) | | 2019 | | $ | 207,647 | | | $ | 41,193 | | | $ | — | | | $ | 57,000 | | | $ | — | | | $ | — | | | $ | — | | | $ | 305,840 | |
| VP of Research and Business Development | | 2017 | | $ | 200,513 |
| | $ | — |
| | $ | — |
| | $ | 41,500 |
| | $ | — |
| | $ | — |
| | $ | 6,073 |
| | $ | 248,086 |
| VP of Research and Business Development | | 2018 | | $ | 212,320 | | | $ | — | | | $ | — | | | $ | 23,400 | | | $ | — | | | $ | — | | | $ | 11,759 | | | $ | 247,479 | |
Matthew S. Jones (7) | | 2018 | | $ | 273,058 |
| | $ | — |
| | $ | — |
| | $ | 40,000 |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | 313,058 |
| Matthew S. Jones (7) | | 2019 | | $ | 269,450 | | | $ | 82,954 | | | $ | — | | | $ | 57,000 | | | $ | — | | | $ | — | | | $ | — | | | $ | 409,404 | |
| Managing Dir. of Bus. Dev and Licensing | | 2017 | | $ | 256,390 |
| | $ | — |
| | $ | — |
| | $ | 33,200 |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | 289,590 |
| Managing Dir. of Bus. Dev and Licensing | | 2018 | | $ | 273,058 | | | $ | — | | | $ | — | | | $ | 40,000 | | | $ | — | | | $ | — | | | $ | — | | | $ | 313,058 | |
___________________
Notes:
(*) Mr. Emalfarb also serves on the Board, of Director, for which he receives no direct, indirect or incremental compensation.
(1) All 2019 bonuses were accrued at December 31, 2019 and paid in January 2020. Mr. Emalfarb’s 2018 bonus was accrued as ofat December 31, 2018 and paid in January 2019.
(2) The Option Awards amount reported in this column represented stock options granted in 20172018 and 20182019 (including annual share-based compensation awards for all named executives, and sign-onMs. Rawson’s awards upon promotions for Ms. Rawson upon promotion)2019 and 2018 in the amount of $55,250 and $22,000, respectively), vesting upon grant, or the one or four yearfour-year anniversary in accordance with their individual employment agreement or consulting agreement.
(3) The Option Awards amount reported in this column represented the grant date fair market value of each option granted, in 2018, computed in accordance with FASB ASC Topic 718. These amounts do not correspond to the actual value that will be recognized by the named executive officers. The assumptions used in the valuation of these awards are consistent with the valuation methodologies specified in the notes to our consolidated financial statements. The table above does not include the value of 175,000 shares ofthe following performance-based vesting stock options, granted to Ms. Rawson in 2018, as the achievement of
the conditions was not deemed probable at the grant date and the value of the awards was deemed zero in accordance with ASC 718. The
•Upon the Company’s uplisting to the NASDAQ in April 2019, 400,000 shares of performance-based vesting stock options granted to Mr. Emalfarb in 2016 became vested, and the related estimated value of the awards at the grant date assuming thatin the performanceamount of $392,000 was recorded in 2019 in accordance with FASB ASC Topic 718.
•Upon the achievements of different conditions in 2019, 175,000 shares of performance-based vesting stock options granted to Ms. Rawson in 2018 became vested, and the related estimated value of the awards at the grant date in the amount of $91,250 was recorded in 2019 in accordance with FASB ASC Topic 718.
conditions are achieved was $104,250. In the event that the performance conditions are not achieved, the option grants relating to any unattained milestones will be automatically canceled.
(4) Other payments paid to includes following:
•Mr. Emalfarb in 2018 includedreceived $12,891 for car allowance in both years. The Company’s contribution to the 401(k) retirement plan were $11,200 and $11,000 for 2019 and 2018, respectively. He also received $204,000 and $445,000 for installment payments relating to his prior employment agreement for 2019 and 2018, respectively.
