UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
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Perma-Fix Environmental Services, Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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PERMA-FIX ENVIRONMENTAL SERVICES, INC.
8302 Dunwoody Place, Suite 250
Atlanta, Georgia 30350
NOTICE OF ANNUAL MEETING
To Be HeldJuly 28, 201625, 2019
To the Stockholders of Perma-Fix Environmental Services, Inc.:
Notice is hereby given that the 20162019 Annual Meeting of Stockholders (the “Meeting”) of Perma-Fix Environmental Services, Inc. (the “Company”(“Company”, “we”, “our”, or “us”) will be held at the Crowne Plaza Hotel, Atlanta Airport, 1325 Virginia Avenue, Atlanta, Georgia 30344, on Thursday, July 28, 2016,25, 2019, at 11:00 a.m. (EDST), for the following purposes:
1. | To elect |
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2. | To ratify the appointment of Grant Thornton, LLP as the independent registered public accounting firm of the Company for the |
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3. | To approve, on an advisory basis, the |
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4. | To transact such other business as may properly come before the meeting and at any adjournments thereof. |
Only stockholders of record at the close of business on June 9, 2016,6, 2019, will be entitled to notice of, and to vote at, the Meeting or at any postponement or adjournment thereof.
ThisThe Company is taking advantage of the rules of the Securities and Exchange Commission that allow issuers to provide electronic access to proxy materials over the Internet instead of mailing printed copies of those materials to each stockholder. The Company believes that furnishing these materials electronically allows us to more efficiently provide our stockholders with our proxy materials while reducing costs and reducing the impact of the Meeting on the environment. If you would like us to send you printed copies of our proxy statement and accompanying materials, we will be happy to do so upon your request at no charge. For more information, please refer to the Notice of Annual MeetingInternet Availability of Stockholders, our Annual Report for 2015 and the accompanying Proxy Statement and Proxy Card are being firstMaterials (the “Notice”) that we mailed to stockholdersholders of record on or about June 23, 2016.14, 2019. The Notice also provides instructions as to how you may vote your proxy.
The Company’s Annual Report for 2015Your vote is enclosed for your reference.
By the order of the Board of Directors
Ben Naccarato
Secretary
Atlanta, Georgia
June 23, 2016
It is important that your shares be represented at the Meeting.important. Whether or not you plan to attend the Meeting, we urge you are encouraged to vote as soon as possible to ensure that your shares overare represented at the internet as described inmeeting.
Important Notice Regarding the proxy material, or you may sign, date and mailInternet Availability of Proxy Materials for the enclosed proxy card in the pre-paid envelope provided. If you decideAnnual Meeting of Stockholders to attend the Meeting, you may, if so desired, revokebe Held on July 25, 2019: This Proxy Statement, the Proxy Card, and vote in person.our Annual Report for 2018, is available at:http://www.cstproxy.com/perma-fix/2019.
By order of the Board of Directors | |
Ben Naccarato | |
Secretary |
Atlanta, Georgia
June 14, 2019
PERMA-FIX ENVIRONMENTAL SERVICES, INC.
8302 Dunwoody Place, Suite 250
Atlanta, Georgia 30350
PROXY STATEMENT
FOR THE
20162019 ANNUAL MEETING OF STOCKHOLDERS
Why am I receiving this Proxy Statement?
You are receiving this Proxy Statement from us because you were a stockholder of record of the common stock, par value $.001 (the “Common Stock”), of Perma-Fix Environmental Services, Inc. (“Perma-Fix”, the “Company”, “we”, “our”, or “us”) at the close of business on June 9, 20166, 2019 (the “Record Date”). This Proxy Statement is furnished in connection with the solicitation on behalf of the Board of Directors of the Company (the “Board of Directors” or the “Board”) of proxies to be used in voting at the 20162019 Annual Meeting of Stockholders to be held at the Crowne Plaza Hotel, Atlanta Airport, 1325 Virginia Avenue, Atlanta, Georgia, 30344, on Thursday, July 28, 2016,25, 2019, at 11:00 a.m. (EDST), and any adjournments thereof (the “Meeting”). By use of a proxy, you may vote whether or not you plan to attend the Meeting. This Proxy Statement describes the matters on which the Board would like you to vote, and provides information on those matters, so that you can make an informed decision.
Who is entitled to vote at the Meeting?
Only the holders of our Common Stock at the close of business on the Record Date will have the right to receive notice of, and be entitled to vote at, the Meeting. At the close of business on the Record Date, 11,574,33112,054,439 shares of Common Stock (which excludes 7,642 treasury shares) were outstanding. Each stockholder of record, as of the Record Date, is entitled to one vote for each share of Common Stock that the stockholder owned as of the Record Date on each matter to be voted upon at the Meeting.
Why did I receive a one-page notice in the mail regarding the Internet availability of proxy materials instead of a full set of proxy material?
Pursuant to rules adopted by the Securities and Exchange Commission (“SEC”), the Company has elected to provide access to its proxy materials via the Internet instead of mailing printed copies. Accordingly, the Company is sending a Notice of Internet Availability of Proxy Materials (the “Notice”) to the Company’s stockholders. Most stockholders will not receive printed copies of the proxy materials unless they request them. Instead, instructions on how to access the proxy materials over the Internet or to request a printed copy may be found in the Notice. All stockholders will have the ability to access the proxy materials on the website referred to in the Notice or request to receive a printed or electronic set of the proxy materials. Stockholders may request to receive proxy materials in printed form by following the instructions in the Notice. The Company encourages stockholders to take advantage of the availability of the proxy materials on the Internet to help reduce the environmental impact of our annual meetings.
What vote is required to approve the matters being considered?
● | Directors are elected by a plurality of the shares present in person or represented by proxy and entitled to vote at the Meeting. |
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● | The ratification of the appointment of Grant Thornton LLP as the independent registered public accounting firm requires the affirmative vote of a majority of the shares present in person or represented by proxy and entitled to vote at the Meeting. |
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● | The approval of the |
Are abstentions counted?
If your proxy indicates an abstention from voting on thea proposal, the shares represented will be counted as present for the purpose of determining a quorum, but they will not be voted on any mattersuch proposal at the annual meeting.Meeting. Because abstentions represent shares entitled to vote, if you abstain from voting on a proposal, your abstention (a) will have no effect on the election of directors, (b) will have the effect of a vote against the ratification of the appointment of the independent registered public accounting firm, and (c) will have the effect of a vote against the resolution on executive compensation.
How do I cast my vote?
If you are a stockholder whose shares are registered in your name, you may vote your shares in person at the meetingMeeting or by one of the two following methods:
● | Vote by Internet, by going to the web addresswww.cstproxyvote.com and following the instructions for Internet voting. |
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● | Vote by Telephone,by calling toll free 1-866-894-0536 and follow the instructions provided by the recorded message. | |
● | Vote by Proxy Card (if you requested printed copy),by completing, signing, dating and mailing the |
If your shares are held in “street name” (throughan account at a broker,brokerage firm, bank, broker-dealer or other nominee),similar organization, you may receiveare the beneficial owner of shares held in “street name,” and the Notice of Internet Availability of Proxy Materials was forwarded to you by that organization. The organization holding your account is considered the shareholder of record for purposes of voting during the Meeting. As a separate voting instruction form with this Proxy Statement, orbeneficial owner, you may needhave the right to contactdirect that organization on how to vote the shares held in your account. You should follow the instructions received from that organization to vote your shares. If you wish to vote in person at the meeting, you must obtain a legal proxy from the bank, broker bank or other nominee to determine whether you will be able to vote electronically using the Internet.holder of record that holds your shares.
Whether or not you plan to attend the 20162019 Annual Meeting of Stockholders, please submit your vote either by internet, telephone, or by written proxy card.
Can I change my mind after I vote?
Yes, you may change your mind at any time before the polls close at the Meeting. You can change your vote by:
● | executing and submitting a revised proxy; |
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● | providing a written revocation to the Secretary of the Company; or |
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● | voting in person at the Meeting. |
What constitutes a quorum?
A majority of all of the outstanding shares of Common Stock entitled to notice of, and to vote at, the Meeting, represented in person or by proxy, will constitute a quorum for the holding of the Meeting. The failure of a quorum to be represented at the Meeting will necessitate adjournment and will subject the Company to additional expense. If your proxy indicates an abstention from voting on a proposal, the shares represented will nonetheless be counted as present for the purpose of determining a quorum.
Will my shares be voted if I do not provide my proxy?
No. If your shares are registered in your name, they will not be voted, unless you submit your proxy or vote in person at the Meeting. If you hold your shares directly in your own name, you must vote, either by internet, by telephone, completing, signing and delivering a proxy voting by the internet,(if you requested a printed copy), or attending the Meeting and voting at the Meeting.
Who votes shares held in “street name”?
If your shares of Common Stock are held by a bank, broker or other nominee as custodian on your behalf, you are considered a “beneficial” stockholder of those shares, which are said to be held in “street name.” As a beneficial stockholder, youmustprovide voting instructions to your broker, bank, or other nominee by the deadline provided in the proxy materials you receive from your broker, bank, or other nominee to ensure your shares are voted in the way you would like. If you do not provide voting instructions to your broker, bank, or other nominee, whether your shares can be voted on your behalf depends on the type of item being considered for vote. The NYSE has rules that govern brokers who have record ownership of listed company stock (including stock such as ours that is listed on The NASDAQNasdaq Capital Market) held in brokerage accounts for their clients who beneficially own the shares. Under these rules, brokers who do not receive voting instructions from their clients have the discretion to vote uninstructed shares on certain matters (“routine matters”), but do not have the discretion to vote uninstructed shares as to certain other matters (“non-routine matters”). A “broker non-vote” occurs when a broker has not received voting instructions from a beneficial owner on a non-routine matter and therefore cannot vote such beneficial owner’s shares on the matter. In these cases, the broker can register your shares as being present at the Meeting for purposes of determining the presence of a quorum, but will not be able to vote on these non-discretionary matters for which specific authorization is required. Under NYSE interpretations, Proposal 1 (election of directors) and Proposal 3 (advisory vote on executive compensation) are considered non-routine matters. However, since broker non-votes are not counted in any vote requiring a plurality of votes cast (Proposal 1) or a majority of the votes present in person or represented by proxy and entitled to vote (Proposal 3), broker non-votes will have no effect on the outcome of anyeither of these proposals. Proposal 2 (ratification of the selection of the independent registered public accounting firm for 2015)2018) is considered a routine matter and, thus, we do not expect to receive any broker non-votes on this proposal.
Who will count the votes?
All votes will be tabulated by the inspector of election appointed for the Meeting, who will separately tabulate affirmative and negative votes and abstentions.
Where can I find the voting results of theMeeting? Meeting?
We will announce the preliminary voting results at the Meeting and publish final results in a Form 8-K to be filed with the Securities and Exchange Commission within four business days after the Meeting.
Who is paying the cost of this solicitation?
The Company will pay the cost of preparing, printing, assembling, and mailing this Proxy Statement, and the Proxy Card.along with all other proxy materials. In addition to solicitation by use of the mail, certain of the Company’s officers and employees may, without receiving additional compensation therefore, solicit the return of proxies by telephone, e-mail or personal interview. WeThe Company has also have retainedengaged The Proxy Advisory Group, LLC to assist us in the solicitation of votes described above. We will pay The Proxy Advisory Group, LLCproxies and provide related advice and informational support, for a service fee, of $9,500,plus customary disbursements, which includes a base fee and customary costs and expenses for this service.are not expected to exceed $10,500 in total. The Company will reimburse brokerage houses and custodians, nominees, and fiduciaries for their reasonable out-of-pocket expenses in forwarding soliciting materials to their principals, the beneficial owners of Common Stock.
Is the stockholder list available for review?
A list of stockholders entitled to vote at the Meeting will be open to the examination of any stockholder for any purpose germane to the Meeting during ordinary business hours commencing 10 days before the Meeting. Prior to the Meeting, the list will be maintained at our principal executive offices located at 8302 Dunwoody Place, Suite 250, Atlanta, Georgia 30350.
PROPOSAL 1 - ELECTION OF DIRECTORS
The Company’s Restated Certificate of Incorporation provides that each member of the Board of Directors shall hold office until the next Annual Meeting of Stockholders and their successors have been elected and qualified or until their earlier resignation or removal. Successors to those directors whose terms have expired are required to be elected by stockholder vote. The existing Board of Directors may fill vacancies for an unexpired term and any newly created directorships created by the Board of Directors’ action.
The sevensix nominees for membership on our Board of Directors named below were recommended by our Corporate Governance and Nominating Committee to serve as members of the Board of Directors. All nominees are incumbent directors and meet the qualifications for membership on our Board of Directors as set forth in the Company’s Amended and Restated Bylaws, as amended (the “Bylaws”).
The Company’s Bylaws provide that the number of the Company’s directors shall be at least three and no more than eight, as may be determined from time to time by resolution adopted by affirmative vote of a majority of the entire Board of Directors. The Board of Directors has set the size of the Board at sevensix members.
Nominees for Directors
The following biographical information includes a discussion of the specific experience, qualifications, attributes or skills that led to the conclusion by our Corporate Governance and Nominating Committee that each of the nominees is qualified to serve as one of our Directors:
Dr. Louis F. Centofanti Director Age: | Dr. Centofanti,
As founder of |
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Hon. Joe R. Reeder, Director Age: | Mr. Reeder, a director since In May 2018 Mr. Reeder was appointed to the Advisory Council Bid Protest Committee to the United States Court of Federal Claims. A
Mr. |
Larry M. Shelton Board Chairman Age: | Mr. Shelton, a director since July 2006, has also held the position of Chairman of the Board of the Company since December 16, 2014. Mr. Shelton
With his years of accounting experience as CFO for various companies, including a number of waste management companies, Mr. Shelton combines extensive industry knowledge and understanding of accounting principles, financial reporting requirements, evaluating and overseeing financial reporting processes and business matters. These factors led the Board to conclude that he should serve as a director. |
Zach P. Wamp, Director Age: 61 | Mr. Wamp, a director since January 2018, is currently the President of Zach Wamp Consulting, a position he has held since 2011. As the President and owner of Zach Wamp Consulting, he has served some of the most prominent companies from Silicon Valley to Wall Street as a business development consultant and advisor. From September 2013 to November 2017, Mr. Wamp chaired the Board of Directors for Chicago Bridge and Iron Federal Services, LLC (a subsidiary of Chicago Bridge & Iron Company, NYSE: CBI, which provides critical services primarily to the U.S. government). From January 1995 to January 2011, Mr. Wamp served as a member of the U.S. House of Representatives from Tennessee’s 3rddistrict. His district included the Oak Ridge National Laboratory, with strong science and research missions from energy to homeland security. Among his many accomplishments, which included various leadership roles in the advancement of education and science, Mr. Wamp was instrumental in the formation and success of the Tennessee Valley Technology Corridor, which created thousands of jobs for Tennesseans in the areas of high-tech research, development, and manufacturing. During his career in the political arena, Mr. Wamp served on several prominent subcommittees during his 14 years on the House Appropriations Committee, including serving as a “ranking member” of the Subcommittee on Military Construction and Veterans Affairs and Related Agencies. Mr. Wamp has been a regular panelist on numerous media outlets and has been featured in a number of national publications effectively articulating sound social and economic policy. Mr. Wamp’s business career has also included work in the real estate sector for a number of years as a licensed industrial-commercial real estate broker where he was named Chattanooga’s Small Business Person of the Year. He is a founding partner in Learning Blade, the nation’s premiere STEM education platform, which is now operating at some level in 28 states. Mr. Wamp has an extensive career in solving and overseeing solutions to complex issues involving domestic concerns. In addition, his wide-ranging career, particularly with respect to his government-related work, provides solid experience for the continuing growth of the Company’s Treatment and Services Segments. His extensive knowledge and problem-solving experience enhances the Board’s ability to address significant challenges in the nuclear market, and led the Board to conclude that he should serve as a director. |
Mark A. Zwecker, Director Age: | Mark Zwecker, a director since the
As a director |
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE “FOR” THE ELECTION OF THE SEVENSIX NOMINEES AS THE COMPANY’S DIRECTORS.
Board of Director Independence
TheOur Common Stock is listed on the Nasdaq Capital Market. Rule 5605 of the Nasdaq Marketplace Rules requires a majority of a listed company’s board of directors to be comprised of independent directors. In addition, the Nasdaq Marketplace Rules require that, subject to specified exceptions, each member of a listed company’s audit, compensation and nominating and corporate governance committees be independent under applicable provisions of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Audit committee members must also satisfy independence criteria set forth in Rule 10A-3 under the Exchange Act, and compensation committee members must also satisfy the independence criteria set forth in Rule 10C-1 under the Exchange Act. Under Nasdaq Rule 5605(a)(2), a director will only qualify as an “independent director” if, in the opinion of our Board, that person does not have a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. In order to be considered independent for purposes of Rule 10A-3 under the Exchange Act, a member of an audit committee of a listed company may not, other than in his or her capacity as a member of the audit committee, the board of directors, or any other board committee, accept, directly or indirectly, any consulting, advisory, or other compensatory fee from the listed company or any of its subsidiaries or otherwise be an affiliated person of the listed company or any of its subsidiaries. In order to be considered independent for purposes of Rule 10C-1, the board must consider, for each member of a compensation committee of a listed company, all factors specifically relevant to determining whether a director has a relationship to such company which is material to that director’s ability to be independent from management in connection with the duties of a compensation committee member, including, but not limited to: the source of compensation of the director, including any consulting advisory or other compensatory fee paid by such company to the director; and whether the director is affiliated with the company or any of its subsidiaries or affiliates.
Our Board annually undertakes a review of the composition of our Board of Directors and its committees and the independence of each director. Based upon information requested from and provided by each director concerning his or her background, employment and affiliations, including family relationships, our Board of Directors has determined that each of S. Robert Cochran, Dr. Gary Kugler (a director other thanuntil July 26, 2018), Joe R. Reeder, Larry M. Shelton, Zach P. Wamp and Mark A. Zwecker is/was an “independent director” as defined under the Nasdaq Marketplace Rules. Our Board of Directors has also determined that each member of our Audit Committee, consisting of Mark A. Zwecker (Chairperson), S. Robert Cochran, Dr. Centofanti and Mr. John Climaco, is “independent” within the meaningGary G. Kugler (who was a member of the applicable NASDAQ rules.Audit Committee until April 19, 2018), and Larry M. Shelton (who became a member effective April 19, 2018), and each member of our Compensation and Stock Option Committee, consisting of Dr. Gary G. Kugler (who was the Chairperson and a member until April 19, 2018), Larry M. Shelton (who became the Chairperson effective April 19, 2018), Joe R. Reeder, and Mark A. Zwecker (who became a member effective April 19, 2018), satisfy/satisfied the independence standards for such committees established by the Securities and Exchange Commission and the Nasdaq Marketplace Rules, as applicable. In making such determination, our Board of Directors considered the relationships that each such non-employee director has with our Company and all other facts and circumstances our Board of Directors deemed relevant in determining independence, including the beneficial ownership of our capital stock by each non-employee director.
