UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, Dc 20549
WASHINGTON, DC 20549_______________________
SCHEDULE 14A
_______________________
(Rule 14a-101)
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. ____)
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Filed by a Party other than the Registrant ☐
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£ | Definitive Additional Materials. |
£ | Soliciting Material Pursuant to |
On Track Innovations Ltd.
(Name of Registrant as Specified In Its Charter)
Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
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ON TRACK INNOVATIONS LTD.
NOTICE OF THE 20172020 ANNUAL GENERAL MEETING OF SHAREHOLDERS
TO BE HELD ON NOVEMBER 21, 2017
AUGUST 13, 2020
You are hereby notified that the 20172020 Annual General Meeting (the “Meeting”) of Shareholders of On Track Innovations Ltd. (the “Company”), will be held on Tuesday, November 21, 2017,Thursday, August 13, 2020, at 5:10:00 P.M.A.M., Israel time, at our offices, Z.H.R.Hatnufa 5, Yokneam Industrial Zone, Rosh Pina,Yokneam, Israel, 1200000 (the “2069200. However, we are actively monitoring developments with regard to the coronavirus, or COVID-19, and it is possible that the Meeting”), may be held solely by means of remote communication. In the event it is not possible or advisable to hold the Meeting in person, we will announce alternative arrangements for the meeting as promptly as practicable. We intend to hold the Meeting for the following purposes:
1. To consider and approve by a non-binding advisory vote, the compensation of our named executive officers, as described in the accompanying proxy statement;
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2. To conduct an advisory vote on the frequency of an advisory vote on the compensation of the Company’s named executive officers;
3. To appoint Kesselman & Kesselman, Certified Public Accountants (Isr.), a member firm of PricewaterhouseCoopers International Limited (“PwC”), as the Company’s independent registered public accounting firm to serve until the 2021 annual general meeting of shareholders, and to authorize the Company’s Board of Directors (the “Board”), upon the recommendation of our Audit Committee, to determine the remuneration of PwC in accordance with the volume and nature of their services;
4. To approve a framework for an insurance policy for such directors and officers of the Company (“D&O Insurance Policy”), as described in the accompanying proxy statement, for a period of three years commencing as of August 2020, as described in the accompanying proxy statement; and
5. To present the financial statements of the Company for the fiscal year ended December 31, 2019.
The Board recommends that you vote in favor of items 1, 3 and 4 above and “EVERY THREE YEARS” for item 2 3, 4 and 5 above. No vote is required for item 5.
Record Date and Right to Vote
The Board has fixed the close of business on October 13, 2017,Monday, July 6, 2020, as the record date for the Meeting (“Record Date”). Subject to the provisions of Israeli law and the Company’s Amended and Restated Articles of Association (the “Articles of Association”), only shareholders on the Record Date are entitled to notice of and to vote at the Meeting and at any adjournment or postponement thereof.
All shareholders that are entitled to notice and to vote at the Meeting are cordially invited to attend the Meeting. If your shares are registered in your name, please bring the admission ticket attached to your proxy card. If your shares are registered in the name of a broker, trust, bank or other nominee, you will need to bring a proxy or a letter from that broker, trust, bank or other nominee or your most recent brokerage account statement, that confirms that you are the beneficial owner of those shares as of the Record Date (“Proof of Ownership”). If you do not have either an admission ticket or Proof of Ownership, you will not be admitted to the Meeting.
Important Notice Regarding the Availability of Proxy Materials
August13, 2020: http://www.otiglobal.com/agm and on our proxy agent’s website at www.proxyvote.com.
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Your vote is important regardless of the number of shares you own. You may vote by telephone or over the internetInternet on our proxy agent’s website at www.proxyvote.com until the Cut-OffCut-Off Date (as defined below) by following the instructions included on the enclosed proxy card. If you are not voting by phone or internet,Internet, the Company requests that you complete, sign, date and return the enclosed proxy card without delay and no later than the Cut-OffCut-Off Date described below in the enclosed postage-paidpostage-paid return envelope, even if you now plan to attend the Meeting. You may revoke your proxy at any time prior to its exercise by delivering written notice or another duly executed proxy bearing a later date to the SecretaryChief Executive Officer of the Company, or by attending the Meeting and voting in person. We will not be able to count a proxy card unless we receive it at our principal executive offices at Z.H.R.Hatnufa 5, Yokneam Industrial Zone, P.O. Box 32, Rosh-Pina,Yokneam, Israel, 1200000,2069200, or at the office of our proxy agent,Broadridge Financial Solutions Inc. at Vote Processing, c/o Broadridge, 51 Mercedes Way Edgewood, NY 11717, in the enclosed envelope, by Saturday, November 18, 2017Monday, August 10, 2020 at 5:10:00 P.M.A.M. Israel time, which is November 18, 2017August 10, 2020 at 10:3:00 A.M. Eastern Time (the “Cut-OffCut-Off Date”).
IMPORTANT: If your shares are held in the name of a brokerage firm, bank, nominee or other institution, you should provide instructions to your broker, bank, nominee or other institution on how to vote your shares, otherwise your broker, nominee or other institution may have the right to vote on the matters contained in the proxy pursuant to its sole discretion. Please contact the person responsible for your account and give instructions for a proxy to be completed for your shares.
By order of the Board, | ||
/s/ | ||
James Scott Medford Chairman of the Board of Directors |
July 9, 2020
October 16, 2017
IMPORTANT: In order to secure a quorum and to avoid the expense of additional proxy solicitation, please sign, date and return your proxy promptly and no later than the Cut-OffCut-Off Date, in the enclosed envelope even if you plan to attend the meeting personally. Your cooperation is greatly appreciated.
ON TRACK INNOVATIONS LTD.
Z.H.R.
Hatnufa 5, Yokneam Industrial Zone
Yokneam, Israel, 2069200
Rosh Pina, Israel, 1200000
PROXY STATEMENT
INTRODUCTION
This proxy statement and the accompanying proxy card are being sent by On Track Innovations Ltd. (the “Company,” “our,” “us” or “we”) to the holders of record of the Company’s outstanding ordinary shares on October 13, 2017July 6, 2020 (the “Record Date”). The Record Date has been fixed by the Company’s Board of Directors as described hereunder. The accompanying proxy is being solicited by the Board of Directors of the Company (the “Board”), for use at our 20172020 Annual General Meeting (the “Meeting”), to be held on Tuesday, November 21, 2017,Thursday, August 13, 2020, at 5:10:00 P.M.A.M. Israel time, at our offices, Z.H.R.Hatnufa 5, Yokneam Industrial Zone, Rosh Pina,Yokneam, Israel, 12000002069200 and at any adjournment or postponement thereof. However, we are actively monitoring developments with regard to the coronavirus, or COVID-19, and it is possible that the Meeting may be held solely by means of remote communication. In the event it is not possible or advisable to hold the Meeting in person, we will announce alternative arrangements for the Meeting as promptly as practicable. The cost of solicitation of proxies will be borne by the Company. Directors, officers and employees of the Company may also assist in the solicitation of proxies by mail, telephone, telefax, in person or otherwise, without additional compensation. Brokers, custodians and fiduciaries will be requested to forward proxy soliciting materials to the owners of the Ordinary Shares held in their names and the Company will reimburse them for their reasonable out-of-pocketout-of-pocket expenses incurred in connection with the distribution of such proxy materials.
The Board has fixed October 13, 2017July 6, 2020 as the Record Date for the Meeting. Only shareholders of record on the Record Date are entitled to notice of and to vote at the Meeting or any adjournment or postponement thereof. On October 13, 2017,July 6, 2020, there were 41,134,37853,824,377 outstanding Ordinary Shares. Each Ordinary Share is entitled to one vote per share. Subject to the provisions of Israeli law and pursuant to the Articles of Association of the Company, no business may be transacted at any shareholder meeting unless a quorum is present when the meeting begins. The quorum required for a meeting of shareholders is at least two shareholders present in person or by proxy, holding in the aggregate at least one third (33 1/3%) of the issued and outstanding Ordinary Shares as of the Record Date (the “Quorum”). Abstentions will not be counted with respect to the items below, but will be counted in determining if a Quorum is present. Broker non-votes,non-votes, as defined below, are counted in determining if a Quorum is present.
All Ordinary Shares represented in person or by valid proxies received by the Company prior to the Cut-OffCut-Off Date (as defined below), and not revoked, will be voted as specified in the proxies or voting instructions. Votes that are left blank will be voted as recommended by the Board. With regard to other matters that may properly come before the Meeting, votes will be cast at the discretion of the proxies.
Broker non-votesnon-votes occur when a beneficial owner of shares held in “street name” does not give instructions to the broker or nominee holding the shares as to how to vote on matters deemed “non-routine.“non-routine.” Generally, if shares are held in street name, the beneficial owner of the shares is entitled to give voting instructions to the broker or nominee holding the shares. If the beneficial owner does not provide voting instructions, the broker or nominee can still vote the shares with respect to matters that are considered to be “routine,” but not with respect to “non-routine”“non-routine” matters. In the event that a broker, bank, or other agent indicates on a proxy that it does not have discretionary authority to vote certain shares on a non-routinenon-routine proposal, then those shares will be treated as broker non-votes.non-votes. Because Items No. 1, 2 3 and 4 in this proxy statement are non-routinenon-routine proposals, your broker, bank or other agent will not be entitled to vote on these proposals without your instructions. Item No. 53 is a routine proposal, so
your broker, bank or other agents will be entitled to vote on those proposalsthat proposal without your instruction. No vote is required for Item No. 6.5.
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Any shareholder who has submitted a proxy may revoke it at any time before it is voted, by written notice addressed to and received by our Secretary,Chief Executive Officer, by submitting a duly executed proxy bearing a later date, but not after the Cut-OffCut-Off Date, or by electing to vote in person at the Meeting. The mere presence at the Meeting of the person appointing a proxy does not, however, revoke the appointment.
We will not be able to count a proxy card unless we receive it at our principal executive offices at Z.H.R.Hatnufa 5, Yokneam Industrial Zone, P.O. Box 32, Rosh Pina,Yokneam, Israel, 1200000,2069200, or at our proxy agent, Broadridge Financial Solutions Inc. at Vote Processing, c/o Broadridge, 51 Mercedes Way Edgewood, NY 11717, in the enclosed envelope, by Saturday, November 18, 2017,Monday, August 10, 2020, at 5:10:00 P.M.A.M. Israel time, which is Saturday, November 18, 2017Monday, August 10, 2020 at 10:3:00 A.M. Eastern Time (“Cut-OffCut-Off Date”). You may also vote by telephone or over the Internet on our proxy agent’s website at www.proxyvote.com until the Cut-OffCut-Off Date by following the instructions included on the enclosed proxy card.
Our website address and our proxy agent’s website address are included several times in this proxy statement as a textual referencereferences only, and the information in these websites is not incorporated by reference into this proxy statement.
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ITEM NO. 1 – ELECTION OF DIRECTORS
Introduction
The number of our directors is currently fixed at five with three directors having terms that expire at the Meeting, one with a term that expires in January 2019 and another with a term that expires at the General Meeting that will take place after December 15, 2019. The Board has nominated Mr. William C. Anderson III, Mr. James Scott Medford, and Mr. Michael Soluri, each of whom currently serves as a director, to be our Director Nominees. Shareholders will be asked to elect each of the said Director Nominees to hold office starting on the date of the Meeting until our next General Meeting following three years from their election. The enclosed proxy, if returned, and unless indicated to the contrary, will be voted for the election of each of the Director Nominees.
We have been advised by each of the Director Nominees that he is willing to be named as a nominee and each is willing to serve as a director if elected. If some unexpected occurrence should make necessary, in the discretion of the Board, the substitution of some other person for the nominees, it is the intention of the persons named in the proxy to vote for the election of such other person as may be designated by the Board.
Furthermore, as required by the Israeli Companies Law of 1999 (the “Companies Law”), all Director Nominees have declared in writing that they possess the requisite skills and expertise, as well as sufficient time, to perform their duties as a director of the Company.
The names of each current member of our Board, our executive officers, and their ages as of the Record Date, are as follows:
Director Nominees
William C. Anderson III was elected as an External Director under the Companies Law in 2014 to hold office for a three-year term that commenced on May 26, 2014. On May 24, 2017, Mr. Anderson was reappointed to serve as a Director until the Meeting. Mr. Anderson is the founder of AmpThink LLC, a wireless solutions company focused on building large, complex, wireless networks employing different technologies including low and high frequency RFID, wireless bridging, WiFi, near field communications and Bluetooth. AmpThink has led the delivery of networks for three recent major American football sporting events. Mr. Anderson has been acting as Chief Executive Officer of AmpThink LLC since its incorporation in 2011. Prior to AmpThink, Mr. Anderson was co-founder of Genesta, a wireless systems integrator specializing in the design and deployment of warehouse automation systems, where from 2000 to 2011, Mr. Anderson acted as Chief Technology Officer. In this position, Mr. Anderson helped create solutions for clients such as Con Edison, Frito-Lay, and Sara Lee. Mr. Anderson holds a degree in Economics and Philosophy from Boston College and a Master’s degree in Management Science from The State University of New York at Oswego.
The Company believes Mr. Anderson’s qualifications including his years of experience in the high-tech industry and network solutions business, as well as his experience as Chief Technology Officer and Chief Executive Officer of private American companies, make him suitable to serve as a director of the Company.
James Scott Medford was appointed as a director and as Chairman of our Board of Directors on January 15, 2017 to hold office until the Meeting. Mr. Medford has over 35 years of experience in the fields of AIDC (automatic identification and data capture), encompassing early introduction to bar coding, wireless technology, speech recognition and RFID (Radio-Frequency Identification). From 1990 to 2006, Mr. Medford served as a Vice President at Intermec Technologies, where he developed various departments. During 2006, Mr. Medford was a partner at Genesta Partnership, which designs and deploys systems in manufacturing and logistics, where he also managed projects for Fortune 100 companies. From 2008 to 2015, Mr. Medford served as a Senior Vice President of Sales at Impinj, a manufacturer of RFID integrated circuits, devices and software. Since 2015, Mr. Medford has served as Chief Sales Officer at Invengo International Pte Ltd., a leading provider of RFID technology and solutions, focused on growing the American and European markets, mainly in the retail segments. Mr. Medford currently provides consulting services to numerous high tech solution companies and investment firms, and since 2015 has served as Chairman of LMC, Ltd, a UK based company providing solutions to the international rail and transportation industry.