•Ms. Rawson received $8,807 and $7,996 for the Company’s contribution to the 401(k) retirement plan in 2019 and $445,000 for installment payments relating to the change of control provision in connection with the DuPont transaction in his prior employment agreement. Other payments paid to Mr. Emalfarb in 2017 included $141,777 for a litigation settlement payment, $12,891 for car allowance, $55,362 for the Company’s contribution and catch up amount to the 401(k) retirement plan, and $444,996 for installment payments relating to the change of control provision in connection with the DuPont transaction in his prior employment agreement. Other payments paid to Ms. Rawson in 2018, included $7,996 for the Company’s contribution to the 401(k) retirement plan. Other payments paid to respectively.
•Mr. Tchelet includedreceived $11,759 and $6,073 for sales commission earned in 2018 and 2017, respectively.2018.
(5) OnMs. Rawson was promoted to Chief Financial Officer in June 2019, and she previously served as the Company’s Chief Accounting Officer since March 14, 2018,2018. Prior to that, Ms. Rawson was the Company’s Director of Financial Reporting since June 2016, was promoted to the Company’s Chief Accounting Officer, and serves as the Company’s principal financial officer. The amounts represent the total compensation of Ms. Rawson served as the Company’s Director of Financial Reporting (prior to March 14, 2018) and Chief Accounting Officer (since March 14, 2018) for the year ended December 31, 2018.Reporting.
(6) The amounts represent the compensation for services of Mr. Tchelet for the year ended December 31, 2018 and 2019, in accordance with the Sky Blue Biotech Agreement.Agreement indicated below.
(7) The amounts represent the compensation for services of Mr. Jones for the year ended December 31, 2018 and 2019, in accordance with the Novaro Agreement.Jones Consultant Agreement indicated below.
Employment AgreementsArrangements
Mark A. Emalfarb
On June 21, 2016, the Company entered into a newan employment agreement (the “Emalfarb Agreement”) with Mr. Emalfarb. The Emalfarb Agreement has an initial term of three years and automatic renewals of two years at the end of each term, unless either party provides a notice of nonrenewal, and provides that Mr. Emalfarb be employed as our President and Chief Executive Officer and that we will cause Mr. Emalfarb to be elected as a member of the Board. The material terms of the Emalfarb Agreement are summarized below:
Base Salary and Bonus. Mr.The Emalfarb will receiveAgreement provided for an annual base salary of $375,000, which was increased to $405,000 in January 2019, to $475,000 in June 2019, and he may be eligibleto $500,000 in January 2020, in recognition of his successful efforts in every area of the business in 2018 and 2019. The Emalfarb Agreement also provided for an annual bonus award, with the timing and amount of any such bonus determined in the sole discretion of the Compensation Committee of the Board.Board, which determined to award Mr. Emalfarb a cash bonus of $200,000 for 2018 and $250,000 for 2019.
Performance Stock Options. The Emalfarb Agreement provided Mr. Emalfarb will have the opportunity to be awarded three (3) annual stock option grants, eachgrants. Each such annual option incentive stock option grant will be to purchase up to three hundred thousand (300,000) shares of common stock (the “Maximum Option Bonus”) based on performance achievements in 2016, 2017 and 2018.achievements. Performance incentives for the six-month period January-June 2019 will be agreed to by the Board and Mr. Emalfarb based solely on the Compensation Committee’s evaluation of Mr. Emalfarb’s performance during that time period. The stock option grant(s), if granted by the Compensation Committee, will have a five-year term and shall vest on the grant date.
Upon the execution of the Emalfarb Agreement, Mr. Emalfarb received a stock option grant to purchase 100,000 shares of common stock (the “First Option”), with an exercise price equal to $1.67. On January 3, 2017, Mr. Emalfarb received a stock option grant to purchase 150,000 shares of common stock (the “Second Option”), with an exercise price equal to $1.63 per share. The First Option
For fiscal years 2019 and Second Option together represent 83.3% of the 2016 Maximum Option Bonus. On January 2, 2018, Mr. Emalfarb received a stock option grant to purchase 270,000300,000 shares of common stock for his 2017annual performance, representing 90%100% of the 2017 Maximum Option Bonus. All options granted to Mr. Emalfarb vestfor fiscal year 2018 vested immediately upon grant and have a five-year term from the date of grant. All options granted to Mr. Emalfarb for fiscal year 2019 vest annually in equal installments over four years and have a ten-year term from the date of grant.
