UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington,WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant ☒
Filed by a Party other than the Registrant ☐
Check the appropriate box:
☐ ☒ Preliminary Proxy Statement
☐ Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
☒☐ Definitive Proxy Statement
☐ Definitive Additional Materials
☐ Soliciting Material Under §240.14a-12§240.14a-12
NEUROMETRIX, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check all boxes that apply)the appropriate box):
☒No fee requiredrequired.
☐Fee computed on table below per Exchange Act Rule 14a-6(i)(1) and 0-11.
1)Title of each class of securities to which transaction applies:
2)Aggregate number of securities to which transaction applies:
3)Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
4)Proposed maximum aggregate value of transaction:
5)Total fee paid:
☐ Fee paid previously with preliminary materialsmaterials.
☐ Fee computed on table in exhibit requiredCheck box if any part of the fee is offset as provided by Item 25(b) per Exchange Act Rules 14a-6(i)(1)Rule 0-11(a)(2) and 0-11identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing:
1)Amount previously paid:
2)Form, Schedule or Registration Statement No:
3)Filing party:
4)Date Filed:
NeuroMetrix, Inc.
4B4 Gill Street, Suite B
Woburn, Massachusetts 01801
March 30,[●], 2023
Dear Stockholder,Stockholder:
You are cordially invited to attend the 2023 annuala special meeting (the “Special Meeting”) of Stockholdersstockholders of NeuroMetrix, Inc. (the “Corporation”“Company”), to be held in a virtual format only on May 2,October 19, 2023, at 10:00 a.m., Eastern Time.
We have decided towill hold this year’s annual meetingthe Special Meeting virtually via live audio webcast on the internet. We believe hosting a virtual annual meeting enables greater stockholder attendance and participation from any location around the world, improves meeting efficiency and our ability to communicate effectively with our stockholders, and reduces the cost and environmental impact of our annual meeting.the Special Meeting. You will be able to attend the annual meeting,Special Meeting, vote and submit your questions during the annual meeting by pre-registering at http:https://viewproxy.com/neurometrix/2023/2023SM/htype.asp. You will not be able to attend the annual meetingSpecial Meeting in person.
The attached notice of annual meeting and proxy statement describeDetails regarding the Special Meeting, the business we will conductto be conducted at the annual meetingSpecial Meeting, and provide information about usthe Company that you should consider when you vote your shares.shares are described in this proxy statement. You may obtain additional information about the Company from documents we file with the Securities and Exchange Commission.
AtThe Special Meeting, is being held solely to allow the annual meeting, one person will be electedstockholders to ourconsider and vote on the following proposals:
1.To approve a proposed amendment to the NeuroMetrix, Inc. Amended and Restated Certificate of Incorporation, as amended, in substantially the form attached to the proxy statement as Appendix A, to, at the discretion of the Board of Directors, as Class I director foreffect a three-year term. In addition, we will ask stockholders to approve the compensationreverse stock split of our named executive officers, as disclosedissued and outstanding shares of common stock, at a ratio of between 1:2 and 1:8, inclusive; and
2.To authorize an adjournment of the Special Meeting, if necessary, if a quorum is present, to solicit additional proxies if there are not sufficient votes in this proxy statement and to ratify the appointmentfavor of Baker Tilly US, LLP as the Corporation’s independent registered public accounting firm for our fiscal year ending December 31, 2023. Proposal 1.
The Board of Directors (the “Board of Directors”) recommends the approval of each of these proposals. Such other business will be transacted as may properly come before the annual meeting.Special Meeting or any adjournments thereof.
We hope you will be able to attend the annual meeting.Special Meeting. Whether you plan to attend the annual meetingSpecial Meeting or not, it is important that you cast your vote either virtually or by proxy. You may vote at any time before the Special Meeting over the Internet as well as by telephone or by mail. Therefore, when you have finished reading the proxy statement, you are urged to vote in accordance with the instructions set forth in this proxy statement. We encourage you to vote by proxy so that your shares will be represented and voted at the meeting, whether or not you can attend. You may vote by attending the Special Meeting as described in this proxy statement.
ThankWe hope you for your continued support. We look forwardwill be able to seeing you at our annual meeting.attend the Special Meeting.
Sincerely,
Sincerely,
Shai N. Gozani, M.D., Ph.D.
Chairman, Chief Executive Officer and President
NeuroMetrix, Inc.
4BPRELIMINARY PROXY STATEMENT – SUBJECT TO COMPLETION – DATED SEPTEMBER [●], 2023
NEUROMETRIX, INC.
4 Gill Street, Suite B
Woburn, Massachusetts 01801
781-890-9989
NOTICE OF 2023 ANNUALSPECIAL MEETING OF STOCKHOLDERS
To the Stockholders of NeuroMetrix, Inc.:
The annual meetingSpecial Meeting of stockholders of NeuroMetrix, Inc., a Delaware corporation (the “Corporation”“Company”), will be held in a virtual format only on Tuesday, May 2,Monday, October 19, 2023, at 10:00 a.m. Eastern Time for the purposes listed below.
PURPOSES:
1.To approve a proposed amendment to elect one directorthe NeuroMetrix, Inc. Amended and Restated Certificate of Incorporation, as amended (the “Certificate of Incorporation”), in substantially the form attached to servethe proxy statement as Appendix A, to, at the discretion of the Board of Directors, effect a three-year term expiring in 2026;
2. to approve by an advisory vote the compensationreverse stock split of our named executive officers, as disclosedissued and outstanding shares of common stock, at a ratio of between 1:2 and 1:8, inclusive (the “Reverse Split Proposal”); and
2.To authorize an adjournment of the Special Meeting, if necessary, if a quorum is present, to solicit additional proxies if there are not sufficient votes in this proxy statement;
3. to ratifyfavor of the appointment of Baker Tilly US, LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2023; and
4. to transact such other business that is properly presented at the annual meeting and any adjournments or postponements thereof.Reverse Split Proposal (the “Adjournment Proposal”).
WHO MAY VOTE:
You may vote if you were the record owner of the Corporation’sCompany’s common stock at the close of business on March 6,August 31, 2023.
VIRTUAL MEETING:
The annual meetingSpecial Meeting will be a virtual meeting via live audio webcast on the Internet. Stockholders who wish to attend the annual meetingSpecial Meeting must pre-register at http:https://viewproxy.com/neurometrix/2023/2023SM/htype.asp by 11:59 p.m. Eastern Time, on April 29,October 18, 2023. You will receive an event passcode to attend the meeting, and a virtual control number to vote if proper documentation is provided. The live audio webcast of the annual meetingSpecial Meeting can be accessed by stockholders on the day of the meeting at http://viewproxy.com/neurometrix/2023/htype.asp.by clicking on the link you have received in your e-mail confirmations. You will not be able to attend the annual meetingSpecial Meeting in person.
All stockholders are cordially invited to attend the annual meeting.Special Meeting. Whether you plan to attend the annual meetingSpecial Meeting or not, we urge you to vote and submit your proxy by the Internet, telephone or mail in order to ensure the presence of a quorum.You may change or revoke your proxy at any time before it is voted at the meeting.
By Order of the Board of Directors,
Shai N. Gozani, M.D., Ph.D.
Chairman, Chief Executive Officer and President
Woburn, Massachusetts
March 30,[●], 2023
Stockholders are requested to sign the enclosed proxy card
and return it in the enclosed stamped envelope by return mail.
—OR—
Stockholders may also complete a proxy via the Internet or by
telephone in accordance with the instructions listed on the proxy card.
March 30, 2023
NeuroMetrix, Inc.NEUROMETRIX, INC.
4B4 Gill Street, Suite B
Woburn, Massachusetts 01801
781-890-9989
PROXY STATEMENT FOR THE NEUROMETRIX, INC.
2023 ANNUALSPECIAL MEETING OF STOCKHOLDERS TO BE HELD ON OCTOBER 19, 2023
This proxy statement, along with the accompanying noticeNotice of 2023 annual meetingthe Special Meeting of stockholders,Stockholders, contains information about the 2023 annual meetingSpecial Meeting of stockholdersStockholders of NeuroMetrix, Inc., including any adjournments or postponements of the annual meeting. Special Meeting. We are holdingproviding you with these proxy materials because the annual meetingBoard of Directors, on Tuesday, May 2, 2023,behalf of the Company, is soliciting your proxy to vote at the Special Meeting. The Special Meeting will be held at 10:00 a.m., Eastern Time, on October 19, 2023 in a virtual format at http://viewproxy.com/neurometrix/2023/htype.asp.by accessing the link provided in your email confirmation when you registered.
In this proxy statement, we refer to NeuroMetrix, Inc. as “NeuroMetrix,“NeuroMetrix,” “the Corporation,“the Company,” “we”“we” and “us.“us.”
This proxy statement relates to the solicitation of proxies by our board of directors (“the Board of Directors”)Directors for use at the annual meeting.Special Meeting.
On or about March 30,September 11, 2023, we intend to begin sendingthis proxy statement, the attached noticeNotice of 2023 annual meetingSpecial Meeting of stockholdersStockholders and the enclosed proxy card to all stockholders entitled to vote at the annual meeting. Although not part of this proxy statement, we are also sending, along with this proxy statement, our 2022 annual report, which includes our financial statements for the fiscal year ended December 31, 2022Special Meeting.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE
STOCKHOLDER MEETING TO BE HELD ON MAY 2,OCTOBER 19, 2023
This proxy statement the notice of 2023 annual meeting of stockholders, our form of proxy card and our 2022 annual report to stockholders areis available for viewing, printing and downloading at http:https://viewproxy.com/www.viewproxy.com/neurometrix/2023/htype.asp2023SM. To view these materials, please have your 11-digit control number(s) available that appears on your proxy card. On this website, you can also elect to receive future distributions of our proxy statements and annual reports to stockholders by electronic delivery.card available.
Additionally, you can find a copy of our Annual Report2022 annual report on Form 10-K, which includes our financial statements, for the fiscal year ended December 31, 2022 on the website of the Securities and Exchange Commission or the SEC,(the “SEC”) at https://www.sec.gov, or in the “Financials and Filings” section of the “Investors“Investor Relations” section ofon our website at https://www.neurometrix.com.www.neurometrix.com. You may also obtain a printed copy of our Annual Reportannual report on Form 10-K, including our financial statements, free of charge, from us by sending a written request to: Attention: Secretary, NeuroMetrix, Inc, 4BInc. 4 Gill Street, Suite B, Woburn, MA 01801. Exhibits will be provided upon written request and payment of an appropriate processing fee.
IMPORTANT INFORMATION ABOUT THE ANNUALSPECIAL MEETING AND VOTING
Only holders of shares of our common stockholdersstock of record as of the close of business on March 6,August 31, 2023 (the “Record Date”) will be entitled to vote at the meeting and any adjournments or postponements thereof. Our convertible preferred stock hasShares of our outstanding Series B Convertible Preferred Stock have no voting rights. As of that date, 7,791,538the Record Date, 8,585,019 shares of our common stock, $0.0001 par value per share (the “common stock”), were issued and outstanding. Each share of common stock outstanding as of the record dateRecord Date will be entitled to one vote, and stockholders may vote in person or by proxy. Execution of a proxy will not in any way affect a stockholder’s right to attend the meeting and vote in person, although the presence (without further action) of a stockholder at the annual meetingSpecial Meeting will not constitute revocation of a previously given proxy. Any stockholder of record delivering a proxy has the right to revoke itsuch proxy by either: (1) filingsending a timely written revocation withto our Secretary at NeuroMetrix, Inc., 4B4 Gill Street, Suite B, Woburn, Massachusetts 01801; (2) submitting a new proxy by telephone, Internet, or proxy card after the date of the previously submitted proxy; or (3) attending the meeting and voting by ballotcasting a vote at the annual meeting.Special Meeting. Your most current vote, whether by telephone, Internet or proxy card is the one that will be counted.
Whether you plan to attend the annual meetingSpecial Meeting or not, we urge you to vote by proxy. If you vote by proxy, the individuals named on the proxy card, or your “proxies,” will vote your shares of common stock in the manner you indicate. You may specify whether your shares of common stock should be voted for, against,“for”, “against” or abstain“abstain” with respect to proposals 1 through 3.each of the proposals. If you properly submit a proxy without giving specific voting instructions, your shares of common stock will be voted in accordance with the Board of Directors’ recommendations as noted below. Voting by proxy will not affect your right to attend the annual meeting.Special Meeting. If your shares of common stock are registered directly in your name through our stock transfer agent, American Stock Transfer &and Trust Company, or you have stock certificates registered in your name, you may vote:
1.•By the Internet or by telephone. Follow the instructions included in the proxy card to vote by the Internet or telephone prior to the meeting.