Our Board of Directors has determined that Dr. Centofanti is not deemed to be an “independent director” because of his employment as a senior executive of the Company. The Board determined that Mr. Climaco does not currently qualify as an “independent director” because of his employment, effective June 2, 2015, as EVP of PF Medical, a majority-owned Polish subsidiary of the Company, and because he is also a director of Digirad Corporation, with which PF Medical entered into a supplier agreement and a subscription agreement (together, the “Digirad Agreement”) on July 24, 2015 (see “John Climaco” under “Certain Relationships and Related Transactions – Related Party Transactions” for further discussion of his position with PF Medical and a description of the Digirad Agreement).
Board Leadership Structure
We currently separate the roles of Chairman of the Board and CEO. The Board believes that its currentthis leadership structure, with Dr. Centofanti serving as President and CEO and Mr. Shelton serving as our independent non-executive Chairman of the Board, is appropriate for the Company at this time, as this structure promotes balance between the Board’s independent authority to oversee our business, and the CEO and his management team, who manage the business on a day-to-day basis.
The Company does not have a written policy with respect to the separation of the positions of Chairman of the Board and CEO. The Company believes it is important to retain its flexibility to allocate the responsibilities of the offices of the Chairman and CEO in any way that is in the best interests of the Company at a given point in time; therefore, the Company’s leadership structure may change in the future as circumstances may dictate.
Mr. Mark Zwecker, a current member of our Board, continues to serve as the Independent Lead Director, a position he has held since February 2010. The Lead Director’s role includes:
● | convening and chairing meetings of the non-employee directors as necessary from time to time and Board meetings in the absence of the Chairman of the Board; |
● | acting as liaison between directors, committee chairs and management; |
● | serving as information sources for directors and management; and |
● | carrying out responsibilities as the Board may delegate from time to time. |
Meetings and Committees of the Board of Directors
During 2015,2018, the Board of Directors held four meetings. No director attended fewer than 75% of the aggregate number of meetings held by the Board of Directors and the committees on which he served during 2015.2018. The Company does not currently have a policy with respect to the attendance of its directors at annual meetings; however, the Company encourages each of its directors to attend whenever possible. All members of our Board of Directors attended our 20152018 Annual Meeting of Stockholders. The Board of Directors has a standing Audit Committee, Compensation and Stock Option Committee, Corporate Governance and Nominating Committee, Research and Development Committee, and Strategic Advisory Committee.
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Audit Committee:
The Audit Committee assists the Board of Directors in monitoring the integrity of the financial statements of the Company, the independent auditor’s qualifications and independence, the performance of the Company’s internal audit function and independent auditor, the Company’s management of cybersecurity and the Company’s compliance with legal and regulatory requirements. In carrying out these purposes, the Audit Committee, among other things:
● | appoints, evaluates, and approves the compensation of the Company’s independent auditor; |
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● | pre-approves all auditing services and permitted non-audit services; |
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● | annually considers the qualifications and independence of the independent auditors; |
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● | reviews recommendations of independent auditors concerning the Company’s accounting principles, internal controls, and accounting procedures and practices; |
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● | reviews and approves the scope of the annual audit; |
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● | reviews and discusses with the independent auditors the audited financial statements; |
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● | reviews and provides oversight of the Company’s cybersecurity polices; | |
● | reviews and provides oversight of any related party transactions; and | |
● | performs such other duties as set forth in the Audit Committee Charter. |
The Audit Committee was established in accordance with the requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the listing requirements of the NASDAQ,Nasdaq and is governed by an Audit Committee Charter. A copy of the Audit Committee Charter is available on our website atwww.perma-fix.com. www.perma-fix.com. The Audit Committee has established procedures for the receipt, retention, and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters, and the confidential, anonymous submission of concerns by employees of the Company regarding accounting or auditing matters. The Audit Committee has the authority to retain internal or external legal counsel and other experts in connection with performing the Audit Committee duties.
The Audit Committee members during 20152018 were Mark A. Zwecker (Chairperson), S. Robert Cochran, and Larry M. Shelton, and Jack Lahav, who replaced Dr. Gary G. Kugler as a member of the Audit Committee, effective September 17, 2015.April 19, 2018. Dr. Kugler elected to retire as a director and did not stand for re-election at the Company’s 2018 Annual Meeting of Stockholder’s held on July 26, 2018. The Board of Directors has determined that each member of the Audit Committee is/was “independent,” as that term is defined for an audit committee member under the Exchange Act and Nasdaq Rule 5605(c) and is/was an “audit committee financial expert” as defined by Item 407(d)(5)(ii) of Regulation S-K of the Exchange Act. The Audit Committee meets at least quarterly and at such additional times as necessary or advisable. The Audit Committee held eightseven meetings during 2015. Each member of the Audit Committee in 2015 was “independent,” as that term is defined by the current NASDAQ listing standards, and each current member of the Audit Committee is “independent” under such definition.2018.
Compensation and Stock Option Committee:
The Compensation and Stock Option Committee (“Compensation Committee”) reviews and recommends to the Board of Directors the compensation and benefits of all of the Company’s officers and reviews general policy matters relating to compensation and benefits of the Company’s employees. The Compensation Committee also administers the Company’s stock option plans. The Compensation Committee has the sole authority to retain and terminate a compensation consultant, as well as to approve the consultant’s fees and other terms of engagement. It also has the authority to obtain advice and assistance from internal or external legal, accounting or other advisors. No compensation consultant was employed during 2015.2018. Members of the Compensation Committee during 20152018 were Dr. Gary G. Kugler (who became a member effective September 17, 2015 and who also replaced Larry Shelton as Chairperson of the Compensation Committee effective September 17, 2015), Larry M. Shelton (Chairperson), Joe R. Reeder, and Mark A. Zwecker.Zwecker, who replaced Dr. Charles E. Young was alsoGary G. Kugler as a member of the Compensation Committee, until his departure fromeffective April 19, 2018. Effective April 19, 2018, Larry M. Shelton became the Board effective September 17, 2015. Dr. Young elected not to stand for re-election atChairperson of the Company’s 2015 Annual Meeting of Stockholders due to personal reasons and not due to any disagreement with the Company’s operations, policies or practices. The Compensation Committee, which position was previously held four meetings in 2015.by Dr. Gary G. Kugler. All members of the Compensation Committee in 2015 are/were "independent"“independent” as that term is defined by the current NASDAQNasdaq listing standards, and each current member of thestandards. The Compensation Committee is “independent” under such definition.meets as often as may be deemed necessary or appropriate in its judgment. The Compensation held four meetings during 2018. The Compensation Committee is governed by the Company’s Compensation and Stock Option Committee Charter, which is available on our website atwww.perma-fix.comwww.perma-fix.com..
Corporate Governance and Nominating Committee:
The Corporate Governance and Nominating Committee (“Nominating Committee”) recommends to the Board of Directors candidates to fill vacancies on the Board and the nominees for election as directors at each Annual Meetingannual meeting of Stockholders.stockholders. In making such recommendation, the Nominating Committee takes into account information provided to them from the candidate, as well as the Nominating Committee’s own knowledge and information obtained through inquiries to third parties to the extent the Nominating Committee deems appropriate. The Company’s Bylaws sets forth certain minimum director qualifications to qualify for nomination for elections as a director. To qualify for nomination or election as a director, an individual must:
● | be an individual at least 21 years of age who is not under legal disability; |
● | have the ability to be present, in person, at all regular and special meetings of the Board of Directors; |
● | not serve on the boards of more than three other publicly held companies; |
● | satisfy the director qualification requirements of all environmental and nuclear commissions, boards or similar regulatory or law enforcement authorities to which the |
● | not be affiliated with, employed by or a representative of, or have or acquire a material personal involvement with, or material financial interest in, any “Business Competitor” (as defined); |
● | not have been convicted of a felony or of any misdemeanor involving moral turpitude; and |
● | have been nominated for election to the Board of Directors in accordance with the terms of the Bylaws. |
In addition to the minimum director qualifications as mentioned above, in order for any proposed nominee to be eligible to be a candidate for election to the Board of Directors, such candidate must deliver to the Nominating Committee a completed questionnaire with respect to the background, qualifications, stock ownership and independence of such proposed nominee. The Nominating Committee reviews each candidate’s qualifications are also reviewed to include:include considerations of:
● | standards of integrity, personal ethics and |
● | ability to represent the interests of the Company’s stockholders; |
● | ability to dedicate sufficient time, energy and attention to fulfill the requirements of the position; and |
● | diversity of skills and experience with respect to accounting and finance, management and leadership, business acumen, vision and strategy, charitable causes, business operations, and industry knowledge. |
The Nominating Committee does not assign specific weight to any particular criteria and no particular criterion is necessarily applicable to all prospective nominees. The Nominating Committee does not have a formal policy for the consideration of diversity in identifying nominees for directors. However, the Company believes that the backgrounds and qualifications of the directors, considered as a group, should provide a significant composite mix of experience, knowledge, and abilities that will allow the Board to fulfill its responsibilities.
Stockholder Nominees
The Nominating Committee will consider properly submitted stockholder nominations for candidates for membership on the Board of Directors from stockholders who meet each of the requirements set forth in the Bylaws, including, but not limited to, the requirements that any such stockholder own at least 1% of the Company’s shares of the Common Stock entitled to vote at the meeting on such election, has held such shares continuously for at least one full year, and continuously holds such shares through and including the time of the annual or special meeting. Nominations of persons for election to the Board of Directors may be made at any Annual Meeting of Stockholders, or at any Special Meeting of Stockholders called for the purpose of electing directors. Any stockholder nomination (“Proposed Nominee”) must comply with the requirements of the Company’s Bylaws and the Proposed Nominee must meet the minimum qualification requirements as discussed above. For a nomination to be made by a stockholder, such stockholder must provide advance written notice to the Nominating Committee, delivered to the Company’s principal executive office address (i) in the case of an Annual Meeting of Stockholders, no later than the 90th day nor earlier than the 120th day prior to the anniversary date of the immediately preceding Annual Meeting of Stockholders; and (ii) in the case of a Special Meeting of Stockholders called for the purpose of electing directors, not later than the 10th day following the day on which public disclosure of the date of the Special Meeting of Stockholders wasis made.
The Nominating Committee will evaluate the qualification of the Proposed Nominee and the Proposed Nominee’s disclosure and compliance requirements in accordance with the Company’s Bylaws. If the Board of Directors, upon the recommendation of the Nominating Committee, determines that a nomination was not made in accordance with the Company’s Bylaws, the Chairman of the Meeting shall declare the nomination defective and it will be disregarded.
Members of the Nominating Committee during 20152018 were Joe R. Reeder (Chairperson), Jack Lahav,S. Robert Cochran, and Zach P. Wamp, who replaced Dr. Gary G. Kugler. Dr. Charles E. Young also served on the Nominating Committee until his departure from the BoardKugler as a member effective September 17, 2015.April 19, 2018. The Nominating Committee meets at least quarterly and at such times as necessary or advisable and held fourfive meetings in 2015.2018. The Nominating Committee is governed by a Corporate Governance and Nominating Committee Charter, which is available on our website atwww.perma-fix.com. All members of the Nominating Committee in 2015 are/were "independent"“independent” as that term is defined by the current NASDAQNasdaq listing standards, and each current member of the Nominating Committee is “independent” under such definition.standards.
Research and DevelopmentStrategic Advisory Committee:
The Research and Development Committee (the “R&D Committee”) outlines the structures and functions of the Company’s research and development strategies, the acquisition and protection of the Company’s intellectual property rights and assets, and provides its perspective on such matters to the Board of Directors. Members of the R&D Committee during 2015 were Dr. Gary Kugler and Dr. Louis Centofanti. The R&D Committee held four meetings in 2015. The R&D Committee does not have a charter.
Strategic Advisory Committee:
The primary functions of the Strategic Advisory Committee (“Strategic Committee”) are to investigate and evaluate strategic alternatives available to the Company and to work with management on long-range strategic planning and identifying potential new business opportunities. The members of the Strategic Advisory Committee during 20152018 were John M. ClimacoS. Robert Cochran (Chairperson), Joe R. Reeder, Mark A. Zwecker, and Larry M. Shelton.TheShelton. The Strategic Advisory Committee does not have a charter. The Strategic Committee held four meetings in 2015. The Strategic Committee does not have a charter.2018.
RiskRisk Oversight by Our Board
The Board is responsible for understanding the risks the Company faces, what steps management is taking to manage those risks and if the steps taken are effective in managing those risks. It is also important that the Board understands what level of risk is appropriate for the Company. While the Board has the ultimate oversight responsibility for the risk management process, certain committees play an integral part in fulfilling the Board’s oversight responsibilities in certain areas of risk.Inrisk. In particular, the Audit Committee focuses on financial and enterprise risk exposures, including internal controls.controls and cybersecurity (including oversight of appropriate risk prevention and mitigation strategies, systems, processes and controls). The Audit Committee reviews and discusses with management and internal audit our major financial risk exposures, including risks related to fraud, liquidity and regulatory compliance, our policies with respect to risk assessment and risk management, cybersecurity management, and the steps management has taken to monitor and control such exposures at least quarterly and whenever warranted. The Compensation Committee strives to create incentives that do not encourage excessive risk-taking beyond the Company’s ability to effectively identify and manage risk. To monitor such risks, the Board receives regular updates from management of higher risk activities that we face, such as our closure policies and statusThe participation of our pending litigation.Board in our risk oversight process includes receiving regular reports from members of senior management on areas of material risk to our Company, including operational, financial, legal and regulatory, cybersecurity, and strategic and reputational risks. Each of our directors has access to our named executive officers and any other members of our management to discuss and monitor potential risks.
Code of Ethics
We have adopted a Code of Ethics that applies to all our executive officers, including our principal executive officer, principal financial officer, and controller. Our Code of Ethics is available on our website atwww.perma-fix.com. If any amendments are made to the Code of Ethics or any grants of waivers are made to any provision of the Code of Ethics to any of our executive officers, we will promptly disclose the amendment or waiver and nature of such amendment of waiver on our website.
Compensation of Directors
Directors who are employees receive no additional compensation for serving on the Board of Directors or its committees. In 2015,2018, we provided the following annual compensation to each of our directors who are not employees:
● | options to purchase 2,400 shares of our Common Stock with each option having a 10-year term and being fully vested after six months from grant date; |
● | a quarterly director fee of $8,000; |
● | an additional quarterly fee of $5,500 and $7,500 to the Chairman of our Audit Committee and Chairman of the Board (non-employee), respectively; and |
● | a fee of $1,000 for each board meeting |
Each director may elect to have either 65% or 100% of such fees payable in Common Stock under the 2003 Outside Directors Stock Plan (“2003 Outside Directors Plan”), with the balance payable in cash.
Effective June 2, 2015, Mr. John Climaco,Dr. Louis Centofanti, a current directormember of the Company, was named the EVP of PF Medical, the Company’s majority-owned Polish subsidiary. As the EVP of PF Medical, Mr. ClimacoBoard, is provided an annual salary of $150,000 from PF Medical. As a result of Mr. Climaco’s employment with PF Medical effective June 2, 2015, he was no longernot eligible to receive compensation for his service as a director of the Company after such date.as he is an employee (named executive officer) of the Company.
The table below summarizes the director compensation expenses recognized by the Company for the director optionoptions and stock awards (resulting from fees earned) for the year ended December 31, 2015.2018. The terms of the 2003 Outside Directors Stock Plan are further described below under “2003 Outside Directors Stock Plan.” Compensation noted below for Mr. Climaco was earned as a director of the Company prior to becoming the EVP of PF Medical.
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Director Compensation
Name | Fees Earned or Paid In Cash | Stock Awards | Option Awards | Non-Equity Incentive Plan Compensation | Change in Pension Value and Nonqualified Deferred Compensation Earnings | All Other Compensation | Total | Fees Earned or Paid In Cash | Stock Awards | Option Awards | Non-Equity Incentive Plan Compensation | Nonqualified Deferred Compensation Earnings | All Other Compensation | Total | ||||||||||||||||||||||||||||
($) (1) | ($) (2) | ($)(3) | ($) | ($) | ($) | ($) | ($)(1) | ($)(2) | ($)(3) | ($) | ($) | ($) | ($) | |||||||||||||||||||||||||||||
John M. Climaco | 6,475 | 16,032 | — | — | — | 117,000 | (4) | 139,507 | ||||||||||||||||||||||||||||||||||
Dr. Gary G. Kugler | 12,775 | 31,635 | 6,823 | — | — | — | 51,233 | |||||||||||||||||||||||||||||||||||
Jack Lahav | — | 46,669 | 6,823 | — | — | — | 53,492 | |||||||||||||||||||||||||||||||||||
S. Robert Cochran | — | 48,002 | 7,248 | — | — | — | 55,250 | |||||||||||||||||||||||||||||||||||
Dr. Gary G. Kugler(5) | 7,091 | 17,558 | — | — | — | — | 24,649 | |||||||||||||||||||||||||||||||||||
Joe R. Reeder | 3,150 | 43,801 | 6,823 | — | — | — | 53,774 | — | 47,336 | 7,248 | — | — | — | 54,584 | ||||||||||||||||||||||||||||
Larry M. Shelton | 23,275 | 57,633 | 6,823 | — | — | — | 87,731 | 23,100 | 57,203 | 7,248 | — | — | — | 87,551 | ||||||||||||||||||||||||||||
Dr. Charles E. Young(5) | 9,229 | 22,855 | — | — | — | — | 32,084 | |||||||||||||||||||||||||||||||||||
Zach P. Wamp(4) | 11,721 | 29,021 | 22,548 | — | — | — | 63,290 | |||||||||||||||||||||||||||||||||||
Mark A. Zwecker | 20,475 | 50,698 | 6,823 | — | — | — | 77,996 | 20,300 | 50,269 | 7,248 | — | — | — | 77,817 |
(1) | Under the 2003 Outside Directors |
(2) | The number of shares of Common Stock comprising stock awards granted under the 2003 Outside Directors |
(3) | Options granted under the Company’s 2003 Outside Directors |
Name | Options Outstanding at December 31, 2018 | |||
S. Robert Cochran | 10,800 | |||
Dr. Louis Centofanti | 50,000 | |||
Joe R. Reeder | 24,000 | |||
Larry M. Shelton | 24,000 | |||
Zach P. Wamp | 8,400 | |||
Mark A. Zwecker | 24,000 | |||
Total | 141,200 |
(4) | Mr. Wamp was appointed by the Board to fill a vacancy on the Board effective January 18, 2018. | |
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See “John Climaco” under “Certain Relationships and Related Transactions” for further information on Mr. Climaco.