Stock Exchange Stock Option. In addition, Mr. Emalfarb received a stock option grant to purchase up to four hundred thousand (400,000) shares of common stock at an exercise price of $1.67, equal to the closing price of Dyadic common stock on June 21, 2016. The stock option shallwould vest and become exercisable only if the Company’s shares of
common stock commence trading on the NASDAQ Capital Markets or other stock exchange approved by the Board. The Stock Exchange stock option grant has a five-year term. All 400,000 stock options granted to Mr. Emalfarb in 2016 became vested, upon the Company’s uplisting to the NASDAQ in April 2019.
Licensing/Collaboration Transaction Stock Options. A stock option to purchase up to six hundred thousand (600,000) shares of common stock shall be proportionally awarded, vest and become exercisable when each of three (3) Bona Fide Licensing / Collaboration Transactions are entered into with the Company. A Bona Fide transaction is defined as a license, joint venture or other collaboration for a specific biologicalbiologic with the intent to commercialize and/or a license agreement that generates a cumulative five million dollars in non-refundable cash, or when either the vaccine or biologics pharmaceutical business categories are sold. On November 12, 2019, the Company entered into an amendment (the “Amendment”) to the Emalfarb Agreement. Pursuant to the Amendment, the stock options to be awarded to Mr. Emalfarb upon the Company entering into a first or second licensing and/or collaboration transaction, as provided in the Emalfarb Agreement, shall each be awarded on the date of the relevant licensing and/or collaboration transaction and shall each have a fixed exercise date on the tenth anniversary of the date of grant.
Severance Terms. Mr. Emalfarb will be eligible for severance benefits comparable to other executives at his level. In addition, if Mr. Emalfarb’s employment is terminated by the Company without cause, by Mr. Emalfarb for good reason, or due to Mr. Emalfarb’s death or disability, then the Company shall fulfill its obligations as for annual base salary through the effective date of termination and he will be entitled to receive his accrued but unpaid vacation through the date thereof plus, in the sole discretion of the Compensation Committee, the 2016, 2017, 2018 Maximum Option Bonus and performance incentive for the period January through June 21, 2019 may be awarded. In addition, all of Mr. Emalfarb’s unvested Stock Exchange Stock Options and Licensing/Collaboration Transaction Stock Options will vest immediately in the event milestones for which the options would have been awarded are achieved within one year from the date of termination or upon a change of control.
Change of Control. In the sole discretion of the Compensation Committee, Mr. Emalfarb may be awarded an additional bonus on or before the occurrence of a change of control.
Side Letter. In connection with the execution of the Emalfarb Agreement, the Company and Mr. Emalfarb entered into a separate agreement (the “Side Letter”) under which the Company agreed to pay Mr. Emalfarb in monthly installments over the initial term of the Emalfarb Agreement, $1,335,000, equal to the amount of the severance payments that would have been payable under his previous employment agreement if Mr. Emalfarb resigned for “good reason” in connection with a change in control. All payments under this Side Letter have been made, and the Company has no additional obligation associated with this Side Letter as of June 2019.
Ping W. Rawson
In connection with Ping Rawson’s appointment as the Company’s Chief AccountingFinancial Officer in June 2019, the Board approved her base salary at $225,000 per year, which was increased to $231,750 per year in January 2020, which increase was consistent with annual increases for the majority of the Company’s Board of Directors approved compensation for Ms. Rawson as follows:employees. Ms. Rawson will be entitled to an annual base salary of $210,000 and she is eligible for aalso receive discretionary annual cash bonuses and other equity compensation as determined by the Company.
For fiscal year 2019, Ms. Rawson received stock option grants to purchase 100,000 shares of common stock for her annual performance in January 2019 and additional 25,000 options associated with her promotion to the CFO in June 2019. Ms. Rawson also received a cash bonus up to 100,000 stock options priced atof $56,250 based on her annual performance.