•By mail. Complete and mail the enclosed proxy card in the enclosed postage prepaid envelope. Your proxy will be voted in accordance with your instructions.instructions if it is received before the Special Meeting. If you sign the proxy
card but do not specify how you want your shares voted, they will be voted as recommended by ourthe Board of Directors.
2.By Internet or by telephone. Follow the instructions attached to the proxy card to vote by Internet or telephone.
3.•Virtually at the meeting. Stockholders who wish to attend the Special Meeting must pre-register at https://viewproxy.com/neurometirx/2023SM/htype.asp by 11:59 p.m. Eastern Time, on October 18, 2023. If you attend the meeting by visiting the link provided upon registering, during the Special Meeting while the polls are open, you may vote your shares electronically at the meeting by entering the 11-digit virtual control number found on your proxy card.
card and following the instructions.
Telephone and Internet voting facilities for stockholders of record will be available 24-hours24 hours a day and will close at 11:59 p.m. Eastern Time on May 1,October 18, 2023.
If your shares are held in “street name” (held in the name of a bank, broker, or other nominee), you should have received voting instructions from that organization rather than from us. Simply follow the voting instructions to ensure that your vote is counted. To vote electronically at the Special Meeting, you must provide theobtain a valid proxy from your broker, bank broker, or other holder of record with instructions on how to vote your shares and can do so as follows:
1.By mail.agent. Follow the instructions you receive from your broker, bank or other nominee explaining how to vote your shares.
2.By Internetagent included with these proxy materials, or by telephone. Follow the instructions you receive fromcontact your broker, bank or other nomineeagent to vote by Internet or telephone.
3.Virtually at the meeting. Contact the broker or other nominee who holds your shares to obtain a broker’s proxy card, which you will need to register to attend the annual meeting. You will be assigned a virtual
control number in order to vote your shares during the annual meeting. You will not be able to vote at the annual meeting unless you haverequest a proxy card from your broker.
form.
The representation virtually or by proxy of at least a third of all shares of common stock issued, outstanding, and entitled to vote at the meeting is necessary to constitute a quorum for the transaction of business. Abstentions and broker “non-votes” are counted as present or represented for purposes of determining the presence or absence of a quorum for the meeting. A “non-vote” occurs when a nominee holding shares for a beneficial owner votes on one proposal, but does not vote on another proposal because, in respect of such other proposal, the nominee does not have discretionary voting power and has not received voting instructions from the beneficial owner. An automated system administered by our transfer agent tabulates the votes. The vote on each matter submitted to stockholders is tabulated separately.
Each A representative of the persons namedAlliance Advisors (as defined below) will serve as proxies in the proxy is onean inspector of our officers. All properly executed proxies returned in time to be cast at the meeting will be voted. With respect to Proposal 1, the election of one Class I director, any stockholder submitting a proxy has a right to withhold authority to vote for the nominee to the Board of Directors in the manner provided on the proxy. The stockholders will also act upon Proposal 2, to consider an advisory vote on compensation of our named executive officers and Proposal 3, to ratify the selection of Baker Tilly US, LLP as the Corporation’s independent auditors for fiscal 2023.elections.
If your shares of common stock are registered in your name, they will not be counted “for” or “against” the proposals above if you do not vote as described above. If your shares of common stock are held in street name and you do not provide voting instructions to the bank, broker or other holder of record that holds your shares, the bank, broker or other holder of record will have the authority to vote your unvoted shares only on proposal 3such proposals even if it does not receive instructions from you. We encourage you to provide voting instructions. This ensures your shares will be voted at the meeting in the manner you desire. If your broker cannot vote your shares on a particular matter because it has not received instructions from you and does not have discretionary voting authority on that matter or because your broker chooses not to vote on a matter for which it does have discretionary voting authority, this is referred to as a s “broker non-vote”.non-vote.” Under rules that govern brokers, banks, and other agents that are record holders of company stock held in brokerage accounts for their clients who beneficially own such shares, if the beneficial owner does not provide voting instructions, the broker, bank or other nominee can still vote the shares with respect to matters that are considered “routine” (discretionary matters), but cannot vote the shares with respect to “non-routine” (non-discretionary) matters.
The following sets forth the vote required to approve each proposal and how votes are counted:
| | | | | |
Proposal 1: Election of DirectorReverse Stock Split | The nominee to serve as Class I director who receives the most votes (also known as a “plurality”affirmative vote of the votes cast) will be elected. Youholders of a majority of the shares voted at the Special Meeting by the stockholders entitled to vote on the Reverse Split Proposal is required to approve the amendment of the Certificate of Incorporation to effect a reverse stock split of our common stock. Assuming that a quorum is present, broker non-votes (if any), abstentions, and shares of common stock that are not present in person or by proxy at the special meeting would have no effect on the Reverse Split Proposal. The Reverse Split Proposal is a “routine” matter and therefore a broker may vote either FOR the nominee or WITHHOLD your voteon this matter without instructions from the nominee. Votes thatbeneficial owner as long as instructions are withheld will not be included in the vote tally for the electiongiven. |
Proposal 2: Approve an Adjournment of the director. Brokerage firms doSpecial Meeting, if Necessary, to Solicit Additional Proxies if there are not have authoritySufficient Votes in Favor of the Reverse Split Proposal | Approval of the adjournment of the Special Meeting, if necessary, to solicit additional proxies if there are not sufficient votes in favor of the Reverse Split Proposal requires the affirmative vote of the holders of a majority of the shares of common stock present and entitled to vote customers’ unvoted shares heldon the matter either in person or by proxy at the firms in street name for this proposal. AsSpecial Meeting. A “broker non-vote” or a result, any shares not voted byfailure to submit a customer will be treated as a broker non-vote. Such broker non-votesproxy or vote at the Special Meeting will have no effect on the outcome of the electionvote for the Adjournment Proposal. For purposes of the nominee. |
Proposal 2: Approve an Advisory Votevote on the Compensation our Named Executive OfficersAdjournment Proposal, an abstention will have the same effect as a vote “AGAINST” such proposal.
|
The affirmative vote of a majority of the votes cast for or against this proposal is required to approve, on an advisory basis, the compensation of our named executive officers, as described in this proxy statement. Abstentions will have no effect on the results of this vote. Brokerage firms do not have authority to vote customers’ unvoted shares held by the firms in street name for this proposal. As a result, any shares not voted by a customer will be treated as a broker non-vote. Such broker non-votes will have no effect on the results of this vote. Although the advisory vote is non-binding, the Compensation Committee and the Board of Directors will review the voting results and take them into consideration when making future decisions regarding executive compensation. | | |
Proposal 3: Ratify the Appointment of Independent Registered Public Accounting Firm | The affirmative vote of a majority of the votes cast for or against this proposal is required to ratify the appointment of our independent registered public accounting firm. Abstentions will have no effect on the results of this vote. Brokerage firms have authority to vote customers’ unvoted shares held by the firms in street name for this proposal. If a broker does not exercise this authority, such broker non-votes will have no effect on the results of this vote. We are not required to obtain the approval of our stockholders to select our independent registered public accounting firm. However, if our stockholders do not ratify the selection of Baker Tilly US, LLP as our independent registered public accounting firm for 2023, our Audit Committee of our Board of Directors will reconsider its selection. |
If you hold your shares in street name, it is critical that you cast your vote if you want your vote to be counted for the election of the director nominee (Proposal 1 of this proxy statement). Your bank, broker or other holder of record will not have discretion to vote uninstructed shares on the election of the director nominee or on the approval of the advisory vote on executive compensation (Proposal 2 of this proxy statement). Your bank, broker, or other holder of record does, however, continue to have discretion to vote any uninstructed shares on the ratification of the appointment of our independent registered public accounting firm (Proposal 3 of this proxy statement).
The Board of Directors knows of no other matter to be presented at the meeting. If any other matter should be presented at the meeting upon which a vote may be properly taken, shares represented by all proxies received by the Board of Directors will be voted with respect thereto in accordance with the judgment of the persons named as proxies in the proxy.
The preliminary voting results will be announced at the annual meeting,Special Meeting, and we will publish preliminary, results, or final results, if available, in a Current Report on Form 8-K within four business days of the annual meeting.Special Meeting. If final results are unavailable at the time we file the Form 8-K, then we will file an amended report on Form 8-K to disclose the final voting results within four business days after the final voting results are known.
Electronic Delivery of Future Stockholder Communications
Most stockholders can elect to view or receive copies of future proxy materials over the Internet instead of receiving paper copies in the mail.
If you are a stockholder of record, you can choose this option and save the CorporationCompany the cost of producing and mailing these documents by going to https://www.astfinancial.com,, accessing your account information and following the instructions provided.
BOARD MATTERS AND CORPORATE GOVERNANCE
Board of Directors
Our amended and restated certificate of incorporation, as amended, provides for a classified board of directors consisting of three staggered classes of directors (Class I, Class II and Class III). The members of each class of our Board of Directors serve for staggered three-year terms, with the terms of Class I, Class II and Class III directors expiring upon the election and qualification of directors at the annual meetings of stockholders to be held in 2023, 2024 and 2025, respectively. As of the date that this proxy statement was mailed to stockholders:
1.our Class I director is Shai N. Gozani, M.D., Ph.D.;
2.our Class II directors are David Van Avermaete and Bradley M. Fluegel; and
3.our Class III directors are David E. Goodman, M.D. and Nancy E. Katz.
Our Board of Directors has determined that Dr. Goodman, Mr. Fluegel, Ms. Katz, and Mr. Van Avermaete are independent directors for purposes of the corporate governance rules contained in the Nasdaq Marketplace Rules, or the Nasdaq rules. In making the independence determination with respect to these directors, our Board of Directors has considered the materiality of any relationship that each of our directors has with us. Our Board of Directors held five meetings during 2022. During 2022, all our directors attended more than 75% of the aggregate of (i) the total number of meetings of our Board of Directors and (ii) the total number of meetings held by any committees of our Board of Directors on which such director served.
Our Board of Directors has an Audit Committee, a Compensation Committee, and a Nominating and Corporate Governance Committee.
Board Committees and Meetings
Audit Committee
Our Board of Directors currently has an Audit Committee consisting of Dr. Goodman, Chairman, Mr. Fluegel and Ms. Katz. The Audit Committee operates pursuant to a charter that was approved by our Board of Directors, a current copy of which is available on our website at https://www.neurometrix.com under the heading “Investor Relations” and subheading “Corporate Governance”. The role and responsibilities of our Audit Committee are set forth in the Audit Committee’s written charter and include, among other functions, assistingHow Does the Board of Directors in overseeing the operation of a comprehensive system of internal controls covering the integrity of our financial statements and reports, compliance with laws, regulations and corporate policies, and the qualifications, performance and independence of our registered public accounting firm. Dr. Goodman, Mr. Fluegel and Ms. Katz are all “independent” as that term is defined in the rules of the SEC and the applicable Nasdaq rules relating to audit committee members. Our Board of Directors has concluded that Dr. Goodman qualifies as an “audit committee financial expert” as such term is defined in SEC rules. The Audit Committee held four meetings during 2022. Please also see the report of the Audit Committee set forth elsewhere in this proxy statement.
Compensation Committee
Our Board of Directors has a Compensation Committee consisting of Dr. Goodman and Mr. Van Avermaete. Dr. Goodman and Mr. Van Avermaete are “independent directors” as that term is defined in the Nasdaq
rules. The Compensation Committee operates pursuant to a charter that was approved by our Board of Directors, a current copy of which is available on our website at https://www.neurometrix.com under the heading “Investor Relations” and subheading “Corporate Governance.” The role and responsibilities of our Compensation Committee are set forth in the Compensation Committee’s written charter and include, among other functions, having direct responsibility for the oversight of all the compensation plans, policies, and programs of the Corporation in which the directors and executive officers participate, and certain other incentive and equity plans in which all other employees of the Corporation participate. The Compensation Committee held one meeting during 2022 and also addressed Compensation Committee matters during meetings of the full Board of Directors.
The Compensation Committee typically meets at least two times each year in connection with the consideration and determination of executive compensation. DependingRecommend That I Vote on the nature of the matter to be discussed, these meetings may occur at regularly scheduled times or may be special meetings. Specific agenda items are typically determined by the members of the Compensation Committee and our Chief Executive Officer. The Compensation Committee has the authority to determine all compensation payable to our executive officers. For annual and other compensation decisions, our Chief Executive Officer typically provides detailed information to the Compensation Committee regarding the performance of our executive officers, to the extent relevant, and makes detailed recommendations to the Compensation Committee regarding the compensation of all executive officers, excluding his own. The Compensation Committee also considers the result of the most recent stockholder advisory vote on executive compensation. The Compensation Committee ultimately made all determinations regarding compensation payable to our executive officers throughout the year.Proposals?