The Company believes Mr. Medford’s operational executive management and board experience with global companies make him suitable to serve as a director and Chairman of the Board of Directors of the Company.
Michael Soluriwas appointed as a director on January 15, 2017 to serve until the Meeting. Mr. Soluri is a technology sales executive with expertise in global direct IT sales within the finance, manufacturing and retail industries and the internet of things field. From 1993 to 1995, Mr. Soluri served as the Sales Director of Ameriquest Technologies, a company digitizing existing processes. From 1995 to 1997, Mr. Soluri served as the Executive Sales Director of Siemens Data Communications, where he focused on smart switching technologies and intelligent data hub markets. From 1998 to 2015, Mr. Soluri served as the Executive Manager, Global Client Services at the Imaging, Software and Solutions Division of Lexmark International, and since 2016 has served as the Chief Revenue Officer and Vice President of EDM Group that focuses on information management for organizations.
The Company believes Mr. Soluri’s professional and corporate experience make him suitable to serve as a director of the Company.
There are no family relationships between any of our directors or executive officers.
Proposed Resolution
It is proposed that the following resolution be adopted at the Meeting:
“RESOLVED, to elect each of William C. Anderson III, James Scott Medford and Michael Soluri as a Director on the Board starting on the date of the Meeting until our next General Meeting following three years from their election.”
Required Vote
The affirmative vote of a majority of the Ordinary Shares voting on the matter is required to approve this resolution. The election of each director shall be voted separately. Since abstentions are not considered votes cast, they will have no impact on the outcome of this proposal. Broker non-votes will not impact the results of the vote on directors’ election, but will be counted for purposes of determining whether there is a quorum.
ITEM NO. 2 — APPROVAL OF AMENDMENT TO THE AMENDED AND RESTATED SHARE OPTION PLAN
Our Amended and Restated 2001 Stock Option Plan (the “Plan”) expired on February 28, 2016. As a result of the foregoing, following the approval of the compensation committee (the “Compensation Committee”) and the Board, the Company is seeking the approval of shareholders to amend the Plan, so that securities may be issued under the Plan from time to time until December 31, 2021.
General Description of the Current Plan
The following is a summary of the material provisions of the Plan, which is qualified in its entirety by the specific provision of the Plan, as amended, the full text of which is set forth inAppendix A to this proxy statement.
Purpose. The purpose of the Plan is to afford an incentive to officers, directors, employees and consultants of the Company, or any subsidiary of the Company which now exists or hereafter is organized or acquired by the Company, or any affiliate, to acquire a proprietary interest in the Company, to continue as employees, directors and consultants, to increase their efforts on behalf of the Company, to promote the success of the Company’s business and to attract new employees, directors or consultants, whose services are considered valuable.
Administration. The Plan is administered by our Compensation Committee, which makes recommendations to our Board regarding the grantees of options and the terms of the grant, including exercise prices, grant dates, vesting schedules, acceleration of vesting and forfeiture. Under the Plan, the terms and conditions of options are set forth in individual option agreements with the grantee.
Eligibility. Our employees, directors, consultants and service providers, and those of our subsidiaries and affiliates, are the persons eligible to participate in the Plan as recipients of options.
Shares Reserved. As of October 1, 2017, the aggregate number of outstanding options under the Plan is 1,393,500 of which 445,000 were issued between March 2016 and November 2016 (and currently cannot be exercised as a result of an agreement between various option holders and the Company whereby such holders have agreed not to exercise until the number of shares available under the Plan are increased) and an additional 844,006 options are available for grant under the Plan. If any outstanding option expires or is canceled or terminated, the shares allocable to the unexercised, canceled or terminated portion of such option shall become available for subsequent grants unless the Plan has been terminated.
Term and Exercisability. Usually, unless otherwise determined by the Compensation Committee and the Board, the options granted vest gradually over a period of between three to four years starting on the date of the grant and vesting in portions of 1/3-1/4 respectively of the total number of options granted each year. The options granted expire after a five year period and no grantee is entitled to exercise his or her options following the end of said five years period from the date of the grant.
Termination and Amendment. Under the Plan, if the employment or services of a grantee is terminated for cause, all of his or her options expire immediately. A grantee whose employment or services is terminated without cause may exercise within three months of termination his or her options that are vested at the time of termination. If the termination is due to the death or disability of the grantee, the options may be exercised within 18 months of the date of termination in the case of death and 12 months in the case of disability.
The Board may at any time amend, alter, suspend or terminate the Plan. However, no amendment, alteration, suspension or termination of the Plan shall impair the rights of any grantee, unless otherwise is mutually agreed in writing between the grantee and the Compensation Committee. Additionally, under NASDAQ rules, certain amendments that materially change the Plan are subject to approval by our shareholders. Before giving effect to the proposed amendment the Plan expired on February 28, 2016. After giving effect to the amendment to the Plan, the Plan will expire on December 31, 2021.
Exercise Price. The exercise price of the options granted under the Plan or any portion thereof is determined by the compensation committee, subject to the applicable law and any guidelines as may be determined by the Board from time to time.
Assignability and Sale. Unless otherwise provided in the Plan and/or in any appendix thereof, no option, whether fully paid or not, shall be assignable, transferable, given as a gift, pledged or any right with respect to them given to any third party whatsoever, and during the lifetime of the grantee each and all of such grantee’s rights to purchase Company’s shares are exercisable only by the grantee. Any such action made directly or indirectly, for an immediate validation or for a future one, is void, and any purported assignment, transfer or pledge of an option in contradiction to the provisions of the Plan will cause the option to immediately expire.
Adjustments. In the event of a transaction in which all or substantially all of the Company’s shares are to be exchanged for securities of another company, the shares underlying any grantee’s unexercised options shall be substituted with securities of the successor company, unless otherwise provided in the grantee’s option agreement.
Acceleration. Notwithstanding anything to the contrary in the Plan, the grantee is entitled to full acceleration of unvested options upon the grantee’s termination from the Company if such termination is due to certain Transactions, which are defined in the Plan and which include consolidation, merger, and the sale of substantially all of the Company’s assets, if such termination occurs in circumstances related to the Transaction, as further determined by the Compensation Committee.
Israeli Tax Matters. In accordance with the terms and conditions imposed by Section 102 of the Israel Income Tax Ordinance, (“Ordinance”), grantees subject to taxation by the State of Israel that receive options under the Plan (excluding grantees who previously received options that were incorporated upon the commencement of Amendment No. 132 of the Ordinance that was approved on July 24, 2002 and became effective on January 1, 2003, and those who are not employees or office holders and those who are our controlling shareholders) are afforded certain tax benefits. The Company elected the benefits available under the “capital gains” alternative. There are various conditions that must be met in order to qualify for these benefits, including registration of the options in the name of a trustee (the “Trustee”), for each of the Israeli employees who is granted options. Each such option, and any Ordinary Shares acquired upon the exercise of such option, must be held by the Trustee for a period commencing on the date of grant and ending no earlier than 24 months as of the end of the date in which the option was granted and deposited in trust with the Trustee or as of the end of such tax year (based on the time of grant). In the capital gains alternative a company may not recognize expenses pertaining to the options for tax purposes. We also grant our Israeli employees options pursuant to Section 102(c) of the Ordinance that are not held in trust by a trustee, which while enabling the immediate exercising and selling of options granted under the Plan, will be subject to the marginal tax rate up to 50% plus payments to the National Insurance Institute and health tax on the date of the sale of the shares or options. As of
January 1, 2003, Section 3(i) of the Ordinance was partially replaced by Section 102(c) and no longer applies to allocations of options to Israeli employees (including directors and office holders). Section 3(i) still applies and imposes taxes on individuals and entities subject to taxation in Israel who are not employees (such as consultants and service providers) and to employees who are considered “controlling shareholders.”
Tax consequences arising from the grant or exercise of any option, from the payment of shares underlying such option or from any other event or act under the Plan, are borne by the grantee of the option. The Company and/or its subsidiaries or any other person required by applicable law shall withhold tax as required by applicable law. Grantees shall indemnify the Company and/or its subsidiaries against liability for any such tax.
U.S. Tax Matters. The Company only issues awards under the Plan to Israeli residents and, as a result, the Plan generally does not implicate U.S. tax matters for the Company or award recipients.
Reasons for Adoption of the Plan Amendment
Since our Plan expired on February 28, 2016, but from March 2016 through November 2016, we inadvertently issued 445,000 options that are currently outstanding and unexercised, we need to extend the term of the Plan to allow the exercise of these options and issuance of additional options under the Plan. If the amendment to the Plan is not approved, the foregoing options will be cancelled and we will not be able to grant additional options under the Plan which could adversely affect our ability to attract and retain qualified personnel.
Awards under the Plan
Under the Plan, as of October 1, 2017, 14,212,494 options had been exercised and 1,393,500 options are outstanding including 605,168 exercisable. Of the options that are outstanding, as of October 1, 2017, 753,000 options are held by our directors and executive officers, and have a weighted average exercise price of $1.12 per share.
Awards under the Plan may be granted to our officers, directors, employees and consultants. Because the grants of awards under the Plan will be in the discretion of our Compensation Committee, it is not possible to determine the future awards that will be granted to executive officers or directors under the Plan if the amendment is approved. For information regarding option awards previously made to our named executive officers and directors under the Plan, see the sections entitled “Outstanding Equity Awards at Fiscal Year End” and “Director Compensation for 2016”, respectively, below. For information regarding option awards which the Company intends to make to its non-executive directors, see Item No. 3 below.
Securities Authorized for Issuance Under Equity Compensation Plans
The following table reflects certain information about our equity compensation plans as of December 31, 2016:
Plan Category | Number of securities to be issued upon exercise of outstanding options | Weighted-average exercise price of outstanding options | Number of securities remaining available for future issuance under equity compensation plans | |||||||||
Equity compensation plan approved by security holders | - | - | - | |||||||||
Equity compensation plan not approved by security holders | 1,604,836 | $ | 1.36 | 657,672 | ||||||||
Total | 1,604,836 | $ | 1.36 | 657,652 |
Proposed Resolution
It is proposed that the following resolution be adopted at the Meeting:
“RESOLVED,to approve an amendment to the Plan so that Options may be granted pursuant to the Plan from time to time until December 31, 2021, as specified in Appendix A.”
Required Vote
The affirmative vote of a majority of the shares voting on the matter is required to approve this resolution. Since abstentions are not considered votes cast, they will have no effect on the outcome of this proposal. Broker non-votes will not impact the results of the vote on the amendment to the Plan, but will be counted for purposes of determining whether there is a quorum.
ITEM NO. 3 — APPROVAL OF THE GRANT OF OPTIONS TO DIRECTOR NOMINEES
The Company wishes to grant to each of William C. Anderson III, James Scott Medford, and Michael Soluri (collectively, the “Director Nominees”) options to purchase up to 30,000 Ordinary Shares of the Company under the Plan, with an exercise price calculated according to the average closing price of the Company’s Ordinary Shares on NASDAQ during the 30 days prior to the date of grant. These options will vest over three years, commencing the date of the election of the Director Nominees (and subject to the election of the respective nominee), where 1/3 of the options shall vest at the end of each year following the vesting commencement date, provided that at such vesting date, the respective director holds office as a director and further subject to the terms of the Plan.
Under the Companies Law, such grants are subject to shareholder approval.
It is being clarified that even if Item No. 2 above will not be approved, but the grant of options stated herein is approved, then the grant of the said options will be in full force and effect and though not issued under the Plan, will be subject to the terms of the Plan with respect to exercise period, adjustments and other technical matters not stated herein.
Proposed Resolution
It is proposed that the following resolution be adopted at the Meeting:
“RESOLVED, to approve the grant of options to purchase up to 30,000 Ordinary Shares of the Company under the Plan to each of Mr. Anderson, Mr. Medford and Mr. Soluri, subject to the terms specified above.”
Required Vote
The affirmative vote of a majority of the shares voting on the matter is required to approve this resolution, provided either (i) included in such majority is at least a majority of the shares of shareholders who are non-controlling1
1 Under the Companies Law, in general, a person will be deemed to be a controlling shareholder if the person has the power to direct the activities of the Company, other than by reason of being a director or other office holder of the Company, and you are deemed to have a personal interest if any member of your immediate family (spouse, sibling, parent, grandparent or each of the foregoing with respect to your spouse or their spouse) has a personal interest in the adoption of the proposal. In addition, you are deemed to have a personal interest if a company, other than the Company, that is affiliated with you has a personal interest in the adoption of the proposal. Such company is a company in which you or a member of your immediate family serves as a director or chief executive officer, has the right to appoint a director or the chief executive officer, or owns 5% or more of the outstanding shares. You are also deemed to have a personal interest if you are voting other person’s shares pursuant to a proxy provided by the
shareholders and do not have a personal interest in said resolution; or (ii) the total number of shares of shareholders specified in clause (i) who voted against this resolution does not exceed two percent of the voting rights in the Company. Since abstentions are not considered votes cast, they will have no effect on the outcome of this proposal. Broker non-votes will not impact the results of the vote on the approval of the grant of options to our Director Nominees, but will be counted for purposes of determining whether there is a quorum.
ITEM NO. 4 — ADVISORY VOTE ON THE COMPENSATION OF OUR NAMED
EXECUTIVE OFFICERS (“SAY-ON-PAY VOTE”)
In accordance with the requirements of Section 14A of the Securities Exchange Act of 1934, as amended (the “Exchange Act”“Exchange Act”), and related rules of the Securities and Exchange Commission (the “SEC”), we are including a separate proposal subject to shareholder vote to approve, on a non-binding,non-binding, advisory basis, the compensation of our Named Executive Officers (as defined below) listed in the Summary Compensation Table as disclosed in this proxy statement pursuant to Item 402 of Regulation S-K.S-K. To learn more about our executive compensation, see “Compensation of Directors and Executive Officers” elsewhere in this proxy statement.