In connection with Ms. Rawson’s appointment as the grant date. In addition,Company’s Accounting Officer in March 2018, the Company granted Ms. Rawson a sign-on award of 50,000 stock options that will vest annually in equal installments over four years, and a conditional award of 50,000 stock options that willwould vest upon the Company’s becoming an SEC reporting entity. SuchIn November 2018, the Company granted Ms. Rawson a special performance-based award of 125,000 options, will automaticallywhich would vest if for any reasonupon the Board determines notCompany’s successful uplisting to pursue SEC registrationthe NASDAQ or in the event of a change of control.national stock
exchange. Ms. Rawson will be eligible for sixtwelve (12) months of severance benefits, if her services are no longer required due to a change of control or any reason other than for cause. Such severance benefits will increase to twelve months, one year from the effective dateA total of 175,000 of the agreement oroptions vested upon the Company becoming an SEC reporting entity whichever occurs first.and listing on the NASDAQ in 2019.
Ronen Tchelet, Ph.D.
We entered into a consulting agreement with Sky Blue Biotech kft, dated January 1, 2016 (the “Sky Blue Biotech Agreement”), to engage Mr. Tchelet to serve as our Vice President of Research and Business Development. The engagement term of the Sky Blue Biotech Agreement is one year and will renew annually on the anniversary date of the agreement, unless the Company or Mr. Tchelet provides notice of non-renewal any time after the one year anniversary date with not less than 90 days’ notice. Mr. Tchelet is subject to an annual performance evaluation and adjustment of his base consulting fees, in the sole discretion of the Company. Mr. Tchelet’s will be paid at the rate ofTchelet was compensated EUR €180,000 per annum in 2018 for the consulting services provided, which was increased to EUR €185,400 per annum in January 2019, and heto EUR €190,962 in January 2020, which increase was consistent with annual increases for the majority of the Company’s employees.
Mr. Tchelet is also eligible for a discretionary annual target bonus of up to 40% of his base contract amount if specific performance targets are met. For fiscal year 2019, Mr. Tchelet received a cash bonus of EUR €37,080. For fiscal years 2019 and 2018, Mr. Tchelet received stock option grants to purchase 75,000 and 100,000 shares of common stock for his annual performance, respectively. All options granted to Mr. Tchelet for fiscal years 2019 and 2018 vest upon the one-year anniversary and have a ten-year term from the date of grant.
During the engagement period, Mr. Tchelet shall be entitled to reimbursement of all business travel, entertainment and other business expenses reasonably incurred in the performance of his duties for the Company. Additionally, if the Company enters into a licensing agreement or research
and development agreement sourced and developed by Mr. Tchelet during the engagement period, Mr. Tchelet shall receive the following: (i) a commission of up to 1% of the up-front licensing revenue and (ii) a commission of up to 2.5% of the research and development revenue. Commissions will be paid quarterly within 30 days of the Company’s receipt of payment. On January 19, 2016, the Company granted Mr. Tchelet a stock option to purchase 200,000 shares of the Company’s common stock at $1.57 per share. The stock option was granted for a ten-year term and vests in four equal annual installments. On January 3, 2017, the Company granted Mr. Tchelet a stock option to purchase 50,000 shares of the Company’s common stock at $1.63 per share. On January 2, 2018, the Company granted Mr. Tchelet a stock option to purchase 60,000 shares of the Company’s common stock at $1.39 per share. The stock options granted in 2017 and 2018 have a ten-year term and vest in one year.
Mr. Tchelet is subject to certain restrictive covenants, including Company ownership of Mr. Tchelet’s work product which shall remain the sole and exclusive property of the Company, non-disclosure for five years following the date of execution of the agreement or for three years following the termination of agreement whichever is last to occur, and non-solicitation for five years following the termination of the Sky Blue Biotech Agreement.
Matthew S. Jones
We entered into a consulting agreement with Novaro Ltd. dated March 31, 2017 (the “Novaro“Jones Consultant Agreement”) to engage Mr. Jones as our Managing Director Business Development and Licensing. The engagement term of the Jones Consultant Agreement is one year and will renew annually on the anniversary date of the agreement, unless the Company or Novaro Ltd. provides notice of non-renewal any time after the first annual anniversary date with then not less than 90 days’ notice. Mr. Jones is subject to an annual performance evaluation and adjustment of his base consulting fees, in the sole discretion of the Company. Mr. Jones will be paidwas compensated GBP £203,528 per annum in 2018 for the consulting services provided, which was increased to GBP £209,634 per annum in January 2019, and heto GBP £215,923 in January 2020, which increase was consistent with annual increases for the majority of the Company’s employees.