The Compensation Committee typically utilizes an incentive compensation plan for management. This plan employs quantitative metrics established early in the fiscal year in developing a corporate performance rating. The Compensation Committee has established a process for annual assessment of corporate performance which is the foundation for decisions regarding bonus payments to executive officers. Metrics are established following approval by the Board of Directors of the annual operating budget. These are monitored quarterly during the year and assessed after the end of the year. The Compensation Committee evaluates performance against these metrics and applies judgment in arriving at an overall corporate performance rating or “factor”. In concept, the management bonus pool is activated by achievement of a single threshold or “gating” metric. Following activation, value is then created within the pool by achievement toward specific performance metrics. During 2022, the Compensation Committee established incentive compensation goals focused on revenue growth, operating results, R&D productivity, and infrastructure development. The 2022 gating metric was not achieved and consequently a management bonus pool was not activated by the Compensation Committee.
The Compensation Committee has the authority to directly retain the services of independent consultants and other experts to assist in fulfilling its responsibilities. The Compensation Committee did not retain independent consultants or other experts during 2022.
The Compensation Committee also typically reviews our director compensation on at least an annual basis. Our Chief Executive Officer may make recommendations to the Compensation Committee regarding director compensation.
Nominating and Corporate Governance Committee
Our Board of Directors currently has a Nominating and Corporate Governance Committee consisting of Mr. Van Avermaete and Ms. Katz. Mr. Van Avermaete and Ms. Katz are “independent directors” as that term is defined in the Nasdaq rules. The Nominating and Corporate Governance Committee operates pursuant to a charter that was approved by our Board of Directors, a current copy of which is available on our website at https://www.neurometrix.com under the heading “Investor Relations” and subheading “Corporate Governance”. The role and responsibilities of our Nominating and Corporate Governance Committee are set forth in the Nominating and Corporate Governance Committee’s written charter and include, among other functions, providing leadership in shaping the corporate governance of the Corporation, leading the Board of Directors in its annual review of the Board’s performance, assisting the Board by identifying individuals, consistent with the Board’s criteria, who are qualified to become Board members, recommending to the Board the director nominees for the next annual meeting of stockholders or for filling newly created directorships resulting from an increase in the size of the Board or vacancies, and recommending to the Board director nominees for each committee. The Nominating and Corporate Governance Committee did not meet separately during 2022. Nominating and Corporate Governance Committee matters were addressed during meetings of the full Board of Directors.
Policy Governing Director Attendance at Annual Meetings
The Board of Directors has adopted a policyrecommends that all directors are expected to attend our annual meetings of stockholders in person, unless doing so is impracticable due to public safety concerns or unavoidable conflicts. All of our current directors in office atyou vote as follows:
“FOR” the timeapproval of the 2022 annual meeting of stockholders were in attendance via the audio webcast.
Policies Governing Director Nominations
Securityholder Recommendations
The Nominating and Corporate Governance Committee’s current policy with regardamendment to the considerationCertificate of director candidates recommended by securityholders is that it will review and consider any director candidates who have been recommended by one or more of our stockholders entitledIncorporation, in substantially the form attached to vote in the election of directors in compliance with the procedures established from time to time by the Nominating and Corporate Governance Committee. All securityholder recommendations for director candidates must be submitted to our Secretary at 4B Gill Street, Woburn, Massachusetts 01801, who will forward all recommendations to the Nominating and Corporate Governance Committee. All securityholder recommendations for director candidates for our 2024 annual meeting of stockholders must be submitted to our Secretary on or before December 1, 2023 and must include the following information:
1.the name and address of record of the stockholder;
2.a representation that the securityholder is a record holder of our stock entitled to vote in the election of directors, or if the securityholder is not a record holder, evidence of ownership in accordance with Rule 14a-8(b)(2) under the Securities Exchange Act of 1934, as amended (the “Securities Exchange Act”);
3.the name, age, business and residential address, educational background, current principal occupation or employment, and principal occupation or employment for the preceding five (5) full fiscal years of the proposed director candidate;
4.the names of other public companies in which such person holds or has held directorships during the past five years;
5.a description of the qualifications and background of the proposed director candidate which addresses the minimum qualifications and other criteria for Board membership approved by the Board of Directors from time to time;
6.a description of all arrangements or understandings between the securityholder and the proposed director candidate;
7.the consent of the proposed director candidate (1) to be named in the proxy statement relatingas Appendix A, to, our annual meeting of stockholders and (2) to serve as a director if elected at such annual meeting; and
8.any other information regarding the proposed director candidate that is required to be included in a proxy statement filed pursuant to the rules of the Securities and Exchange Commission.
Board Membership Criteria
The Nominating and Corporate Governance Committee has established criteria for Board membership. These criteria include the following specific, minimum qualifications that the Nominating and Corporate Governance Committee believes must be met by a Nominating and Corporate Governance Committee-recommended nominee for a position on the Board of Directors. The nominee must have high personal and professional integrity, must have demonstrated exceptional ability and judgment, and must be expected, in the judgment of the Nominating and Corporate Governance Committee, to be highly effective, in conjunction with the other nominees to the Board of Directors, in collectively serving the interests of our company and stockholders. In addition to the minimum qualifications for each nominee set forth above, the Nominating and Corporate Governance Committee will recommend that the Board of Directors select persons for nomination to help ensure that:
1.the Board of Directors will be comprised of a majority of “independent directors” in accordance with the Nasdaq rules;
2.each of our Audit, Compensation, and Nominating and Corporate Governance Committees shall be comprised entirely of independent directors;
3.each member of our Audit Committee is able to read and understand fundamental financial statements, including a company’s balance sheet, income statement, and cash flow statement; and
4.at least one member of the Audit Committee has past employment experience in finance or accounting, requisite professional certification in accounting, or any other comparable experience or background which results in the individual’s financial sophistication, including being or having been a chief executive officer, chief financial officer, or other senior officer with financial oversight responsibilities.
Finally, in addition to any other standards the Nominating and Corporate Governance Committee may deem appropriate from time to time for the overall structure and compositiondiscretion of the Board of Directors, the Nominating and Corporate Governance Committee, when recommending that the Board of Directors select persons for nomination, may consider diversity among its members and whether the nominee has direct experience in the industry or in the markets in which we operate. The Nominating and Corporate Governance Committee strives
where appropriate to achieveeffect a diverse balance of professional expertise and backgrounds, including expertise in finance, operations, and strategy and backgrounds in health care, medical devices, and other industries.
The Nominating and Corporate Governance Committee will recommend to the Board of Directors the nomination of the director candidates who it believes will, together with the existing Board members and other nominees, best serve our interests and the interestsreverse stock split of our stockholders.
Identifying and Evaluating Nominees
The Nominating and Corporate Governance Committee may solicit recommendations for director nominees from any or all of the following sources: non-management directors, the Chief Executive Officer, other executive officers, third-party search firms, or any other source it deems appropriate. The Nominating and Corporate Governance Committee will review and evaluate the qualifications of any proposed director candidate that it is considering or that has been recommended to it by a securityholder in compliance with the Nominating and Corporate Governance Committee’s procedures for that purpose, and conduct inquiries it deems appropriate into the background of these proposed director candidates. In identifying and evaluating proposed director candidates, the Nominating and Corporate Governance Committee may consider, in addition to the minimum qualifications and other criteria for Board membership approved by the Nominating and Corporate Governance Committee from time to time, all facts and circumstances that it deems appropriate or advisable, including, among other things, the skills of each proposed director candidate, his or her depth and breadth of business experience or other background characteristics, his or her independence and the needs of the Board of Directors. Based on these considerations, the Nominating and Corporate Governance Committee will recommend to the Board of Directors the nomination of the director candidates who it believes will, together with the existing Board members and other nominees, best serve the interests of our company and stockholders. The Nominating and Corporate Governance Committee will evaluate proposed director candidates who have been recommended by securityholders in compliance with the policies and procedures established by the Nominating and Corporate Governance Committee in the same manner as all other proposed director candidates being considered by the Nominating and Corporate Governance Committee, with no regard to the source of the initial recommendation of such proposed director candidate.
Board Leadership Structure
The positions of chairman of the Board and chief executive officer of the Corporation have historically been combined, and Dr. Gozani currently holds both positions. We believe this Board leadership structure is appropriate because of the efficiencies achieved in having the role of chief executive officer and chairman combined, and because the detailed knowledge of our day-to-day operations and business that the chief executive officer possesses greatly enhances the decision-making processes of the Board of Directors as a whole. We have a strong governance structure in place, including independent directors, to ensure the powers and duties of the dual role are handled responsibly. Furthermore, consistent with Nasdaq listing requirements, the independent directors regularly have the opportunity to meet in executive sessions without Dr. Gozani in attendance. We do not have a lead independent director.
Board’s Role in Risk Oversight
Management is responsible for managing the risks that we face. The Board of Directors is responsible for overseeing management’s approach to risk management that is designed to support the achievement of
organizational objectives, including strategic objectives, to improve long-term organizational performance and enhance stockholder value. The involvement of the full Board in reviewing our strategic objectives and plans is a key part of the Board’s assessment of management’s approach and tolerance to risk. A fundamental part of risk management is not only understanding the risks a company faces and what steps management is taking to manage those risks, but also understanding what level of risk is appropriate for us. In setting our business strategy, our Board assesses the various risks being mitigated by management and determines what constitutes an appropriate level of risk for us. Our Board’s role in risk oversight has not, to date, had any effect on the Board’s leadership structure.
While the Board of Directors has ultimate oversight responsibility for overseeing management’s risk management process, the Audit Committee and Compensation Committee assist the Board of Directors in fulfilling that responsibility. The Audit Committee assists the Board of Directors in its oversight of risk management in the areas of financial reporting, internal controls, cybersecurity risk, and compliance with legal and regulatory requirements, and the Compensation Committee assists the Board of Directors in its oversight of the evaluation and management of risks related to our compensation policies and practices.
Communications with the Board
If you wish to communicate with any of our directors or the Board of Directors as a group, you may do so by writing to them at Name(s) of Director(s)/Board of Directors of NeuroMetrix, Inc., c/o Secretary, NeuroMetrix, Inc., 4B Gill Street, Woburn, Massachusetts 01801.
We recommend that all correspondence be sent via certified U.S. Mail, return receipt requested. All correspondence received by the Secretary will be forwarded by the Secretary promptly to the addressee(s).
Code of Business Conduct and Ethics
We have adopted a Code of Business Conduct and Ethics that applies to all of our directors, officers and employees, including our principal executive officer, principal financial officer, principal accounting officer or controller and persons performing similar functions. A current copy of the Code of Business Conduct and Ethics is available on our website at https://www.neurometrix.com under the heading “Investor Relations” and subheading “Corporate Governance,” and we intend to disclose on this website any amendment to, or waiver of, any provision of the Code of Business Conduct and Ethics applicable to our directors or executive officers that would otherwise be required to be disclosed under SEC rules or, to the extent permitted, by Nasdaq rules. A current copy of the Code of Business Conduct and Ethics may also be obtained, without charge, upon written request directed to us at: NeuroMetrix, Inc., 4B Gill Street, Woburn, Massachusetts 01801, Attention: Chief Executive Officer.
PROPOSAL 1: ELECTION OF DIRECTOR
Introduction
We have one Class I director with a term expiring at the 2023 annual meeting of stockholders: Shai N. Gozani, M.D., Ph.D. Our Board of Directors has nominated and recommends that Dr. Gozani be re-elected as a Class I director, to hold office until our 2026 annual meeting of stockholders and until his successor is duly elected and qualified or until his earlier death, resignation or removal. Dr. Gozani has indicated his willingness to serve, if elected; however, should he become unable or unwilling to serve, the proxies will be voted for the election of a substitute nominee recommended by our Board of Directors.
Vote Required
Directors are elected by a plurality of the votes cast by stockholders entitled to vote. This means that the person receiving the highest number of “FOR” votes will be elected as director. Votes may be cast for or withheld from a nominee. Broker non-votes and votes that are withheld are not included in the number of votes cast and will have no effect on the outcome of the election of the nominees.
Recommendation
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE NOMINEE, SHAI N. GOZANI, M.D., PH.D., AND PROPERLY AUTHORIZED PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE VOTED “FOR” THE NOMINEE UNLESS INSTRUCTIONS TO WITHHOLD OR TO THE CONTRARY ARE GIVEN.
Information Regarding the Directors and Executive Officers
The following table and biographical descriptions set forth certain information with respect to each continuing director who is not standing for election, and the executive officers who are not directors, based on information furnished to us by the directors, and executive officers, as of March 1, 2023.
| | | | | | | | | | | | | | |
Name | | Age | | Position |
Shai N. Gozani, M.D., Ph.D. | | 58 | | Chairman of the Board, Chief Executive Officer, President and Secretary |
Thomas T. Higgins | | 71 | | Senior Vice President, Chief Financial Officer and Treasurer |
David E. Goodman, M.D. (1) (2)
| | 66 | | Director |
Bradley M. Fluegel (1)
| | 61 | | Director |
Nancy E. Katz (1) (3)
| | 63 | | Director |
David Van Avermaete (2) (3)
| | 71 | | Director |
(1) Member of Audit Committee.