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2003 Outside DirectorsStockPlan
We believe that it is important for our directors to have a personal interest in our success and growth and for their interests to be aligned with those of our stockholders; therefore, under our 2003 Outside Directors Stock Plan, as amended (“2003 Outside Directors Stock Plan”), each outside director is granted a 10-year option to purchase up to 6,000 shares of Common Stock on the date such director is initially elected to the Board, and receives on each re-election date an option to purchase up to another 2,400 shares of our Common Stock, with the exercise price being the fair market value of the Common Stock on the day preceding the option grant date. No option granted under the 2003 Outside Directors Stock Plan is exercisable until after the expiration of six months from the date the option is granted and no option shall be exercisable after the expiration of ten years from the date the option is granted. As of the date of this Proxy Statement, options to purchase 163,200156,000 shares of Common Stock arewere outstanding under the 2003 Outside Directors Stock Plan.Plan, of which all were vested.
As a member of the Board, each director may elect to receive either 65% or 100% of the director'sdirector’s fee in shares of our Common Stock. The number of shares received by each director is calculated based on 75% of the fair market value of the Common Stock determined on the business day immediately preceding the date that the quarterly fee is due. The balance of each director’s fee, if any, is payable in cash. In 2015,2018, the fees earned by our outside directors totaled approximately $345,000.$312,000. Reimbursements of expenses for attending meetings of the Board are paid in cash at the time of the applicable Board meeting. As a management director, Dr. Centofanti is not eligible to participate in the 2003 Outside Directors Stock Plan. Although Dr. Centofanti is not compensated for his services provided as a director, Dr. Centofanti is compensated for his services rendered as an officer of the Company. SeeCompany (See “EXECUTIVE COMPENSATION —– Summary Compensation Table.” Effective June 2, 2015, Mr. John Climaco, a current director, became ineligible to participate in the 2003 Outside Directors Stock Plan upon becoming the EVP of PF Medical, a majority-owned Polish subsidiary of the Company. As the EVP of PF Medical, Mr. Climaco is provided an annual salary of $150,000 from PF Medical.
As of the date of this Proxy Statement, we have issued 461,335651,449 shares of our Common Stock in payment of director fees since the inception of the 2003 Outside Directors Stock Plan.
In the event of a “change of control” (as defined in the 2003 Outside Directors Stock Plan), each outstanding stock option and stock award shall immediately become exercisable in full notwithstanding the vesting or exercise provisions contained in the applicable stock option agreement.
Communications with the Board
The Company’s Board of Directors believes that it is important for the Company to have a process that enables stockholders to send communications to the Board. Accordingly, stockholders who wish to communicate with the Board of Directors or a particular director may do so by sending a letter to the Secretary of the Corporation, at 8302 Dunwoody Place, Suite 250, Atlanta, Georgia 30350. The mailing envelope must clearly indicate that the enclosed letter is a “Stockholder-Board Communication” or “Stockholder-Director Communication.” All such letters must identify the author as a stockholder and clearly state whether the intended recipients are all members of the Board of Directors or only certain specified individual directors. The Secretary of the Corporation will make copies of all such letters and circulate them to the appropriate director or directors.
Family Relationships
There are no family relationships between any of the Company’s existing directors, executive officers, or persons nominated or chosen to become a director or executive officer. Dr. Centofanti and John Climaco areis the only directorsdirector who are employeesis an employee of the Company.
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Certain Relationships and Related Transactions
Audit Committee Review
Our Audit Committee Charter provides for the review by the Audit Committee of any related party transactions, other than transactions involving an employment relationship with the Company, which are reviewed by the Compensation Committee. Although we do not have written policies for the review of related party transactions, the Audit Committee reviews transactions between the Company and its directors, executive officers, and their respective immediate family members. In reviewing a proposed transaction, the Audit Committee takes into account, among other factors it deems appropriate:
(1) | the extent of the related person’s interest in the transaction; |
(2) | whether the transaction is on terms generally available to an unaffiliated third-party under the same or similar circumstances; |
(3) | the cost and benefit to the Company; |
(4) | the impact or potential impact on a director’s independence in the event the related party is a director, an immediate family member of a director or an entity in which a director is a partner, stockholder or executive officer; |
(5) | the availability of other sources for comparable products or services; |
(6) | the terms of the transaction; and |
(7) | the risks to the Company. |
Related party transactions are reviewed by the Audit Committee prior to the consummation of the transaction. With respect to a related party transaction arising between Audit Committee meetings, the CFO may present it to the Audit Committee Chairperson, who will review and may approve the related party transaction subject to ratification by the Audit Committee at the next scheduled meeting. Our Audit Committee shall approve only those transactions that, in light of known circumstances are not inconsistent with the Company’s best interests.
Related Party Transactions
Mr. David Centofanti.Mr. David Centofanti serves as the Company’sour Vice President of Information Systems. For such position, he received annual compensation of $168,000$173,000 in 2015. Mr.2018. David Centofanti is the son of Dr. Louis F. Centofanti, our CEO, PresidentEVP of Strategic Initiatives and a Board member. We believe the compensation received by Mr. Centofanti for the technical expertise he provides to the Company is competitive and comparable to compensation we would have to pay to an unaffiliated third party with the same technical expertise.
Mr. Robert L. FergusonFerguson..Mr. Robert L. Ferguson serves as an advisor to the Company’sour Board and iswas also a member of the Supervisory Board of PF Medical (until May 11, 2018), a majority-owned Polish subsidiary of the Company. Mr.Robert Ferguson previously served as a Board member forof the Company from June 2007 to February 2010 and again from August 2011 to September 2012. Robert Ferguson is also a consultant for us in connection with our Test Bed Initiative (“TBI”) at our Perma-Fix Northwest Richland, Inc. (“PFNWR”) facility. As an advisor to the Company’sour Board, Mr.Robert Ferguson is paid $4,000 monthly plus reasonable expenses. For such services, Mr.Robert Ferguson received compensation of approximately $58,000$50,000 for the year ended December 31, 2015.2018. For Robert Ferguson’s consulting work in connection with our TBI, on July 27, 2017 (“grant date”) we granted Robert Ferguson a stock option from our 2017 Stock Option Plan for the purchase of up to 100,000 shares of our Common Stock at an exercise price of $3.65 a share, which was the fair market value of our common stock on the date of grant (“Ferguson Stock Option”). The vesting of the Ferguson Stock Option is subject to the achievement of the following milestones (“waste” as noted below is defined as liquid LAW (“low activity waste”) and/or liquid TRU (“transuranic waste”)):On August 2, 2013,
● | Upon treatment and disposal of three gallons of waste at the PFNWR facility by January 27, 2018, 10,000 shares of the Ferguson Stock Option shall become exercisable; | |
● | Upon treatment and disposal of 2,000 gallons of waste at the PFNWR facility by January 27, 2019, 30,000 shares of the Ferguson Stock Option shall become exercisable; and | |
● | Upon treatment and disposal of 50,000 gallons of waste at the PFNWR facility and assistance, on terms satisfactory to the Company, in preparing certain justifications of cost and pricing data for the waste and obtaining a long-term commercial contract relating to the treatment, storage and disposal of waste by January 27, 2021, 60,000 shares of the Ferguson Stock Option shall become exercisable. |
The term of the Ferguson Stock Option is seven (7) years from the grant date. Each of the milestones is exclusive of each other; therefore, achievement of any of the milestones above by Robert Ferguson by the designated date will provide Robert Ferguson the right to exercise the number of options in accordance with the milestone attained. The 10,000 options as noted above became vested by Robert Ferguson on December 19, 2017. On May 1, 2018, Robert Ferguson exercised the 10,000 options for the purchase of 10,000 shares of our Common Stock, resulting in total proceeds paid to us of approximately $36,500.
On January 17, 2019, the Ferguson Stock Option was amended whereby the vesting date of the Ferguson Stock Option for the second milestone as discussed above was amended from “by January 27, 2019” to “by March 31, 2020.” All other terms of the Ferguson Stock Option remain unchanged.
On April 1, 2019, we completed a lending transaction with Messrs. Robert Ferguson and William Lampson (“collectively, the “Lenders”(the “Lender”), whereby the Companywe borrowed from the LendersLender the sum of $3,000,000$2,500,000 pursuant to the terms of a Loan and Security Purchase Agreement and promissory note (the “Loan”). The proceeds from the Loan wereare to be used for general working capital purposes. The promissory noteLoan is unsecured, with a term of threetwo years with interest payable at a fixed interest rate of 2.99%4.00% per annum. The promissory noteLoan provides for monthly payments of accrued interest only during the first year of the Loan, with the first interest payment due SeptemberMay 1, 20132019 and monthly payments of $125,000approximately $208,333 in principal plus accrued interest forstarting in the second and third year of the Loan. AsThe Loan also allows for prepayment of principal payments over the term of the Loan without penalty. In connection with the above Loan, the Lender entered into a Subordination Agreement with our credit facility lender, whereby the Lender agreed to subordinate payment under the Loan, and agreed that the Loan will be junior in right of payment to the credit facility in the event of default or bankruptcy or other insolvency proceeding by us. In connection with this capital raise transaction described above and consideration for the Companyus receiving the Loan, we issued warrantsa Warrant (the “Warrant”) to eachthe Lender to purchase up to 35,00060,000 shares of the Company’sour Common Stock at an exercise price of $2.23$3.51 per share, which was based on the closing bid price for a share of our Common Stock on NASDAQ.com immediately preceding the execution of the Company’s Common Stock at the closing of the transaction.Loan and Warrant. The warrants areWarrant is exercisable six months from August 2, 2013April 1, 2019 and expireexpires on August 2, 2016.April 1, 2024. As further consideration for this capital raise transaction relating to the Loan, the Companywe issued an aggregate 90,00075,000 shares of the Company’sour Common Stock with each Lender receiving 45,000 shares.to the Lender. The 90,00075,000 shares of Common Stock, the Warrant and 70,000the 60,000 shares of Common Stock purchase warrantsthat may be purchased under the Warrant will be and were issued in a private placement that was exempt from registration under Rule 506 and/or Sections 4(a)(2) and 4(a)(5) of the Securities Act of 1933, as amended (the “Act”), and bear a restrictive legend against resale except in a transaction registered under the Securities Act or in a transaction exempt from registration thereunder.
Mr. John Climaco.On June 2, 2015, Mr. Climaco, a current memberUpon default, the Lender will have the right to elect to receive in full and complete satisfaction of our obligations under the Loan either: (a) the cash amount equal to the sum of the Company’s Boardunpaid principal balance owing under the loan and a memberall accrued and unpaid interest thereon (the “Payoff Amount”) or (b) upon meeting certain conditions, the number of whole shares of our Common Stock (the “Payoff Shares”) determined by dividing the Payoff Amount by the dollar amount equal to the closing bid price of our Common Stock on the date immediately prior to the date of default, as reported or quoted on the primary nationally recognized exchange or automated quotation system on which our Common Stock is listed; provided however, that the dollar amount of such closing bid price shall not be less than $3.51, the closing bid price for our Common Stock as disclosed on NASDAQ.com immediately preceding the signing of this loan agreement.
If issued, the Payoff Shares will not be registered and the Lender will not be entitled to registration rights with respect to the Payoff Shares. The aggregate number of shares, warrant shares, and Payoff Shares that are or will be issued to the Lender pursuant to the Loan, together with the aggregate shares of our Common Stock and other voting securities owned by the Lender or which may be acquired by the Lender as of the Strategic Committeedate of issuance of the Board, was electedPayoff Shares, shall not exceed the number of shares of our Common Stock equal to 14.9% of the number of shares of our Common Stock issued and outstanding as of the EVPdate immediately prior to the default, less the sum of PF Medical. As EVP(i) the number of PF Medical, Mr. Climaco receives an annual salaryshares of $150,000our Common Stock owned by the Lender immediately prior to the date of such default, and is not eligible(ii) the number of shares of our Common Stock that may be acquired by the Lender under warrants and/or options outstanding immediately prior to receive additional compensation for serving on the Company’s Board.date of such default.
On October 17, 2014, the Company’s Compensation CommitteeEmployment Agreements and the Board, with Mr. Climaco abstaining, approved a consulting agreement with Mr. Climaco. Pursuant to the consulting agreement, Mr. Climaco was responsible to, among other things:
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Mr. Climaco was paid $22,000 per month under the consulting agreement, beginning September 2014, until the termination of the consulting agreement effective June 2, 2015, upon Mr. Climaco’s election as EVP of PF Medical. For his services under the consulting agreement, Mr. Climaco received approximately $117,000 in 2015.
Mr. Climaco is also a director of Digirad Corporation, a Delaware corporationManagement Incentive Plans (“Digirad”), Nasdaq: DRAD. On July 24, 2015, PF Medical and Digirad entered into a multi-year Tc-99m Supplier Agreement (the “Supplier Agreement”) and a Series F Stock Subscription Agreement (the “Subscription Agreement”), (together, the “Digirad Agreements”MIPs”). The Supplier Agreement became effective upon the completion of the Subscription Agreement. Pursuant to the terms of the Digirad Agreements,Digirad purchased, in a private placement, 71,429 shares of PF Medical’s restricted Series F Stock for an aggregate purchase price of $1,000,000. The 71,429 share investment made by Digirad constituted approximately 5.4% of the outstanding common shares of PF Medical. As a result of this transaction, the Company’s ownership interest in PF Medical was diluted from approximately 64.0% to 60.5%. The Supplier Agreement provides, among other things, that upon PF Medical’s commercialization of certain Tc99m generators, Digirad will purchase agreed upon quantities of Tc-99m for its nuclear imaging operations either directly or in conjunction with its preferred nuclear pharmacy supplier and PF Medical will supply Digirad, or its preferred nuclear pharmacy supplier, with Tc-99m at a preferred pricing, subject to certain conditions.
Employment Agreements.We have an employment agreement (each dated July 10, 2014)agreements with each of Dr. CentofantiMark Duff, (our President and CEO), Ben Naccarato (our CFO), and John LashDr. Louis Centofanti, (our COO).EVP of Strategic Initiatives), with each employment agreement dated September 8, 2017. Each of the employment agreements is effective for three years from September 8, 2017 (the “Initial Term”) unless earlier terminated by us or by the executive officer. At the end of the Initial Term of each employment agreement, each employment agreement will automatically be extended for one additional year, unless at least six months prior to the expiration of the Initial Term, we or the executive officer provides written notice not to extend the terms of the employment agreement. Each employment agreement provides for annual base salaries, performance bonuses (including(as provided in the Management Incentive PlansPlan (“MIP”) as approved by our Boards)Board), and other benefits commonly found in such agreements. In addition, each employment agreement provides that in the event of termination of suchthe executive officer without cause or termination by the officerterminates his employment for good reason“good reason” (as such terms are defined in the agreements) or is terminated by us without cause (including the executive officer terminating his employment for “good reason” or is terminated by us without cause within 24 months after a Change in Control (as defined in the agreement)), we will pay the terminatedexecutive officer shall receive payments of an amountthe following: (a) a sum equal to any unpaid base salary, accrued unused vacation time and any employee benefits that have accrued as of the termination but had not yet been paid plus(“Accrued Amounts”); (b) two years of full base salary; (c) performance compensation under the MIP earned with respect to the fiscal year immediately preceding the date of termination; (d) an additional year of performance compensation as provided under the MIP earned, if not already paid, with respect to the fiscal year immediately preceding the date of termination; and (e) pro-rated performance compensation earned under the current fiscal year MIP up to the date of termination, if applicable. If the executive terminates his employment for a reason other than for good reason, we will pay to the executive the amount equal to one year’s base salary at the time of termination. In addition,Accrued Amounts plus any performance compensation payable pursuant to the employment agreements provide thatMIP.
If there is a Change in the event of a change in controlControl (as defined in the employment agreements), all outstanding stock options to purchase our Common Stock granted to, and held by the executive officer coveredwill immediately become exercisable in full commencing on the date of termination through the original term of the options. In the event of the death of an executive officer, all outstanding stock options to purchase Common Stock held by the executive officer will immediately become exercisable in full commencing on the date of death, with such options exercisable for the lesser of the original option term or twelve months from the date of the executive officer’s death. In the event of an executive officer terminating his employment agreementfor “good reason” or is terminated by us without cause, all outstanding stock options to bepurchase Common Stock held by the executive officer will immediately vested and exercisable.become exercisable in full commencing on the date of termination, with such options exercisable for the lesser of the original option term or within 60 days from the date of the executive’s date of termination.
On January 17, 2019, the Company’s Compensation Committee and the Board approved individual MIP for the CEO, CFO, and EVP of Strategic Initiatives. Each MIP is effective January 1, 2019 and applicable for the year ended December 31, 2019. Each MIP provides guidelines for the calculation of annual cash incentive based compensation, subject to Compensation Committee oversight and modification. Each MIP awards cash compensation based on achievement of performance thresholds, with the amount of such compensation established as a percentage of the executive’s annual 2019 base salary on the approval date of the MIP. The potential target performance compensation ranges from 5% to 150% of the 2019 base salary for the CEO ($14,350 to $430,500), 5% to 100% of the 2019 base salary for the CFO ($11,762 to $235,231), and 5% to 100% of the 2019 base salary for the EVP of Strategic Initiatives ($11,449 to $228,985). Pursuant to the MIPs, the Compensation Committee has the right to modify, change or terminate the MIPs at any time and for any reason. See “2019 MIPs.”
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act, and the regulations promulgated thereunder require our executive officers and directors and beneficial owners of more than 10% of our Common Stock to file reports of ownership and changes of ownership of our Common Stock with the Securities and Exchange Commission, and to furnish us with copies of all such reports. Based solely on a review of the copies of such reports furnished to us and written information provided to us, we believe that during 20152018 none of our executive officers, directors, or beneficial owners of more than 10% of our Common Stock failed to timely file reports under Section 16(a), except for Mr. Jack Lahav, who inadvertently failed to timely file two Form 4s to report two transactions..