Mr. Jones is also eligible for a discretionary annual target bonus of up to 40% of the base contract value if specific performance targets are met as specified in the NovaroJones Consultant Agreement. For fiscal year 2019, Mr. Jones received a cash bonus of GBP £62,890. For fiscal years 2019 and 2018, Mr. Jones received stock option grants to purchase 50,000 and 100,000 shares of common stock for his annual performance, respectively. In March 2018, the Company granted Mr. Jones a special award of 50,000 stock options in recognition of his achievements in business development. All options granted to Mr. Jones during fiscal years 2019 and 2018 vest upon the one-year anniversary and have a ten-year term from the date of grant.
During the engagement period, Mr. Jones shall be entitled to reimbursement of all business travel, entertainment and other business expenses reasonably incurred in the performance of his duties on behalf of the Company. On January 3, 2017, the Company granted Mr. Jones a stock option to purchase 40,000 shares of the Company’s common stock at $1.63 per share. On January 2, 2018, the Company granted Mr. Jones a stock option to purchase 50,000 shares of the Company’s common stock at $1.39 per share. The stock options granted in 2017 and 2018 have a ten-year term and vest in one year.
Mr. Jones is subject to certain restrictive covenants, including Company ownership of Mr. Jones’ work product which shall remain the sole and exclusive property of the Company, non-disclosure for five years following the date of execution of the agreement or for three years following the termination of agreement whichever is last to occur, and non-solicitation for five years following the termination of agreement.
Outstanding Equity Awards at Fiscal Year-End
The following table summarizes the outstanding equity award holdings held by our “named executive officers” (as defined by the SEC’s disclosure requirements) at December 31, 2018.2019.
| | | | | Option Awards | | Stock Awards | | | Option Awards | | | Stock Awards | |
| | | Number of
Securities
Underlying
Unexercised
Options | | Number of
Securities
Underlying
Unexercised
Options | | Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned | | Option
Exercise | | Option | | Number
of
Shares
or Units
of
Stock
That
Have
Not | | Market
Value
of
Shares
or
Units
of
Stock
That
Have
Not | | Equity
Incentive
Plan
Awards:
Number
of
Unearned
Shares,
Units or
Other
Rights
That
Have Not | | Equity
Incentive
Plan
Awards:
Market
or Payout
Value of
Unearned
Shares,
Units or
Other
Rights
That
Have Not | | | Number of
Securities
Underlying
Unexercised
Options | | Number of
Securities
Underlying
Unexercised
Options | | Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned Options | | 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 | | Equity
Incentive
Plan
Awards:
Number
of
Unearned
Shares,
Units or
Other
Rights
That
Have Not Vested | | Equity
Incentive
Plan
Awards:
Market
or Payout
Value of
Unearned
Shares,
Units or
Other
Rights
That
Have Not Vested |
| Name | | Exercisable (#) | | Unexercisable (#) | | Options
(#) | | Price
($) | | Expiration
Date | | Vested
(#) | | Vested
($) | | Vested
(#) | | Vested
($) | Name | | (#) exercisable | | (#) unexercisable | | (#) | | ($) | | | | (#) | | ($) | | (#) | | ($) |
| Mark A. Emalfarb | | 50,000 |
| | — |
| | — |
| | $ | 1.71 |
| | 4/13/2019 | | — | | — |
| | — | | — | Mark A. Emalfarb | | 100,000 | | | — | | | — | | | 1.67 | | | 6/20/2021 | | — | | | — | | | — | | | — | |
| | | 100,000 |
| | — |
| | — |
| | $ | 1.67 |
| | 6/20/2021 | | — | | — |
| | — | | — | | | 400,000 | | | — | | | — | | | 1.67 | | | 6/20/2021 | | — | | | — | | | — | | | — | |