(2) Member of Compensation Committee.
(3) Member of Nominating and Corporate Governance Committee.
| | | | | | | | | | | | | | |
| Board Diversity Matrix (As of March 1, 2023) |
| Total Number of Directors | 5 |
| Female | Male | Non-Binary | Did Not
Disclose
Gender |
| Part I: Gender Identity | |
| Directors | 1 | 2 | 0 | 2 |
| Part II: Demographic Background | | |
| African American or Black | 0 | 0 | 0 | 0 |
| Alaskan Native or Native American | 0 | 0 | 0 | 0 |
| Asian | 0 | 0 | 0 | 0 |
| Hispanic or Latinx | 0 | 0 | 0 | 0 |
| Native Hawaiian or Pacific Islander | 0 | 0 | 0 | 0 |
| White | 1 | 2 | 0 | 0 |
| Two or More Races or Ethnicities | 0 | 0 | 0 | 0 |
| LGBTQ+ | 0 |
| Did Not Disclose Demographic Background | 2 |
Director Nominated for Election at the Annual Meeting
Shai N. Gozani, M.D., Ph.D. founded our company in 1996 and currently serves as Chairman of our Board of Directors and as our President, Chief Executive Officer and Secretary. Since founding our company in 1996, Dr. Gozani has served in a number of positions at our company including Chairman since 1996, President from 1996 to 1998 and from 2002 to the present, Chief Executive Officer since 1997 and Secretary since July 2008. Dr. Gozani holds a B.A. in computer science, an M.S. in Biomedical Engineering and a Ph.D. in Neurobiology, from the University of California, Berkeley. He also received an M.D. from Harvard Medical School and the Harvard-M.I.T. Division of Health Sciences at M.I.T. Prior to forming our company, Dr. Gozani completed a neurophysiology research fellowship in the laboratory of Dr. Gerald Fischbach at Harvard Medical School. Dr. Gozani has published articles in the areas of basic and clinical neurophysiology, biomedical engineering and computational chemistry. Since 2019 Dr. Gozani has served on the Board of Directors of Madorra, Inc. The Board has concluded that Dr. Gozani should serve as a director because Dr. Gozani’s extensive knowledge of engineering and neurophysiology, combined with the unique understanding of our technology and business he has gained as our founder and as a key executive, provides invaluable insight to our Board of Directors and to the entire organization.
Directors Whose Terms Extend Beyond the Annual Meeting
Bradley M. Fluegel has served as a member of our Board of Directors since June 2022. Since January 2018, Mr. Fluegel has been a principal of BMF Advisors, where he advises healthcare companies. He previously served as Senior Vice President, Chief Healthcare Commercial Market Development Officer of Walgreens from October 2012 to January 2018. From April 2011 to September 2012, Mr. Fluegel served as Executive in Residence at Health Evolution Partners, a healthcare private equity firm. Mr. Fluegel served as Executive Vice President and Chief Strategy and External Affairs Officer of WellPoint, Inc. (now Elevance Health) from September 2007 to December 2010. Prior to that, Mr. Fluegel served as Senior Vice President of National Accounts and Vice President, Enterprise Strategy at Aetna, Inc. Mr. Fluegel currently serves on the board of directors of Performant Financial Corporation (Nasdaq: PFMT) and Digital Transformation Opportunities Corp. (Nasdaq: DTOC) and formerly served
on the board of directors of Itamar Medical Ltd. and Fitbit, Inc. prior to Google’s acquisition of the company. Mr. Fluegel received a Master’s Degree in Public Policy from Harvard University’s Kennedy School of Government and a Bachelor of Arts in Business Administration from the University of Washington. He also serves as a lecturer at the University of Pennsylvania’s Wharton School of Business. Mr. Fluegel’s qualifications to serve on the Board of Directors include his extensive executive experience and his background in the healthcare industry.
David E. Goodman, M.D., M.S.E. has served as a member of our Board of Directors since June 2004. Since 2013, Dr. Goodman has been running his own independent primary care medical practice where he also manages the care of first responders (police, fire, EMS) injured in the line of duty. From 2013 to 2016, Dr. Goodman served as CEO of Feet First, a technology-focused healthcare services company he co-founded that is committed to preventing the devastating and expensive microvascular complications of diabetes. From 2014 to 2016, Dr. Goodman served as a director of Xtant Medical (OTC QX: BONE), a comprehensive supplier of orthopedic and spine surgery products. From 2012 to 2015, Dr. Goodman served as CMO of FirstVitals, a healthcare services company focused on wellness and prevention. Since 2011, Dr. Goodman has also served as an independent consultant. During 2010, Dr. Goodman served as President and Chief Executive Officer of SEDline, Inc., a research-focused company with the mission to expand the scope and applications for neuromonitoring. From 2008 to 2009, Dr. Goodman served as Executive Vice President of Business Development for Masimo Corporation, a manufacturer of non-invasive patient monitors. From 2006 to 2008, Dr. Goodman served as an independent consultant providing product design, regulatory and analytical consulting services to medical device and biopharmaceutical companies and also served in this capacity from 2003 to 2004 and from 2001 to 2002. From 2005 to 2006, Dr. Goodman served as President and Chief Executive Officer of BaroSense, Inc., a medical device company focused on developing minimally invasive devices for the long-term treatment of obesity. From 2004 to 2005, Dr. Goodman served as President and Chief Executive Officer of Interventional Therapeutic Solutions, Inc., an implantable drug delivery systems company. From 2002 to 2003, Dr. Goodman served as Chairman, President and Chief Executive Officer of Pherin Pharmaceuticals, a pharmaceutical discovery and development company. From 1994 to 2001, Dr. Goodman held various positions, including Chief Executive Officer, Chief Medical Officer and director, for LifeMasters Supported SelfCare, Inc., a disease management services company that Dr. Goodman founded. Dr. Goodman also served as a director of Sound Surgical Technologies LLC, a private manufacturer of aesthetic surgical tools from 2011 until its acquisition by Solta Medical (Nasdaq: SLTM) in 2013. Dr. Goodman holds a B.A.S. in applied science and bioengineering and a M.S.E. in bioengineering from the University of Pennsylvania. He also received an M.D. from Harvard Medical School and the Harvard-M.I.T. Division of Health Sciences and Technology. Dr. Goodman holds 22 issued and pending patents and is a practicing physician with licenses in California and Hawaii. The Board has concluded that Dr. Goodman should serve as a director because Dr. Goodman’s medical and engineering background and his many years of executive experience in the medical device industry provide important experience and expertise to the Board of Directors.
Nancy E. Katz has served as a member of our Board of Directors since December 2010. From May 2011 to August 2014, Ms. Katz served as Vice President, Consumer Marketing at Medtronic, Inc., a medical technology company. From July 2005 to July 2010, Ms. Katz was Senior Vice President, Bayer Diabetes Care — North America. Prior to this position, she was President and Chief Executive Officer of Calypte Biomedical Corporation, a manufacturer of HIV diagnostics, President of Zila Pharmaceutical, Inc., a manufacturer of oral care products, and
held senior marketing positions with the Lifescan division of Johnson & Johnson (blood glucose diabetes products), Schering-Plough Healthcare Products, and with American Home Products. Ms. Katz has previously served on the Boards of Directors of Cyanotech Corporation (Nasdaq: CYAN), of Neoprobe Corporation (AMEX: NEOP), Calypte Biomedical Corporation, LXN Corporation and Pepgen Corporation. She received a B.S. in business from the University of South Florida. The Board has concluded that Ms. Katz should serve as a director because of her executive level experience in the healthcare industry, as well as consumer marketing expertise which provides the Board of Directors with valuable insight in business strategy and execution.
David Van Avermaete has served as a member of our Board of Directors since September 2013. Since January 2015, Mr. Van Avermaete has served as President of Inject Safe Technologies, a privately held company that has developed a bandage specifically designed to support injections. From April 2004 to February 2013, Mr. Van Avermaete served as Chief Executive Officer of VeraLight, Inc., a medical device company he founded, that focuses on non-invasive screening for type 2 diabetes. From 2000 to 2004, Mr. Van Avermaete served as Senior Vice President Non-Invasive Technology of InLight Solutions, a Johnson & Johnson company focused on transformational technology in the diabetes field. From 1998 to 2000, Mr. Van Avermaete served as U.S. President of the LifeScan division of Johnson & Johnson and, from 1990 to 1998, in various senior level positions at LifeScan concentrating in sales and marketing. Previously, Mr. Van Avermaete served as Vice President Sales and Marketing at Biotope, Director of Marketing at Roche Diagnostics, and Director of Marketing and Sales at Syntex Medical Diagnostics. Mr. Van Avermaete received a Master of Business Administration and a Master of Science Degree in Microbiology from the University of Arizona and a Bachelor of Science Degree in medical technology and chemistry from Ball State University. The Board has concluded that Mr. Van Avermaete should serve as a director because his executive level experience in the medical device and diabetes field, as well as in entrepreneurial ventures, provides the Board of Directors with a valuable perspective in commercializing medical device products.
Executive Officers Who are Not Directors
Thomas T. Higgins has served as our Senior Vice President, Chief Financial Officer and Treasurer since September 2009. Prior to joining NeuroMetrix, from January 2005 to March 2008, Mr. Higgins was Executive Vice President and Chief Financial Officer at Caliper Life Sciences, Inc., a provider of technology and services for life sciences research. Before Caliper, Mr. Higgins was Executive Vice President, Operations and Chief Financial Officer at V.I. Technologies, Inc. (Vitex), a biotechnology company addressing blood safety. Before Vitex, Mr. Higgins served at Cabot Corporation in various senior finance and operations roles. His last position at Cabot was President of Distrigas of Massachusetts Corporation, a subsidiary involved in the liquefied natural gas business, and prior to that he was Vice President and General Manager of Cabot’s Asia Pacific carbon black operations. Before joining Cabot, Mr. Higgins was with PricewaterhouseCoopers where he started his career. Mr. Higgins holds a BBA with honors from Boston University.
DIRECTORS’ COMPENSATION
As of December 31, 2022, the non-employee, continuing members of our Board of Directors were entitled to receive annual cash retainers in the amount of $40,000 for service as a member of our Board of Directors. Annual retainers for serving as chair of a committee are as follows:
| | | | | | | | |
Position | | Retainer |
Audit Committee Chairperson | | $10,000 |
Compensation Committee Chairperson | | $5,000 |
Nominating and Corporate Governance Committee Chairperson | | $5,000 |
These fees are payable in arrears in quarterly installments. Non-employee directors are also reimbursed for reasonable out-of-pocket business expenses incurred in connection with attending meetings of the Board or any committee thereof. In addition, the Company grants to new non-employee directors upon their initial election to the Board a number of RSUs having an aggregate fair market value equal to $100,000. In connection with each of the Company’s annual meetings of stockholders, each non-employee director receives RSUs having an aggregate fair market value of $60,000, which vest at the end of the period beginning on the date of each regular annual meeting of stockholders and ending on the date of the next regular annual meeting of stockholders, subject to the non-employee director’s continued service as a director through the applicable vesting dates.
The following table shows compensation information with respect to services rendered to us in all capacities during the fiscal year ended December 31, 2022 for each non-employee member of the Board of Directors.
Director Compensation Table — 2022
| | | | | | | | | | | | | | | | | | | | |
| Name | | Fees Earned or Paid in Cash ($) | | Option Awards ($)(1) | | Total Compensation ($) |
Bradley M. Fluegel (2) | | 20,000 | | 100,000 | | 120,000 |
David E. Goodman, M.D. (3) | | 47,863 | | 60,000 | | 107,463 |
Nancy E. Katz (4) | | 42,863 | | 60,000 | | 102,863 |
David Van Avermaete (5) | | 42,863 | | 60,000 | | 102,863 |
(1)These amounts represent the aggregate grant date fair value of restricted stock units granted to each director in fiscal year 2022 computed in accordance with FASB ASC Topic 718. A discussion of the assumptions used in determining grant date fair value may be found in Note 3 to our Financial Statements, included in our Annual Report on Form 10-K for the year ended December 31, 2022.
(2)Mr. Fluegel joined the Board of Directors on July 1, 2022. As of December 31, 2022, Mr. Fluegel held restricted stock units which, upon vesting, entitle him to receive 20,604 shares of common stock.
(3)As of December 31, 2022, Dr. Goodman held restricted stock units which, upon vesting, entitle him to receive 17,647 shares of common stock. Dr. Goodman also held options to purchase 10,692 shares of common stock, 3,192 of which were vested.