Our compensation policyCompensation Policy for our Named Executive Officers and other officers is designed to reward high performance and innovation, to promote accountability and to ensure that executive interests are aligned with the interests of our shareholders. The following is a summary of the primary components of our Named Executive Officers’ compensation. We urge our shareholders to review the “Compensation of Directors and Executive Officers” section of this proxy statement and related compensation tables for more information.
One component of our compensation program is base compensation or salary. We design base salaries to fall within a competitive range of the companies against which we compete for executive talent. Generally, the base salary established for an individual Named Executive Officer reflects many inputs, including our Chief Executive Officer’s assessment of the Named Executive Officer’s performance, the level of responsibility of the Named Executive Officer, and competitive pay levels based on salaries paid to employees with similar roles and responsibilities at our peer group companies.
Another component of our compensation program is cash bonuses. We structure our cash bonus award program to reward Named Executive Officers for our Company’s successful performance, and for each individual’s contribution to that performance.
A third component of our compensation program is equity awards. We grant share options to our Named Executive Officers in order to align their interests with the interests of our shareholders by tying the value delivered to our Named Executive Officers to the value of our Ordinary Shares. We also believe that share option grants to our Named Executive Officers provide them with long-termlong-term incentives that will aid in retaining executive talent by providing opportunities to be compensated through the Company’s performance and rewarding executives for creating shareholder value over the long-term.
long-term.
At our 20162019 annual meeting of shareholders held on December 15, 2016,May 14, 2019, we provided our shareholders with the opportunity to cast a non-bindingnon-binding advisory vote on executive compensation. Over 87%80% of the votes cast on this “say-on-pay“say-on-pay vote” were voted in favor of the proposal. We have considered the say-on-paysay-on-pay vote and we believe that strong support from our shareholders for the say-on-paysay-on-pay vote indicates that our shareholders are supportive of our approach to executive compensation. In the future, we will continue to consider the outcome of our say-on-paysay-on-pay votes when making compensation decisions regarding the Named Executive Officers. At our extraordinary shareholders meeting held in May 2014, our shareholders also voted in favor of the proposal to hold say-on-paysay-on-pay votes annually. We expect to conductare conducting the next advisory vote at our 2018 annual meeting of shareholders.
other person that has a personal interest, whether or not you have a discretion to voteon the shares. However, you are not deemed to have a personal interest in the adoption of the proposal if your interest in such proposal arises solely from your ownershipfrequency of the Company’s Ordinary Shares, or to a matter that is not related to a relationship with a controlling shareholder.
say-on-pay votes at the Meeting, as specified in Item No. 2 below.
The vote on this proposal is not intended to address any specific element of compensation; rather, the vote relates to the compensation of our Named Executive Officers, as described in this proxy statement in accordance with the compensation disclosure rules of the SEC. To the extent there is any significant vote against our Named Executive Officer compensation as disclosed in this proxy statement, the Compensation Committee of our Board will evaluate whether any actions are necessary to address the concerns of shareholders.
Our Board believes that the information provided in this proxy statement demonstrates that our Named Executive Officer compensation is designed to provide incentives and rewards for both our short-termshort-term and long-termlong-term performance, and is structured to motivate the Company’s Named Executive Officers to meet our strategic objectives, thereby maximizing total return to shareholders.
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Therefore, it is proposed that the following resolution be adopted at the Meeting:
“RESOLVED, to approve, on a non-bindingnon-binding advisory basis, the compensation of the Company’s Named Executive Officers, as disclosed pursuant to Item 402 of Regulation S-K,S-K, including the compensation tables and narrative discussion set forth in this proxy statement.”
Required Vote
The affirmative vote of a majority of the Ordinary Shares voting on the matter is required to approve this resolution, provided either (i) included in such majority is at least a majority of the Ordinary Shares of shareholders who are non-controlling2 shareholders nor having a personal interest in said resolution; or (ii) the total number of Ordinary Shares of shareholders specified in clause (i) who voted against this resolution does not exceed two percent of the voting rights in the Company.resolution. Since abstentions are not considered votes cast, they will have no effectimpact on the outcome of this proposal. Broker non-votesnon-votes will not impact the results of the vote on executive compensation, but will be counted for purposes of determining whether there is a quorum.
The Board recommends a vote FOR the approval, on a |
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ITEM NO. 2 — ADVISORY VOTE ON THE FREQUENCY OF AN ADVISORY VOTE ON THE
COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS (“FREQUENCY VOTE”)
In accordance with the requirements of Section 14A of the Exchange Act and related rules of the SEC, we are seeking an advisory, non-binding determination from our shareholders as to the future frequency with which shareholders would have an opportunity to provide an advisory approval of our Named Executive Officers’ compensation (“say-on-pay” vote). We are providing shareholders the option of selecting a frequency of one, two or three years, or abstaining.
The Board presently believes that future “say-on-pay” votes should occur every three years. The Board’s recommendation of a frequency of three years is a change from the annual “say-on-pay” votes that the Company has been having since 2014. The reasons for the change in the Board’s recommendation from every one year to every three years are the following: (i) this is the first time since 2014, that the Company is required to seek an advisory vote on the frequency of the “say-on-pay” vote, in accordance with the applicable rules, and accordingly, the first time that the Board has an opportunity to reconsider the annual frequency that was determined back in 2014; (ii) the Israeli Companies Law, 5759-1999 (the “Companies Law”), which applies to the Company, is much more strict than the Delaware or other U.S. states’ corporate law with respect to the manner in which compensation of the office holders of a company is approved and, in general, requires the approval of the company’s shareholders for the compensation of the company’s directors, chief executive officer and, in certain cases, other officers, as well as an approval of the shareholders of a company of a compensation policy; (iii) the Board believes that a three-year cycle for the advisory vote on executive compensation will reduce the administrative, compliance and other corporate expenses associated with holding “say-on-pay” votes more frequently (e.g., every year or every two years); and (iv) a three-year cycle will provide investors the most meaningful timing alternative by which to evaluate the effectiveness of our executive compensation strategies and their alignment with the Company’s business and results of operation.
Based on the above, we request that you indicate your support for triennial advisory vote on the compensation of our Named Executive Officers.
The frequency vote is advisory, and therefore not binding on the Company, the Compensation Committee or our Board. Shareholders are not being asked to approve or disapprove of the Board’s recommendation, but rather to indicate their own choice as among the frequency options.
Required Vote
The choice of frequency that receives the highest number of votes, from the holders of shares present in person or represented by proxy and entitled to vote, will be considered as the frequency that our shareholders are recommending for us to hold a non-binding, advisory vote on the compensation of our Named Executive Officers. Broker non-votes will not impact the results of the vote on the recommendation of frequency, but will be counted for purposes of determining whether there is a quorum.
The Board recommends a vote for “EVERY THREE YEARS” as the frequency for an advisory vote on executive compensation. |
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ITEM NO. 3 — APPOINTMENT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM AND
AUTHORIZATION OF AUDIT COMMITTEE DETERMINATION OF REMUNERATION
Our Audit Committee and Board have recommended that Somekh Chaikin, a member of KPMG International (“Somekh Chaikin”),PwC be appointedre-appointed as our independent registered public accounting firm to perform the audit of our consolidated financial statements until the 20182021 annual general meeting of shareholders. Somekh ChaikinPwC confirmed that they have no relationship with the Company or with any affiliate of the Company, except as auditors. A representative of Somekh ChaikinPwC is not expected to be present at the Meeting.
Shareholder approval of the appointment of Somekh ChaikinPwC as our independent registered public accounting firm to serve until the 20182021 annual general meeting of shareholders, is required under the Companies Law. Our Audit Committee and Board believe that such appointment is appropriate and in the best interests of the Company and its shareholders. Shareholder approval is further necessary under the Companies Law in order to delegate the authority to fix the remuneration of our independent registered public accounting firm. Subject to the approval of this proposal, the Board, with the recommendation of our Audit Committee, will fix the remuneration of Somekh ChaikinPwC in accordance with the volume and nature of their services to the Company.
2 See footnote 1 above.
Proposed Resolution
It is proposed that the following resolution be adopted at the Meeting:
“RESOLVED, to appoint Somekh Chaikin,Kesselman & Kesselman, Certified Public Accountants (Isr.), a member firm of KPMGPricewaterhouseCoopers International Limited (“PwC”), to serve as our independent registered public accounting firm until the 20182021 annual general meeting of shareholders,and to authorize the Board, upon the recommendation of our Audit Committee, to determine the remuneration of Somekh ChaikinPwC, in accordance with the volume and nature of their services.”
Required Vote
The affirmative vote of a majority of the Ordinary Shares voting on the matter is required to approve this resolution. AbstentionsSince abstentions are not considered votes cast, they will have no effectimpact on the outcome of this proposal. Because this is a routine matter, there will not be any broker non-votes.
non-votes.
The Board recommends a vote FOR the approval of the appointment of |
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ITEM NO. 6 -4 — APPROVAL OF A FRAMEWORK FOR A COMPANY’S
DIRECTORS AND OFFICERS INSURANCE POLICY
In order to induce individuals to serve as directors and officers of the Company, it is critical that the Company maintain adequate directors and officers insurance. Therefore, the Company believes that it is necessary to continue to procure insurance for its directors and officers.
At the Meeting, the Company’s Shareholders will be asked to approve a framework for an insurance policy for such directors and officers of the Company (“D&O Insurance Policy”), as described below, for a period of three years commencing as of August 2020.
It is proposed that the Company shall be entitled to purchase a D&O Insurance Policy for the directors and officers currently in office and other directors and officers as may be elected and/or appointed from time to time, including those who are controlling shareholders in the Company and their relatives (as such terms are defined in the Companies Law), all subject to the following terms:
(i) A liability coverage of up to $20 million for a single claim and for the entire period of the insurance and an annual premium of up to $250,000 with a 15% increase per year and with a deductible that shall not exceed $2,500,000 per claim;
(ii) The Company shall be entitled to purchase “run off” coverage for a period of up to seven years. The total premium for the run off coverage for the entire period of the insurance shall not exceed 300% of the last paid annual premium and the deductible shall not exceed $2,500,000 per claim;
(iii) The Company may extend the insurance policy in place to include coverage for liability pursuant to a public offering of securities, provided that the additional premium for such extension of liability coverage shall not exceed 50% of the current annual premium;
(iv) All insurance policies that will be purchased as aforesaid may include entity coverage for securities claims, insuring the Company itself for claims filed against the Company for the violation of laws regulating securities. This coverage shall include priorities for payment of any insurance benefits according to which the rights of the directors and officers to receive indemnity from the insurers shall take precedence over the right of the Company itself; and
(v) The Company shall be entitled to purchase any of the above insurances, including extending existing insurance policies, with the same insurer or another insurer, in Israel or abroad, provided that the terms of engagement are in arm’s length and that such engagement is not expected to have a material effect on the Company’s profitability, assets or liabilities.
The terms of the existing insurance policy (i.e., before approval of the above, if approved) of the directors and officers of the Company, is within the limitations of the terms included in the Company’s proposal set forth above. The Compensation Committee and the Board, who wish to adhere to the terms of the existing insurance policy (i.e., before approval of the above, if approved) of the directors and officers of the Company, have already approved this proposal and that the terms of the D&O Insurance Policy for all directors and officers (including the directors designated by Jerry L. Ivy, Jr., a controlling shareholder of the Company) are (i) within the limitations set forth in the Compensation Policy of the Company, and (ii) identical and on market terms and may not materially affect the Company’s profitability, assets or liabilities. The D&O Insurance Policy will cover the incumbent directors and officers of the Company, as well as directors and officers of the Company that will be appointed in the future, from time to time.
Proposed Resolution
It is proposed that the following resolution be adopted at the Meeting:
“RESOLVED, to approve a framework for an insurance policy for such directors and officers of the Company, as described in the proxy statement, for a period of three years commencing as of August 2020, as described in this proxy statement.”
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Required Vote
Approval of Proposal 4 requires the affirmative vote of shareholders present in person or by proxy and holding our Ordinary Shares amounting in the aggregate to at least a majority of the votes actually cast with respect to such proposal, in accordance with the provisions of Section 270(3) of the Companies Law and Section 1B(A)(5) of the Israeli Companies Regulations (Relief in Transactions with Interested Parties), 5760- 2000. Since abstentions are not considered votes cast, they will have no impact on the outcome of this proposal. Broker non-votes will not impact the results of the vote on this proposal, but will be counted for purposes of determining whether there is a quorum.
The Board recommends a vote FOR the approval of the D&O Insurance Policy, as described in the proxy statement, for a period of three years commencing as of August 2020, as described in this proxy statement. |
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ITEM NO. 5 — PRESENTATION OF 20162019 FINANCIAL STATEMENTS
The Company’s financial informationstatements for the year ended December 31, 2016, is2019, are contained in our Annual Report on Form 10-Kavailable at www.sec.gov (where the (the contents of the SEC’s website are not part of this proxy statement).
At the Meeting, the Company will review the audited consolidated financial statements for the year ended December 31, 2016,2019 and will answer appropriate questions relating thereto.
No vote will be required regarding this item.
CURRENT DIRECTORS
In addition to the Director Nominees, the following is information with respect to the rest of our current directors serving on the Company’s Board.
Donna Seidenberg Marks was appointed as an External Director under the Companies Law on November 2, 2015, effective January 1, 2016 to hold office for a three-year term. Ms. Seidenberg Marks is a Certified Public Accountant with a wide variety of experience serving clients in various industries over her 37 years in the practice of public accounting. From March 2011 through March 2014, Ms. Seidenberg Marks served as a director at the Fuoco Group, LLC, a certified public accounting firm that provides audit, tax and consulting services to its clients throughout its five locations in Florida and New York. Prior to joining the Fuoco Group, Mrs. Seidenberg Marks was the managing partner of her own firm, Donna Seidenberg, PA and served as a Managing Director at American Express Tax and Business Services (which merged into the international accounting firm of RSM International). Her practice includes performing audits, reviews and compilations of financial statements, preparing tax returns, and rendering consulting services, including forensic accounting and expert witness testimony in mediations and litigation matters in her areas of specialization. Her experience also includes consulting on Sarbanes-Oxley implementation. Ms. Seidenberg Marks is a frequent speaker at local and national meetings of the Community Associations Institute for which she serves on its National Business Partners Council, and is a past President and Treasurer of its local chapter. Ms. Seidenberg Marks earned a B.A. in Business Administration degree in Accounting (magna cum laude) from the University of South Florida in 1978, and is a member of the Florida Institute of Certified Public Accountants. The Company believes that Ms. Seidenberg Marks’ professional and corporate experience, as well as her knowledge and familiarity with corporate finance and accounting as an experienced Certified Public Accountant, make her suitable to serve as a director of the Company.