| | (1) | — |
| | — |
| | 400,000 |
| | $ | 1.67 |
| | 6/20/2021 | | — | | — |
| | — | | — | | | 150,000 | | | — | | | — | | | 1.63 | | | 1/3/2022 | | — | | | — | | | — | | | — | |
| | | 150,000 |
| | — |
| | — |
| | $ | 1.63 |
| | 1/3/2022 | | — | | — |
| | — | | — | | | 270,000 | | | — | | | — | | | 1.39 | | | 1/2/2023 | | — | | | — | | | — | | | — | |
| | | 270,000 |
| | — |
| | — |
| | $ | 1.39 |
| | 1/2/2023 | | — | | — |
| | — | | — | | | 300,000 | | | — | | | — | | | 1.87 | | | 1/2/2024 | | — | | | — | | | — | | | — | |
| Ping W. Rawson | (2) | 12,500 |
| | 12,500 |
| | — |
| | $ | 1.62 |
| | 6/26/2026 | | — | | — |
| | — | | — | Ping W. Rawson | (1) | 18,750 | | | 6,250 | | | — | | | 1.62 | | | 6/26/2026 | | — | | | — | | | — | | | — | |
| | (2) | 2,973 |
| | 8,917 |
| | — |
| | $ | 1.63 |
| | 1/3/2027 | | — | | — |
| | — | | — | | (1) | 5,945 | | | 5,945 | | | — | | | 1.63 | | | 1/3/2027 | | — | | | — | | | — | | | — | |
| | (2) | — |
| | 30,000 |
| | — |
| | $ | 1.39 |
| | 1/2/2028 | | — | | — |
| | — | | — | | (1) | 7,500 | | | 22,500 | | | — | | | 1.39 | | | 1/2/2028 | | — | | | — | | | — | | | — | |
| | (2) | — |
| | 50,000 |
| | — |
| | $ | 1.44 |
| | 3/19/2028 | | — | | — |
| | — | | — | | | 50,000 | | | — | | | — | | | 1.44 | | | 3/19/2028 | | — | | | — | | | — | | | — | |
| | (1) | — |
| | — |
| | 50,000 |
| | $ | 1.44 |
| | 3/19/2028 | | — | | — |
| | — | | — | | (1) | 12,500 | | | 37,500 | | | — | | | 1.44 | | | 3/19/2028 | | — | | | — | | | — | | | — | |
| | (3) | — |
| | — |
| | 125,000 |
| | $ | 1.76 |
| | 11/16/2028 | | — | | — |
| | — | | — | | | 125,000 | | | — | | | — | | | 1.76 | | | 11/16/2028 | | — | | | — | | | — | | | — | |
| | | (1) | — | | | 100,000 | | | — | | | 1.87 | | | 1/2/2029 | | — | | | — | | | — | | | — | |
| | | | 25,000 | | | — | | | — | | | 6.26 | | | 6/28/2029 | | — | | | — | | | — | | | — | |
| Ronen Tchelet, Ph.D. | | 100,000 |
| | — |
| | — |
| | $ | 1.41 |
| | 4/30/2024 | | — | | — |
| | — | | — | Ronen Tchelet, Ph.D. | (1) | 150,000 | | | 50,000 | | | — | | | 1.57 | | | 1/18/2026 | | — | | | — | | | — | | | — | |
| | (4) | 100,000 |
| | 100,000 |
| | — |
| | $ | 1.57 |
| | 1/18/2026 | | — | | — |
| | — | | — | | | 50,000 | | | — | | | — | | | 1.63 | | | 1/3/2027 | | — | | | — | | | — | | | — | |
| | | 50,000 |
| | — |
| | — |
| | $ | 1.63 |
| | 1/3/2027 | | — | | — |
| | — | | — | | | 60,000 | | | — | | | — | | | 1.39 | | | 1/2/2028 | | — | | | — | | | — | | | — | |
| | (4) | — |
| | 60,000 |
| | — |
| | $ | 1.39 |
| | 1/2/2028 | | — | | — |
| | — | | — | | (2) | — | | | 100,000 | | | 1.87 | | | 1/2/2029 | | — | | | — | | | — | | | — | |
| Matthew S. Jones | | 40,000 |
| | — |
| | — |
| | $ | 1.63 |
| | 1/3/2027 | | — | | — |
| | — | | — | Matthew S. Jones | | 40,000 | | | — | | | — | | | 1.63 | | | 1/3/2027 | | — | | | — | | | — | | | — | |
| | (4) | — |
| | 50,000 |
| | — |
| | $ | 1.39 |
| | 1/2/2028 | | — | | — |
| | — | | — | | | 50,000 | | | — | | | — | | | 1.39 | | | 1/2/2028 | | — | | | — | | | — | | | — | |
| | (4) | — |
| | 50,000 |
| | — |
| | $ | 1.44 |
| | 3/19/2028 | | — | | — |
| | — | | — | | | 50,000 | | | — | | | — | | | 1.44 | | | 3/19/2028 | | — | | | — | | | — | | | — | |
| | | (2) | — | | | 100,000 | | | — | | | 1.87 | | | 1/2/2029 | | — | | | — | | | — | | | — | |
are immediately vested. The 401(k) Plan provides a safe harbor basic match contribution for all eligible employees who make salary deferrals. The match contribution is equal to 100% of the employee’s salary deferral up to 4% of such employee’s annual deferred compensation. This match contribution is credited to the employee’s account and is 100% vested.vested at the time of contribution.