(4)As of December 31, 2022, Ms. Katz held restricted stock units which, upon vesting, entitle her to receive 17,647 shares of common stock. Ms. Katz also held options to purchase 10,692 shares of common stock, 3,192 of which were vested.
(5)As of December 31, 2022, Mr. Van Avermaete held restricted stock units which, upon vesting, entitle him to receive 17,647 shares of common stock. Mr. VanAvermaete also held options to purchase 10,723 shares of common stock, 3,223 of which were vested.
COMPENSATION OF EXECUTIVE OFFICERS
Summary of Executive Compensation
The following table sets forth the total compensation paid or accrued during the fiscal years ended December 31, 2022 and 2021 to (i) our Chief Executive Officer, and (ii) our next most highly compensated executive officer who earned more than $100,000 during the fiscal year ended December 31, 2022 and served as executive officer as of such date (we refer to these individuals as the “named executive officers”). As of December 31, 2022, we had one executive officer in addition to our Chief Executive Officer:
Summary Compensation Table
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Name and Principal Position | | Year | | Salary ($) (1) | | Bonus ($) (2) | | Stock Awards ($) | | All Other Compensation ($) (3) | | Total ($) |
Shai N. Gozani, M.D. Ph.D. Chairman of the Board, Chief Executive Officer, President and Secretary | | 2022 | | 415,000 | | - | | 207,500 | | 22,824 | | 645,324 |
| 2021 | 415,000 | 142,656 | — | — | 557,656 |
| | | | | | | | | | | | |
Thomas T. Higgins Senior Vice President, Chief Financial Officer and Treasurer | | 2022 | | 325,000 | | - | | 162,500 | | 17,874 | | 505,374 |
| 2021 | 325,000 | 89,375 | — | — | 414,375 |
(1)Salary amounts in 2022 were paid in cash. Amounts paid in 2021 include a combination of cash and equity payments. Equity payments in 2021 were computed in accordance with FASB ASC Topic 718. (See “Base Salary Compensation” below.)
(2)Bonus amounts for 2021 were paid in shares of the Corporation valued at the Corporation’s grant date common stock price. (See “Bonus Payments” below.)
(3)Other Compensation in 2022 was a cost-of-living grant paid in shares of the Corporation valued at the Corporation’s grant date common stock price.
Narrative Disclosure to Summary Compensation Table
The compensation paid to the named executive officers may include salary, cash incentive compensation, and equity incentive compensation. The terms of employment agreements that we have entered into with our named executive officers are described below under “Employment Agreements and Potential Payments upon Termination or Change-in-Control.”
Base Salary Compensation
Our executive officers are paid a base salary which is reviewed annually. Dr. Gozani’s 2021 base salary was $415,000 of which $39,000 was paid in cash and the remainder was paid in 171,014 stock options valued using
a Black-Scholes pricing model on the date of grant. Mr. Higgins’ 2021 base salary was $325,000 of which $200,000 was paid in cash and the remainder was paid in 42,808 restricted shares valued at the Corporation’s stock price on the date of grant. Starting on January 1, 2022, executive officer base salary was paid entirely in cash. Dr. Gozani’s base salary for 2022 was $415,000 and Mr. Higgins’ base salary for 2022 was $325,000. Dr. Gozani’s base salary commencing April 1, 2023 is $458,575 and Mr. Higgins’ base salary commencing April 1, 2023 is $359,125.
Bonus Payments
In 2022 and 2021, each executive officer had an annual bonus target which is expressed as a percentage of base salary. In these periods, executive officer bonus targets as a percentage of base salary were as follows: Dr. Gozani — 62.5% and Mr. Higgins — 50%. These executive officer bonus targets are unchanged for 2023.
The Compensation Committee has established a process for annual assessment of corporate performance which is the foundation for decisions regarding bonus payments to executive officers. Metrics are established following approval by the Board of Directors of the annual operating budget. These are monitored quarterly during the year and assessed after the end of the year. The Compensation Committee evaluates performance against these metrics and applies judgment in arriving at an overall corporate performance rating or “factor”. In concept, the management bonus pool is activated by achievement of a single threshold or “gating” metric. Following activation, value is then created within the pool by the percent achievement toward specific performance metrics.
The Compensation Committee metrics for 2022 were focused on revenue growth, operating results, R&D productivity, and infrastructure development. The Committee evaluated performance and concluded that the gating metric had not been achieved. Consequently, the management bonus pool for 2022 was not activated. During 2021, the gating metric was met and a corporate performance factor of 55% was achieved. This entitled the executive officers to a bonus payment of 55% of their bonus targets which was paid in shares of the Corporation’s common stock valued at stock price on the date of payment.
Long-Term Incentive Compensation
The Corporation grants long-term equity incentive awards in the form of restricted stock units (RSUs) to executives as part of the total compensation package. RSU issuances were adopted under the 2022 Equity Incentive Plan in place of stock options which has been issued previously. Generally, RSU awards made as a part of long-term equity incentive vest quarterly over a three-year period and are converted tooutstanding shares of common stock, at a ratio of between 1:2 and 1:8, inclusive; and
“FOR” the adjournment of our Special Meeting of stockholders, if necessary, to solicit additional proxies if there are not sufficient votes in favor of the Reverse Split Proposal.
If any other matter is presented at the Special Meeting, your proxy provides that your shares of common stock will be voted by the proxy holder listed in the proxy in accordance with his or her best judgment. At the time this proxy statement was first made available, we knew of no matters that needed to be acted on at the Special Meeting, other than those discussed in this proxy statement.
Why is the Company seeking approval for the Reverse Split Proposal?
On August 8, 2023, we received a notice from the Listing Qualifications Department (the “Staff”) of the Nasdaq Stock Market LLC (“Nasdaq”) indicating that, for the last 31 consecutive business days, the bid price of the common stock had closed below $1.00 per share, which is the minimum price required for continued listing on The Nasdaq Capital Market under Nasdaq Listing Rule 5550(a)(2). This notice has no immediate effect on our Nasdaq listing, and we have 180 calendar days, or until February 5, 2024, to regain compliance with the minimum bid price requirement. As of the date hereof, we had not regained compliance with the minimum bid price requirement since the closing bid price of vesting. Prior to the 2022 Equity Incentive Plan, long-term equity incentive awards were granted in the form ofour common stock options, exercisable to the extent vested, during the term of the option while the grantee is employed by us andwas not at least $1.00 per share for a periodminimum of three months thereafter, unless such termination is upon death or disability,ten consecutive business days. To cure the deficiency, we may conduct the reverse stock split of our common stock for which we are seeking stockholder approval in which case the grantee may continue to exercise the option for a period of 12 months, or for cause, in which case the option terminates immediately. Vesting of RSUs and stock options is also subject to acceleration in some certain circumstances in connection with a change-in-control as described below in “Employment Agreements and Potential Payments upon Termination or Change-in-Control.” During 2022 Dr. Gozani received a long-term equity incentive grant of 61,029 RSUs and Mr. Higgins received a long-term equity incentive grant of 47,794 RSUs. In 2021, there were no long-term incentive compensation grants made to the Corporation’s executive officers.
Amended and Restated Management Retention and Incentive Plan
The Corporation’s Amended and Restated Management Retention and Incentive Plan (the “MRIP”) provides that a portion of the consideration payable upon a change of control transaction, as defined in the MRIP, would be paid to our executive officers and certain other key employees. The MRIP was designed to retain these individuals while providing incentives to build corporate value potentially leading to a change of control transaction.
In the event of a change of control transaction, subject to the participant’s continued employment or service with us, the participant shall receive cash consideration equal to a fixed percentage of the value of the change of control transaction to be received by the Corporation or our stockholders, net of expenses.
Outstanding Equity Awards at 2022 Fiscal Year-End
The table below sets forth information with respect to our named executive officers concerning the outstanding equity awards as of December 31, 2022.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | |
| Option Awards | | Stock Awards |
| Number of Securities Underlying Unexercised Options | | Option Exercise Price ($) | | Option Expiration Date | | Number of Shares or Units of Stock that Have Not Vested (#) | | Market Value of Shares or Units of Stock That Have Not Vested ($)(1) |
| Exercisable (#) | Unexercisable (#) | | | | |
| Shai N. Gozani, M.D., Ph.D. | 100,000 | - | | $4.58 | | 12/29/2029 | | - | | - |
| 125,000 | - | | $1.57 | | 10/27/2030 | | - | | - |
| 171,014 | - | | $2.92 | | 5/26/2031 | | - | | - |
| - | - | | - | | - | | 50,858(2) | | $75,778 |
| | | | | | | | | | |
| Thomas T. Higgins | 50,000 | - | | $4.58 | | 12/29/2029 | | - | | - |
| 25,000 | - | | $1.57 | | 10/27/2030 | | - | | - |
| - | - | | - | | - | | 39,828(3) | | $59,344 |
(1) The market value of the stock awards is determined by multiplying the number of shares by $1.49,this proxy statement. On August 28, 2023, the closing price of our common stock as reported on Nasdaq was $0.70 per share.
The Board of Directors has approved the reverse stock split as a potential means of increasing the share price of our common stock and may choose to implement it if other options are unavailable, undesirable, or insufficient. The Board of Directors believes that maintaining our listing on The Nasdaq Capital Market provides a broader market for our common stock and facilitate the use of our common stock in financing and other transactions. We expect the reverse stock split, if effected, to facilitate the continuation of such listing. We cannot assure you, however, that the reverse stock split, if effected, will result in an increase in the per share price of our common stock, or if it does, how long the increase would be sustained, if at all, or whether the increase will be proportional to the reverse stock split ratio.
If our stockholders approve the Reverse Split Proposal, the Board of Directors in its sole discretion will determine whether to effect the reverse stock split. The Board of Directors reserves the right to elect not to effect a reverse stock split, including any or all reverse stock split ratios within the proposed range, if it determines, in its sole discretion, that implementing a reverse stock split is not in the best interest of the Company and its stockholders. For more information, see “Proposal 1: Reverse Split Proposal” contained elsewhere in this proxy statement.
What Are the Costs of Soliciting these Proxies?
We will pay all the costs of soliciting these proxies. In addition, our directors and employees may solicit proxies in person or by telephone or email. We will pay these employees and directors no additional compensation for these services. We will ask banks, brokers and other institutions, nominees and fiduciaries to forward these proxy materials to their principals and to obtain authority to execute proxies. We will then reimburse them for their expenses. We have engaged Alliance Advisors LLC (“Alliance”) to advise us on the Nasdaq Global Market on December 31, 2022,solicitation of proxies and to manage the last dayproduction and distribution of our fiscal year.
(2) Unvested shares vest evenly in quarterly amounts of 5,086 shares from February 3, 2023 through May 3, 2025.
(3) Unvested shares vest evenly in quarterly amounts of 3,983 shares from February 3, 2023 through May 3, 2025.
Employment Agreements and Potential Payments upon Termination or Change-in-Control
Shai N. Gozani, M.D., Ph.D.
On December 30, 2020, the Compensation Committee approved an employment agreement with Dr. Gozani, effective January 1, 2021. Dr. Gozani’s annual salary of $415,000 wasthis proxy statement. We expect to be paid in 2021 as cash compensation in the amount required to meet employment standards of the Commonwealth of Massachusetts and the employee share of medical and other insurance benefits ofpay Alliance approximately $39,000, and equity compensation as the remainder in the approximate amount of $376,000, valued based on Black-Scholes. Dr. Gozani was also eligible to receive an annual performance bonus of up to 62.5% of his base salary, payable in cash or stock. The Compensation Committee and Dr. Gozani executed an Addendum to this agreement in December 2021, which provided that Dr. Gozani’s base salary of $415,000 was to be paid in cash starting January 1, 2022. In March 2023, the Compensation Committee reviewed and adjusted Dr. Gozani’s base salary to $458,575 with effect from April, 1, 2023.
The employment agreement may be terminated$43,000 for their services, plus reimbursement for certain out-of-pocket expenses incurred by us with or without cause or by Dr. Gozani. Under the terms of the employment agreement if (1) we terminate Dr. Gozani for cause or if he resigns for other than good reason, Dr. Gozani will not be entitled to any separation benefits; (2) we terminate Dr. Gozani’s employment without cause other than within six months prior to or 12 months following a change in control of the Corporation or Dr. Gozani resigns for good reason, he will be entitled to receive separation benefits equal to his base salary ofAlliance.