Audit Committee Report
The Audit Committee is responsible for providing independent objective oversight of the Company’s accounting functions and internal controls. In accordance with rules adopted by the Securities and Exchange Commission, the Audit Committee of the Company states that:
● | The Audit Committee has reviewed and discussed with management the Company’s audited financial statements for the fiscal year ended December 31, |
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● | The Audit Committee has discussed with Grant Thornton LLP, the Company’s independent registered public accounting firm for the year ended December 31, |
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● | The Audit Committee has received the written disclosures and the letter from Grant Thornton LLP, required by PCAOB Rule 3526, “Communication with Audit Committees Concerning Independence,” as modified or supplemented, and has discussed with Grant Thornton LLP, the independent registered public accounting firm’s independence. |
In connection with the Audit Committee’s discussion with Grant Thornton LLP, as described above, the Audit Committee discussed and considered the nature and scope of the audit services performed by Grant Thornton LLP for the year ended December 31, 2015,2018, and determined that the audit services provided by Grant Thornton LLP were compatible with maintaining the independence of Grant Thornton LLP.
Based upon the review and discussions referred to above, the Audit Committee recommended to the Board of Directors that the Company’s audited financial statements be included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015,2018, for filing with the Securities and Exchange Commission. The Audit Committee has appointed Grant Thornton, LLP as the Company’s independent registered public accounting firm for 2016.
2019.
This report is submitted on behalf of the members of the Audit Committee:
Mark A. Zwecker (Chairperson) | |
S. Robert Cochran Larry M. Shelton | |
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The Report of the Audit Committee shall not be deemed to be “soliciting material” or to be “filed” with the Securities and Exchange Commission, nor shall it be incorporated by any general statement incorporating by reference this Proxy Statement into any filing under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, except to the extent that the Company specifically incorporates this information by reference and shall not otherwise be deemed filed under such Acts.
EXECUTIVE OFFICERS
The following table sets forth, as of the date hereof, information concerning our executive officers:
NAME |
| AGE | POSITION | ||
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| 56 | President | ||
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| 56 | CFO, Vice President, Secretary, and | ||
| 75 |
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Dr. LouisF.Centofanti
See “Election of Directors – Dr. Louis F. Centofanti” for further information on Dr. Centofanti.
Mr. Ben Naccarato
Mr. Naccarato has served as the Company’s CFO since February 26, 2009. Mr. Naccarato joined the Company in September 2004 and served as Vice President, Finance of the Company’s Industrial Segment until May 2006, when he was named Vice President, Corporate Controller/Treasurer. Prior to joining the Company in September 2004, Mr. Naccarato was the CFO of Culp Petroleum Company, Inc., a privately held company in the fuel distributionSince July 2015 and used waste oil industry from December 2002 to September 2004. In July 2015, Mr. Naccarato was namedhas served as the CFO of PF Medical and a member of the Management Board of PF Medical, respectively. PF Medical is the Company’s majority-owned Polish subsidiary involved in the research and development of a new medical isotope production technology. EffectiveMr. Naccarato has over 30 years of experience in senior financial positions in the waste management and used oil industries. From December 22, 2015,2002 to September 2004, Mr. Naccarato was appointed to the Management BoardCFO of PF Medical.a privately held company in the fuel distribution and used waste oil industry. Mr. Naccarato is a graduate of University of Toronto having receivedwith a Bachelor of Commerce and Finance Degree and is a Chartered Professional Accountant, Certified Management Accountant.Accountant (CPA, CMA).
Mr. John Lash
Mr. Lash has served as the Company’s COO since March 20, 2014.Mr. Lash previously served as Senior Vice President (“SVP”) of Operations of the Company’s Treatment Segment for over ten years. Mr. Lash has over 20 years of experience in the nuclear industry, with specific experience in managing remedial activities, as well as decontamination and disposal of radioactive materials from commercial and government operating facilities. As SVP of Operations, Mr. Lash was responsible for all treatment and remediation activities. Prior to joining the Company in 2001, Mr. Lash served as Broad Spectrum Manager for Waste Control Specialists in Dallas, TX where his responsibilities included contract management of U.S. Department of Energy (“DOE”) nationwide procurement for mixed waste treatment services, business development activities, and technology development. Prior to that, he worked for ten years at Chem-Nuclear Systems where he held various managerial positions including manager of the Chem-Nuclear Consolidation Facility. Mr. Lash received his education and qualification from the U.S. Navy Nuclear Power Program, where he served for 8 years prior to working in the commercial and nuclear industry.
Mr. Mark Duff
On May 15, 2016, the Board appointed
Mr. Mark Duff towas appointed President and CEO by the position of Executive Vice President, effective June 13, 2016.Company’s Board on September 8, 2017, succeeding Dr. Louis Centofanti. Mr. Duff brings additional experiencepreviously held the positions of Chief Operating Officer (“COO”) and leadership toEVP of the Company and will join the management team to support and help accelerate anticipated revenue growth and profitability.Company. Mr. Duff has over 30 years of management and technical experience in the DOEU.S Department of Energy (“DOE”) and U.S. Department of Defense (“DOD”) environmental and construction markets as a corporate officer, senior project manager, co-founder of a consulting firm, and federal employee. For the pastimmediate five years prior to joining the Company in June 2016, Mr. Duff has beenwas responsible for the successful completion of over 70 performance-based projects at the Paducah Gaseous Diffusion Plant (“PGDP”) in Paducah, KY. At the PGDP, he served as the Project Manager for the Paducah Remediation Contract, which was a five-year project with a total value of $458 million. Prior to the PGDP project, Mr. Duff was a senior manager supporting Babcock and Wilcox (“B&W”), leading several programs that included building teams to solve complex technical problems. These programs included implementation of the American Recovery and Reinvestment Act (“ARRA”) at the DOE Y-12 facility with a $245 million budget for new cleanup projects completed over a two yeartwo-year period. During this period, Mr. Duff served as project manager leading a team of senior experts in support of Toshiba Corporation in Tokyo, Japan to integrate United States technology in the recovery of the Fukushima Daiichi Nuclear Reactor disaster. This project included arriving in Japan within three weeks after the earthquake to coordinate technologies associated with water treatment, radiation protection and shielding. Prior to joining B&W, Mr. Duff served as the president of Safety and Ecology Corporation (“SEC”). As President of SEC, he helped grow the company from $50 million to $80 million in annual revenues with significant growth in infrastructure, marketing, and client diversification. Mr. Duff has an MBA from the University of Phoenix and received his B.S. from the University of Alabama.
EXECUTIVE COMPENSATION
Summary Compensation
The following table summarizes the total compensation paid to or earned by each of the named executive officerofficers (“NEO”NEOs”) for the fiscal years ended December 31, 20152018 and 2014.2017.
Name and Principal Position | Year | Salary | Bonus | Option Awards | Non-Equity Incentive Plan Compensation | All other Compensation | Total Compensation | |||||||||||||||||||
($) | ($) | ($)(4) | ($)(5) | ($)(6) | ($) | |||||||||||||||||||||
Mark Duff(1) | 2018 | 275,125 | — | — | — | 29,555 | 304,680 | |||||||||||||||||||
President and CEO | 2017 | 267,000 | — | 188,118 | — | 32,362 | 487,480 | |||||||||||||||||||
Ben Naccarato | 2018 | 229,494 | — | — | — | 40,732 | 270,226 | |||||||||||||||||||
Vice President and CFO | 2017 | 226,552 | (2) | — | 94,059 | — | 36,706 | 357,317 | ||||||||||||||||||
Dr. Louis Centofanti(1) | 2018 | 223,400 | — | — | — | 32,177 | 255,577 | |||||||||||||||||||
EVP of Strategic Initiatives | 2017 | 262,959 | (3) | — | 94,059 | — | 30,464 | 387,482 |
Name and Principal Position | Year | Salary | Bonus | Option Awards | Non-Equity Incentive Plan Compensation | All other Compensation | Total Compensation | |||
($) | ($) | ($) (4) | ($) (5) | ($)(6) | ($) | |||||
Dr. Louis Centofanti(1) | 2015 | 271,115 | — | — | 82,691 | 31,446 | 385,252 | |||
President and CEO | 2014 | 271,115 | — | — | — | 26,141 | 297,256 | |||
Ben Naccarato | 2015 | 214,240 | — | — | 65,343 | 37,710 | 317,293 | |||
Vice President and CFO | 2014 | 214,240 | — | — | — | 33,135 | 247,375 | |||
John Lash(2) | 2015 | 215,000 | — | — | 65,575 | 26,863 | 307,438 | |||
Vice President and COO | 2014 | 201,770 | 25,000 | (3) | 129,739 | — | 23,372 | 379,881 |
(1) |
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(2) | Effective April, 20, 2017, the Compensation Committee and the Board approved an increase in Mr. Naccarato’s annual salary to $229,494 from $220,667. |
(3) | After retiring in 2017 as President and CEO, Dr. Centofanti |
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(4) | Reflects the aggregate grant date fair value of awards computed in accordance with ASC 718, “Compensation – Stock Compensation.” |
(5) | Represents performance compensation earned under the Company’s |
(6) | The amount shown includes a monthly automobile allowance |
Insurance | Auto Allowance or | |||||||||||||||
Name | Premium | Company Car | 401(k) match | Total | ||||||||||||
Dr. Louis Centofanti | $ | 17,028 | $ | 9,000 | $ | 5,418 | $ | 31,446 | ||||||||
Ben Naccarato | $ | 24,039 | $ | 9,000 | $ | 4,671 | $ | 37,710 | ||||||||
John Lash | $ | 17,028 | $ | 6,000 | $ | 3,835 | $ | 26,863 |
Name | Insurance Premium | Auto Allowance | 401(k) match | Total | ||||||||||||
Mark Duff | $ | 14,430 | $ | 9,000 | $ | 6,125 | $ | 29,555 | ||||||||
Ben Naccarato | $ | 27,109 | $ | 9,000 | $ | 4,623 | $ | 40,732 | ||||||||
Dr. Louis Centofanti | $ | 18,687 | $ | 9,000 | $ | 4,490 | $ | 32,177 |
Outstanding Equity Awards at Fiscal Year-EndYear-End
The following table sets forth unexercised options held by the NEOs as of the fiscal year-end.
18 |
Outstanding Equity Awards at December 31, 20152018
Option Awards | ||||||||||||||||||||||||||||
Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#)(1) Unexercisable | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price ($) | Option Expiration Date | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#)(1) Unexercisable | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price ($) | Option Expiration Date | ||||||||||||||||||
Dr. Louis Centofanti | — | — | — | — | — | 10,000 | 40,000 | (2) | — | 3.65 | 7/27/2023 | |||||||||||||||||
Ben Naccarato | — | — | — | — | 10,000 | 40,000 | (2) | — | 3.65 | 7/27/2023 | ||||||||||||||||||
John Lash | 15,000 | 30,000 | (2) | — | 5.00 | 7/10/2020 | ||||||||||||||||||||||
Mark Duff | 20,000 | 80,000 | (2) | — | 3.65 | 7/27/2023 | ||||||||||||||||||||||
33,333 | (3) | 16,667 | (3) | — | 3.97 | 5/15/2022 |
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Incentive stock option granted on July | |
(3) | Incentive stock option granted on May 15, 2016 under the Company’s 2010 Stock Option Plan. The option |
None of the Company’s NEOs exercised options during 2015.2018.
Employment Agreements
Each of our CEO, COO,Messrs. Duff, Centofanti and CFO (each is an NEO) has anNaccarato have entered into employment dated July 10, 2014agreements with the Company. The employment agreements dated July 10, 2014 with our CEO, COO,Company (each, an “Employment Agreement” and CFO are collectively, referred to as the “Employment Agreements” and each as an “Employment Agreement.” These Employment Agreements provided that (a) Dr. Centofanti, CEO, was entitled to receive an), effective September 8, 2017, with annual base salarysalaries of $271,115; (b) Mr. Lash, COO, was entitled to receive an$267,000, $223,400, and $229,494, respectively. Each annual base salary of $215,000; and (c) Mr. Naccarato, CFO, was entitled to receive an annual base salary of $214,240. The base salary is subject to adjustment as determined by the Compensation Committee. In addition, to base salary,each of these executive officers is entitled to participate in the Company'sCompany’s broad-based benefits plans and to anycertain performance compensation payable under anseparate MIPs as approved by the Company’s Compensation Committee and Board. The Company’s Compensation Committee and the Board approved individual MIP2018 MIPs on January 18, 2018 (which were effective January 1, 2018 and applicable for year 2018) for each of Mark Duff, Dr. Louis Centofanti, and Ben Naccarato (see discussion of the CEO, CFO, and COO (see further detail of each MIP2018 MIPs below under “2018 MIPs”). No compensation was earned under each of the heading “2015 Management Incentive Plans (“MIPs”)”).2018 MIPs.
Each of the Employment Agreements is effective for three years. Each Employment Agreement may beyears from September 8, 2017 (the “Initial Term”) unless earlier terminated prior to its expiration by the Company with or without “cause” (as defined below) or by the executive officer. At the end of the Initial Term of each Employment Agreement, each Employment Agreement will automatically be extended for one additional year, unless at least six months prior to the expiration of the Initial Term, the Company or the executive officer for “good reason” (as defined below) or any other reason. Ifprovides written notice not to extend the NEO’sterms of the Employment Agreement.
Pursuant to the Employment Agreements, if the executive officer’s employment is terminated due to death, death/disability or for cause we(as defined in the agreements), the Company will pay to the NEOexecutive officer or to his estate a lump suman amount equal to the sum of any unpaid base salary, accrued unused vacation time through the date of termination, and any benefits otherwise due at that timeto the executive officer under any employee benefit plan excluding any severance program or policy (the “Accrued Amounts”). and any performance compensation payable pursuant to the MIP.
If the NEOexecutive officer terminates his employment for “good reason” (as defined in the agreements) or is terminated by the Company without cause we(including any such termination for “good reason” or without cause within 24 months after a Change in Control (as defined in the agreement)), the Company will pay the NEO a sum equal toexecutive officer the total Accrued Amounts, plus one yeartwo years of full base salary.salary, performance compensation (under the MIP) earned with respect to the fiscal year immediately preceding the date of termination, an additional year of performance compensation (under the MIP) earned, if not already paid, with respect to the fiscal year immediately preceding the date of termination, and pro-rated performance compensation earned under the current fiscal year MIP up to the date of termination, if applicable. If the NEOexecutive terminates his employment for a reason other than for good reason, wethe Company will pay to him the executive an amount equal to the Accrued Amounts. Amounts plus any performance compensation payable pursuant to the MIP.
If there is a Change in Control (as defined below)in the agreements), all outstanding stock options to purchase common stock held by the NEOexecutive officer will immediately become vested and exercisable in full. The amountsfull commencing on the date of termination through the original term of the options. In the event of the death of an executive officer, all outstanding stock options to purchase common stock held by the executive officer will immediately become exercisable in full commencing on the date of death, with such options exercisable for the lesser of the original option term or twelve months from the date of the executive officer’s death. In the event an executive officer terminates his employment for “good reason” or is terminated by the Company without cause, all outstanding stock options to purchase common stock held by the executive officer will immediately become exercisable in full commencing on the date of termination, with such options exercisable for the lesser of the original option term or within 60 days from the date of the executive’s date of termination. Severance benefits payable with respect to a termination (other than base salary and amounts otherwiseAccrued Amounts) shall not be payable under any Company employee benefit plan) are payable only ifuntil the termination constitutes a “separation from service” (as defined under Treasury Regulation Section 1.409A-1(h)).
“Cause” is generally defined in each of the Employment Agreements as follows:
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“Good reason” is generally defined in each of the Employment Agreements as follows:
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“Change in Control” is generally defined in each of the Employment Agreements as follows:
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Potential Payments
The following table sets forth the potential (estimated) payments and benefits to which our NEOs - Mark Duff, Ben Naccarato, and Dr. Centofanti Mr. Lash, and Mr. Naccarato,- would be entitled upon termination of employment or following a Change in Control of the Company, as specified under each Employment Agreementof their respective agreements with the Company, assuming eachcircumstance described below occurred on December 31, 2015,2018, the last day of our fiscal year.
Name and Principal Position Potential Payment/Benefit | Disability, Death, or For Cause | Termination by Executive for Good Reason or by Company Without Cause | Change in Control of the Company | Disability or For Cause | Death | By Executive for Good Reason or by Company Without Cause | Change in Control of the Company | |||||||||||||||||||||
Dr. Louis Centofanti | ||||||||||||||||||||||||||||
President, CEO and Director | ||||||||||||||||||||||||||||
Severance | $ | ── | $ | 271,115 | $ | ── | ||||||||||||||||||||||
Mark Duff | ||||||||||||||||||||||||||||
President and CEO | ||||||||||||||||||||||||||||
Salary | $ | — | $ | — | $ | 560,000 | (1) | $ | 560,000 | (1) | ||||||||||||||||||
Performance compensation | $ | — | (2) | $ | — | (2) | $ | — | (2) | $ | — | (2) | ||||||||||||||||
Stock Options | $ | ── | (1) | $ | ── | (1) | $ | ── | (1) | $ | — | (3) | $ | — | (4) | $ | — | (4) | $ | — | (4) | |||||||
Ben Naccarato | ||||||||||||||||||||||||||||
CFO | ||||||||||||||||||||||||||||
Severance | $ | ── | $ | 214,240 | $ | ── | ||||||||||||||||||||||
Salary | $ | — | $ | — | $ | 458,988 | (1) | $ | 458,988 | (1) | ||||||||||||||||||
Performance compensation | $ | — | (2) | $ | — | (2) | $ | — | (2) | $ | — | (2) | ||||||||||||||||
Stock Options | $ | ── | (1) | $ | ── | (1) | $ | ── | (1) | $ | — | (3) | $ | — | (4) | $ | — | (4) | $ | — | (4) | |||||||
John Lash | ||||||||||||||||||||||||||||
COO | ||||||||||||||||||||||||||||
Severance | $ | ── | $ | 215,000 | $ | ── | ||||||||||||||||||||||
Dr. Louis Centofanti | ||||||||||||||||||||||||||||
EVP of Strategic Initiatives | ||||||||||||||||||||||||||||
Salary | $ | — | $ | — | $ | 446,800 | (1) | $ | 446,800 | (1) | ||||||||||||||||||
Performance compensation | $ | — | (2) | $ | — | (2) | $ | — | (2) | $ | — | (2) | ||||||||||||||||
Stock Options | $ | ── | (2) | $ | ── | (2) | $ | ── | (3) | $ | — | (3) | $ | — | (4) | $ | — | (4) | $ | — | (4) |
(1) |
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(2) | No amount was earned and payable under the 2018 MIP (see “2018 MIPs” below). |
(3) | Benefit is |
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No performance compensation under the NEO’s MIP would have been payable at December 31, 2015 under any of the circumstances described in the table above. Pursuant to each MIP, if the participant’s employment with the Company is voluntarily or involuntarily terminated prior to the annual payment of the MIP compensation payment period, no MIP payment is payable. The payment is to be paid on or about 90 days after the end of the preceding fiscal year, based on finalization of our financial statements for year-end. See “2015 Management Incentive Plans (“MIPs”)” below.