Our Nominating Committee is charged with identifying, evaluating and recommending director nominees to the full board of directors.Board. There are no minimum qualifications for director.nomination of directors. The Nominating Committee generally seeks individuals with broad experience at the policy-making level in business, or with particular industry expertise. While we do not have a formal diversity policy for board membership, we look for potential candidates that help ensure that the board of directorsBoard has the benefit of a wide range of attributes. We believe that all of our directors should be committed to enhancing shareholder value and should have sufficient time to carry out their duties and to provide insight and practical wisdom based on experience. Each director must also represent the interests of all shareholders.
The following information is given with respect to the nominees for election as Class IIII directors at the Annual Meeting:
at Pfizer was Vice-President, Biotherapeutics Pharmaceutical Sciences External Affairs and Biosimilar Strategy with responsibility for external sourcing, competitive intelligence and external influencing as well as for executing the technical development plan for Pfizer’s entry into biosimilars. He is widely recognized as a Key Thought Leader in the biopharmaceutical industry. Dr. Bose has served as the Chair of the Biologics and Biotechnology Leadership Committee of the Pharmaceutical Research and Manufacturers of America (PhRMA), the chief advocacy arm of the US pharmaceutical industry. His outstanding accomplishments and service to the profession have been recognized by his election as “Fellow” of 3 leading professional organizations: American Chemical Society, American Institute of Chemical Engineers and American Institute for Medical and Biological Engineering. Dr. Bose was elected to the US National Academy of Engineering in February 2017 for innovative research in biologics manufacturing. Dr. Bose currently provides consulting services in bioprocessing to several start-up biotechnology companies.companies including a part-time process development management role at Akero Therapeutics (NASDAQ: AKRO). He received a Ph.D. in chemical engineering from Purdue University, a M.S. from the University of Michigan, Ann Arbor and a B. Tech from the Indian Institute of Technology, Kanpur.
Jack L. Kaye joined Dyadic’s board of directorsthe Board in May 2015 and currently serves as chairman of the Company’s audit committee.Audit Committee. He also serves on the Company’s compensation committee.Compensation Committee. Mr. Kaye is currently the Chairman of the audit committee and a member of the compensation committee and special transaction pricing committee of uniQure B.V. where he has served since May 2016. Mr. Kaye’s prior board service includes Keryx Biopharmaceuticals Inc., a position he has held from 2006 to May 2016 where he served as Chairman of the audit committee and he was also a member of their nominating and governance committee. He also served on the boards of Tongli Pharmaceuticals (USA) Inc. and Balboa Biosciences, Inc., where he served as Chairman of both audit committees. In the past, Mr. Kaye was selected to participate on several dissident board slates which included the Astellas, Inc./OSI, Roche Pharmaceuticals, Inc./Illumina and the Horizon, Inc./Depomed hostile M&A transactions. Mr. Kaye was a partner at Deloitte LLP from 1978 until May 2006, when he retired. At Deloitte, Mr. Kaye was responsible for serving a diverse client base of public and private, global and domestic companies in a variety of industries. Mr. Kaye has extensive experience consulting with clients on accounting and reporting matters, private and public debt financings, SEC rules and regulations and corporate governance/ Sarbanes-Oxley issues. In addition, he has served as Deloitte’s Tristate liaison with the banking and finance community and assisted clients with numerous merger and acquisition transactions. Mr. Kaye served as Partner-in-Charge of Deloitte’s Tri-State Core Client practice, a position he held for more than twenty years. He earned a B.B.A. from Baruch College and is a Certified Public Accountant.