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Shlomi Cohen was elected as a director in December 2016 to hold office starting on December 15, 2016 until our next General Meeting following three years from his election. Mr. Cohen currently serves as the Company’s Chief Executive Officer. Prior to joining the Company, Mr. Cohen, served as president and Chief Executive Officer of RayV Technologies Ltd. from 2012 until it was acquired by Yahoo! in 2014. Prior to that and from 2010 to 2012, Mr. Cohen served as president of Europe Middle-East Africa for NICE Systems Ltd (Nasdaq: NICE). Mr. Cohen has also held sales positions with a number of leading technology companies, including Nokia (2007-2010), Siemens (2003-2007), BATM Advanced Communications (1998-2002) and Eldor Computers (1990-1995). Mr. Cohen holds an M.B.A. from the Bar Ilan University and a B.SC. in mechanical engineering from the Tel-Aviv University. The Company believes Mr. Cohen’s professional and corporate experience make him suitable to serve as a director of the Company.
EXECUTIVE OFFICERS
The following is information with respect to Company’s current executive officers who are not directors.
Shlomi Cohen is the Company’s Chief Executive Officer and a director nominee. For additional information, see page 11 above.
Yishay Curelaru was appointed as the Company’s Chief Financial Officer effective January 31, 2016. Prior to his appointment, Mr. Curelaru served as the Company’s controller and deputy Chief Financial Officer from July 2013, and oversaw the Company’s finance department in this capacity. Prior to joining the Company, Mr. Curelaru was a senior accountant at PricewaterhouseCoopers (PwC) beginning in 2011. Mr. Curelaru also served as a captain in the Special Forces of the Israeli Defense Forces from 2000 until 2005. Mr. Curelaru holds a B.A. in economics and accounting from the Ben-Gurion University of the Negev, and is a Certified Public Accountant in Israel.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information, to the best knowledge and belief of the Company, as of October 1, 2017July 6, 2020 (unless provided herein otherwise), with respect to holdings of our Ordinary Shares by (1) each person known by us to be the beneficial owner of more than 5% of the total number of shares of our Ordinary Shares outstanding as of such date; (2) each of our directors, including the Director Nominees;directors; (3) each of our Named Executive Officers (as defined below under “Summary Compensation Table”)(specified below); and (4) all of our current directors and our executive officers as a group.
AllUnless otherwise indicated below, all information with respect to the ownership of any of the below shareholders has been furnished by such shareholder and unless otherwise indicated below, we believe that the persons named in the table have sole voting and sole investment power with respect to all of the shares shown as owned, subject to community property laws, where applicable. The shares owned by the directors and executive officers include the shares owned by their family members to which such directors and executive officers disclaim beneficial ownership, as provided for below. If a shareholder has the right to acquire shares by exercising options currently exercisable or exercisable within 60 days of the date of this table, these shares are deemed outstanding for the purpose of computing the percentage owned by the specific shareholder (that is, they are included in both the numerator and the denominator), but they are disregarded for the purpose of computing the percentage owned by any other shareholder.
The information in the table below is based on 41,134,37853,824,377 Ordinary Shares outstanding as of October 1, 2017.July 6, 2020 and reflects number of shares owned. Unless otherwise indicated, the address of each of the individuals named below is: c/o On Track Innovations Inc., Z.H.R.Hatnufa 5, Yokneam Industrial Zone, P.O. Box 32, Rosh Pina, Israel.Yokneam, Israel, 2069200.
Name of beneficial owner | Position | Number of Ordinary Shares Beneficially Owned | % of Class | ||||
William C. Anderson III(1) | Director | 2,080,000 | 3.9 | % | |||
Leonid Berkovich | External Director | — | — |
| |||
Eran Gilad | Director | — | — |
| |||
Sandra Bjork Hardardottir(2) | Director | 511,203 | * |
| |||
James Scott Medford(3) | Director | 530,000 | * |
| |||
Donna Seidenberg Marks(4) | External Director | 60,000 | * |
| |||
Michael Shanahan | Director | — | — |
| |||
Michael Soluri(5) | Director | 20,000 | * |
| |||
Yehuda Holtzman | Chief Executive Officer | — | — |
| |||
Shlomi Cohen | Former Chief Executive Officer | — | — |
| |||
Assaf Cohen(6) | Chief Financial Officer | 75,000 | * |
| |||
Nehemia Itay(7) | VP Hardware Engineering | 15,000 | * |
| |||
Amir Eilam(8) | VP Research & Development | 20,000 | * |
| |||
All current directors and executive officers | 3,276,203 | 6.1 | % | ||||
5% Shareholders |
| ||||||
Jerry L. Ivy, Jr.(9) | Shareholder | 15,288,680 | 28.4 | % |
____________
(*) Less than 1%
(1) Includes 2,060,000 Ordinary Shares held by Mr. Anderson and includes options held by Mr. Anderson to purchase 20,000 Ordinary Shares currently exercisable or exercisable within 60 days of this table.
(2) Includes 511,203 Ordinary Shares held by Ms. Hardardottir. Such shares are also included in the Ordinary Shares held by Mr. Jerry L. Ivy, Jr., as detailed in footnote 9 below.
(3) Includes 510,000 Ordinary Shares held by Mr. Medford and includes options held by Mr. Medford to purchase 20,000 Ordinary Shares currently exercisable or exercisable within 60 days of this table.
Name of beneficial owner | Position | Number of Shares Beneficially Owned | % of Class of Shares | |||||||
Shlomi Cohen(1) | Chief Executive Officer and Director | 234,937 | * | |||||||
Yishay Curelaru(2) | Chief Financial Officer | 36,333 | * | |||||||
Nehemia Itay(3) | VP of Hardware Engineering | 188,302 | * | |||||||
Amir Eilam (4) | VP, Research & Development | 56,667 | * | |||||||
James Scott Medford (5) | Director | 10,000 | * | |||||||
Michael Soluri | Director | - | * | |||||||
William C. Anderson III (6) | Director | 110,000 | * | |||||||
Donna Seidenberg Marks (7) | Director | 16,667 | * | |||||||
All current executive officers and directors as a group (6 persons) | 407,937 | 1.0 | % | |||||||
5% Shareholders | ||||||||||
Jerry L. Ivy Jr. (8) | Shareholder | 3,996,550 | 9.7 | % |
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely upon a review of Forms 3, 4 and 5, and amendments thereto, submitted to the SEC during the fiscal year ended December 31, 2016, we believe that during said year, our executive officers, directors and all persons who own more than ten percent of a registered class of our equity securities complied with all Section 16(a) filing requirements, except for Donna Seidenberg Marks, who filed an untimely Form 3 on January 28, 2016 andYishay Curelaruwho filed an untimely Form 3 on February 16, 2016.
CORPORATE GOVERNANCE
Independent Directors
Four out of our five current directors on our Board, William C. Anderson, James Scott Medford, Ms. Donna Seidenberg Marks and Michael Soluri are independent directors as defined in SEC and NASDAQ Rules. Mr. Cohen serves concurrently as director and as Chief Executive Officer and is, accordingly, not considered independent.
Financial Expertise
Under the Companies Law, our Board is required to determine how many of our non-External Directors should be required to have financial and accounting expertise. In determining such number, the Board must consider, among other things, the type and size of the company and the scope and complexity of its operations. Our Board has determined that at least one director (excluding External Director) should be required to have financial and accounting expertise. Each member of the Audit Committee of our Board has financial and accounting proficiency as defined under the Companies Law.
Board Leadership Structure
Mr. Cohen is our Chief Executive Officer, and Mr. Medford is Chairman of our Board. As Chief Executive Officer of the Company, Mr. Cohen reports to the Company’s Board. None of our independent directors serves as the lead independent director. We believe that this leadership structure is appropriate given the current size and operations of the Company.
Risk Oversight
Our Board’s role in risk oversight includes risk analysis and assessment in connection with each financial and business review, update and decision-making proposal and deliberations.
The Board’s role in our risk oversight is consistent with our leadership structure, with our Chief Executive Officer, whose performance is assessed by the Board, and other members of senior management having responsibility for assessing and managing our risk exposure, and the Board providing oversight in connection with those efforts.
The Board, including the Audit Committee and Compensation Committee, periodically reviews and assesses the significant risks to the Company. Our management is responsible for the Company’s risk management process and the day-to-day supervision and mitigation of risks. These risks include strategic, operational, competitive, financial, legal and regulatory risks. Our Board leadership structure, together with the frequent interaction between our directors and management, assists in this effort. Communication between our Board and management regarding long-term strategic planning and short-term operational practices include matters of material risk inherent in our business.
The Board plays an active role, as a whole and at the committee level in overseeing management of the Company’s risks. Each of our Board committees is focused on specific risks within their areas of responsibility, but the Board believes that the overall enterprise risk management process is more properly overseen by all of the members of the Board. The Audit Committee is responsible, among other things, for overseeing the management of financial and accounting risks, risks related to the Company’s compliance with legal and regulatory requirements, risks in regards to the independent auditor’s performance of its internal audit function, evaluation of any inadequacies in the business management of the Company and risks in related-party transactions. The Compensation Committee is responsible, among other things, for overseeing the management of risks relating to executive and employees compensation plans, incentive awards and other beneficial arrangements. While each committee is responsible for the evaluation and management of such risks, the entire Board is regularly informed through committee reports. The Board incorporates the insight provided by these reports into its overall risk management analysis.
The Board administers its risk oversight responsibilities through the Chief Executive Officer and the Chief Financial Officer, who, together with management representatives of the relevant functional areas review and assess the operations of the Company as well as operating management’s identification, assessment and mitigation of the material risks affecting our operations.
External Directors
Under the Companies Law, a company incorporated under the laws of the State of Israel with shares listed on an exchange, including NASDAQ, must appoint at least two External Directors; however, pursuant to an exemption provided under section 5D of the Israeli Companies Regulations (Relief for Public Companies with Shares Listed for Trading on a Stock Market Outside of Israel), 5760-2000 (the “Exemption”), a public company with securities listed on certain foreign exchanges, including NASDAQ, that satisfies the applicable foreign country laws and regulations that apply to companies organized in that country relating to the appointment of independent directors and composition of audit and compensation committees and has no controlling shareholder is exempt from the requirement to appoint External Directors or comply with the audit committee and compensation committee composition requirements under the Companies Law. On May 25, 2017, in conjunction with the expiration of Mr. Anderson’s term as External Director the Company adopted the Exemption and appointed William C. Anderson III as a director (who is not an External Director), effective May 26, 2017, to serve until the next general meeting of shareholders of the Company at which directors are being elected.
Ms. Seidenberg Marks the Company’s only remaining External Director, was electedto purchase 60,000 Ordinary Shares currently exercisable or exercisable within 60 days of this table.
(5) Consists of options held by the general meetingMr. Soluri to purchase 20,000 Ordinary Shares currently exercisable or exercisable within 60 days of shareholders as the second External Director commencing asthis table.
(6) Consists of January 1, 2016. Basedoptions held by Mr. Cohen to purchase 75,000 Ordinary Shares currently exercisable or exercisable within 60 days of this table.
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(7) Consists of options held by Mr. Itay to purchase 15,000 Ordinary Shares currently exercisable or exercisable within 60 days of this table.
(8) Consists of options held by Mr. Eilam to purchase 20,000 Ordinary Shares currently exercisable or exercisable within 60 days of this table.
(9) Information is based solely on the information provided to the Company, Ms. Seidenberg Marks qualifies as External Director under the Companies Law.
Qualifications
The Companies Law provides that a person may not be appointed as an External Director if the person is a relative of the controlling shareholder of the company or if the person (or any of the person’s relatives, partners, employers or anyone to whom the person is directly or indirectly subjected to or any entity under the person’s control) has or had during the two years preceding the date of appointment any affiliationSchedule 13D/A filed by Mr. Jerry L. Ivy, Jr. with the company, its controlling shareholder, anySEC on May 8, 2020 and consists of the controlling shareholder’s relatives, any other entity under the control of the company or the company’s controlling shareholder, and, where there is no controlling shareholder and no shareholder holding 25% or more of the voting power of the company, any affiliation to the chairman of the board of directors of the company, the company’s chief executive officer, any beneficial owner of 5% or more of the issued shares or the voting power of the company or the most senior executive officer of the company in the finance field.
The term affiliation includes:
“Office holder” is defined in the Companies Law as a chief executive officer, chief business manager, deputy general manager, vice general manager, any person who holds such position in the company, even if such person holds a different title, any director and other manager or officer who reports directly to the chief executive officer.
No person can serve as an External Director if his or her position or other business interests create, or may create, a conflict of interest with his or her position as an External Director or may otherwise interfere with his or her ability to serve as an External Director. No person can serve as an External Director if the person (or any of the person’s relatives, partners, employers, anyone to whom the person is directly or indirectly subjected to or any entity under the person’s control) has business or professional relations with anyone the affiliation (as defined above) with whom is prohibited as described above, even if those affiliations are not of an ongoing nature, excluding negligible affiliations. External Directors are required to possess professional qualifications as set out in regulations promulgated under the Companies Law.
Election, Term and Compensation
External Directors are elected by a majority vote at a shareholders’ meeting where included in such majority is (i) at least a majority of the13,997,575 Ordinary Shares of shareholders who are non-controlling shareholdersheld by Mr. Ivy and do not have a personal interest in said resolution; or (ii) the total number of1,291,105 Ordinary Shares of shareholders specified in clause (i) who voted against this resolution does not exceed two percent of the voting rights in the Company.