The amounts payable with respect to a termination (other than base salary and amounts otherwise payable under any Company employee benefit plan) are payable only if the termination constitutes a “separation from service” (as defined under Treasury Regulation Section 1.409A-1(h)).
20152018 Executive Compensation Components
For the fiscal year ended December 31, 2015,2018, the principal components of compensation for executive officers were:
● | base salary; |
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● | performance-based incentive compensation; |
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● | long term incentive compensation; |
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● | retirement and other benefits; and |
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● | perquisites. |
Based on the amounts set forth in the Summary Compensation table, during 2015,2018, salary accounted for approximately 69%87.7% of the total compensation of our NEOs, while equity option awards, bonus, MIP compensation, and other compensation accounted for approximately 31%12.3% of the total compensation of the NEOs.
Base Salary
The NEOs, other executive officers, and other employees of the Company receive a base salary during the fiscal year. Base salary ranges for executive officers are determined for each executive based on his or her position and responsibility by using market data and comparisons to other companies within the industry segments in which the Company operates.
During its review of base salaries for executives, the Compensation Committee primarily considers:
● | market data and comparisons to other companies within the industry segments in which the Company operates; |
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● | internal review of the executive’s compensation, both individually and relative to other officers; and |
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● | individual performance of the executive. |
Salary levels are typically considered annually as part of the performance review process as well as upon a promotion or other change in job responsibility. Merit basedMerit-based salary increases for executives are based on the Compensation Committee’s assessment of the individual’s performance. The base salary and potential annual base salary adjustments for the CEO, COO, and CFONEOs are set forth in their respective Employment Agreements.employment agreements. On January 17, 2019, the Compensation Committee and the Board approved a base salary increase of 2.5% for each named NEO, which became effective January 1, 2019.
Performance-Based Incentive Compensation
The Compensation Committee has the latitude to design cash and equity-based incentive compensation programs to promote high performance and achievement of our corporate objectives by directors and the NEOs, encourage the growth of stockholder value and enable employees to participate in our long-term growth and profitability. The Compensation Committee may grant stock options and/or performance bonuses. In granting these awards, the Compensation Committee may establish any conditions or restrictions it deems appropriate. In addition, the CEO has discretionary authority to grant stock options to certain high-performing executives or officers, subject to the approval of the Compensation Committee. The exercise price for each stock optionsoption granted is at or above the market price of our Common Stock on the date of grant. Stock options may be awarded to newly hired or promoted executives at the discretion of the Compensation Committee. Grants of stock options to eligible newly hired executive officers are generally made at the next regularly scheduled Compensation Committee meeting following the hire date.
2015Management Incentive Plans (“2018 MIPs”)
On April 17, 2015,January 18, 2018, the Board and the Compensation Committee approved individual MIPs for our CEO, COO,CFO and CFO.EVP of Strategic Initiatives. The MIPs wereare effective as of January 1, 2015.2018 and applicable for fiscal 2018. Each MIP providedprovides guidelines for the calculation of annual cash incentive basedincentive-based compensation, subject to Compensation Committee oversight and modification. Each MIP awarded cash compensation based on achievement of performance thresholds, (as discussed below), with the amount of such compensation established as a percentage of the executive’s 2018 annual base salary.salary on the approval date of the MIP. The potential target performance compensation ranged from 5% to 100% or $13,556 to $271,115 of the 2015 base salary for the CEO ($13,350 to $267,000), 5% to 100% or $10,750 to $215,000 of the 2015 base salary for the COO,CFO ($11,475 to $229,494) and 5% to 100% or $10,712 to $214,240 of the 2015 base salary for the CFO.EVP of Strategic Initiatives ($11,170 to $223,400).
Performance compensation under the Company’s MIPs iswas to be paid on or about 90 days after the end of the preceding fiscal year,year-end, or sooner, based on finalization of our audited financial statements for the immediately preceding fiscal year on which the MIP is based. If the MIP participant’s employment with the Company is voluntarily or involuntarily terminated prior to a regularly scheduled MIP compensation payment date, no MIP payment is payable for and after such period.
Payment of amounts earned under the 2015 MIPs have been deferred, but is expected to be made no later than the end of the third quarter of 2016.
2018. The Compensation Committee retains the right to modify, change or terminate each MIP and may adjust the various target amounts described below, at any time and for any reason.
The total performance compensation paid to the CEO, COO,CFO and CFOEVP of Strategic Initiatives as a group under the 2015 MIPs was subjectnot to a ceiling ofexceed 50% of the Company’s pre-tax net income (exclusive of PF Medical) prior to the calculation of performance compensation.
No cash performance incentive based compensation was paid to any of the NEOs under his respective 2018 MIP since none of the performance targets which would have resulted in payment of performance incentive was met.
The following describes the principal terms of each MIP:2018 MIP as approved on January 18, 2018:
CEO:CEO MIP:
2015
2018 CEO performance compensation was based upon meeting corporate revenue, earningsEBITDA (earnings before interest, taxes, depreciation and amortization (“EBITDA”)amortization), health and safety, and environmental compliance (permit and license violations) objectives during fiscal year 20152018 from our continuing operations (excluding PF Medical). The Compensation Committee believes performance compensation payable under each of the 20152018 MIPs as discussed herein and below should be based on achievement of an EBITDA target, which excludes certain non-cash items, as this target provides a better indicator of operating performance as it excludes certain non-cash items.performance. However, EBITDA has certain limitations as it does not reflect all items of income or cash flows that affect the Company’s financial performance under GAAP.accounting principles generally accepted in the United States of America (“GAAP”). At achievement of 70%60% to 119%110% of each of the Revenuerevenue and EBITDA targets, the potential performance compensation was payable at 5% to 50% of the 2018 base salary, of whichsalary. For this compensation, 60% was based on EBITDA goal, 10% on revenue goal, 15% on the number of health and safety claim incidents that occurred during fiscal year 2015,2018, and the remaining 15% on the number of notices alleging environmental, health or safety violations under our permits or licenses that occurred during the fiscal year 2015.2018. Upon achievement of over 119%111% to 150%+ of each of the Revenuerevenue and EBITDA targets, withthe potential performance compensation was payable at over 50%65% to 100% of the CEO’s 2018 base salary,salary. For this compensation, the amount of total performance compensation payable was based on the four objectives noted above, with the payment of such performance compensation being weighted more heavily toward the EBITDA objective. Each of the revenue and EBITDA components was based on our board approved Revenue TargetBoard-approved revenue target and EBITDA Target.target. The 20152018 target performance incentive compensation for our CEO was as follows:
Annualized Base Pay: | $ | 271,115 |
Performance Incentive Compensation Target (at 100% of MIP): | $ | 135,558 |
Total Annual Target Compensation (at 100% of MIP): | $ | 406,673 |
Annualized Base Pay: | $ | 267,000 | ||
Performance Incentive Compensation Target (at 100% of Plan): | $ | 133,500 | ||
Total Annual Target Compensation (at 100% of Plan): | $ | 400,500 |
TARGET | ||||||||||||||||||||||||||||
Revenue Target | $ | 42,500,000 | $ | 59,500,000 | $ | 72,250,000 | $ | 85,000,000 | $ | 102,000,000 | $ | 119,000,000 | $ | 136,000,000 | ||||||||||||||
EBITDA Target | $ | 4,080,000 | $ | 5,712,000 | $ | 6,936,000 | $ | 8,160,000 | $ | 9,792,000 | $ | 11,424,000 | $ | 13,056,000 | ||||||||||||||
Threshold % Of Target | 50 | % | 70 | % | 85 | % | 100 | % | 120 | % | 140 | % | 160 | % | ||||||||||||||
Bonus % Awarded | 0 | % | 10 | % | 50 | % | 100 | % | 130 | % | 170 | % | 200 | % | ||||||||||||||
% of Target Achieved | 50%-69 | % | 70%-84 | % | 85%-99 | % | 100%-119 | % | 120%-139 | % | 140%-159 | % | 160% | + | ||||||||||||||
Revenue | $ | - | $ | 1,356 | $ | 6,778 | $ | 13,556 | $ | 19,365 | $ | 27,112 | $ | 32,921 | ||||||||||||||
EBITDA | - | 8,134 | 40,667 | 81,334 | 116,192 | 162,669 | 197,526 | |||||||||||||||||||||
Health and Safety | - | 2,033 | 10,167 | 20,334 | 20,334 | 20,334 | 20,334 | |||||||||||||||||||||
Permit & License Violations | - | 2,033 | 10,167 | 20,334 | 20,334 | 20,334 | 20,334 | |||||||||||||||||||||
$ | - | $ | 13,556 | $ | 67,779 | $ | 135,558 | $ | 176,225 | $ | 230,449 | $ | 271,115 |
Perma-Fix Environmental Services, Inc. | ||||||||||||||||||||||||||||
2018 Management Incentive Plan | ||||||||||||||||||||||||||||
CEO MIP MATRIX | ||||||||||||||||||||||||||||
Performance Target Achieved | ||||||||||||||||||||||||||||
<60% | 60%-74% | 75%-89% | 90%-110% | 111%-129% | 130%-150% | >150% | ||||||||||||||||||||||
Revenue (1) (5) | $ | - | $ | 1,334 | $ | 6,674 | $ | 13,350 | $ | 19,071 | $ | 26,700 | $ | 32,421 | ||||||||||||||
EBITDA (2) | - | 8,010 | 40,050 | 80,100 | 114,429 | 160,200 | 194,529 | |||||||||||||||||||||
Health & Safety (3) (5) | - | 2,003 | 10,013 | 20,025 | 20,025 | 20,025 | 20,025 | |||||||||||||||||||||
Permit & License Violations (4) (5) | - | 2,003 | 10,013 | 20,025 | 20,025 | 20,025 | 20,025 | |||||||||||||||||||||
$ | - | $ | 13,350 | $ | 66,750 | $ | 133,500 | $ | 173,550 | $ | 226,950 | $ | 267,000 |
1) | Revenue was defined as the total consolidated |
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2) | EBITDA was defined as earnings before interest, taxes, depreciation, and amortization from continuing operations |
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3) | The |
Work Comp. Claim Number | Performance Target Payable Under Column | |||
6 | 60%-74% | |||
5 | 75%-89% | |||
4 | 90%-110% | |||
3 | 111%-129% | |||
2 | 130%-150% | |||
1 | >150% |
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| Permits or |
Permit and License Violations | Performance Target Payable Under Column | |||
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60%-74% | ||||
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| 75%-89% | ||
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| 90%-110% | ||
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| 111%-129% | ||
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| 130%-150% | ||
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5) | No performance incentive compensation was payable for achieving the health and safety, permit and license violation, and revenue targets unless a minimum of |
COOCFO MIP:
2015 COO
2018 CFO performance compensation was based upon meeting corporate revenue, EBITDA, health and safety, and environmental compliance (permit and license violations) objectives during fiscal year 20152018 from our continuing operations (excluding PF Medical). At achievement of 70%60% to 119%110% of each of the Revenuerevenue and EBITDA targets, the potential performance compensation was payable at 5% to 50% of the 2018 base salary, of whichsalary. For this compensation, 60% was based on EBITDA goal, 10% on revenue goal, 15% on the number of health and safety claim incidents that occurred during fiscal year 2015,2018, and the remaining 15% on the number of notices alleging environmental, health or safety violations under our permits or licenses that occurred during the fiscal year 2015.2018. Upon achievement of over 119%111% to 150%+ of each of the Revenuerevenue and EBITDA targets, withthe potential performance compensation was payable at over 50%65% to 100% of the CFO’s 2018 base salary,salary. For this compensation, the amount of performance compensation payable was based on the four objectives noted above, with the payment of such performance compensation being weighted more heavily toward the EBITDA objective. Each of the revenue and EBITDA components was based on our board approved Revenue TargetBoard-approved revenue target and EBITDA Target.target. The 20152018 target performance incentive compensation for our COOCFO was as follows:
Annualized Base Pay: |
| $ | 215,000 |
|
Performance Incentive Compensation Target (at 100% of MIP): |
| $ | 107,500 |
|
Total Annual Target Compensation (at 100% of MIP): |
| $ | 322,500 |
|
Annualized Base Pay: | $ | 229,494 | ||
Performance Incentive Compensation Target (at 100% of Plan): | $ | 114,747 | ||
Total Annual Target Compensation (at 100% of Plan): | $ | 344,241 |
TARGET | ||||||||||||||||||||||||||||
Revenue Target | $ | 42,500,000 | $ | 59,500,000 | $ | 72,250,000 | $ | 85,000,000 | $ | 102,000,000 | $ | 119,000,000 | $ | 136,000,000 | ||||||||||||||
EBITDA Target | $ | 4,080,000 | $ | 5,712,000 | $ | 6,936,000 | $ | 8,160,000 | $ | 9,792,000 | $ | 11,424,000 | $ | 13,056,000 | ||||||||||||||
Threshold % Of Target | 50 | % | 70 | % | 85 | % | 100 | % | 120 | % | 140 | % | 160 | % | ||||||||||||||
Bonus % Awarded | 0 | % | 10 | % | 50 | % | 100 | % | 130 | % | 170 | % | 200 | % | ||||||||||||||
% of Target Achieved | 50%-69 | % | 70%-84 | % | 85%-99 | % | 100%-119 | % | 120%-139 | % | 140%-159 | % | 160% | + | ||||||||||||||
Revenue | $ | - | $ | 1,074 | $ | 5,374 | $ | 10,750 | $ | 15,357 | $ | 21,500 | $ | 26,107 | ||||||||||||||
EBITDA | - | 6,450 | 32,250 | 64,500 | 92,143 | 129,000 | 156,643 | |||||||||||||||||||||
Health and Safety | - | 1,613 | 8,063 | 16,125 | 16,125 | 16,125 | 16,125 | |||||||||||||||||||||
Permit & License Violations | - | 1,613 | 8,063 | 16,125 | 16,125 | 16,125 | 16,125 | |||||||||||||||||||||
$ | - | $ | 10,750 | $ | 53,750 | $ | 107,500 | $ | 139,750 | $ | 182,750 | $ | 215,000 |
Perma-Fix Environmental Services, Inc. | ||||||||||||||||||||||||||||
2018 Management Incentive Plan | ||||||||||||||||||||||||||||
CFO MIP MATRIX | ||||||||||||||||||||||||||||
Performance Target Achieved | ||||||||||||||||||||||||||||
<60% | 60%-74% | 75%-89% | 90%-110% | 111%-129% | 130%-150% | >150% | ||||||||||||||||||||||
Revenue (1) (5) | $ | - | $ | 1,146 | $ | 5,736 | $ | 11,475 | $ | 16,392 | $ | 22,949 | $ | 27,867 | ||||||||||||||
�� | ||||||||||||||||||||||||||||
EBITDA (2) | - | 6,885 | 34,424 | 68,848 | 98,355 | 137,696 | 167,203 | |||||||||||||||||||||
Health & Safety (3) (5) | - | 1,722 | 8,607 | 17,212 | 17,212 | 17,212 | 17,212 | |||||||||||||||||||||
Permit & License Violations (4) (5) | - | 1,722 | 8,607 | 17,212 | 17,212 | 17,212 | 17,212 | |||||||||||||||||||||
$ | - | $ | 11,475 | $ | 57,374 | $ | 114,747 | $ | 149,171 | $ | 195,069 | $ | 229,494 |
1) | Revenue was defined as the total consolidated |
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2) | EBITDA was defined as earnings before interest, taxes, depreciation, and amortization from continuing operations |
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3) | The |
Claim Number | Performance Target Payable Under Column | |||
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| |||
60%-74% | ||||
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| 75%-89% | ||
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| 90%-110% | ||
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| 111%-129% | ||
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| 130%-150% | ||
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4) | Permits or |
Permit and License Violations | Performance Target Payable Under Column | |||
6 | 60%-74% | |||
5 | 75%-89% | |||
4 | 90%-110% | |||
3 | 111%-129% | |||
2 | 130%-150% | |||
1 | >150% |
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| No performance incentive compensation was payable for achieving the health and safety, permit and license violation, and revenue targets unless a minimum of |
CFOEVP of Strategic Initiatives MIP:
2015 CFO
2018 EVP of Strategic Initiatives performance compensation was based upon meeting corporate revenue, EBITDA, health and safety, and environmental compliance (permit and license violations) objectives during fiscal year 20152018 from our continuing operations (excluding PF Medical). At achievement of 70%60% to 119%110% of each of the Revenuerevenue and EBITDA targets, the potential performance compensation was payable at 5% to 50% of the 2018 base salary, of whichsalary. For this compensation, 60% was based on EBITDA goal, 10% on revenue goal, 15% on the number of health and safety claim incidents that occurred during fiscal year 2015,2018, and the remaining 15% on the number of notices alleging environmental, health or safety violations under our permits or licenses that occurred during the fiscal year 2015.2018. Upon achievement of over 119%111% to 150%+ of each of the Revenuerevenue and EBITDA targets, withthe potential performance compensation was payable at over 50%65% to 100% of the total salary,EVP of Strategic Initiative’s 2018 base salary. For this compensation, the amount of performance compensation payable was based on the four objectives noted above, with the payment of such performance compensation being weighted more heavily toward the EBITDA objective. Each of the revenue and EBITDA components was based on our board approved Revenue TargetBoard-approved revenue target and EBITDATarget. target. The 20152018 target performance incentive compensation for our CFOEVP of Strategic Initiatives was as follows:
Annualized Base Pay: |
| $ | 214,240 |
|
Performance Incentive Compensation Target (at 100% of MIP): |
| $ | 107,120 |
|
Total Annual Target Compensation (at 100% of MIP): |
| $ | 321,360 |
|
Annualized Base Pay: | $ | 223,400 | ||
Performance Incentive Compensation Target (at 100% of Plan): | $ | 111,700 | ||
Total Annual Target Compensation (at 100% of Plan): | $ | 335,100 |
TARGET | ||||||||||||||||||||||||||||
Revenue Target | $ | 42,500,000 | $ | 59,500,000 | $ | 72,250,000 | $ | 85,000,000 | $ | 102,000,000 | $ | 119,000,000 | $ | 136,000,000 | ||||||||||||||
EBITDA Target | $ | 4,080,000 | $ | 5,712,000 | $ | 6,936,000 | $ | 8,160,000 | $ | 9,792,000 | $ | 11,424,000 | $ | 13,056,000 | ||||||||||||||
Threshold % Of Target | 50 | % | 70 | % | 85 | % | 100 | % | 120 | % | 140 | % | 160 | % | ||||||||||||||
Bonus % Awarded | 0 | % | 10 | % | 50 | % | 100 | % | 130 | % | 170 | % | 200 | % | ||||||||||||||
% of Target Achieved | 50%-69 | % | 70%-84 | % | 85%-99 | % | 100%-119 | % | 120%-139 | % | 140%-159 | % | 160% | + | ||||||||||||||
Revenue | $ | - | $ | 1,071 | $ | 5,356 | $ | 10,712 | $ | 15,303 | $ | 21,424 | $ | 26,015 | ||||||||||||||
EBITDA | - | 6,427 | 32,136 | 64,272 | 91,817 | 128,544 | 156,089 | |||||||||||||||||||||
Health and Safety | - | 1,607 | 8,034 | 16,068 | 16,068 | 16,068 | 16,068 | |||||||||||||||||||||
Permit & License Violations | - | 1,607 | 8,034 | 16,068 | 16,068 | 16,068 | 16,068 | |||||||||||||||||||||
$ | - | $ | 10,712 | $ | 53,560 | $ | 107,120 | $ | 139,256 | $ | 182,104 | $ | 214,240 |
Perma-Fix Environmental Services, Inc. | ||||||||||||||||||||||||||||
2018 Management Incentive Plan | ||||||||||||||||||||||||||||
EVP OF STRATEGIC INITIATIVES MIP MATRIX | ||||||||||||||||||||||||||||
Performance Target Achieved | ||||||||||||||||||||||||||||
<60% | 60%-74% | 75%-89% | 90%-110% | 111%-129% | 130%-150% | >150% | ||||||||||||||||||||||
Revenue (1) (5) | $ | - | $ | 1,116 | $ | 5,584 | $ | 11,170 | $ | 15,957 | $ | 22,340 | $ | 27,127 | ||||||||||||||
EBITDA (2) | - | 6,702 | 33,510 | 67,020 | 95,743 | 134,040 | 162,763 | |||||||||||||||||||||
Health & Safety (3) (5) | - | 1,676 | 8,378 | 16,755 | 16,755 | 16,755 | 16,755 | |||||||||||||||||||||
Permit & License Violations (4) (5) | - | 1,676 | 8,378 | 16,755 | 16,755 | 16,755 | 16,755 | |||||||||||||||||||||
$ | - | $ | 11,170 | $ | 55,850 | $ | 111,700 | $ | 145,210 | $ | 189,890 | $ | 223,400 |
1) | Revenue was defined as the total consolidated |
2) | EBITDA was defined as earnings before interest, taxes, depreciation, and amortization from continuing operations |
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3) | The |
Claim Number | Performance Target Payable Under Column | |||
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60%-74% | ||||
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| 75%-89% | ||
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| 90%-110% | ||
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| 111%-129% | ||
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| 130%-150% | ||
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4) | Permits or |
Permit and License Violations | Performance Target Payable Under Column | |||
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60%-74% | ||||
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| 75%-89% | ||
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| 90%-110% | ||
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| 111%-129% | ||
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| 130%-150% | ||
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5) | No performance incentive compensation was payable for achieving the health and safety, permit and license violation, and revenue targets unless a minimum of |
20152018 MIP Targets
As discussed above, 20152018 MIPs approved by the Board and the Compensation Committee for the CEO, COO,CFO and CFO byEVP of Strategic Initiatives provided for the Compensation Committee award of cash compensation based on achievement of performance targets which include Revenueincluded revenue and EBITDA Targetstargets as approved by our Board. The Revenue Target2018 MIP revenue target of $85,000,000$63,398,000 and EBITDA Targettarget of $8,160,000$7,682,000 were set forth in the 2015 MIPs were based on our Board approved 2015 budget subject to certain adjustments by the Board.Compensation Committee taking into account the Board-approved budget for 2018 as well as the committee’s expectations for performance that in its estimation would warrant payment of incentive cash compensation. In formulating the Revenue Targetrevenue target of $85,000,000,$63,398,000, the Board considered 20142017 results, current economic conditions, and forecasts for 20152018 government (U.S. Department of Energy or “DOE”)(U.S DOE) spending. The Compensation Committee believed the performance targets were likely to be achieved, but not assured.