Barry Buckland, Ph.D. joined Dyadic’s board of directorsthe Board in January 2018.2018 and currently serves on the Company's Science and Technology Committee. Dr. Buckland retired from Merck Research Laboratories in 2009 after 28 years of contributions to the Bioprocess R&D group, including more than 12 years as leader in the position of Vice President. Since leaving the Merck Research Laboratories, Dr. Buckland has headed up his own consulting company (BiologicB, LLC). He also is President of Engineering Conferences International (ECI), a not for profitnot-for-profit organization which organizes prestigious conferences with an engineering focus. Dr. Buckland has chaired successful conference
such as Microbial Engineering I and Vaccine Technology Conferences I to IV. He is also a visiting professor at University College London in the Biochemical Engineering Department and is the author or co-author of more than 70 publications. His previous Boardboard experience includes Enumeral Biomedical and Mucosis. Dr. Buckland was a Senior Advisor to Protein Sciences until they were purchased by Sanofi in 2017. Dr. Buckland became Executive Director of NIIMBL (National Institute for Innovation for Manufacturing Biopharmaceuticals) in 2017. Dr. Buckland was elected to the USA National Academy of Engineering in 1997. In 2008, Dr. Buckland was awarded the ACS Marvin Johnson award for Biotechnology. In 2009, Dr. Buckland was awarded the Discoverers Award by the Pharmaceutical Research and Manufacturers of America (PhRMA) for his role in the discovery and development of GARDASIL, an effective vaccine against HPV. He was one of three recipients.
Our directors hold office for terms of approximately three years or until the earlier of their death, resignation or removal or until their successors have been elected and qualified. Our officers are elected annually by the board of directorsBoard and serve at the discretion of the boardBoard (see Executive Officers). There are no family relationships among our directors and executive officers. Our directors have neither been convicted in any criminal proceeding during the past 10 years nor are parties to any judicial or administrative proceeding during the past 10 years that resulted in a judgment,
decree or final order enjoining them from future violations of, or prohibiting activities subject to, federal or state securities laws or a finding of any violation of federal or state securities laws or commodities laws. Similarly, no bankruptcy petitions have been filed by or against any business or property of any of our directors or officers, nor has any bankruptcy petition been filed against a partnership or business association in which these persons were general partners, directors or executive officers.
PROPOSAL 2: RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Mayer Hoffmann McCann P.C. (“MHM”), audited our consolidated financial statements for the year ended December 31, 2018.2019. We had no disagreements with MHM on accounting and financial disclosures. The audit committeeAudit Committee has appointed MHM to serve as our independent registered public accounting firm for the year ending December 31, 2019.2020. MHM has advised the Company that it has no direct or indirect financial interest in the Company. MHM leases substantiallySubstantially all of itsMHM’s personnel, who work under the control of MHM shareholders, fromare employees of wholly-owned subsidiaries of CBIZ, Inc. (“CBIZ”), which provides personnel and various services to MHM in an alternative practice structure.
The Audit Committee has reviewed the fees described below and concluded that the payment of such fees is compatible with maintaining MHM’s independence.
The following table presents fees billed, by our independent registered public accounting firm for professional services, in the years indicated, by category, as described in the notes to the table.
Our Audit Committee’s policy is to pre-approve all audit and permissible non-audit services provided by our independent auditors. These services may include audit services, audit-related services, tax services and other services. Pre-approval is generally provided for up to one year and any pre-approval is detailed as to the particular service or category of services. The independent auditor and management are required to periodically report to the Audit Committee regarding the extent of services provided by the independent auditor in accordance with this pre-approval. Any proposed services not included within the list of pre-approved services or any proposed services that will cause the Company to exceed the pre-approved aggregate amount requires specific pre-approval by the Audit Committee. All audit fees, audit-related fees, tax fees, and other fees listed in the table above were approved by the Audit Committee pursuant to its pre-approval policies and procedures.
The Company’s management has the primary responsibility for the Company’s financial statements and the reporting process, including disclosure controls and the system of internal control over financial reporting. The Audit Committee, in its oversight role has:
DYADIC INTERNATIONAL, INC.