$458,575 and continuation of health benefits for a period of twelve months from the date of such termination; (3) we terminate Dr. Gozani’s employment within six months prior toIf you have any questions or 12 months following a changerequire any assistance in control of the Corporation or Dr. Gozani resigns for good reason, he will be entitled to the same benefits as described in (2) above, and in addition, we will accelerate his rights to exercisevoting your shares, under any stock option grants; and (4) Dr. Gozani dies or becomes totally disabled, we will accelerate the rights of his representative to exercise shares under and stock option grants.please contact:
Thomas T. HigginsAlliance Advisors
On December 30, 2020, the Compensation Committee approved an employment agreement with Mr. Higgins, effective January 1, 2021. Mr. Higgins’ annual salary of $325,000 was to be paid in 2021 as cash compensation in the amount of $200,000, and equity compensation as the remainder in the approximate amount of $125,000, valued based on Black-Scholes. Mr. Higgins was also eligible to receive an annual performance bonus of up to 50% of his base salary, payable in cash or stock. The Compensation Committee and Mr. Higgins executed an Addendum to this agreement in December 2021 which provided that Mr. Higgins’ base salary of $325,000 was to be paid in cash starting January 1, 2022. In March 2023, the Compensation Committee reviewed and adjusted Mr. Higgins’ base salary to $359,125 with effect from April 1, 2023.200 Broadacres Drive, 3rd Floor
Under the terms of his employment agreement, if (1) we terminate Mr. Higgins for cause or if he resigns for other than good reason, Mr. Higgins will not be entitled to any separation benefits; (2) we terminate Mr. Higgins’ employment without cause other than within six months prior to or 12 months following a change in control of the Corporation or Mr. Higgins resigns for good reason, he will be entitled to receive separation benefits equal to his base salary of $359,125 and continuation of health benefits for a period of twelve months from the date of such termination; (3) we terminate Mr. Higgins’ employment within six months prior to or 12 months following a change in control of the Corporation or Mr. Higgins resigns for good reason, he will be entitled to the same benefits as described in (2) above, and in addition, we will accelerate his rights to exercise shares under any stock option grants; and (4) Mr. Higgins dies or becomes totally disabled, we will accelerate the rights of his representative to exercise shares under and stock option grantsBloomfield, NJ 07003
Confidentiality and Non-Competition AgreementsToll-Free: 877-777-5603
Dr. Gozani and Mr. Higgins have each entered into a confidentiality and non-competition agreement with us, which provides for protection of our confidential information, assignment to us of intellectual property developed by the executive officer and non-compete and non-solicitation obligations that are effective during, and for 12 months following termination of, the executive officer’s employment.E-mail: NURO@AllianceAdvisors.com
2022 Equity Incentive Plan
Under our 2022 Equity Incentive Plan, in the event of a merger, sale or dissolution of our company, or a similar “sale event,” all outstanding awards under our 2022 Equity Incentive Plan, unless otherwise provided for in a particular award, will terminate unless the parties to the transaction, in their discretion, provide for assumption, continuation or appropriate substitutions or adjustments of these awards. In the event that the outstanding awards under our 2022 Equity Incentive Plan terminate in connection with a sale event, all stock options and stock appreciation rights granted under our 2022 Equity Incentive Plan will automatically become fully exercisable and all other awards granted under our 2022 Equity Incentive Plan will become fully vested and non-forfeitable as of the
effective time of the sale event. The administrator may also provide for a cash payment with respect to outstanding options and stock appreciation rights in exchange for the cancellation of such awards.
Hedging Policy
We do not have a hedging policy, but our code of conduct discourages short sales and trading in our stock on a short-term basis.
PAY VERSUS PERFORMANCE
The following table shows the relationship between executive compensation actually paid (“CAP”) to Shai N. Gozani, M.D., Ph.D., the Corporation’s Chief Executive Officer and President and principal executive officer (“PEO”) and our named executive officers (“NEOs”) and certain financial performance of the Corporation during the last two fiscal years ended December 31, 2022 and 2021.
| | | | | | | | | | | | | | | | | | | | |
| Year | Summary Compensation Table Total for PEO(1) | Compensation Actually Paid to PEO(2) | Average Summary Compensation Table Total for Non-PEO NEOs(3) | Average Compensation Actually Paid to Non-PEO NEOs(4) | Value of Initial Fixed $100 Investment Based On Total Shareholder Return | Net Income (Loss) |
| 2022 | $645,324 | $541,624 | $505,374 | $424,164 | $45 | ($4,416,609) |
| 2021 | $557,636 | $1,369,489 | $414,375 | $745,992 | $153 | ($2,281,457) |
(1)The amounts shown are the amounts of total compensation reported for Dr. Gozani for each corresponding year in the “Total” column of the Summary Compensation Table.
(2)The amounts shown represent the amount of CAP to Dr. Gozani, as computed in accordance with SEC rules. The dollar amounts do not reflect the actual amount of compensation earned by or paid to Dr. Gozani during the applicable year.
In accordance with SEC rules, the following adjustments were made to Dr. Gozani’s total compensation for each year to determine CAP:
| | | | | | | | | | | | | | |
| Footnote (2) - Table 1 |
| Year | Reported Summary Compensation Table Total for PEO | Reported Value of Equity Awards(i) | Equity Award Adjustments(ii) | Compensation Actually Paid to PEO |
| 2022 | $645,324 | ($230,324) | $126,624 | $541,624 |
| 2021 | $557,656 | ($518,656) | $1,330,489 | $1,369,489 |
(i)Reported Value of Equity Awards represents salary amounts paid in equity plus the amounts reported in the “Stock Awards,” “Bonus” and “All Other Compensation” columns in the Summary Compensation Table for the applicable year.
(ii)The equity award adjustments include the addition (or subtraction, as applicable) of the following: (1) the year-end fair value of any equity awards granted in the applicable year that are outstanding and unvested as of the end of the year; (2) the amount of change as of the end of the applicable year (from the end of the prior fiscal year) in fair value of any awards granted in prior years that are outstanding and unvested as of the end of the applicable year; (3) for awards that are granted and vest in same applicable year, the fair value as of the vesting date; (4) for awards granted in prior years that vest in the applicable year, the amount equal to the change as of the vesting date (from the end of the prior fiscal year) in fair value; (5) for awards granted in prior years that are determined to fail to meet the applicable vesting conditions during the applicable year, a deduction for the amount equal to the fair value at the end of the prior fiscal year; and (6) the dollar value of any dividends or other earnings paid on stock or option awards in the applicable year prior to the vesting date that are not otherwise reflected in the fair value of such award or included in any other component of total compensation for the applicable year. The valuation assumptions used to calculate fair values did not materially differ from those disclosed at the time of grant.The amounts deducted or added in calculating the equity award adjustments are as follows:
| | | | | | | | | | | | | | | | | | | | | | | |
| Footnote (2) - Table 2 |
| Year | Year End Fair Value of Equity Awards | Year over Year Change in Fair Value of Outstanding and Unvested Equity Awards | Fair Value as of Vesting Date of Equity Awards Granted and Vested in the Year | Year over Year Change in Fair Value of Equity Awards Granted in Prior Years that Vested in the Year | Fair Value at the End of the Prior Year of Equity Awards that Failed to Meet Vesting Conditions in the Year | Value of Dividends or other Earnings Paid on Stock or Option Awards not Otherwise Reflected in Fair Value or Total Compensation | Total Equity Award Adjustments |
| 2022 | $75,778 | $0 | $50,846 | $0 | $0 | $0 | $126,624 |
| 2021 | $0 | $0 | $790,802 | $539,688 | $0 | $0 | $1,330,489 |
(3)The dollar amounts shown represent the average of the amounts reported for the Company’s named executive officers (NEOs) as a group (excluding Dr. Gozani, who has served as our CEO since 2002) in the “Total” column of the Summary Compensation Table in each applicable year. The names of each of the NEOs (excluding Dr. Gozani) included for purposes of calculating the average amounts in each applicable year are as follows: (i) for 2022, Thomas T. Higgins; and (ii) for 2021, Thomas T. Higgins.
(4)The dollar amounts shown represent the average amount of CAP to the NEOs as a group (excluding Dr. Gozani), as computed in accordance with SEC rules. The dollar amounts do not reflect the actual average amount of compensation earned by or paid to the NEOs as a group (excluding Dr. Gozani) during the applicable year.
In accordance with the SEC rules, the following adjustments were made to average total compensation for the NEOs as a group (excluding Dr. Gozani) for each year to determine the CAP, using the same methodology described above in Footnote 2:
| | | | | | | | | | | | | | |
| Footnote (4) - Table 1 |
| Year | Average Reported Summary Compensation Table Total for Non-PEO NEOs | Average Reported Value of Equity Awards | Average Equity Award Adjustments(i) | Average Compensation Actually Paid to Non-PEO NEOs |
| 2022 | $505,374 | ($180,374) | $99,164 | $424,164 |
| 2021 | $413,375 | ($214,375) | $545,992 | $745,992 |
(i)The amounts deducted or added in calculating the total average equity award adjustments are as follows:
| | | | | | | | | | | | | | | | | | | | | | | |
| Footnote (4) - Table 2 |
| Year | Average Year End Fair Value of Equity Awards | Year over Year Average Change in Fair Value of Outstanding and Unvested Equity Awards | Average Fair Value as of Vesting Date of Equity Awards Granted and Vested in the Year | Year over Year Average Change in Fair Value of Equity Awards Granted in Prior Years that Vested in the Year | Average Fair Value at the End of the Prior Year of Equity Awards that Failed to Meet Vesting Conditions in the Year | Average Value of Dividends or other Earnings Paid on Stock or Option Awards not Otherwise Reflected in Fair Value or Total Compensation | Total Average Equity Award Adjustments |
| 2022 | $59,344 | $0 | $39,819 | $0 | $0 | $0 | $99,164 |
| 2021 | $0 | $0 | $251,617 | $294,375 | $0 | $0 | $545,992 |
Analysis of Information Presented in the Pay Versus Performance Table
Compensation Actually Paid and Net Income (Loss)
Our Company is investing today for future growth and profitability. Our primary focus is on building the product lines and infrastructure to support our future objectives. In executive compensation, our primary goals are long term retention, achievement relative to annual corporate metrics established by our Compensation Committee, and alignment with shareholder interests in terms of stock price. To achieve these goals, we employ a combination of base salary, incentive compensation and equity awards. Net Income (Loss) is not currently a performance measure for our executive compensation.
Compensation Actually Paid and Cumulative Total Shareholder Return (TSR)
The following graph depicts the relationship between Compensation Actually Paid to our PEO, the average of Compensation Actually Paid to our Non-PEO NEOs and Cumulative Total Shareholder Return (TSR) for the two-year period covering 2021 and 2022. A large portion of executive compensation has been in the equity of the Corporation which is impacted by changes in our stock price each period. These equity awards foster alignment of the interests of our executive officers with those of our shareholders, as well as encouraging long-term continuance of employment.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information concerningwith respect to the beneficial ownership as of March 1, 2023, except as noted below, of our common stock by:
1.eachas of August 28, 2023, for (a) our directors;
2.each ofdirectors, (b) our named executive officers;
3.all ofofficers, (c) our directors and executive officers and directors as a group;group, and
4. (d) each stockholder known byto us to beneficially own more than five percent of our common stock.
The number of common shares “beneficially owned” by each stockholder is determined under rules issued by the SEC regarding the beneficial ownership of securities. This information is not necessarily indicative of beneficial ownership for any other purpose. Under these rules, beneficial ownership of common stock includes (1) any shares as to which the person or entity has sole or sharedshare voting power or investment power and (2) any shares as to which the person or entity has the right to acquire beneficial ownership within 60 days after March 1,August 28, 2023, including any shares that could be purchased by the exercise of options or warrants on or within 60 days after March 1,August 28, 2023. We deem shares of common stock that may be acquired by an individual or group within 60 days of March 1,August 28, 2023, pursuant to the exercise of options or warrants to be outstanding for the purpose of computing the percentage ownership of such individual or group but are not deemed to be outstanding for the purpose of computing the percentage ownership of any other person shown in the table. Each stockholder’s percentage ownership is based on 7,791,5388,585,019 shares of our common stock outstanding as of March 1,August 28, 2023, plus the number of shares of common stock that may be acquired by such stockholder upon the exercise of options or warrants that are exercisable on or within 60 days after March 1,August 28, 2023. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Amount and Nature of Beneficial Ownership (1) | | |
Name and Address(2) of Beneficial Owner | | Common Stock | | Options (3) | | Restricted Stock Units (4) | | Total | | Percent of Class of Total |
| Shai N. Gozani, M.D., Ph.D. | | 61,473 | | 396,014 | | - | | 457,487 | | 5.5% |
| Thomas T. Higgins | | 47,868 | | 75,000 | | - | | 122,868 | | 1.5% |
| David E. Goodman, M.D. | | 2 | | 4,442 | | - | | 4,444 | | * |
| Bradley M. Fluegel | | 5,310 | | - | | 3,434 | | 8,744 | | * |
| Nancy E. Katz | | 2 | | 4,442 | | - | | 4,444 | | * |
| David Van Avermaete | | - | | 4,473 | | - | | 4,473 | | * |
| All Current Directors and Executive Officers as a group (6 persons) | | 114,655 | | 484,371 | | 3,434 | | 602,460 | | 7.3% |
Unless otherwise indicated in footnotes to this table, we believe that the stockholders named in this table have sole voting and investment power with respect to all shares of common stock shown to be beneficially owned by them based on information provided to us by these stockholders, except to the extent authority is shared by spouses under community property laws.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | Amount and Nature of Beneficial Ownership | | |
| Name and Address (1) of Beneficial Owner | | Common Stock | | Options (2) | | Restricted Stock Units (3) | | Total | | Percent of Class of Total |
| Shai N. Gozani, M.D., Ph.D. | | 69,911 | | 396,014 | | - | | 465,925 | | 5.1% |
| Thomas T. Higgins | | 54,236 | | 75,000 | | - | | 129,236 | | 1.4% |
| David E. Goodman, M.D. | | 17,649 | | 5,692 | | - | | 23,341 | | * |
| Bradley Fluegel | | 12,178 | | - | | 3,434 | | 15,612 | | * |
| Nancy E. Katz | | 17,649 | | 5,692 | | - | | 23,341 | | * |
| David Van Avermaete | | 17,647 | | 5,692 | | - | | 23,339 | | * |
| All Current Directors and Executive Officers as a group (7 persons) | | 189,270 | | 488,090 | | 3,434 | | 680,794 | | 7.5% |
| | | | | | | |
| * Represents less than 1% of the outstanding shares of common stock | | | | | | | |
| | | | | | | | | | |
27
* Represents less than 1% of the outstanding shares of common stock.