The initial term of an External Director is three years commencing from the date of his or her election and under regulations that apply to Israeli companies whose shares that have been offered to the public outside of Israel or traded on a stock exchange outside of Israel, may be extended for consecutive additional three year periods (unlikeheld by other public companies, in which only two additional three year periods are allowed). External Directors may only be removed by the same percentage of shareholders as is required for their election, or by a court, and then only if the External Directors cease to meet the statutory qualifications for their appointment or if they violate their duty of loyalty to the company. If an External Directorship becomes vacant, our Board is required under the Companies Law to call a shareholders’ meeting promptly to appoint a new External Director.
An External Director is entitled to compensation as provided in regulations adopted under the Companies Law and is otherwise prohibited from receiving any other compensation, directly or indirectly, in connection with services provided as an External Director.
Alternate Directors
Under our current Articles of Association, each of our directors may appoint, with the agreement of the Board and subject to the provisions of the Israeli Companies Law, by written notice to us, any person to serve as an alternate director. Under the Companies Law, neither a current serving director, nor a currently-serving alternate director or any person not eligible under the Companies Law to be appointed as a director, may be appointed as an alternate director. An alternate director has all the rights and duties of the director appointing him, unless the appointment of the alternate provides otherwise, and the right to remuneration. The alternate director may not act at any meeting at which the appointing director is present. Unless the time period or scope of the appointment is limited by the appointing director, the appointment is effective for all purposes, but expires upon the expiration of the appointing director’s term. Currently, none of our directors has appointed any alternate directors.
Directors’ Service Contracts
Currently, except for Shlomi Cohen who serves as our Chief Executive Officer (and as one of our directors), none of our directors have any services contracts either with us, or with any of our subsidiaries, which provide for benefits upon termination of employment or service.
Board Meetings and Committees
During 2016, the Board held seven meetings (and adopted certain resolutions by way of nine unanimous written consents). A majority of the directors attended all of the meetings of the Board and the committees on which they served and none of our directors attended less than 75% of the meetings of the Board and the committees. Each of the directors is encouraged to attend the annual shareholder’s meeting. None of the five directors currently serving on the Board attended the 2016 annual shareholder’s meeting. Our Board has established an Audit Committee and a Compensation Committee.
Audit Committee
The current members of our Audit Committee are William C. Anderson III, Donna Seidenberg Marks and Michael Soluri. Donna Seidenberg Marks serves as the Chairman of the Audit Committee. Our Board has determined that all of the above are independent Audit Committee members within the meaning of NASDAQ and SEC rules. Our Board has also determined that Donna Seidenberg Marks is an “Audit Committee Financial Expert” as defined in Item 407(d)(5)(ii) of Regulation S-K under the Exchange Act and that he has the requisite experience under NASDAQ rules.
Our Audit Committee operates under a written charter that is posted on our website at http://investors.otiglobal.com.
Our Audit Committee provides assistance to our Board in fulfilling its legal and fiduciary obligations in matters involving our accounting, auditing, financial reporting, internal control and legal compliance functions by pre-approving the services performed by our independent accountants and reviewing their reports regarding our accounting practices and systems of internal control over financial reporting. Our Audit Committee also oversees the audit efforts of our independent accountants and takes those actions that it deems necessary to satisfy itself that the accountants are independent of management.
Under the Companies Law and NASDAQ rules, our Audit Committee is responsible for (i) determining whether there are deficiencies in the business management practices of our Company, including in consultation with our internal auditor or the independent auditor, and making recommendations to the Board to improve such practices, (ii) determining whether to approve certain related party transactions (including transactions in which an office holder has a personal interest) and whether such transaction should be deemed as material or extraordinary, (iii) where the Board approves the working plan of the internal auditor, to examine such working plan before its submission to the Board and propose amendments thereto, (iv) examining our internal controls and internal auditor’s performance, including whether the internal auditor has sufficient resources and tools to dispose of its responsibilities, (v) examining the scope of our auditor’s work and compensation and submitting a recommendation with respect thereto to our Board or shareholders, depending on which of them is considering the appointment of our auditor, and (vi) establishing procedures for the handling of employee complaints as to the management of our business and the protection to be providedparties to such employees. In compliance with regulations promulgated under the Companies Law, our Audit Committee also approves our financial statements, thereby fulfilling the requirement that a board committee provide such approval.Schedule 13D/A (out of which 779,902 Ordinary Shares are held by Ms. Marlene V. Ivy and 511,203 Ordinary Shares are held by Ms. Hardardottir). Mr. Ivy’s address is 1003 Lake St. #301, Kirkland, WA 98033.
Our Audit Committee held four meetings during the fiscal year ended December 31, 2016 (and adopted certain resolutions by way of one unanimous written consent).
Compensation Committee
The current members of our Compensation Committee are William C. Anderson III, Donna Seidenberg Marks and Michael Soluri. William C. Anderson III is the Compensation Committee’s Chairman. Our Board has determined that all Compensation Committee members are independent within the meaning of NASDAQ and SEC rules.
The Compensation Committee operates under a charter that is posted on our website at http://investors.otiglobal.com.
Under the Companies Law and NASDAQ rules, our Compensation Committee is responsible for (i) proposing office holder compensation policies to the Board, (ii) proposing necessary revisions to any compensation policy and examining its implementation, (iii) determining whether to approve transactions with respect to compensation of office holders, and (iv) determining, in accordance with office holder compensation policies, whether to exempt an engagement with an unaffiliated nominee for the position of chief executive officer from requiring shareholder approval.
Subject to the provisions of the Companies Law, compensation of executive officers is generally determined and approved by our Compensation Committee and our Board. Shareholder approval is generally required when (i) approval by our Board and our Compensation Committee is not consistent with our Amended and Restated Executive Officers Compensation Policy which was adopted by the annual meeting of shareholders on December 15, 2016, or (ii) the compensation is that of our Chief Executive Officer. In special circumstances, our Compensation Committee and Board may approve the compensation of an executive officer (other than a director, a chief executive officer or a controlling shareholder) or approve the compensation policy despite shareholder objection. Additionally, under certain circumstances, our Compensation Committee may exempt an engagement with a nominee for the position of chief executive officer from requiring shareholders’ approval or may otherwise postpone such shareholders’ approval.
A director or executive officer may not be present when the Board discusses or votes upon the terms of his or her compensation, unless the chairman of the Board (as applicable) determines that he or she should be present to present the transaction that is subject to approval. The Chief Executive Officer may not be present during voting or deliberations regarding his or her compensation.
We may from time to time engage the services of external compensation consultants on a case by case basis, though we did not engage any such compensation consultant for the fiscal year ended December 31, 2016. All compensation consultants we have engaged are independent for the purposes of NASDAQ rules.
Our Compensation Committee held two meetings during the fiscal year ended December 31, 2016 (and adopted certain resolutions by way of two unanimous written consents).
Nominating Committee; Director Candidates
We do not have a Nominating Committee or any committees of a similar nature, nor any charter governing the nomination process. Our Board does not believe that such committees are needed for a company our size. However, our independent directors will consider shareholder suggestions for additions to our Board.
Director nominees are recommended for our Board’s selection by a majority of our independent directors in a vote in which only our independent directors participate. Under the Companies Law, our directors are elected by the general meeting of shareholders, with the recommendation of the Board. There is no formal process or policy that governs the manner in which we identify potential candidates for the Board. Historically, however, the Board has considered several factors in evaluating candidates for nomination to the Board, including the candidate’s knowledge of the Company and its business, the candidate’s business experience and credentials, and whether the candidate would represent the interests of all the Company’s shareholders as opposed to a specific group of shareholders. Diversity is not considered material in identifying nominees for directors. We do not have a formal policy with respect to our consideration of Board nominees recommended by our shareholders because we are a small company. However, our independent directors will consider shareholders suggestions for additions to our Board. A shareholder who desires to recommend a candidate for nomination to the Board should do so by writing to us at Board of Directors, c/o Company Secretary, On Track Innovations Ltd., Z.H.R. Industrial Zone, Rosh Pina, Israel, 1200000.
Deadline and Procedures for Submitting Board of Directors Nominations
Subject to our Articles of Association and the Companies Law, a shareholder wishing to nominate a candidate for election to the Board at the next Annual Meeting is required to give written notice containing the required information specified above addressed to the Board, c/o Company Secretary,Chief Executive Officer, On Track Innovations Ltd., Z.H.R.Hatnufa 5, Yokneam Industrial Zone, Rosh Pina,Yokneam, Israel, 1200000,2069200, of his or her intention to make such a nomination. The notice of nomination and other required information must be received by the Company no later than the time required by the Companies Law.
Code of Ethics
We have adopted a Code of Business Conduct and Ethics that applies to our directors, executive and financial officers and all of our employees. The Code of Business Conduct and Ethics is publicly available on our website at http://investors.otiglobal.com and we will provide, at no charge, persons with a written copy thereof upon written request made to us.
Communications with the Board of Directors
Shareholders who have questions or concerns should contact the members of the Board by writing to: Board of Directors, c/o Company Secretary, On Track Innovations Ltd., Z.H.R. Industrial Zone, Rosh Pina, Israel, 1200000. All communications received in writing will be distributed to the members of the Board deemed appropriate, depending on the facts and circumstances outlined in the communication received.
11
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
Summary Compensation Table
The following table sets forth the compensation earned during the years ended December 31, 20162019 and 20152018 by (i) our Chief Executive Officer,Officer; (ii) our former Chief Executive Officer,Officer; (iii) our Chief Financial Officer; (iv) our VP of Hardware Engineering; (iv) orand (v) our VP Research & Development; andDevelopment. We refer to the persons listed in (i) through (v) our former Chief Financial Officer (collectively,collectively as the “Named Executive Officers”). Messrs. Itay and Eilam are not executiveOfficers. Certain of these officers but are included solely to comply with requirements under Israeli law.
Summary Compensation Table
Name and Principal Position | Year | Salary ($) (1) | Bonus ($) | Option Awards ($) (2) | Non-equity Incentive Plan Compensation ($) | All Other Compensation ($) (3) | Total ($) | |||||||||||||||||||
Shlomi Cohen | 2016 | 301,109 | 78,738 | 61,200 | 163,328 | 58,930 | 663,305 | |||||||||||||||||||
Chief Executive Officer (4) | 2015 | 177,153 | 52,098 | 80,120 | - | 24,499 | 333,870 | |||||||||||||||||||
Yishay Curelaru | 2016 | 118,338 | 7,915 | 36,500 | 20,524 | 43,842 | 227,119 | |||||||||||||||||||
Chief Financial Officer (5) | 2015 | 63,162 | - | 3,427 | - | 15,894 | 82,483 | |||||||||||||||||||
Nehemia Itay | 2016 | 139,713 | 10,263 | 9,900 | 25,547 | 43,487 | 228,910 | |||||||||||||||||||
VP of Hardware Engineering (6) | 2015 | 214,932 | 34,015 | - | - | 45,516 | 294,463 | |||||||||||||||||||
Amir Eilam | 2016 | 128,055 | 9,089 | 13,200 | 23,765 | 46,062 | 220,171 | |||||||||||||||||||
VP, Research & Development (7) | 2015 | 154,494 | 30,054 | 12,000 | - | 47,627 | 244,175 | |||||||||||||||||||
Shay Tomer | 2016 | 170,438 | 6,621 | - | 13,132 | 101,360 | 291,551 | |||||||||||||||||||
Former Chief Financial Officer (8) | 2015 | 197,401 | 20,993 | 22,034 | - | 50,034 | 290,462 |
Name and Principal Position | Year | Salary | Bonus ($) | Stock-based Awards ($)(2) | Non-equity Incentive Plan Compensation ($) | All other Compensation ($)(3) | Total | |||||||
Yehuda Holtzman | 2019 | 28,194 | — | — | — | 7,873 | 36,067 | |||||||
Chief Executive Officer(4) | ||||||||||||||
Shlomi Cohen | 2019 | 289,919 | — | — | — | 235,615 | 525,534 | |||||||
Former Chief Executive Officer(5) | 2018 | 419,524 | 36,351 | 65,000 | 259,550 | 71,479 | 851,904 | |||||||
Assaf Cohen | 2019 | 152,018 | — | 13,650 | 28,054 | 44,799 | 238,521 | |||||||
Chief Financial Officer and former Interim Chief Executive Officer(6) | 2018 | 104,754 | 2,643 | 6,000 | 19,861 | 38,385 | 171,643 | |||||||
Nehemia Itay | 2019 | 167,129 | — | — | — | 44,052 | 211,182 | |||||||
VP Hardware Engineering(7) | 2018 | 162,629 | 2,033 | — | 19,521 | 43,680 | 227,863 | |||||||
Amir Eilam | 2019 | 150,688 | — | — | — | 48,213 | 198,901 | |||||||
VP Research & Development(8) | 2018 | 143,547 | — | — | 33,158 | 47,288 | 223,993 |
____________
(1) Salary payments which were in NIS were translated into U.S. Dollars according to the annual average exchange rate of NIS 3.56 per U.S. Dollar in 2019 and NIS 3.59 per U.S. Dollar in 2018.
(2) The fair value recognized for the 2018 option awards was determined as of the grant date in accordance with FASB ASC Topic 718 (see Note 10B to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2018). The fair value recognized for the 2019 option awards was determined as of the grant date in accordance with FASB ASC Topic 718 (see Note 11C to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2019). (3) This cost reflects social benefits (as required under applicable Israeli law), car expenses and termination payments. (4) The 2019 “All Other Compensation” of Mr. Holtzman, as shown in the table above, is comprised of $1,788 of car expenses and $6,085 of social benefits. (5) The 2019 “All Other Compensation” of Mr. Cohen, as shown in the table above, is comprised of $20,704 of car expenses, $33,973 of social benefits and $180,938 of termination payments. The 2018 “All Other Compensation” of Mr. Cohen, as shown in the table above, is comprised of $20,529 of car expenses and $50,950 of social benefits. Effective August 1, 2019, Mr. Cohen is no longer the Chief Executive Officer of the Company. (6) The 2019 “All Other Compensation” of Mr. Cohen, as shown in the table above, is comprised of $17,169 of car expenses and $27,630 of social benefits. The 2018 “All Other Compensation” of Mr. Cohen, as shown in the table above, is comprised of $16,579 of car expenses and $21,806 of social benefits. (7) The 2019 “All Other Compensation” of Mr. Itay, as shown in the table above, is comprised of $17,169 of car expenses and $26,883 of social benefits. The 2018 “All Other Compensation” of Mr. Itay, as shown in the table above, is comprised of $17,024 of car expenses and $26,656 of social benefits. (8) The 2019 “All Other Compensation” of Mr. Eilam, as shown in the table above, is comprised of $17,169 of car expenses and $31,044 of social benefits. The 2018 “All Other Compensation” of Mr. Eilam, as shown in the table above, is comprised of $17,024 of car expenses and $30,264 of social benefits. |
All of the incumbent Named Executive Officers and our directors mentioned in the table above and our directors are entitled to acceleration of the vesting of any unvested share options and restricted shares in the event of a change of control of the Company.