26 |
Compensation Earned Under 20152019 MIPs
The following table sets forth the MIP compensation earned by the CEO, CEO, and CFO for fiscal year 2015 under each MIP. Payment of amounts earned under the 2015 MIPs have been deferred, but is expected to be made no later than the end of the third quarter of 2016.
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2016 MIPs
On February 4, 2016,January 17, 2019, the Board and the Compensation Committee approved individual MIPsMIP for our CEO, COO,CFO and CFO.EVP of Strategic Initiatives. The MIPs are effective as of January 1, 2016.2019 and applicable for fiscal 2019. Each MIP provides guidelines for the calculation of annual cash incentive basedincentive-based compensation, subject to Compensation Committee oversight and modification. Each MIP awards cash compensation based on achievement of performance thresholds, (as discussed below), with the amount of such compensation established as a percentage of the executive’s 2019 annual base salary.salary on the approval date of the MIP. The potential target performance compensation ranges from 5% to 100% or $13,962 to $279,248150% of the 2016 base salary for the CEO ($14,350 to $430,500), 5% to 100% or $10,750 to $215,000 of the 2016 base salary for the COO,CFO ($11,762 to $235,231) and 5% to 100% or $11,033 to $220,667 of the 2016 base salary for the CFO.EVP of Strategic Initiatives ($11,449 to $228,985).
Performance compensation is to be paid on or about 90 days after the end of the preceding fiscal year,year-end, or sooner, based on finalization of our audited financial statements for 2016. If the MIP participant’s employment with the Company is voluntarily or involuntarily terminated prior to a regularly scheduled MIP compensation payment date, no MIP payment will be payable for and after such period.
2019. The Compensation Committee retains the right to modify, change or terminate each MIP and may adjust the various target amounts described below, at any time and for any reason.
The total performance compensation paid to the CEO, COO,CFO and CFOEVP of Strategic Initiatives as a group is not to exceed 50% of the Company’s pre-tax net income (exclusive of PF Medical) prior to the calculation of performance compensation.
The following describes the principal terms of each MIP:2019 MIP as approved on January 17, 2019:
CEO MIP:
2016
2019 CEO performance compensation is based upon meeting corporate revenue, EBITDA, health and safety, and environmental compliance (permit and license violations) objectives during fiscal year 20162019 from our continuing operations (excluding PF Medical). The Compensation Committee believes performance compensation payable under each of the 20162019 MIPs as discussed herein and below should be based on achievement of an EBITDA Target,target, which excludes certain non-cash items, as this target provides a better indicator of operating performance as it excludes certain non-cash items.performance. However, EBITDA has certain limitations as it does not reflect all items of income or cash flows that affect the Company’s financial performance under GAAP. At achievement of 70%60% to 119%110% of each of the Revenuerevenue and EBITDA Targets,targets, the potential performance compensation is payable at 5% to 50% of the 2019 base salary, of whichsalary. For this compensation, 60% is based on EBITDA goal, 10% on revenue goal, 15% on the number of health and safety claim incidents that occur during fiscal year 2016,2019, and the remaining 15% on the number of notices alleging environmental, health or safety violations under our permits or licenses that occur during the fiscal year 2016.2019. Upon achievement of over 119%111% to 150%+ of each of the Revenuerevenue and EBITDA Targets, withtargets, the potential performance compensation is payable at over 50%75% to 100%150% of the CEO’s 2019 base salary,salary. For this compensation, the amount of total performance compensation payable is based on the four objectives noted above, with the payment of such performance compensation being weighted more heavily toward the EBITDA objective. Each of the revenue and EBITDA components is based on our Board approved Revenue TargetBoard-approved revenue target and EBITDA Target.target. The 20162019 target performance incentive compensation for our CEO is as follows:
Annualized Base Pay: |
| $ | 279,248 |
|
Performance Incentive Compensation Target (at 100% of MIP): |
| $ | 139,624 |
|
Total Annual Target Compensation (at 100% of MIP): |
| $ | 418,872 |
|
Annualized Base Pay: | $ | 287,000 | ||
Performance Incentive Compensation Target (at 100% of Plan): | $ | 143,500 | ||
Total Annual Target Compensation (at 100% of Plan): | $ | 430,500 |
Perma-Fix Environmental Services, Inc. | ||||||||||||||||||||||||||||
2019 Management Incentive Plan | ||||||||||||||||||||||||||||
CEO MIP MATRIX | ||||||||||||||||||||||||||||
Performance Target Achieved | ||||||||||||||||||||||||||||
<60% | 60%-74% | 75%-89% | 90%-110% | 111%-129% | 130%-150% | >150% | ||||||||||||||||||||||
Revenue (1) (5) | $ | - | $ | 1,435 | $ | 7,175 | $ | 14,350 | $ | 24,600 | $ | 34,850 | $ | 55,350 | ||||||||||||||
EBITDA (2) | - | 8,609 | 43,049 | 86,100 | 147,600 | 209,100 | 332,100 | |||||||||||||||||||||
Health & Safety (3) (5) | - | 2,153 | 10,763 | 21,525 | 21,525 | 21,525 | 21,525 | |||||||||||||||||||||
Permit & License Violations (4) (5) | - | 2,153 | 10,763 | 21,525 | 21,525 | 21,525 | 21,525 | |||||||||||||||||||||
$ | - | $ | 14,350 | $ | 71,750 | $ | 143,500 | $ | 215,250 | $ | 287,000 | $ | 430,500 |
TARGET | ||||||||||||||||||||||||||||
Revenue Target | <$56,000,000 | $ | 56,000,000 | $ | 68,000,000 | $ | 80,000,000 | $ | 96,000,000 | $ | 112,000,000 | $ | 128,000,000 | |||||||||||||||
EBITDA Target | <$6,370,000 | $ | 6,370,000 | $ | 7,735,000 | $ | 9,100,000 | $ | 10,920,000 | $ | 12,740,000 | $ | 14,560,000 | |||||||||||||||
% of Performance Incentive Target | 0 | % | 10 | % | 50 | % | 100 | % | 130 | % | 170 | % | 200 | % | ||||||||||||||
% of Target Achieved | <70% | 70%-84 | % | 85%-99 | % | 100%-119 | % | 120%-139 | % | 140%-159 | % | 160% | + | |||||||||||||||
Revenue | $ | - | $ | 1,397 | $ | 6,981 | $ | 13,962 | $ | 19,945 | $ | 27,924 | $ | 33,908 | ||||||||||||||
EBITDA | - | 8,377 | 41,887 | 83,774 | 119,678 | 167,549 | 203,452 | |||||||||||||||||||||
Health and Safety | - | 2,094 | 10,472 | 20,944 | 20,944 | 20,944 | 20,944 | |||||||||||||||||||||
Permit & License Violations | - | 2,094 | 10,472 | 20,944 | 20,944 | 20,944 | 20,944 | |||||||||||||||||||||
$ | - | $ | 13,962 | $ | 69,812 | $ | 139,624 | $ | 181,511 | $ | 237,361 | $ | 279,248 |
27 |
1) |
| Revenue is defined as the total consolidated |
2) | EBITDA is defined as earnings before interest, taxes, depreciation, and amortization from continuing operations | |
3) | The |
Work Comp. | Performance | |||
4 | 60%-74% | |||
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| 75%-89% | ||
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| 90%-110% | ||
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| 111%-129% | ||
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| 130%-150% | ||
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4) |
| Permits or |
Permit and License Violations | Performance Target Payable Under Column | |||
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60%-74% | ||||
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| 75%-89% | ||
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| 90%-110% | ||
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| 111%-129% | ||
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| 130%-150% | ||
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5) |
| No performance incentive compensation will be payable for achieving the health and safety, permit and license violation, and revenue targets unless a minimum of |
28 |
COO
CFO MIP:
2016 COO
2019 CFO performance compensation is based upon meeting corporate revenue, EBITDA, health and safety, and environmental compliance (permit and license violations) objectives during fiscal year 20162019 from our continuing operations (excluding PF Medical). At achievement of 70%60% to 119%110% of each of the Revenuerevenue and EBITDA Targets,targets, the potential performance compensation is payable at 5% to 50% of the 2019 base salary, of which 60%salary. For this compensation, 75% is based on EBITDA goal, 10% on revenue goal, 15%7.5% on the number of health and safety claim incidents that occur during fiscal year 2016,2019, and the remaining 15%7.5% on the number of notices alleging environmental, health or safety violations under our permits or licenses that occur during the fiscal year 2016.2019. Upon achievement of over 119%111% to 150%+ of each of the Revenuerevenue and EBITDA Targets, withtargets, the potential performance compensation is payable at over 50%65% to 100% of the CFO’s 2019 base salary,salary. For this compensation, the amount of total performance compensation payable is based on the four objectives noted above, with the payment of such performance compensation being weighted more heavily toward the EBITDA objective. Each of the revenue and EBITDA components is based on our Board approved Revenue TargetBoard-approved revenue target and EBITDA Target.target. The 20162019 target performance incentive compensation for our COOCFO is as follows:
Annualized Base Pay: |
| $ | 215,000 |
|
Performance Incentive Compensation Target (at 100% of MIP): |
| $ | 107,500 |
|
Total Annual Target Compensation (at 100% of MIP): |
| $ | 322,500 |
|
Annualized Base Pay: | $ | 235,231 | ||
Performance Incentive Compensation Target (at 100% of Plan): | $ | 117,616 | ||
Total Annual Target Compensation (at 100% of Plan): | $ | 352,847 |
TARGET | ||||||||||||||||||||||||||||
Revenue Target | <$56,000,000 | $ | 56,000,000 | $ | 68,000,000 | $ | 80,000,000 | $ | 96,000,000 | $ | 112,000,000 | $ | 128,000,000 | |||||||||||||||
EBITDA Target | <$6,370,000 | $ | 6,370,000 | $ | 7,735,000 | $ | 9,100,000 | $ | 10,920,000 | $ | 12,740,000 | $ | 14,560,000 | |||||||||||||||
% of Performance Incentive Target | 0 | % | 10 | % | 50 | % | 100 | % | 130 | % | 170 | % | 200 | % | ||||||||||||||
% of Target Achieved | <70% | 70%-84 | % | 85%-99 | % | 100%-119 | % | 120%-139 | % | 140%-159 | % | 160% | + | |||||||||||||||
Revenue | $ | - | $ | 1,074 | $ | 5,374 | $ | 10,750 | $ | 15,357 | $ | 21,500 | $ | 26,107 | ||||||||||||||
EBITDA | - | 6,450 | 32,250 | 64,500 | 92,143 | 129,000 | 156,643 | |||||||||||||||||||||
Health and Safety | - | 1,613 | 8,063 | 16,125 | 16,125 | 16,125 | 16,125 | |||||||||||||||||||||
Permit & License Violations | - | 1,613 | 8,063 | 16,125 | 16,125 | 16,125 | 16,125 | |||||||||||||||||||||
$ | - | $ | 10,750 | $ | 53,750 | $ | 107,500 | $ | 139,750 | $ | 182,750 | $ | 215,000 |
Perma-Fix Environmental Services, Inc. | ||||||||||||||||||||||||||||
2019 Management Incentive Plan | ||||||||||||||||||||||||||||
CFO MIP MATRIX | ||||||||||||||||||||||||||||
Performance Target Achieved | ||||||||||||||||||||||||||||
<60% | 60%-74% | 75%-89% | 90%-110% | 111%-129% | 130%-150% | >150% | ||||||||||||||||||||||
Revenue (1) (5) | $ | - | $ | 1,175 | $ | 5,881 | $ | 11,762 | $ | 19,323 | $ | 26,043 | $ | 31,084 | ||||||||||||||
EBITDA (2) | - | 8,821 | 44,105 | 88,212 | 115,935 | 156,261 | 186,505 | |||||||||||||||||||||
Health & Safety (3) (5) | - | 883 | 4,411 | 8,821 | 8,821 | 8,821 | 8,821 | |||||||||||||||||||||
Permit & License Violations (4) (5) | - | 883 | 4,411 | 8,821 | 8,821 | 8,821 | 8,821 | |||||||||||||||||||||
$ | - | $ | 11,762 | $ | 58,808 | $ | 117,616 | $ | 152,900 | $ | 199,946 | $ | 235,231 |
1) |
| Revenue is defined as the total consolidated |
2) | EBITDA is defined as earnings before interest, taxes, depreciation, and amortization from continuing operations |
3) | The |
Work Comp. Claim Number | Performance Target Payable Under Column | |||
4 | 60%-74% | |||
3 | 75%-89% | |||
2 | 90%-110% | |||
1 | 111%-129% | |||
1 | 130%-150% | |||
1 | >150% |
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Permit and License Violations | Performance Target Payable Under Column | |||
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60%-74% | ||||
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| 75%-89% | ||
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| 90%-110% | ||
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| 111%-129% | ||
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| 130%-150% | ||
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5) |
| No performance incentive compensation will be payable for achieving the health and safety, permit and license violation, and revenue targets unless a minimum of |
CFOEVP of Strategic Initiatives MIP:
2016 CFO
2019 EVP of Strategic Initiatives performance compensation is based upon meeting corporate revenue, EBITDA, health and safety, and environmental compliance (permit and license violations) objectives during fiscal year 20162019 from our continuing operations (excluding PF Medical). At achievement of 70%60% to 119%110% of each of the Revenuerevenue and EBITDA Targets,targets, the potential performance compensation is payable at 5% to 50% of the 2019 base salary, of which 60%salary. For this compensation, 75% is based on EBITDA goal, 10% on revenue goal, 15%7.5% on the number of health and safety claim incidents that occur during fiscal year 2016,2019, and the remaining 15%7.5% on the number of notices alleging environmental, health or safety violations under our permits or licenses that occur during the fiscal year 2016.2019. Upon achievement of over 119%111% to 150%+ of each of the Revenuerevenue and EBITDA Targets, withtargets, the potential performance compensation is payable at over 50%65% to 100% of the EVP of Strategic Initiative’s 2019 base salary,salary. For this compensation, the amount of total performance compensation payable is based on the four objectives noted above, with the payment of such performance compensation being weighted more heavily toward the EBITDA objective. Each of the revenue and EBITDA components is based on our Board approved Revenue TargetBoard-approved revenue target and EBITDA Target.target. The 20162019 target performance incentive compensation for our CFOEVP of Strategic Initiatives is as follows:
Annualized Base Pay: |
| $ | 220,667 |
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Performance Incentive Compensation Target (at 100% of MIP): |
| $ | 110,334 |
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Total Annual Target Compensation (at 100% of MIP): |
| $ | 331,001 |
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TARGET | ||||||||||||||||||||||||||||
Revenue Target | <$56,000,000 | $ | 56,000,000 | $ | 68,000,000 | $ | 80,000,000 | $ | 96,000,000 | $ | 112,000,000 | $ | 128,000,000 | |||||||||||||||
EBITDA Target | <$6,370,000 | $ | 6,370,000 | $ | 7,735,000 | $ | 9,100,000 | $ | 10,920,000 | $ | 12,740,000 | $ | 14,560,000 | |||||||||||||||
% of Performance Incentive Target | 0 | % | 10 | % | 50 | % | 100 | % | 130 | % | 170 | % | 200 | % | ||||||||||||||
% of Target Achieved | <70% | 70%-84 | % | 85%-99 | % | 100%-119 | % | 120%-139 | % | 140%-159 | % | 160% | + | |||||||||||||||
Revenue | $ | - | $ | 1,103 | $ | 5,517 | $ | 11,034 | $ | 15,762 | $ | 22,067 | $ | 26,795 | ||||||||||||||
EBITDA | - | 6,620 | 33,100 | 66,200 | 94,572 | 132,400 | 160,772 | |||||||||||||||||||||
Health and Safety | - | 1,655 | 8,275 | 16,550 | 16,550 | 16,550 | 16,550 | |||||||||||||||||||||
Permit & License Violations | - | 1,655 | 8,275 | 16,550 | 16,550 | 16,550 | 16,550 | |||||||||||||||||||||
$ | - | $ | 11,033 | $ | 55,167 | $ | 110,334 | $ | 143,434 | $ | 187,567 | $ | 220,667 |
Annualized Base Pay: | $ | 228,985 | ||
Performance Incentive Compensation Target (at 100% of Plan): | $ | 114,493 | ||
Total Annual Target Compensation (at 100% of Plan): | $ | 343,478 |
Perma-Fix Environmental Services, Inc. | ||||||||||||||||||||||||||||
2019 Management Incentive Plan | ||||||||||||||||||||||||||||
EVP OF STRATEGIC INITIATIVES MIP MATRIX | ||||||||||||||||||||||||||||
Performance Target Achieved | ||||||||||||||||||||||||||||
<60% | 60%-74% | 75%-89% | 90%-110% | 111%-129% | 130%-150% | >150% | ||||||||||||||||||||||
Revenue (1) (5) | $ | - | $ | 1,145 | $ | 5,725 | $ | 11,449 | $ | 18,809 | $ | 25,352 | $ | 30,259 | ||||||||||||||
EBITDA (2) | - | 8,586 | 42,935 | 85,870 | 112,857 | 152,111 | 181,552 | |||||||||||||||||||||
Health & Safety (3) (5) | - | 859 | 4,293 | 8,587 | 8,587 | 8,587 | 8,587 | |||||||||||||||||||||
Permit & License Violations (4) (5) | - | 859 | 4,293 | 8,587 | 8,587 | 8,587 | 8,587 | |||||||||||||||||||||
$ | - | $ | 11,449 | $ | 57,246 | $ | 114,493 | $ | 148,841 | $ | 194,637 | $ | 228,985 |
1) |
| Revenue is defined as the total consolidated |
2) | EBITDA is defined as earnings before interest, taxes, depreciation, and amortization from continuing operations |
3) | The |
Work Comp. | Performance | |||
4 | 60%-74% | |||
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| 75%-89% | ||
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| 90%-110% | ||
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| 111%-129% | ||
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| 130%-150% | ||
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4) |
| Permits or |
Permit and License Violations | Performance Target Payable Under Column | |||