(1) Attached to each share of common stock is a preferred stock purchase right to acquire one ten-thousandth of a share of Series A Junior Participating Cumulative Preferred Stock of the Company, which preferred stock purchase rights are not presently exercisable.
(2) Unless otherwise indicated, the address of each stockholder is c/o NeuroMetrix, Inc., 4B4 Gill Street, Suite B, Woburn, Massachusetts 01801.
(3) Consists of(2) Includes all options that are exercisable on or within 60 days from March 1, 2022August 28, 2023, by the beneficial owner, except as otherwise notednoted.
(4) Consists of(3) Includes all restricted stock units that will vest on or within 60 days of March 1, 2022from August 28, 2023, by the beneficial owner, except as otherwise noted.
EQUITY COMPENSATION PLAN INFORMATIONPROPOSAL 1
REVERSE SPLIT PROPOSAL
General
At the Special Meeting of Stockholders, holders of our common stock will be asked to approve the Reverse Split Proposal to amend the Certificate of Incorporation to effect (a) a reverse stock split of the issued and outstanding shares of common stock (such split to combine a number of outstanding shares of our common stock between 1- for-2 to 1-for-8, inclusive, such number consisting of only whole shares, into one share of common stock). The full text of the proposed certificate of amendment to our Certificate of Incorporation is attached to this proxy statement as Appendix A (the “certificate of amendment”) and the description of the changes described in this proposal is qualified by reference to the proposed amendment. On August 28, 2023, the Board of Directors unanimously approved, recommended and declared it advisable that our stockholders approve the amendment to the Certificate of Incorporation to, at the discretion of the Board of Directors, effect a reverse stock split as described herein. The proposed certificate of amendment attached as Appendix A is subject to revision for such changes as may be required by the Delaware General Corporation Law and any other changes consistent with this proposal that we may deem necessary or appropriate.
If approved by the stockholders and the Board of Directors determines to implement a reverse stock split, the reverse stock split would become effective at a time, and at a ratio, to be designated by the Board of Directors. The Board of Directors may effect only one reverse stock split as a result of this authorization. The Board of Directors’ decision as to whether and when to effect the reverse stock split and the applicable reverse stock split ratio will be based on a number of factors, including market conditions, existing and expected trading prices for our common stock, the number of outstanding shares of common stock, the then-prevailing trading price and trading volume of our common stock and the anticipated impact of a reverse stock split on the trading market for our common stock and the continued listing requirements of The Nasdaq Capital Market. Even if the stockholders approve the reverse stock split, the Board of Directors reserves the right not to effect the reverse stock split if the Board of Directors does not deem it to be in the best interests of us and our stockholders to effect the reverse stock split. The reverse stock split, if authorized pursuant to this resolution and if deemed by the Board of Directors to be in the best interests of us and our stockholders, will be effected, if at all, at a time that is not later than August 3, 2024 (360 days after receipt of the Nasdaq notice of non-compliance with the minimum closing bid price requirement).
If effected, the proposed amendment to our Certificate of Incorporation to effect the reverse stock split, as more fully described below, will effect the reverse stock split. As of the date of this proxy statement, we do not have any current arrangements or understandings relating to the issuance of any additional shares of common stock following the reverse stock split.
Purpose of the Reverse Split Proposal
The Board of Directors has approved the Reverse Split Proposal and declared it advisable primarily for the following table providesreasons:
•the Board of Directors believes that effecting the reverse stock split may be an effective means of regaining compliance with the bid price requirement for continued listing of our common stock on The Nasdaq Capital Market; and
•the Board of Directors believes that a higher stock price may help generate investor interest in us, including interest among institutional investors.
We cannot provide assurance that a reverse stock split would achieve its intended or desired benefits, and we strongly encourage you to review the discussion below in the section titled “Risks and Potential Disadvantages Associated with a Reverse Stock Split.” If the reverse stock split successfully increases the per share price of our common stock and facilitates the continued listing of our common stock on The Nasdaq Capital Market, as to which no assurance can be given, the Board of Directors believes this increase may facilitate future financings and enhance our ability to use our securities as consideration in commercial or strategic transactions.
Nasdaq Requirements for Continued Listing
Our common stock is listed on The Nasdaq Capital Market under the symbol “NURO.” One of the requirements for continued listing on Nasdaq is maintenance of a minimum closing bid price of $1.00. On August 28, 2023, the closing market price per share of our common stock was $0.70, as reported by Nasdaq.
On August 8, 2024, we received a notice from the Staff indicating that, for the last 31 consecutive business days, the bid price of our common stock had closed below $1.00 per share as required for continued listing on The Nasdaq Capital Market under Nasdaq Listing Rule 5550(a)(2). This notice has no immediate effect on our Nasdaq listing and we have 180 calendar days, or until February 5,2024, to regain compliance with the minimum bid price requirement, which may be extended for another 180-calendar day period if
approved by Nasdaq. As of the date hereof, we had not regained compliance with the minimum bid price requirement since the closing bid price of our common stock had not been at least $1.00 per share for a minimum of ten consecutive business days. To cure the deficiency, we may conduct the reverse stock split of our common stock for which we are seeking stockholder approval in this proxy statement.
If we do proceed with the reverse stock split for which we are seeking stockholder approval in this proposal, we cannot assure you that the price per share of our common stock will satisfy the requirements for continued listing of our common stock on The Nasdaq Capital Market in the future or that we will comply with the other continued listing requirements. If our common stock is delisted from the Nasdaq Capital Market, we expect our common stock would likely trade in the over-the-counter market.
If our shares of common stock were to trade on the over-the-counter market, selling our common stock could be more difficult because smaller quantities of shares would likely be bought and sold, and transactions could be delayed. In addition, in the event our common stock is delisted, broker-dealers have certain aggregate informationregulatory burdens imposed upon them, which may discourage broker-dealers from effecting transactions in our common stock, further limiting the liquidity of our common stock. These factors could result in lower prices and larger spreads in the bid and ask prices for our common stock. A delisting from Nasdaq and continued or further declines in the price of our common stock could also greatly impair our ability to raise additional necessary capital through equity or debt financing, and could significantly increase the ownership dilution to stockholders caused by our issuing equity in financing or other transactions.
In light of the factors mentioned above, the Board of Directors approved the reverse stock split as a potential means of increasing the share price of our common stock above $1.00 per share and of maintaining the share price of our common stock above $1.00 per share in compliance with respectNasdaq requirements and deemed it advisable for stockholders to approve the Reverse Split Proposal.
Potential Increased Investor Interest
In approving the proposal authorizing the reverse stock split, the Board of Directors considered that our common stock may not appeal to brokerage firms that are reluctant to recommend lower priced securities to their clients. Investors may also be dissuaded from purchasing lower priced stocks because the brokerage commissions, as a percentage of the total transaction, tend to be higher for such stocks. Moreover, the analysts at many brokerage firms do not monitor the trading activity or otherwise provide coverage of lower priced stocks.
Principal Effects of the Reverse Stock Split
If the stockholders approve the Reverse Split Proposal and the Board of Directors determines to implement the reverse stock split, we will file the certificate of amendment.
Outstanding Shares of Common Stock
Upon effectiveness of the certificate of amendment (the “Effective Time”), a minimum of two and a maximum of eight shares of issued and outstanding common stock immediately prior to the Effective Time and the shares of common stock issued and held in the treasury of the Company immediately prior to the Effective Time will be combined into one new share of common stock. Notwithstanding the immediately preceding sentence, no fractional shares shall be issued as a result of the reverse stock split. The Company shall not be obliged to issue certificates evidencing the shares of common stock outstanding as a result of the reverse stock split or cash in lieu of fractional shares, if any, unless and until the certificates evidencing the shares held by a holder prior to the reverse stock split are either delivered to the Company or its transfer agent, or the holder notifies the Company or its transfer agent that such certificates have been lost, stolen or destroyed and executes an agreement satisfactory to the Company to indemnify the Company from any loss incurred by it in connection with such certificates.
The reverse stock split will be effected simultaneously for all issued and outstanding shares of common stock, and the exchange ratio will be the same for all issued and outstanding shares of common stock. The reverse stock split will affect all of our equity compensation plansstockholders uniformly and will not affect any stockholder’s percentage ownership interests in effectthe Company, except to the extent that, as described below in the section titled “Fractional Shares,” cash payments will be made in lieu of fractional shares. Common stock issued pursuant to the reverse stock split will remain fully paid and nonassessable. A reverse stock split may result in some stockholders owning “odd lots” of less than 100 shares of common stock. Odd lot shares may be more difficult to sell, and brokerage commissions and other costs of transactions in odd lots are generally somewhat higher than the costs of transactions in “round lots” of even multiples of 100 shares.
By approving this amendment, stockholders will approve the combination of any whole number of shares of common stock between and including two and eight into one share. The certificate of amendment to be filed with the Secretary of State of the State of Delaware will include only that number determined by the Board of Directors to be in the best interests of the Company and its stockholders. Based on 8,585,019 shares of common stock issued and outstanding as of December 31, 2022.the Record Date, immediately following a
Equity Compensation Plan Information as of December 31, 2022
| | | | | | | | | | | | | | | | | | | | | | | |
| | 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) |
Equity compensation plans approved by security holders (1) | | 816,443 | | $3.60 | | 380,239 (2) |
Equity compensation plans not approved by security holders(3) | | — | | — | | 1,250 |
| Totals | | 816,443 | | $3.60 | | 381,489 |
reverse stock split we would have approximately 4,292,510 shares of common stock issued and outstanding (without giving effect to the treatment of fractional shares) if the ratio for a reverse stock split is 1-for-2, and 1,073,127 shares of common stock issued and outstanding (without giving effect to the treatment of fractional shares) if the ratio for a reverse stock split is 1-for-8. Any other ratio selected within such range would result in a number of shares of common stock issued and outstanding following the reverse stock split between approximately 1,073,127 and 4,292,510 shares. The actual number of shares of common stock issued and outstanding after giving effect to a reverse stock split, if implemented, would depend on the reverse stock split ratio that is ultimately selected by the Board of Directors.
Authorized Shares of Common Stock
A reverse stock split would not have any effect on the number of authorized shares of common stock, which would stay as 25,000,000 authorized shares of common stock, or preferred stock, which would stay as 25,000 shares designated as Series A Junior Participating Cumulative Preferred Stock, par value $0.001 per share, 1,067 shares designated as Series A-1 Convertible Preferred Stock, par value $0.001 per share, 3,371 shares designated as Series A-2 Convertible Preferred Stock, par value $0.001 per share, 2,622 shares designated as Series A-3 Convertible Preferred Stock, par value $0.001 per share, 4,023 shares as Series A-4 Convertible Preferred Stock, par value $0.001 per share, 147,000 shares designated as Series B Convertible Preferred Stock, par value $0.001 per share, 13,800 shares designated as Series C Convertible Preferred Stock, par value $0.001 per share, 21,300 shares designated as Series D Convertible Preferred Stock, 7,000 shares designated as Series E Convertible Preferred Stock, 10,621 shares designated as Series F Convertible Preferred Stock, and 4,764,196 shares of undesignated preferred stock, par value $0.001 per share.
Exchange Act Registration; Nasdaq Listing; CUSIP
Our common stock is currently registered under Section 12(b) of the Exchange Act, and we are subject to periodic reporting and other requirements of the Exchange Act. The implementation of a reverse stock split would not affect the registration of our common stock under the Exchange Act or our reporting or other requirements under the Exchange Act.