12
Pension, Retirement or Similar Benefit Plans
Except as required by applicable law (relating to severance payments to Israeli employees), and except for an acceleration of unvested options granted to our directors and officers in the event of a change of control of the Company, none of our current officers or employees are entitled to receive any payments upon termination of employment.
Executive Officers Compensation Policy
In accordance with requirements and limitations set forth in the Companies Law, we adopted a Compensation Policy in 2013, which was formulatedthereafter amended by our Compensation Committee of the Board, approved by our Board and recommended to our shareholders whichand approved the adoption of the Compensation Policythereby at our annual general meeting held on December 6, 2013. Pursuant15, 2016. As reported on the Company’s Current Report on Form 8-K filed on September 30, 2019, the proposal to amend the Compensation Policy of the Company that was included in the Company’s Proxy Statement filed with the SEC on August 23, 2019 was not approved by the general meeting of shareholders of the Company (the “2019 General Meeting”) as the proposal did not receive the requisite majority required under the Companies Law. Notwithstanding the above, under the Companies Law, the board of directors of a company has the right to overrule the resolution of the general meeting of the company’s shareholders to not approve proposed changes to the provisions ofcompany’s compensation policy, if certain conditions are being met. Accordingly, and pursuant to the Companies Law, on December 15, 2016, an Amended and RestatedNovember 5, 2019, the Board approved the same proposed amendments to the Compensation Policy, was approved at our annual general meeting.
as were included in the Company’s Proxy Statement filed on August 23, 2019. Prior to such approval, the Compensation Committee of the Company and thereafter the Board, discussed the suggested amendments to the Compensation Policy, and determined that notwithstanding the outcome of the 2019 General Meeting, the approval of the amendments to the Compensation Policy is in the Company’s best interest.
The Compensation Policy sets rules and guidelines with respect to our compensation strategy for executive officers, and is designed to provide for the retention of, and to attract, highly qualified executives. The Compensation Policy is designed to balance competitive compensation of executive officers with our financial resources, while creating appropriate incentives considering, inter alia, risk management factors arising from our business, executive compensation benchmarks used in the industry, our size (including without limitation, sales volume and number of employees), the nature of our business and our then current-current cash flow situation, in order to promote our long-termlong-term goals, work plan, policies and the interests of our shareholders.
The Compensation Policy is designed to allow us to create a full compensation package for each of our executives based on common principles. With respect to variable compensation components, the Compensation Policy is designed to allow us to consider each executive’s contribution in achieving our short-termshort-term and long-termlong-term strategic goals and in maximizing its profits from long-terma long-term perspective and in accordance with the executive’s position.
The Compensation Policy further provides for an annual performance bonus payable to executive officers. The payment of such bonus is tied to long-termlong-term corporate performance, rather than short-termshort-term stock market performance. Bonuses are paid in accordance with specific performance targets and based, among others, upon the following factors: (i) the Company’s achievement of certain financial performance metrics, consisting of annual revenue targets, EBITDA target and free cash flow target, each based on our annual budget; (ii) achievement by the respective executive of certain predetermined objectives; and (iii) other discretionary considerations, taking into account tangible and intangible performance factors, including the executive’s relative contribution to the Company.
Bonus payments shall not exceed, in the case of a Chief Executive Officer, an aggregate amount equivalent to 12twelve months’ base salary, and for other executive officers, an aggregate amount equivalent to ninesix months’ base salary of the respective executive.
salary.
13
Employment Agreements
We maintain written employment and related agreements with all of our current executive officers. These agreements provide for monthly salaries and contributions by us to executive insurance and vocational studies funds. The employment agreements of certain executive officers provide for the achievement of an annual bonus, as described above. In addition, we may decide to grant our executive officers stockshare options from time to time. All of our executive officers’ employment and related agreements contain provisions regarding noncompetition, confidentiality of information and assignment of inventions. The enforceability of covenants not to compete in Israel is unclear.
We have the following written agreements and other arrangements concerning compensation with our current executive officers:
(1) Agreement with Yehuda Holtzman. We have an employment agreement with Mr. Holtzman, which provides that Mr. Holzman will serve as the Chief Executive Officer of the Company, in consideration of a monthly gross salary of NIS 76,000 (approximately $22,000 based on current exchange rates) and other standard benefits. Mr. Holtzman also received options to purchase 450,000 Ordinary Shares and receives 100,000 options on an annual basis to promote retention and as an incentive, all subject to vesting requirements. The issuance of such options is subject to the discretion and approval of both the Company’s Compensation Committee and the Board of Directors. The options granted under the employment agreement shall fully accelerate upon the consummation of an M&A Transaction (as defined in the employment agreement). According to the employment agreement, Mr. Holtzman is eligible to receive an annual bonus in an amount of up to 10 months’ gross base salary. The employment agreement is for an unlimited duration, provided that each party may terminate it without cause upon serving the other party a written notice of 90 days, prior to termination.
(2) Agreement with Assaf Cohen. We have an employment agreement with Mr. Cohen, which provides that Mr. Cohen will serve as Chief Financial Officer of the Company and our subsidiaries, in consideration of a monthly gross salary (effective August 1, 2019 and as described below NIS 45,000; between January 1, 2019 and July 31, 2019 NIS 35,000; between March 1, 2018 and December 31, 2018 NIS 30,000) and other standard benefits. Mr. Cohen also receives grants of options on an annual basis to promote retention and as an incentive, subject to vesting requirements. The issuance of such options is subject to the discretion and approval of both the Company’s Compensation Committee and the Board of Directors. According to the employment agreement, Mr. Cohen is eligible to receive an annual bonus in an amount up to 4 months’ gross base salary (and up to 6 months’ gross base salary for 2020, as detailed below). The employment agreement is for an unlimited duration, provided that each party may terminate it without cause upon serving the other party a written notice of six months (formerly was three months), prior to termination. Effective August 1, 2019, as approved by our Board and Compensation Committee, and pursuant to the amendment to Mr. Cohen’s employment agreement dated September 30, 2019, Mr. Cohen’s monthly gross salary is NIS 45,000 and the abovementioned written notice for termination is six months. In addition, pursuant to the amendment to Mr. Cohen’s employment agreement, as also approved by the Company’s shareholders, Mr. Cohen received a lump sum bonus, in the amount of NIS 100,000, for his services as the Interim Chief Executive Officer of the Company. On March 17, 2020, our Compensation Committee and Board approved an |
14
Outstanding Equity Awards Atat Fiscal Year-End
The following table shows options to purchase our ordinary sharesOrdinary Shares outstanding on the last day of the fiscal year ended December 31, 20162019, held by each of our Named Executive Officers (whereOfficers.
Number of Securities Underlying Unexercised
Option Awards | |||||||||
Name | Number of securities underlying unexercised options | Number of securities underlying unexercised options | Option | Option | |||||
Yehuda Holtzman(1) | __ | __ |
| __ | __ | ||||
| |||||||||
Shlomi Cohen(2) | — | — |
| — | — | ||||
| |||||||||
Assaf Cohen(3) | 10,000 | — | $ | 0.74 | 11/11/2020 | ||||
15,000 | — | $ | 1.07 | 11/30/2021 | |||||
10,000 | 5,000 | $ | 1.21 | 11/28/2022 | |||||
6,666 | 13,334 | $ | 0.84 | 11/27/2023 | |||||
— | 100,000 | $ | 0.38 | 8/13/2024 | |||||
| |||||||||
Nehemia Itay(4) | 15,000 | — | $ | 1.07 | 11/30/2021 | ||||
| |||||||||
Amir Eilam(5) | 5,000 | — | $ | 1.68 | 01/01/2020 | ||||
20,000 | — | $ | 1.07 | 11/30/2021 |
____________
(1) On April 14, 2020, 100,000 options were granted to Mr. Holtzman under the Company’s Amended and Restated 2001 Stock Option Plan, as amended to date (the “Plan”). The options vest in three equal annual installments, commencing January 1, 2021. Also on April 14, 2020, 450,000 options were granted to Mr. Holtzman under the Plan. The options vest in three equal annual installments, commencing November 25, 2020.
(2) All the options granted to Mr. Cohen under the Plan have been forfeited as a result of Mr. Cohen’s resignation from the Company.
(3) On November 11, 2015, 10,000 options were granted to Mr. Cohen under the Plan. The options vest in three equal annual installments, commencing November 11, 2016. On November 30, 2016, 15,000 options were granted to Mr. Cohen under the Plan. The options vest in three equal annual installments, commencing November 30, 2017. On November 28, 2017, 15,000 options were granted to Mr. Cohen under the Plan. The options vest in three equal annual installments, commencing November 28, 2018. On November 27, 2018, 20,000 options were granted to Mr. Cohen under the Plan. The options vest in three equal annual installments, commencing November 27, 2019. On August 13, 2019, 100,000 options were granted to Mr. Cohen under the Plan. The options vest in three equal annual installments, commencing August 13, 2020.
(4) On November 30, 2016, 15,000 options were granted to Mr. Itay under the Plan. The options vest in three equal annual installments, commencing November 30, 2017.
(5) On January 1, 2015, 15,000 options were granted to Mr. Eilam under the Plan, of which 10,000 options were exercised by Mr. Eilam as of December 31, 2019. The options vest in three equal annual installments, commencing January 1, 2016. On December 15, 2016, 20,000 options were granted to Mr. Tomer had no unexercised options).
Number of Securities Underlying Unexercised | ||||||||||||||
Option Awards | ||||||||||||||
Name | Number of securities underlying unexercised options (#) exercisable | Number of securities underlying unexercised options(#) unexercisable | Option exercise price($) | Option expiration date | ||||||||||
Shlomi Cohen (1) | 66,667 | 133,333 | $ | 0.75 | 11/02/2020 | |||||||||
- | 40,000 | $ | 0.44 | 02/14/2021 | ||||||||||
- | 100,000 | $ | 0.84 | 03/22/2021 | ||||||||||
Yishay Curelaru (2) | 5,334 | 2,666 | $ | 2.36 | 05/13/2019 | |||||||||
3,334 | 6,666 | $ | 0.74 | 11/11/2020 | ||||||||||
- | 40,000 | $ | 0.84 | 03/22/2021 | ||||||||||
- | 25,000 | $ | 1.07 | 11/30/2021 | ||||||||||
Nehemia Itay (3) | 30,000 | - | $ | 1.46 | 07/20/2018 | |||||||||
6,667 | 3,333 | $ | 2.36 | 05/13/2019 | ||||||||||
- | 15,000 | $ | 1.07 | 11/30/2021 | ||||||||||
Amir Eilam (4) | 10,000 | - | $ | 1.2 | 05/30/2017 | |||||||||
20,000 | - | $ | 1.46 | 07/20/2018 | ||||||||||
6,667 | 3,333 | $ | 2.36 | 05/13/2019 | ||||||||||
5,000 | 10,000 | $ | 1.68 | 01/01/2020 | ||||||||||
- | 20,000 | $ | 1.07 | 11/30/2021 |
15
Director Compensation for 2016
2019
The following table provides information regarding compensation earned by, awarded or paid to each person for serving as a director who was not a Named Executive Officer during the fiscal year ended December 31, 2016: 2019:
Name | Fees Earned or | Option | Total | |||
William C. Anderson III | 31,908 | — | 31,908 | |||
Eran Gilad | 6,445 | 4,782 | 11,227 | |||
Donna Seidenberg Marks | 33,001 | 6,200 | 39,201 | |||
James Scott Medford | 27,535 | — | 27,535 | |||
Michael Soluri | 33,001 | — | 33,001 |
____________
Name (1) | Fees Earned or Paid in Cash ($) (1) | Option Awards ($) (2) | Total ($) | |||||||||
William C. Anderson III | 28,546 | - | 28,546 | |||||||||
Donna Seidenberg Marks | 27,422 | 8,565 | 35,987 | |||||||||
John A. Knapp Jr.(3) | 23,136 | - | 23,136 | |||||||||
Mark Stolper(4) | 27,667 | - | 27,667 | |||||||||
Dilip Singh(5) | 23,649 | - | 23,649 |
(2) The fair value recognized for the 2019 option awards was determined as of the grant date in accordance with FASB ASC Topic 718 (see Note 11C to our consolidated financial statements included in our Annual Report on Form 10-K).
As of December 31, 2016,2019, our directors held options to purchase our Ordinary Shares as follows:
Name | Aggregate | ||
William C. Anderson III | 30,000 | ||
Eran Gilad | 30,000 | ||
Donna Seidenberg Marks | 80,000 | ||
James Scott Medford | 30,000 | ||
Michael Soluri | 30,000 |
We reimburseDuring 2019, we reimbursed our directors for expenses incurred in connection with attending board meetings and committee meetings and provide the following compensation for directors: annual compensation of $16,586;$17,840; meeting participation fees of $859$925 per in-personin-person meeting; meeting participation by telephone of $516$555 per meeting; and $430$463 per written resolution.
Our executive directors do not receive additional separate compensation for their service on the Board or any committee of the Board. During 2016,2019, our non-executivenon-executive directors were reimbursed for their expenses for each board meeting, and committee meeting attended and in addition received the foregoing compensation with respect to attendance inat such meetings. The aggregate amount paid by us to our non-executivenon-executive directors for their service during 20162019 was $134,776.
$141,163.
See “Security Ownership of Certain Beneficial Owners and Management” for information on beneficial ownership of our shares by our directors and executive officers. We have no outstanding loans to any of our directors or executive officers.