4 | 60%-74% | |||
3 | 75%-89% | |||
2 | 90%-110% | |||
1 | 111%-129% | |||
1 | 130%-150% | |||
1 | >150% |
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| No performance incentive compensation will be payable for achieving the health and safety, permit and license violation, and revenue targets unless a minimum of |
20162019 MIP Targets
As discussed above, 20162019 MIPs approved by the Board and the Compensation Committee for the CEO, COO,CFO and CFO byEVP of Strategic Initiatives provide for the Compensation Committee will award of cash compensation based on achievement of performance targets which included Revenuerevenue and EBITDA Targetstargets as approved by our Board. The Revenue Target2019 MIP revenue target of $80,000,000$63,124,000 and EBITDA Targettarget of $9,100,000$6,777,000 were set forth in the 2016 MIPs are based on our Board approved 2016 budget subject to certain adjustments by the Board.Compensation Committee taking into account the Board-approved budget for 2019 as well as the committee’s expectations for performance that in its estimation would warrant payment of incentive cash compensation. In formulating the Revenue Targetrevenue target of $80,000,000,$63,124,000, the Board considered 20152018 results, current economic conditions, and forecasts for 20162019 government (U.S DOE) spending. The Compensation Committee believes the performance targets are likely to be achieved, but not assured.
Long-Term Incentive Compensation
Employee Stock Option PlanPlans
The 2010 Stock Option Plan (the “2010and the 2017 Stock Option Plan”Plan (together, the “Option Plans”) encouragesencourage participants to focus on long-term performance and providesprovide an opportunity for executive officers and certain designated key employees to increase their stake in the Company. Stock options succeed by delivering value to the executiveexecutives only when the value of our stock increases. The 2010 Option Plan authorizesPlans authorize the grant of Non-Qualified Stock Options (“NQSOs”) and Incentive Stock Options (“ISOs”) for the purchase of our Common Stock.
The Compensation Committee believes that options granted under the 2010 Option Plan enablePlans assist the Company to:
● | enhance the link between the creation of stockholder value and long-term executive incentive compensation; |
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● | provide an opportunity for increased equity ownership by executives; and |
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● | maintain competitive levels of total |
Stock option award levels are determined based on market data, vary among participants based on their positions with us and are granted generally at the Compensation Committee’s regularly scheduled AugustJuly or SeptemberAugust meeting. Newly hired or promoted executive officers who are eligible to receive options are generally awarded such options at the next regularly scheduled Compensation Committee meeting following their hire or promotion date.
Options are awarded with an exercise price equal to or not less than the closing price of the Company’s Common Stock on the date of the grant as reported on the NASDAQ. In certain limited circumstances, the Compensation Committee may grant options to an executive at an exercise price in excess of the closing price of the Company’s Common Stock on the grant date. In 2015, no
The Company’s NEOs have outstanding options from the 2017 Stock Option Plan which were granted on July 27, 2017 as follows: 100,000 ISOs to any employees.Mr. Mark Duff; 50,000 ISOs to Dr. Louis Centofanti; and 50,000 ISOs to Mr. Ben Naccarato. The ISOs granted were for a contractual term of six years with one-fifth yearly vesting over a five year period. The exercise price of each ISO was $3.65 per share, which was equal to the fair market value of the Company’s Common Stock on the date of grant.
PursuantAdditionally, Mr. Duff has outstanding 50,000 ISOs granted to him by the Company on May 15, 2016 from the 2010 Stock Option plan,Plan. The ISOs granted were for a contractual term of six years with one-third vesting annually over a three-year period. The exercise price of each ISO was $3.97 per share, which was equal to the fair market value of the Company’s Common Stock on the date of grant.
On January 17, 2019 the Company’s Compensation Committee and the Board approved the grant of ISOs from the 2017 Stock Option Plan to our NEOs as follows: 25,000 ISOs to Mark Duff; 15,000 ISOs to Ben Naccarato; and 15,000 ISOs to Dr. Louis Centofanti. The ISOs granted were for a contractual term of six years with one-fifth vesting annually over a five year period. The exercise price of the ISO was $3.15 per share, which was equal to the fair market value of the Company’s common stock on the date of grant.
In cases of termination of an executive officer’s employment due to death, by the executive for “good reason”, by the Company without cause, and due to a “change of control,” all outstanding stock options to purchase common stock held by the executive officer will immediately become exercisable in full (see further discussion of the exercisability term of these options in each of these circumstances in “EXECUTIVE COMPENSATION – Employment Agreements”). Otherwise, vesting of option awards ceases upon termination of employment and exercise right of the vested option amount ceases upon three months from termination of employment except in the case of death or retirement (subject to a six monthsix-month limitation), or and disability (subject to a one yearone-year limitation). Prior to the exercise of an option, the holder has no rights as a stockholder with respect to the shares subject to such option.
In the event of a “change of control” (as defined in the 2010 Stock Option Plan) of the Company, each outstanding option and award granted under the plans shall immediately become exercisable in full notwithstanding the vesting or exercise provisions contained in the stock option agreement.
Accounting for Stock-Based Compensation
We account for stock-based compensation in accordance with ASC 718, “Compensation – Stock Compensation.” ASC 718 establishes accounting standards for entity exchanges of equity instruments for goods or services. It also addresses transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entity’s equity instruments or that may be settled by the issuance of those equity instruments. ASC 718 requires all stock-based payments to employees, including grants of employee stock options, to be recognized in the income statement based on their fair values. The Company uses the Black-Scholes option-pricing model to determine the fair-value of stock-based awards which requires subjective assumptions. Assumptions used to estimate the fair value of stock options granted include the exercise price of the award, the expected term, the expected volatility of the Company’s stock over the option’s expected term, the risk-free interest rate over the option’s expected term, and the expected annual dividend yield.
We recognize stock-based compensation expense using a straight-line amortization method over the requisite period, which is the vesting period of the stock option grant. As ASC 718 requires that stock-based compensation expense be based on options that are ultimately expected to vest, our stock-based compensation expense is reduced at an estimated forfeiture rate. Our estimated forfeiture rate is generally based on historical trends of actual forfeitures. Forfeiture rates are evaluated, and revised as necessary.
Retirement and Other Benefits
401(k) Plan
We adopted the Perma-Fix Environmental Services, Inc. 401(k) Plan (the “401(k) Plan”) in 1992, which is intended to comply with Section 401 of the Internal Revenue Code and the provisions of the Employee Retirement Income Security Act of 1974. All full-time employees who have attained the age of 18 are eligible to participate in the 401(k) Plan. Eligibility is immediate upon employment but enrollment is only allowed during four quarterly open periods of January 1, AprilApri1 1, July 1, and October 1. Participating employees may make annual pretax contributions to their accounts up to 100% of their compensation, up to a maximum amount as limited by law. We, at our discretion, may make matching contributions based on the employee’s elective contributions. Company contributions vest over a period of five years. Effective June 15, 2012, we suspended our matching contribution in an effort to reduce costs in light of the economic environment. The Company commenced matching fund contributions effective January 1, 2015. In 2015,2018, the Company contributed approximately $303,000$338,000 in 401(k) matching funds, of which approximately $14,000$15,000 was for our NEOs (see the “Summary Compensation” table in this sectionCompensation Table” under “EXECUTIVE COMPENSTAION” for 401(k) matching fund contributions made for the NEOs)NEOs for 2018).
Perquisites and Other Personal Benefits
The Company provides executive officers with limited perquisites and other personal benefits (health/disability/life insurance) that the Company and the Compensation Committee believe are reasonable and consistent with its overall compensation program to better enable the Company to attract and retain superior employees for key positions. The Compensation Committee periodically reviews the levels of perquisites and other personal benefits provided to executive officers. The executive officers are provided an auto allowance.
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Consideration of Stockholder Say-On-Pay Advisory Vote.
At our Annual Meeting of Stockholders held on September 17, 2015,July 26, 2018, our stockholders voted, on a non-binding, advisory basis, on the compensation of our NEOs for 2014.2017. A substantial majority (approximately 98%90%) of the total votes cast on our say-on-pay proposal at that meeting approved the compensation of our NEOs for 20142017 on a non-binding, advisory basis. The Compensation Committee and the Board believes that this affirms our stockholders’ support of our approach to executive compensation. The Compensation Committee expects to continue to consider the results of future stockholder say-on-pay advisory votes when making future compensation decisions for our NEOs.
Appointment We will hold an advisory vote on the compensation of Mr. Mark Duff, Executive Vice President
On May 15, 2016, the Board appointed Mr. Mark Duff to the positionour NEOs at our 2019 annual meeting of Executive Vice President, effective June 13, 2016. The terms of Mr. Duff’s compensation are as follows:stockholders.
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Equity Compensation Plans
The following table sets forth information as of December 31, 2015,2018, with respect to our equity compensation plans.
Equity Compensation Plan | Equity Compensation Plan | |||||||||||||||||
Plan Category | Number of securities to be issued upon exercise of outstanding options warrants and rights | Weighted average exercise price of outstanding options, warrants and rights | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a) | Number of securities to be issued upon exercise of outstanding options warrants and rights | Weighted average exercise price of outstanding options, warrants and rights | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a) | ||||||||||||
(a) | (b) | (c) | (a) | (b) | (c) | |||||||||||||
Equity compensation plansApproved by stockholders | 218,200 | $7.65 | 345,206 | |||||||||||||||
Equity compensation plans notApproved by stockholders | — | — | — | |||||||||||||||
Equity compensation plans approved by stockholders | 616,000 | $ | 4.23 | 459,417 | ||||||||||||||
Equity compensation plans not approved by stockholders | — | — | — | |||||||||||||||
Total | 218,200 | $7.65 | 345,206 | 616,000 | $ | 4.23 | 459,417 |
Compensation Risk Assessment
In reviewing our executive compensation program, the Company considers whether the program encourages unnecessary or excessive risk taking and has concluded that its compensation policies do not create risks that are reasonably likely to have a material adverse effect on the Company. This conclusion was based on the assessment performed by the Company, with input from the Company’s executive management and its outside securities counsel. The Company’s assessment included consideration of Item 402(s) of Regulation S-K, promulgated under the Securities Act, as discussed betweenwith the Company’s management following in depthin-depth discussions of Item 402(s) with our outside securities counsel. In conducting the Company’s risk assessment, numerous factors were considered, including:
● | the Company does not offer significant short-term incentives that would reasonably be considered as motivating high-risk investments or other conduct that is not consistent with the long term goals of the Company; |
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● | the mix between short-term and long-term compensation; |
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● | the type of equity awards granted to employees and level of equity and equity award holdings; and |
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● | the historical emphasis at the Company on long-term growth and profitability over short-term gains. |
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATEDSTOCKHOLDER MATTERSMATTERS
Security Ownership of Certain Beneficial Owners
The table below sets forth information as to the shares of Common Stock beneficially owned as of June 9, 2016,6, 2019 by each person known by us to be the beneficial owners of more than 5% of any class of our voting securities.
Name of Beneficial Owner | Title Of Class | Amount and Nature of Ownership | Percent Of Class (1) | Title Of Class | Amount and Nature of Ownership | Percent Of Class(1) | ||||||||||
Heartland Advisors, Inc. (2) | Common | 1,778,462 | 15.4% | Common | 1,363,467 | 11.3 | % | |||||||||
TALANTA Investment Group, LLC(3) | Common | 772,356 | 6.4 | % |
(1)The number of shares and the percentage of outstanding Common Stock shown as beneficially owned by a person are based upon 11,574,33112,054,439 shares of Common Stock outstanding on June 9, 2016,6, 2019, and the number of shares of Common Stock which such person has the right to acquire beneficial ownership of within 60 days. Beneficial ownership by our stockholders has been determined in accordance with the rules promulgated under Section 13(d) of the Exchange Act.
(2)This information is based on the Schedule 13F,13F-HR of Heartland Advisors, Inc., an investment advisor, filed with the Securities and Exchange Commission on May 3, 2016, which provides13, 2019, disclosing that at March 31, 2019, Heartland Advisors, Inc., an investment advisor, has had dispositive power over all of these shares shown above, but shared voting power over 1,619,3551,240,212 of such shares and no voting power over 159,107123,255 of the shares. The address of Heartland Advisors, Inc. is 789 North Water Street, Milwaukee, WI 53202.
(3)This information is based on the Schedule 13D of TALANTA Investment Group, LLC, a private investment firm, filed with the Securities and Exchange Commission on August 2, 2017, disclosing that as of July 25, 2017, (i) TALANTA Investment Group, LLC, (ii) TALANTA Fund, L.P, and (iii) Justyn R. Putnam (collectively, the “Reporting Persons”), had shared dispositive power and shared voting power over all shares shown in the table above. The address of the Reporting Persons is 401N. Tryon Street, 10th Floor, Charlotte, North Carolina 28202.
Additionally, another institutional holder,as of May 15, 2019, Capital Bank—GRAWEBank–Grawe Gruppe AG (“Capital Bank”), which ownsa banking institution regulated by the banking regulations of Austria, holds of record as a nominee for certain accredited investors (the “Investors”), 2,029,812 shares of May 20, 2016, an aggregate 1,175,953our Common Stock. Based on representations of Capital Bank (the “Capital Bank Representations”), none of such Investors beneficially own more than 4.9% of our Common Stock, and to its best knowledge, as far as stocks held in accounts with Capital Bank, none of the Investors act together as a group or otherwise act in concert for the purpose of voting on matters subject to the vote of our stockholders or for purpose of disposition or investment of such stock. Additionally, the Capital Bank Representations further provide that the Investors maintain full voting and dispositive power over the Common Stock beneficially owned by such Investors, and Capital Bank has neither voting nor investment power over such shares. Accordingly, Capital Bank has represented that it believes that (i) it is not the beneficial owner, as such term is defined in Rule 13d-3 of the Exchange Act, of the shares of Common Stock registered in Capital Bank’s name because (a) Capital Bank holds the Common Stock as a nominee only, (b) Capital Bank has neither voting nor investment power over such shares, and (c) Capital Bank has not nominated or sought to nominate, and does not intend to nominate in the future, any person to serve as a member of our Board; and (ii) it is not required to file reports under Section 16(a) of the Exchange Act or to file either Schedule 13D or Schedule 13G in connection with the shares of our Common Stock has represented to us that: registered in the name of Capital Bank.