Under the Companies Law, an External Director is entitled to compensation as provided in regulations adopted under the Companies Law and is otherwise prohibited from receiving any other compensation, directly or indirectly, in connection with services provided as an External Director.
Certain Relationships and Related Person Transactions; and Director Independence
Transactions
Our policy is to enter into transactions with related parties on terms that are on the whole no less favorable to us than those that would be available from unaffiliated parties at arm’s length.
Agreements with Directors and Officers
We have entered into employment agreements with all of our executive officers as mentioned above.above and indemnification agreements with all of our executive officers and directors. In addition, we have granted options to purchase our Ordinary Shares to our directors and executive officers, as mentioned elsewhere in this proxy statement.
16
Other than described above, and except for (i) the share purchase agreement (the “Purchase Agreement”) dated December 23, 2019 by and among the Company, Jerry L. Ivy, Jr. Descendants’ Trust (“Ivy”), and two of our directors, Mr. Anderson and Mr. Medford, and (ii) two of our directors, Mr. Shanahan and Ms. Hardardottir, who were designated by Ivy pursuant to the Share Purchase Agreement, none of our directors, executive officers or shareholders holding more than 5% of 5% shareholdersour outstanding Ordinary Shares, or members of any such person’s immediate family, has any relationship with the Company besides serving as directors.directors or executive officers.
Agreements with Directors and Officers
We have entered into employment agreements with all of our executive officers as mentioned above and indemnification agreements with all of our executive officers and directors. In addition, we have granted options to purchase our Ordinary Shares to our directors and executive officers, as mentioned elsewhere in this proxy statement.
Other than described above and except for the Purchase Agreement, none of our directors, executive officers or shareholders holding more than 5% of our outstanding shares, or members of any such person’s immediate family, has any relationship with the Company besides serving as directors or executive officers.
17
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We have engaged Somekh ChaikinPwC, as our principal independent registered public accounting firm foruntil the fiscal year ending December 31, 2017.
2020 annual general meeting. Under Item No. 3 above, we are seeking shareholder approval to appoint PwC until our 2021 annual general meeting.
Our Audit Committee is generally responsible for the oversight of our independent auditors’ work. The Audit Committee’s policy is to pre-approvepre-approve all audit and non-auditnon-audit services provided by Somekh Chaikin.our independent registered public accounting firm. These services may include audit services, audit-relatedaudit-related services, tax services and other services, as further described below. The Audit Committee sets forth the basis for its pre-approvalpre-approval in detail, listing the particular services or categories of services which are pre-approved,pre-approved, and setting forth a specific budget for such services. Additional services may be pre-approvedpre-approved by the Audit Committee on an individual basis. Once services have been pre-approved, Somekh Chaikinpre-approved, our independent registered public accounting firm and our management then report to the Audit Committee on a periodic basis regarding the extent of services actually provided in accordance with the applicable pre-approval,pre-approval, and regarding the fees for the services performed.
Our Audit Committee pre-approvedpre-approved all audit and non-auditnon-audit services provided to us and to our subsidiaries during the periods listed below. The Audit Committee approves discrete projects on a case-by-casecase-by-case basis that may have a material effect on our operations and also considers whether proposed services are compatible with the independence of the independent auditors.
Pursuant to our pre-approvalpre-approval policy, the Audit Committee pre-approvespre-approves and delegates to our Chairman of the Board the authority to approve the retention of ad-hocad-hoc audit and non-auditnon-audit services from our independent auditors, beyond the scope approved by the Audit Committee as part of the annual audit plan.
Principal Accountant Fees and Services
The following fees were billed by PwC and affiliate firms for professional services rendered thereby for the year ended December 31, 2019 and by Somekh Chaikin, a member firm of KPMG International and affiliate firms for professional services rendered thereby for the year ended December 31, 2018 (in thousands):
2019 | 2018 | |||||
Audit Fees(1) | $ | 155 | $ | 171 | ||
Audit-Related Fees(2) |
| — |
| 4 | ||
Tax Fees(3) | $ | 6 | $ | 16 | ||
All Other Fees(4) | $ | 5 |
| — | ||
Total | $ | 166 | $ | 191 |
____________
(1) The audit fees for the years ended December 31, 20162019 and 2015 (in thousands):
2016 | 2015 | |||||||
Audit fees (1) | $ | 167 | $ | 163 | ||||
Audit-related fees (2) | $ | - | $ | - | ||||
Tax fees (3) | $ | 13 | $ | 14 | ||||
All other fees (4) | $ | - | $ | - | ||||
Total | $ | 180 | $ | 177 |
REPORT OF THE AUDIT COMMITTEE
In the course of our oversight2019 and 2018 annual consolidated financial statements, review of the Company’s financial reporting process, we have: (1) reviewed and discussed with management the auditedconsolidated quarterly financial statements of 2019 and 2018, and services that are normally provided in connection with statutory audits of us and our subsidiaries, consents and assistance with review of documents filed with the SEC.
(2) Audit-related fees for fiscal year 2016; (2) discussed2018 consisted primarily of agreed upon procedures reports.
(3) Tax fees are the aggregate fees billed (in the year) for professional services rendered for tax compliance and tax advice other than in connection with the independent auditor the matters required to be discussed by Codification of Statements on Auditing Standard No. 1301, as adopted by the Public Company Accounting Oversight Board; (3) received the written disclosures and the letter from the independent auditor required by applicable requirements of the standards of the Public Company Accounting Oversight Board regarding the independent auditor’s communications with the Audit Committee concerningaudit.
(4) All other fees are fees billed for accounting standard procedure.
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independence, (4) discussed with the independent auditor its independence and (5) considered whether the provision of non-audit services by the independent auditor is compatible with maintaining its independence and concluded that it is compatible at this time.
Based on the foregoing review and discussions, the Audit Committee recommended to the Board that the audited financial statements be included in the Annual Report on Form 10-K for the year ended December 31, 2016 that was filed with the SEC on March 28, 2017.
SHAREHOLDER PROPOSALS FOR 20172021 ANNUAL MEETING
Shareholders who wish to present proposals appropriate for consideration at our 20182021 Annual Meeting of Shareholders (the “20182021 Annual Meeting”) must submit the proposal in proper form consistent with our Articles of Association and applicable law to us at our address as set forth on the first page of this proxy statement and in accordance with the applicable regulations under Rule 14a-814a-8 of the Exchange Act by June 18, 2018,March 9, 2021, in order for the proposal to be considered for inclusion in our proxy statement and form of proxy relating to the 20182021 Annual Meeting. Shareholders who wish to present proposals appropriate for consideration at the 20182021 Annual Meeting outside of Rule 14a-814a-8 must submit the proposal in proper form consistent with our Articles of Association and applicable law to us at our address as set forth on the first page of this proxy statement by July 27, 2018May 24, 2021 in order for the proposal to be considered for inclusion in our proxy statement and form of proxy relating to the 20182021 Annual Meeting. Any such proposals should contain the name and record address of the shareholder, the number of Ordinary Shares beneficially owned as of the record date established for the meeting, a description of, and reasons for, the proposal and all information that would be required to be included in the proxy statement file with the SEC if such shareholder was a participant in the solicitation subject to Section 14 of the Exchange Act. The proposal, as well as any questions related thereto, should be directed to our Secretary.
Chief Executive Officer.
If a shareholder submits a proposal after the last date applicable under our Articles of Association and applicable law but still wishes to present the proposal at our 20182021 Annual Meeting (but not in our proxy statement), the proposal, which must be presented in a manner consistent with our Articles of Association and applicable law, must be submitted to our SecretaryChief Executive Officer in proper form at the address set forth above so that it is received by our SecretaryChief Executive Officer no later than seven days after notice for such meeting.
We did not receive notice of any proposed matter to be submitted by shareholders for a vote at this Meeting and, therefore, in accordance with Exchange Act Rule 14a-4(c)14a-4(c) any proxies held by persons designated as proxies by our Board and received in respect of this Meeting will be voted in the discretion of our management on such other matter which may properly come before the Meeting.
SHAREHOLDERS SHARING THE SAME ADDRESS
Only one set of proxy materials may be delivered to multiple shareholders sharing an address unless the Company has received contrary instructions from one or more of the shareholders. The Company will deliver promptly upon written or oral request a separate copy of the proxy materials to a shareholder at a shared address to which a single copy of the documents was delivered. Requests for additional copies should be directed to the Company’s Secretary,Chief Financial Officer, Mr. Tamir Ben-Yoseph,Assaf Cohen, by e-maile-mail addressed to tamirb@otiglobal.com,assaf@otiglobal.com, by mail addressed to c/o Company Secretary,Chief Financial Officer, On Track Innovations Ltd., Z.H.R.Hatnufa 5, Yokneam Industrial Zone, Rosh Pina,Yokneam, Israel, 1200000,2069200, or by telephone at +011 972-4-6868000.972-4-6868000. Shareholders sharing an address and currently receiving a single copy may contact the SecretaryChief Financial Officer as described above to request that multiple copies be delivered in future years. Shareholders sharing an address and currently receiving multiple copies may request delivery of a single copy in future years by contacting the SecretaryChief Financial Officer as described above.
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OTHER MATTERS
As of the date of this proxy statement, our management knows of no matter not specifically described above as to any action which is expected to be taken at the Meeting. The persons named in the enclosed proxy, or their substitutes, will vote the proxies, insofar as the same are not limited to the contrary, in their best judgment, with regard to such other matters and the transaction of such other business as may properly be brought at the Meeting.
PLEASE DATE, SIGN AND RETURN THE PROXY CARD AT YOUR EARLIEST CONVENIENCE AND NOT LATER THAN SATURDAYMONDAY, AUGUST,NOVEMBER 18, 2017, 10, 2020, AT 5:10:00 P.M.A.M. ISRAEL TIME (10:(3:00 A.M. EASTERN TIME) IN THE ENCLOSED RETURN ENVELOPE. A PROMPT RETURN OF YOUR PROXY CARD WILL BE APPRECIATED AS IT WILL SAVE THE EXPENSE OF FURTHER MAILINGS.
By order of the Board, | ||
/s/ James Scott Medford | ||
James Scott Medford Chairman of the Board of Directors | ||
Rosh Pina,Yokneam, Israel
October 16, 2017July 9, 2020
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APPENDIX A – MARKED COPY OF THE AMENDED AND RESTATED SHARE OPTION PLAN
(CHANGES ARE MARKED)
On Track Innovations ltd.
THE 2001 SHARE OPTION PLAN
As Amended and Restated On November 30, 2011, further
Amended and Restated on October 22, 2013,and further Amended and Restated on November 21, 2017
The Plan, as amended from time to time, shall be known as the On Track Innovations Ltd. 2001 Share Option Plan (the “Plan”).
The purpose of the Plan is to afford an incentive to officers, directors, employees and consultants of On Track Innovations Ltd. (the“Company”), or any subsidiary of the Company which now exists or hereafter is organized or acquired by the Company, or any affiliate, to acquire a proprietary interest in the Company, to continue as employees, directors and consultants, to increase their efforts on behalf of the Company, to promote the success of the Company’s business and to attract new employees, directors or consultants, whose services are considered valuable. All options granted hereunder, whether together or separately, shall be hereinafter referred to as the “Options”.
As used in this Plan, the following words and phrases shall have the meanings indicated:
ZHR Industrial Zone, PO Box 32, Rosh Pina, Israel 12000 | T: +972-4-6868000 | F: +972-4-6938887 | info@otiglobal.com
WWW.OTIGLOBAL.COM
If the Shares are listed on any established stock exchange or a national market system, including without limitation the Neuer Market, Nasdaq National Market system, or The Nasdaq SmallCap Market of the Nasdaq Stock Market , the Fair Market Value shall be the closing sales price for such Shares (or the closing bid, if no sales were reported), as quoted on such exchange or system for the last market trading day prior to time of determination, as reported in any official publication of such stock exchange, including, but not limited, to any official web site, theWall Street Journal, or such other source as the Board deems reliable (hereinafter:“the closing sale price”). In a case where the shares are listed on more than one stock exchange or a national market system, the Fair Market Value shall be the closing sale price for such shares in the stock exchange or the national market system with the greatest value of trading in the company’s stock.
If the Shares are regularly quoted by a recognized securities dealer but selling prices are not reported, the Fair Market Value shall be the mean between the high bid and low asked prices for the Shares on the last market trading day prior to the day of determination, or;
In the absence of an established market for the Shares, the Fair Market Value thereof shall be determined in good faith by the Committee.
The Plan shall be administered by the committee established by the Board of Directors of the Company. Notwithstanding the above, the Board shall automatically have an authority if no Committee shall be constituted or if such Committee shall cease to operate for any reason.
The Committee shall consist of such number of members (not less than two (2) in number) as may be fixed by the Board. The Committee shall select one of its members as its chairman (the“Chairman”) and shall hold its meetings at such times and places as the Chairman shall determine. The Committee shall keep records of its meetings and shall make such rules and regulations for the conduct of its business as it shall deem advisable.
Any member of such Committee shall be eligible to receive Options under the Plan while serving on the Committee, unless otherwise specified herein and subject to the approval of the Board.
To the extent permitted under any applicable laws, the Committee shall have the authority in its discretion, subject to and not inconsistent with the express provisions of the Plan, to administer the Plan and to exercise all the powers and authorities either specifically granted to it under the Plan or necessary or advisable in the administration of the Plan, including, without limitation, the authority: (i) to grant Options; (ii) to determine the kind of consideration payable (if any) with respect to Options; (iii) to determine the period during which Options may be exercised, and whether in whole or in installments; (iv) to determine the persons to whom, and the time or times at which Options shall be granted (such persons are referred to herein as “Grantees”); (v) to determine the number of shares to be covered by each Option; (vi) to interpret the Plan; (vii) to prescribe, amend and rescind rules and regulations relating to the Plan; (viii) to determine the terms and provisions of the agreements (which need not be identical) entered into in connection with Options granted under the Plan (the “Agreements”); (ix) to cancel or suspend Options, as necessary; (x) to designate the type of Options to be granted to a Grantee ;(xi) to determine the Fair Market Value (as defined above) of the shares; and (xii) to make all other determinations deemed necessary or advisable for the administration of the Plan.
The Board shall fill all vacancies, however caused, in the Committee. The Board may from time to time appoint additional members to the Committee, and may at any time remove one or more Committee members and substitute others.
Subject to applicable laws, no member of the Board or Committee shall be liable for any action taken or determination made in good faith with respect to the Plan or any Option granted hereunder.
All decisions and selections made by the Committee pursuant to the provisions of the Plan shall be made by a majority of its members except that no member of the Committee shall vote on, or be counted for quorum purposes, with respect to any proposed action of the Committee relating to any Option to be granted to that member. Any decision, made by the Committee, and reduced to writing, shall be executed in accordance with the provisions of the Company’s Articles of Association, as same may be in effect from time to time. The interpretation and construction by the Committee of any provision of the Plan or of any Option thereunder shall be final and conclusive unless otherwise determined by the Board.
Subject to the Company’s Articles of Association and the Company’s decision, and to all approvals legally required, each member of the Board or the Committee shall be indemnified and held harmless by the Company against any cost or expense (including counsel fees) reasonably incurred by him, or any liability (including any sum paid in settlement of a claim with the approval of the Company) arising out of any act or omission to act in connection with the Plan unless arising out of such member’s own fraud or bad faith, to the extent permitted by applicable law. Such indemnification shall be in addition to any rights of indemnification the member may have as a director or otherwise under the Company’s Articles of Association, any agreement, any vote of shareholders or disinterested directors, insurance policy or otherwise.
The persons eligible for participation in the Plan as recipients of Options shall include any employees, directors, consultants and service providers of the Company or of any Subsidiary or Affiliate of the Company. The grant of an Option hereunder shall neither entitle the Grantee to participate nor disqualify him from participating in, any other grant of Options pursuant to the Plan or any other option or stock plan of the Company or any of its affiliates.
The Company shall initially reserve 13,200,000 authorized but unissued Ordinary Shares (the“Shares”) for purposes of the Plan, subject to adjustment as set forth inSection 9 below. Any of such Shares which may remain unissued and which are not subject to outstanding Options at the termination of the Plan shall cease to be reserved for the purpose of the Plan, but until termination of the Plan the Company shall at all times reserve sufficient number of Shares to meet the requirements of the Plan.
If any outstanding Option under the Plan should, for any reason expire, be canceled or be terminated without having been exercised in full, the Shares allocable to the unexercised, canceled or terminated portion of such Option shall (unless the Plan shall have been terminated) become available for subsequent grants of Options under the Plan.
Each Option granted pursuant to the Plan shall be evidenced by a written agreement between the Company and the Grantee (the“Option Agreement”), in such form as the Committee shall approve from time to time. The Option Agreements shall comply with and be subject to the following terms and conditions specified below:
Each Option Agreement shall state the number of Shares to which the Option relates.
Each Option Agreement shall specifically state the type of Option granted to the Grantee.
Each Option Agreement shall state the Purchase Price. The purchase price of each Share subject to an Option or any portion thereof shall be determined by the Committee in its sole and absolute discretion in accordance with applicable law, subject to any guidelines as may be determined by the Board from time to time (the“Purchase Price”). The Purchase Price shall be subject to adjustment as provided in Section 9 hereof.
The Purchase Price shall be payable upon the exercise of the Option in a form satisfactory to the Committee, including without limitation, by cash or cheque. The Committee shall have the authority to postpone the date of payment on such terms as it may determine.
Notwithstanding anything to the contrary contained herein, in connection with any underwritten public offering by the Company of its shares, the Grantee who purchased Shares shall not, directly or indirectly, sell or otherwise transfer, hypothecate, pledge, grant or otherwise dispose of the Options (whether vested or not vested), the exercised Shares, or Shares issued by the virtue of the exercised Shares, whether in accordance withSection 9(Adjustments) of the Plan or as bonus shares, without the prior written consent of the Company or its underwriters. Such restriction shall be in effect for the period as requested by the Company or such underwriters.
In order to enforce the above restriction, the Company may impose stop-transfer instructions with respect to the exercised Shares
The Option Agreements evidencing Options under the Plan shall contain such other terms and conditions, not inconsistent with the Plan, as the Committee may determine.
Notwithstanding anything to the contrary herein, the Grantee shall be entitled to full acceleration of the unvested options upon termination of engagement with the Grantee by the Company or by the Grantee due to a Transaction in circumstances related to the Transaction, as further determined by the Committee.
For the purpose of this section, the term “Transaction” shall mean any of the following events: (i) a transaction in which at least 50% of the issued and outstanding share capital or voting rights in the Company prior to such transaction will be transferred; (ii) the consolidation, merger or reorganization of the Company with or into any other entity, in which the shareholders of the Company hold, immediately after such transaction, less than fifty percent (50%) of the outstanding share capital of the Company or the surviving company; (iii) the sale or other disposal of all or substantially all of the assets of the Company.
Unless otherwise provided in the option agreement, upon the occurrence of any of the following described events, Grantee’s rights to purchase Shares under the Plan shall be adjusted as hereafter provided:
The Committee may permit the voluntary surrender of all or a portion of any Option granted under the Plan or any option granted under any other plan, program or arrangement of the Company or any subsidiary (“Surrendered Option”), to be conditioned upon the granting to the Grantee of a new Option for the same number of shares of Ordinary Shares as the Surrendered Option, or may require such voluntary surrender as a condition precedent to a grant of a new Option to such Grantee. Subject to the provisions of the Plan, such new Option shall be exercisable at the price, during such period and on such other terms and conditions as are specified by the Committee at the time the new Option is granted.
With respect to all Shares (in contrary to unexercised Options) issued upon the exercise of Options purchased by the Grantee, the Grantee shall be entitled to receive dividends in accordance with the quantity of such Shares, and subject to any applicable taxation on distribution of dividends.
Subject to applicable laws, Options may be granted pursuant to the Plan from time to timewithin a period of five (5) years from February 28, 2011until December 31, 2021. Upon such Plan termination, all outstanding options on such date shall thereafter continue to have force and effect in accordance with the terms set in the option agreement.
Unless otherwise provided in the plan and/or in any Appendix of the Plan, no Option, purchasable hereunder, whether fully paid or not, shall be assignable, transferable, given as a gift, pledged or any right with respect to them given to any third party whatsoever, and during the lifetime of the Grantee each and all of such Grantee’s rights to purchase Shares hereunder shall be exercisable only by the Grantee.
Any such action made directly or indirectly, for an immediate validation or for a future one, shall be void.
Any purported assignment, transfer or pledge of an Option in contradiction to the provision of this section shall cause the option to immediately expire.
Any tax consequences arising from the grant or exercise of any Option, from the payment for Shares covered thereby or from any other event or act (of the Company, and/or its Subsidiaries, or the Grantee), hereunder, shall be borne solely by the Grantee. The Company and/or its Subsidiaries, or any other person required by any applicable law, shall withhold taxes according to the requirements under the applicable laws, rules, and regulations, including withholding taxes at source. Furthermore, the Grantee shall agree to indemnify the Company and/or its Subsidiaries and hold them harmless against and from any and all liability for any such tax or interest or penalty thereon, including without limitation, liabilities relating to the necessity to withhold, or to have withheld, any such tax from any payment made to the Grantee, unless the said liability is a result of default of the Company.
The Committee shall not be required to release any Share certificate to a Grantee until all required payments have been fully made.
The Board may at any time, amend, alter, suspend or terminate the Plan. No amendment, alteration, suspension or termination of the Plan shall impair the rights of any Grantee (with respect to an outstanding option), unless mutually agreed otherwise between the Grantee and the Committee, which agreement must be in writing and signed by the Grantee and the Company. Termination of the Plan shall not affect the Committee’s ability to exercise the powers granted to it hereunder with respect to Options granted under the Plan prior to the date of such termination.
The holders of Options shall not have any of the rights or privileges of shareholders of the Company in respect of any Shares purchasable upon the exercise of any Options, nor shall they be deemed to be a class of shareholders or creditors of the Company for purpose of any applicable laws, until the issuance of such Shares by the Company.
Subject to any applicable law, grants of Options are not considered a part of the compensation package and therefore will not be included in any payment made to the employee such as remuneration and compensation for termination of employment.
Nothing in the Plan or in any Option granted or Agreement entered into pursuant hereto shall confer upon any Grantee the right to continue in the employ of the Company or any subsidiary or to be entitled to any remuneration or benefits not set forth in the Plan or such Agreement or to interfere with or limit in any way the right of the Company or any such subsidiary to terminate such Grantee’s employment or services. Options granted under the Plan shall not be affected by any change in duties or position of a Grantee as long as such Grantee continues in the employ of the Company or any subsidiary.
The Plan and all determinations made and actions taken pursuant hereto shall be governed by and construed and enforced in accordance with the laws and jurisdiction as shall be determined in any Appendix of the Plan.
However, the relationship of the participants as shareholders of the Company, including without limitation all of their rights and duties arising under the Company’s Articles of Association, shall be governed by the laws of the State of Israel, and the company and each participant hereby irrevocably submits to the exclusive jurisdiction of the Courts of Israel located in Tel Aviv, in respect of any dispute or matter arising out of or connected with such relationship and the Articles of Association.
The adoption of the Plan by the Board shall not be construed as amending, modifying or rescinding any previously approved incentive arrangements or as creating any limitations on the power of the Board to adopt such other incentive arrangements as it may deem desirable, including, without limitation, the granting of stock Options otherwise then under the Plan, and such arrangements may be either applicable generally or only in specific cases. For the avoidance of doubt, prior grant of options to Grantees of the Company under their employment agreements, and not in the framework of any previous option plan, shall not be deemed an approved incentive arrangement for the purpose of this Section.
Notwithstanding anything herein to the contrary, the terms and conditions of the Plan may be amended with respect to a particular country by means of an addendum to the Plan in the form of an Appendix, and to the extent that the terms and conditions set forth in the Appendix conflict with any provisions of the Plan, the provisions of the Appendix shall govern. Terms and conditions set forth in the Appendix shall apply only to options issued to Grantees under the jurisdiction of the specific country that is subject of the Appendix and shall not be apply to options issued to Grantees not under the jurisdiction of such country. The adoption of any such Appendix shall be subject to the approval of the Board.
* * * *
ON TRACK
| VOTE BY INTERNET Use the Internet to transmit your voting instructions and for electronic delivery of information up until VOTE BY PHONE Use any VOTE BY MAIL Mark, sign and date your proxy card and return it no later than the |
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
KEEP THIS PORTION FOR YOUR RECORDS
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
ON TRACK INNOVATIONS LTD.
The Board of Directors recommends you vote FOR proposals1, 3 and 4 and “3 Years” for proposal 2.
1. |
|
To consider and approve by a | For | Against | Abstain£ |
2. | To indicate, on an advisory basis, the preferred frequency of shareholders advisory votes on the compensation of our named executive officers. | 1 Year | 2 Years | 3 Years | Abstain£ |
3. | To appoint | For | Against | Abstain£ |
4. | To approve a framework for an insurance policy for such directors and officers of the Company, as described in the accompanying proxy statement, for a period of three years commencing as of August 2020, as described in the accompanying proxy statement. | For | Against | Abstain£ |
Please indicate if you plan to attend this meeting. | Yes | No | ||||||||
Please sign exactly as your name(s) appear(s) hereon. When shares are held jointly, each holder should sign. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer. |
Signature [PLEASE SIGN WITHIN BOX] | Date | Signature (Joint Owners) | Date |
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:
The Notice & Proxy Statement and Form 10-K10-K are available atwww.proxyvote.com.
A copy of the Notice and Proxy Statement are also available at the On Track Innovations Ltd. website at
http://www.otiglobal.com/agm
If you have not voted by phone or internet, please sign, date and mail your proxy card in the envelope provided as soon as possible.
E33670-P98002
ON TRACK INNOVATIONS LTD.
Annual Meeting of Shareholders
November 21, 2017
August13, 2020
THE FOLLOWING PROXY IS BEING SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OFON TRACK INNOVATIONS LTD.
The undersigned shareholder of On Track Innovations Ltd. (the "“Company"”) hereby appoints ShlomiYehuda Holtzman and Assaf Cohen, and Yishay Curelaru, or either of them, as proxy and attorney of the undersigned, for and in the name(s) of the undersigned, to attend the Annual Meeting of Shareholders of the Company (the "“Shareholders Meeting"”) to be held at the Company'sCompany’s offices at Z.H.R.Hatnufa 5, Yokneam Industrial Zone, Rosh-Pina,Yokneam, Israel, 2069200 on Tuesday, November 21, 2017,Thursday, August 13, 2020, at 5:10:00 p.m.a.m., Israel Time, and any adjournment thereof (subject to the below), to cast on behalf of the undersigned all the votes that the undersigned is entitled to cast at such meeting and otherwise to represent the undersigned at the Shareholders Meeting with all powers possessed by the undersigned if personally present at the Shareholders Meeting, including, without limitation, to vote and act in accordance with the instructions set forth on the reverse side. The undersigned hereby acknowledges that the Company is actively monitoring developments with regard to the coronavirus, or COVID-19, and it is possible that the Shareholders Meeting may be held solely by means of remote communication. In the event it is not possible or advisable to hold the Shareholders Meeting in person, the Company will announce alternative arrangements for the Shareholders Meeting as promptly as practicable. The undersigned hereby acknowledges receipt of the Notice of an Annual Meeting of Shareholders and revokes any proxy heretofore given with respect to such meeting.
THE VOTES ENTITLED TO BE CAST BY THE UNDERSIGNED WILL BE CAST AS INSTRUCTED ON THE REVERSE SIDE. IF THIS PROXY CARD IS EXECUTED BUT NO INSTRUCTION IS GIVEN WITH RESPECT TO PROPOSALS NO. 1A, 1B, 1C, 1,2, 3 4 AND 54 SPECIFIED HEREIN, THE VOTES ENTITLED TO BE CAST BY THE UNDERSIGNED WILL BE CAST "FOR"“FOR” PROPOSALS NO. 1A, 1B, 1C, 2,1, 3 AND 4 AND 5.“3 YEARS” FOR PROPOSAL NO. 2.
Continued and to be signed on the reverse side