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Notwithstanding the previous paragraph, if Capital Bank'sBank’s representations to us described above are incorrect or if the Investors for whom Capital Bank's investorsBank is nominee are acting in whole or in part as a group, then Capital Bank and/or asuch group of Capital Bank's investorsInvestors could be a beneficial owner of more than 5% of our voting securities. If Capital Bank iswas deemed the beneficial owner of suchall shares of Common Stock reported by Capital Bank as held of record by it, the following table sets forth information as to the shares of voting securitiesCommon Stock that Capital Bank may be considered to beneficially own on May 20, 2016:15, 2019:
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Name of Record Owner | Title Of Class | Amount and Nature of Ownership | Percent Of Class(*) | |||||||
Capital Bank-Grawe Gruppe | Common | 2,029,812 | (+) | 16.8 | % |
(*)This calculation is based upon 11,574,33112,054,439 shares of Common Stock outstanding on June 9, 2016, plus the number of shares of Common Stock which Capital Bank, as agent for certain accredited investors has the right to acquire within 60 days, which is none.6, 2019.
(+)This amount is the number of shares that Capital Bank has represented to us that it holds of record as nominee for, and as an agent of, certain of its accredited investors. As of the date of this report, Capital Bank has no warrants or options to acquire, as agent for certainsuch investors or otherwise, additional shares of our Common Stocks. Although Capital Bank is the record holder of the shares of Common Stock described in this note, Capital Bank has advised us that it does not believe it is a beneficial owner of the Common Stock or that it is required to file reports under Section 16(a) or Section 13(d) of the Exchange Act. Because Capital Bank (a) has advised us that it holds the Common Stock as a nominee only and that it does not exercise voting or investment power over the Common Stock held in its name and that no one investor of Capital BankInvestor for which it holds our Common Stock holds more than 4.9% of our issued and outstanding Common Stock and (b) has not nominated, and has not sought to nominate, and does not intend to nominate in the future, any person to serve as a member of our Board, we do not believe that Capital Bank is our affiliate. Capital Bank'sBank’s address is Burgring 16, A-8010 Graz, Austria.
Additionally, based on the above representations of Capital Bank, and upon the review and advice of the Company’s outside corporate counsel, the Board of Directors has determined that Capital Bank’s record ownership position does not constitute a “Triggering Event” under the Company’s Shareholder Rights Agreement dated May 2, 2018, as amended (the “Rights Plan”). It was determined that Capital Bank’s record stock ownership position in our Common Stock solely as a nominee for the Investors did not result in Capital Bank being an “Acquiring Person,” as defined in the Rights Plan and, as a result, did not constitute a “Triggering Event” under the Plan.
Security Ownership of Management
The following table sets forth information as to the shares of voting securities beneficially owned as of June 9, 2016,6, 2019, by each of our Directorsdirectors and NEOs and by all of our Directorsdirectors and NEOs as a group. Beneficial ownership has been determined in accordance with the rules promulgated under Section 13(d) of the Exchange Act. A person is deemed to be a beneficial owner of any voting securities for which that person has the right to acquire beneficial ownership within 60 days.
Amount and Nature | ||||
Name of Beneficial Owner(2) | of Beneficial Owner(1) | Percent of Class(1) | ||
Dr. Louis F. Centofanti(3) | 217,025 | (3) | 1.88% | |
John M. Climaco(4) | 22,763 | (4) | * | |
Dr. Gary Kugler(5) | 32,349 | (5) | * | |
Jack Lahav(6) | 215,511 | (6) | 1.86% | |
Joe R. Reeder(7) | 138,663 | (7) | 1.20% | |
Larry M. Shelton(8) | 89,661 | (8) | * | |
Mark A. Zwecker(9) | 157,048 | (9) | 1.35% | |
Ben Naccarato(10) | 1,000 | (10) | * | |
John Lash(11) | 31,000 | (11) | * | |
Directors and Executive Officers as a Group (9 persons) | 905,020 | (12) | 7.72% |
Amount and Nature | ||||||||
Name of Beneficial Owner(2) | of Beneficial Owner(1) | Percent of Class(1) | ||||||
Dr. Louis F. Centofanti(3) | 244,525 | (3) | 2.03 | % | ||||
S. Robert Cochran(4) | 39,357 | (4) | * | |||||
Joe R. Reeder(5) | 177,684 | (5) | 1.47 | % | ||||
Larry M. Shelton(6) | 132,599 | (6) | 1.10 | % | ||||
Zack P. Wamp(7) | 19,010 | (7) | * | |||||
Mark A. Zwecker(8) | 198,050 | (8) | 1.64 | % | ||||
Ben Naccarato(9) | 22,000 | (9) | * | |||||
Mark Duff(10) | 101,551 | (10) | * | |||||
Directors and Executive Officers as a Group (8 persons) | 934,776 | (11) | 7.61 | % |
*Indicates beneficial ownership of less than one percent (1%).
(1)See footnote (1) of the table under “Security Ownership of Certain Beneficial Owners.”
(2)The business address of each person, for the purposes hereof, is c/o Perma-Fix Environmental Services, Inc., 8302 Dunwoody Place, Suite 250, Atlanta, Georgia 30350.
(3)These shares include (i) 154,225161,725 shares held of record by Dr. Centofanti, (ii) options to purchase 10,000 shares which are immediately exercisable, (iii) options to purchase 10,000 shares which are exercisable on July 27, 2019, and (iii)(iv) 62,800 shares held by Dr. Centofanti'sCentofanti’s wife. Dr. Centofanti has sole voting and investment power of these shares, except for the shares held by Dr. Centofanti'sCentofanti’s wife, over which Dr. Centofanti shares voting and investment power. Dr. Centofanti also owns 700 shares of PF Medical’s Common Stock.
(4)Mr. ClimacoCochran has sole voting and investment power over these shares which include: (i) 14,36328,557 shares of Common Stock held of record by Mr. Climaco,Cochran, and (ii) options to purchase 8,40010,800 shares, which are immediately exercisable.
(5)Dr. Kugler has sole voting and investment power over these shares which include: (i) 27,549 shares of Common Stock held of record by Dr. Kugler, and (ii) options to purchase 4,800 shares, which are immediately exercisable.
(6)Mr. Lahav has sole voting and investment power over these shares which include: (i) 191,511 shares of Common Stock held of record by Mr. Lahav, and (ii) options to purchase 24,000 shares, which are immediately exercisable.
(7)Mr. Reeder has sole voting and investment power over these shares which include: (i) 114,663153,684 shares of Common Stock held of record by Mr. Reeder, and (ii) options to purchase 24,000 shares, which are immediately exercisable.
(8)(6)Mr. Shelton has sole voting and investment power over these shares which include: (i) 62,061108,599 shares of Common Stock held of record by Mr. Shelton, and (ii) options to purchase 27,60024,000 shares, which are immediately exercisable. Mr. Shelton also owns 750 shares of PF Medical’s Common Stock.
(9)(7)Mr. Wamp has sole voting and investment power over these shares which include: (i) 10,610 shares of Common Stock held of record by Mr. Wamp, and (ii) options to purchase 8,400 shares, which are immediately exercisable.
(8)Mr. Zwecker has sole voting and investment power over these shares which include: (i) 133,048174,050 shares of Common Stock held of record by Mr. Zwecker, and (ii) options to purchase 24,000 shares, which are immediately exercisable.
(10)(9)Mr. Naccarato has sole voting and investment power over all these shares which include: 1,000(i) 2,000 shares of Common Stock held of record by Mr. Naccarato.Naccarato, (ii) options to purchase 10,000 shares which are immediately exercisable, and (iii) options to purchase 10,000 shares which are exercisable on July 27, 2019. Mr. Naccarato also owns 100 shares of PF Medical’s Common Stock.
(11)(10)Mr. LashDuff has sole voting and investment power over all these shares which include: 1,000(i) 11,551 shares of Common Stock held of record by Mr. Lash, andDuff, (ii) options to purchase 15,00070,000 shares, which are immediately exercisable, and (iii) options to purchase 15,00020,000 shares, which are exercisable on July 10, 2016.27, 2019.
(12)(11)Amount includes 127,800221,200 options, of which 181,200 which are immediately exercisable to purchase 127,800 shares of Common Stock and 15,000 options which40,000 are exercisable on July 10, 2016 to purchase 15,000 shares of Common Stock.27, 2019.
PROPOSAL 2 - RATIFICATION OF THE APPOINTMENT OF OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee of the Company’s Board of Directors appointed Grant Thornton LLP (“Grant Thornton”) as the independent registered public accounting firm to audit the consolidated financial statements of the Company for fiscal year 2016.2019. Grant Thornton has been the Company’s independent registered public accounting firm since July 9, 2014. It is expected that representatives of Grant Thornton will be present at the Annual Meeting, will have an opportunity to make a statement if they desire to do so, and will be available to answer appropriate questions.
During the Company’s fiscal years ended December 31, 2013, and through July 9, 2014, neither the Company, nor anyone on its behalf, consulted with Grant Thornton regarding either (i) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on the Company’s consolidated financial statements, and neither a written report nor oral advice was provided to the Company that Grant Thornton concluded was an important factor considered by the Company in reaching a decision as to the accounting, auditing or financial reporting issue, or (ii) any matter that was either the subject of a disagreement or a reportable event.
The affirmative vote of the holders of a majority of the Common Stock present in person or by proxy at the Meeting and entitled to vote is required for adoption of this proposal.
Stockholder ratification of the selection of Grant Thornton as the Company’s independent registered public accounting firm is not required by the Company’s Bylaws. However, the Company is submitting the selection of Grant Thornton to the stockholders for ratification as a matter of good corporate practice. In the event the stockholders fail to ratify the selection, the Audit Committee of the Board of Directors will reconsider whether or not to retain Grant Thornton.
The following table reflects the aggregate fees for the audit and other services provided by Grant Thornton LLP, the Company’s independent registered public accounting firm, for fiscal years 20152018 and 2014:2017:
Fee Type | 2015 | 2014 | 2018 | 2017 | ||||||||||||
Audit Fees(1) | $ | 340,000 | 347,000 | $ | 535,000 | 454,000 | ||||||||||
Tax Fees(2) | 136,000 | — | 110,000 | 92,000 | ||||||||||||
Total | $ | 476,000 | 347,000 | $ | 645,000 | 546,000 |
(1)Audit fees consist of audit work performed in connection with the annual financial statements, the reviews of unaudited quarterly financial statements, and work generally only the independent registered accounting firm can reasonablereasonably provide, such as consents and review of regulatory documents filed with the Securities and Exchange Commissions.Commission.
(2)Fees for income tax planning, filing, and consulting.
The Audit Committee of the Company'sCompany’s Board of Directors has considered whether Grant Thornton’s provision of the services described above for the fiscal years 20152018 and 20142017 was compatible with maintaining its independence.
Engagement of the Independent Auditor
The Audit Committee approves in advance all engagements withof the Company’s independent accounting firm to perform audit or non-audit services for us. All services under the headings Audit Fees and Tax Fees were approved by the Audit Committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X of the Exchange Act. The Audit Committee'sCommittee’s pre-approval policy provides as follows:
| ● | The Audit Committee will review and pre-approve on an annual basis all audits, audit-related, tax and other services, along with acceptable cost levels, to be performed by the independent accounting firm and any member of the independent accounting firm’s alliance network of firms, and may revise the pre-approved services during the period based on later determinations. Pre-approved services typically include: audits, quarterly reviews, regulatory filing requirements, consultation on new accounting and disclosure standards, employee benefit plan audits, reviews and reporting on |
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● | Any proposed service that is not pre-approved on the annual basis requires a specific pre-approval by the Audit Committee, including cost level approval. | |
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● | The Audit Committee may delegate pre-approval authority to one or more of the Audit Committee members. The delegated member must report to the Audit Committee, at the next Audit Committee meeting, any pre-approval decisions made. |
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE “FOR” RATIFICATION OF THE APPOINTMENT OF GRANT THORNTON LLP AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM.
As previously disclosed by the Company, on June 25, 2014, the Audit Committee approved the dismissal of BDO USA, LLP (“BDO”) as the Company’s independent registered accounting firm. The primary reason for the dismissal of BDO was due to the Company’s desire to reduce its overall cost of the external audit function.
The audit reports of BDO on the consolidated financial statements of the Company as of December 31, 2013, contained no adverse opinion or disclaimer of opinion, and were not qualified or modified as to uncertainty, audit scope, or accounting principles, except the audit report of BDO on the Company’s financial statements for the fiscal year ended December 31, 2013, raised substantial doubt about the Company’s ability to continue as a going concern, noting that the Company had suffered declining revenues, recurring losses from operations and had a net working capital deficiency that raised substantial doubt about its ability to continue as a going concern.
During the Company’s fiscal year ended December 31, 2013, and through June 25, 2014, there were no disagreements, as defined in Item 304(a)(1)(iv) of Regulation S-K, between the Company and BDO on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedures that, if not resolved to BDO’s satisfaction, would have caused BDO to make reference to the matter in connection with its report on the Company’s consolidated financial statements for the relevant periods. Additionally, during the Company’s fiscal year ended December 31, 2013, and through June 25, 2014, there have been no reportable events, as described in Item 304(a)(1)(v) of Regulation S-K.
The Company requested that BDO furnish the Company with a letter addressed to the Commission stating whether or not it agrees with the above statement. A copy of such letter, dated June 30, 2014, was filed as Exhibit 16.1 to our Form 8-K filed with the Commission on July 1, 2014.
PROPOSAL 3 – APPROVAL, BY AN ADVISORY (NON-BINDING) VOTE, OF THE 20152018 COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS
In accordance with the requirements of Section 14A of the Securities Exchange Act of 1934 (“Exchange Act”), we are providing stockholders with an advisory (non-binding) vote on the approval of the 20152018 compensation of our named executive officers (this vote is sometimes referred to as “say on pay”). The Company submits such a “say on pay” vote to stockholders annually. Accordingly, you may vote on the following resolution at the 20162019 annual meeting:
“RESOLVED, that the stockholders of the Company approve, on an advisory basis, the compensation paid to the Company’s named executive officers in 2015,2018, as disclosed pursuant to Item 402 of Regulation S-K, the accompanying compensation tables, and the related narrative discussion, in the Company’s 20162019 Proxy Statement.”
As described in this Proxy Statement, our executive compensation programs are designed to enable us to attract, motivate, and retain executive talent, who are critical to our success. Our compensation is centered around a pay-for-performance philosophy. We believe that our executive compensation program, with its balance of cash incentives designed to reward achievement of key performance goals set for the year and longer-term equity basedequity-based incentives, compensates our executives for performance directly linked to stockholder value creation.
The vote on this Proposal 3 is not intended to address any specific element of compensation and is advisory, which means that the vote is not binding on the Company, our Board of Directors, and the Compensation Committee. However, our Board of Directors and our Compensation Committee value the opinions of our stockholders and will review the voting results in connection with their ongoing evaluation of the Company’s compensation program and will consider the outcome of the vote when making future compensation decisions.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE “FOR” THE APPROVAL, BY ADVISORY (NON-BINDING) VOTE, OF THE 20152018 COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS.
STOCKHOLDER PROPOSALS FOR THE 20172020 ANNUAL MEETING OF STOCKHOLDERS
In order to be considered for inclusion in our proxy materials, you must submit proposals for next year'syear’s annual meeting in writing to our Secretary at our executive offices at 8302 Dunwoody Place, Suite 250, Atlanta, Georgia 30350, on or prior to February 23, 2017.14, 2020. Such proposals also must comply with Rule 14a-8 under the Securities Exchange Act of 1934.
In accordance with our Bylaws, a stockholder who intends to submit a proposal for consideration, but not for inclusion in our proxy materials, must provide written notice of the matter to our Secretary at 8302 Dunwoody Place, Suite 250, Atlanta, Georgia 30350, not less than 90 days nor more than 120 days prior to the first anniversary date of the immediately preceding annual meeting of stockholders. As a result, any notice given by or on behalf of a stockholder pursuant to these provisions of our Bylaws (and not pursuant to Rule 14a-8 under the Securities Exchange Act of 1934) must be received no earlier than March 30, 2017,27, 2020, and no later than April 29, 2017.26, 2020.
OTHER MATTERS AND INFORMATION
Other Business
The Board of Directors has no knowledge of any business to be presented for consideration at the Meeting other than as described above. Should any such matters properly come before the Meeting or any adjournment thereof, the persons named in the enclosed Proxy Card will have discretionary authority to vote such proxy in accordance with their best judgment on such matters and with respect to matters incident to the conduct of the Meeting.
Annual ReportOther Information
Copies of our annual reports on Form 10-K,
A copy of the Company’s 2015 Annual Report accompanies this Proxy Statement. Upon written request, the Company will send you, without charge, a copy of its Annual Report quarterly reports on Form 10-K (without exhibits) for the fiscal year ended December 31, 2015,10-Q and current reports on Form 8-K, including the financial statements and financial statement schedules, which the Company hasand amendments to those reports filed with the Securities and Exchange Commission. Copiesor furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, are available on our website at www.perma-fix.com or on the website maintained by the SEC at www.sec.gov. Printed copies of these materials are available free of charge (except for the costs of duplication and mailing in the case of exhibits to the Form 10-K are available upon writtensuch documents) to stockholders who request but a reasonable fee per page will be charged to the requesting stockholder. Each written request must set forth a good faith representation that, as of the record date, the person making the request was a beneficial owner of the Company’s Common Stock entitled to votethem in writing from our corporate secretary at the Meeting. Stockholders should direct the written request to the Company’s Chief Financial Officer atPerma-Fix Environmental Services, Inc., 8302 Dunwoody Place, Suite 250, Atlanta, Georgia 30350.
Important Notice Regarding the Availability of Proxy Materials fortheAnnual Meeting of Stockholders to beheldJuly 28, 2016
Our 2016 Proxy Materials and Annual Report to Stockholders for the fiscal year 2015 are available at
http://www.cstproxy.com/perma-fix/2016
In order to assure the presence of the necessary quorum at the Meeting, please sign and mail the enclosed Proxy Card promptly in the envelope provided. No postage is required if mailed within the United States. The signing of the Proxy Card will not prevent your attending the Meeting and voting in person, should you so desire.
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