We are currently listed on The Nasdaq Capital Market under the trading symbol “NURO.” If our common stock remains listed on The Nasdaq Capital Market up to the time of a reverse stock split, then immediately following the reverse stock split our common stock would continue to be listed on The Nasdaq Capital Market under the “NURO” symbol, although it is likely that Nasdaq would add the letter “D” to the end of the trading symbol for a period of 20 trading days after the effective date of the reverse stock split to indicate that the reverse stock split had occurred.
Following a reverse stock split, our common stock would have a new Committee on Uniform Securities Identification Procedures (“CUSIP”) number, which is a number used to identify our equity securities, and stock certificates with the older CUSIP number will need to be exchanged for stock certificates with the new CUSIP number by following the procedures described above.
Effects on Equity Compensation Plans and Awards and Convertible Securities
If a reverse stock split is implemented, proportionate adjustments would generally be required to be made with regard to:
•the per share exercise price of, and the number of shares issuable upon exercise of, outstanding stock options issued under our equity compensation plans;
•the number of shares deliverable upon vesting and settlement of outstanding restricted stock and restricted stock unit awards;
•the number of shares reserved for issuance under our equity compensation plans; and
•the per share conversion price, and the number of shares issuable upon conversion of, outstanding convertible securities entitling the holders to purchase or convert into, or otherwise acquire shares of our common stock.
In the case of options, convertible securities or other rights to acquire shares of our common stock, these adjustments would result in approximately the same aggregate price required under such options, convertible securities or other rights upon exercise, conversion, or settlement, and approximately the same value of shares of common stock being delivered upon such exercise, conversion, or settlement, immediately following a reverse stock split as was the case immediately preceding such reverse stock split.
The number of shares of common stock issuable upon exercise or vesting of outstanding equity awards and options and the exercise or purchase price related tothereto, if any, would be equitably adjusted in accordance with the terms of our 2022 Equity Incentive Plan Amended and Restated 1996 Stock Option/Restricted Stock Plan, Amended and Restated 1998 Equity Incentive Plan, 2004 Stock Option and Incentive Plan, andour Employee Stock Purchase Plan.Plan, as applicable, or such stock option grants, as the case may be, which may include rounding the number of shares of common stock issuable down to the nearest whole share or the payment of cash for fractional shares.
(2) As of December 31, 2022, there were 214,316the Record Date, we had 200 shares available for future grant under the 2022 Equity Incentive Plan and 165,923 shares available under the Employeeof Series B Convertible Preferred Stock Purchase Plan. No newoutstanding. The conversion price of such convertible preferred stock grants or awards will be made underadjusted by multiplying the Amended and Restated 1996then current conversion price by a fraction of which the numerator shall be the number of shares of Common Stock Option/Restricted Stock Plan or(excluding any treasury shares of the Amended and Restated 1998 Equity Incentive Plan.
(3) Includes information related to our Amended and Restated 2009 Non-Qualified Inducement Stock Plan, which is designed to provide equity grants to new employees. Pursuant to this plan, we were authorized to issue Non-Qualified Stock Options, Restricted Stock Awards and Unrestricted Stock Awards.
Company) outstanding immediately before the
AUDIT COMMITTEE REPORTEffective Time, and of which the denominator shall be the number of shares of Common Stock outstanding immediately after the Effective Time.
Risks and Potential Disadvantages Associated with a Reverse Stock Split
The undersigned membersBoard of Directors believes that a reverse stock split is a potentially effective means to increase the Audit Committeeper share market price of our common stock and thus enable us to regain compliance with Nasdaq’s minimum bid price requirement. However, there are a number of risks and potential disadvantages associated with a reverse stock split, including the following:
•The Board of Directors cannot predict the effect of a reverse stock split upon the market price for shares of our common stock, and the success of similar reverse stock splits for companies in like circumstances has varied. Some investors may have a negative view of a reverse stock split. Recently, the market price of our common stock has declined substantially, and the equity markets have experienced and continue to experience substantial volatility due to, among other factors, the war in Ukraine, dramatic interest rate increases, high levels of inflation and the collapse of Silicon Valley Bank, Signature Bank and First Republic Bank in the first half of 2023. The principal purpose of a reverse stock split would be to increase the trading price of our common stock to satisfy Nasdaq’s minimum bid price requirement. However, the effect of a reverse stock split on the market price of our common stock cannot be predicted with any certainty, and we cannot assure you that a reverse stock split will accomplish this objective for any meaningful period of time, or at all. Even if a reverse stock split has a positive effect on the market price for shares of our common stock, performance of our business and financial results, general economic conditions and the market perception of our business, and other adverse factors which may not be in our control could lead to a decrease in the price of our common stock following a reverse stock split.
•Although the Board of Directors which consists entirelybelieves that a higher stock price may help generate the interest of directors who meetnew investors, the independence requirementsreverse stock split may not result in a per-share price that will successfully attract certain types of investors and such resulting share price may not satisfy the investing guidelines of institutional investors or investment funds. Further, other factors, such as our financial results, market conditions and the market perception of our business, may adversely affect the interest of new investors in the shares of our common stock. As a result, the trading liquidity of the Nasdaq Marketplace Rules, submit this reportshares of our common stock may not improve as a result of a reverse stock split and there can be no assurance that a reverse stock split, if completed, will result in connection with the committee’s reviewintended benefits described above.
•Even if a reverse stock split does result in an increased market price per share of our common stock, the market price per share following a reverse stock split may not increase in proportion to the reduction of the financial reports fornumber of shares of our common stock outstanding before the fiscal year ended December 31, 2022 as follows:
1. The Audit Committee has reviewed and discussedimplementation of a reverse stock split. Accordingly, even with management and Baker Tilly US, LLPan increased market price per share, the total market capitalization of shares of our independent registered public accounting firm,common stock after a reverse stock split could be lower than the audited financial statements fortotal market capitalization before a reverse stock split. Also, even if there is an initial increase in the Corporation formarket price per share of our common stock after a reverse stock split, the fiscal year ended December 31, 2022;
2. The Audit Committee has discussed with representatives of Baker Tilly US, LLPmarket price many not remain at that level due to factors described in this proposal or other factors, including the matters required to be discussed with themrisks described in accordance with applicable auditing standards; and
3. The Audit Committee has received the written disclosures and the letter from Baker Tilly US, LLP required by applicable requirements of the Public Company Accounting Oversight Board regarding Baker Tilly US, LLP’s communications with the Audit Committee concerning independence, and has discussed with Baker Tilly US, LLP their independence. The Audit Committee also considered the status of pending litigation, taxation matters, and other areas of oversight relating to the financial reporting and audit process that the committee determined appropriate.
In performing all of these functions, the Audit Committee acts in an oversight capacity. The Audit Committee’s roles and responsibilities are set forth in our charter adopted by the Board, which is available on our website at https://www.neurometrix.com. This committee reviews and reassesses our charter annually and recommends any changes to the Board for approval. The Audit Committee is responsible for overseeing our overall financial reporting process, and for the appointment, compensation, retention, and oversight of the work of Baker Tilly US, LLP. The Audit Committee reviews NeuroMetrix’s quarterly and annual reports on Form 10-Q and Form 10-K prior to filing with the SEC. In its oversight role, the Audit Committee relies on the work and assurances of NeuroMetrix’s management, which has the primary responsibility for establishing and maintaining adequate internal control over financial reporting, and for preparing the financial statements, and of Baker Tilly US, LLP, which is engaged to audit and report on the financial statements of NeuroMetrix.
Based on the Audit Committee’s review of the audited financial statements and discussions with management and Baker Tilly US, LLP, the Audit Committee recommended to the Board of Directors that the audited financial statements be included in NeuroMetrix’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022, for filingas updated in reports we subsequently file with the SEC.
Respectfully submitted•The market price of our common stock will also be based on our performance and other factors, some of which are unrelated to the number of shares outstanding. If a reverse stock split is implemented and the market price of shares of our common stock then declines, the percentage decline may be greater than would occur in the absence of a reverse stock split due to decreased liquidity in the market for our common stock. If the market price of shares of our common stock declines after a reverse stock split, the percentage decline as an absolute number and as a percentage of our overall market capitalization may be greater than would occur in the absence of a reverse stock split. Accordingly, the total market capitalization of our common stock following a reverse stock split could be lower than the total market capitalization before a reverse stock split.
•Because we are not reducing the number of our common stock authorized under the Certificate of Incorporation, the proportion of shares owned by our stockholders relative to the number authorized for issuance would be reduced, increasing the potential of a dilutive issuance in the future.
Procedure for Effecting Reverse Stock Split and Exchange of Stock Certificates
If the Reverse Split Proposal is approved by our stockholders, the Board of Directors will continuously evaluate whether a reverse stock split is in the best interests of the Company and its stockholders. If the Board of Directors determines, in its sole discretion, that implementing a reverse stock split would be in the best interests of the Company and its stockholders, it will determine the ratio of the reverse stock split to be implemented and will authorize the filing of the certificate of amendment with the Secretary of State of the State of Delaware at such time as the Board of Directors has determined the appropriate effective time for the reverse stock split. The Board of Directors may delay effecting the reverse stock split, if at all, until a time that is not later than August 3, 2024 (360 days after receipt of the Nasdaq notice of non-compliance with the minimum closing bid price requirement), without re-soliciting stockholder approval. The reverse stock split, at the ratio determined by the Audit Committee:
David E. Goodman, M.D., Chair
Bradley M. Fluegel
Nancy E. KatzBoard of Directors, will become effective on the date of filing of the certificate of amendment with the Secretary of State of the State of Delaware.
PROPOSAL 2: ADVISORY VOTE ON APPROVAL OF EXECUTIVE COMPENSATION AS DISCLOSED IN
Book-Entry Shares
If the reverse stock split is effected, stockholders who hold uncertificated shares (i.e., shares held in book-entry form and not represented by a physical stock certificate), either as direct or beneficial owners, will have their holdings electronically adjusted automatically by our transfer agent (and, for beneficial owners, by their brokers or banks that hold in “street name” for their benefit, as the case may be) to give effect to the reverse stock split. Stockholders who hold uncertificated shares as direct owners will be sent a statement of holding from our transfer agent that indicates the number of post-reverse stock split shares of our common stock owned in book-entry form. Upon the implementation of a reverse stock split, we intend to treat shares held by stockholders through a broker, bank or other agent in the same manner as registered stockholders whose shares are registered in their names. Brokers, banks and other agents would be instructed to effect a reverse stock split for their beneficial holders holding our common stock in street name. However, these brokers, banks and other agents may have different procedures than registered stockholders for processing a reverse stock split. Stockholders who hold shares of our common stock with a broker, bank or other agent and who have any questions in this regard are strongly encouraged to contact their brokers, banks or other agents for more information.
Certificated Shares
As soon as practicable after the Effective Time, stockholders will be notified that the reverse stock split has been effected. After the Effective Time, each stock certificate that, immediately prior to the Effective Time, represented shares of common stock that were issued and outstanding immediately prior to the Effective Time shall, automatically and without the necessity of presenting the same for exchange, represent the number of whole shares of common stock after the Effective Time into which the shares of common stock formerly represented by such certificate shall have been reclassified (as well as the right to receive a cash payment in lieu of a fractional share of common stock). We expect that our transfer agent will act as exchange agent for purposes of implementing the exchange of stock certificates. Holders of pre-split shares will be asked to surrender to the exchange agent certificates representing pre-split shares in exchange for certificates representing the appropriate number of post-split shares in accordance with the procedures to be set forth in a letter of transmittal to be sent by us or our exchange agent. No new certificates will be issued to a stockholder until such stockholder has surrendered such stockholder’s outstanding certificate(s) together with the properly completed and executed letter of transmittal to the exchange agent. Any pre-split shares submitted for transfer, whether pursuant to a sale or other disposition, or otherwise, will automatically be exchanged for post-split shares. STOCKHOLDERS SHOULD NOT DESTROY ANY STOCK CERTIFICATE(S) AND SHOULD NOT SUBMIT ANY CERTIFICATE(S) UNTIL REQUESTED TO DO SO. STOCKHOLDERS SHOULD NOT SUBMIT ANY CERTIFICATES DIRECTLY TO THE PROXY STATEMENTCOMPANY.
We are seeking your advisory vote as required by Section 14AFractional Shares
No fractional shares will be issued in connection with the reverse stock split. Stockholders of record on the effective date of the Securities Exchange Actsplit who otherwise would be entitled to receive fractional shares because they hold a number of 1934,pre-split shares not evenly divisible by the number of pre-split shares for which each post-split share is to be exchanged, will in lieu of a fractional share, be entitled upon the effectiveness of the reverse stock split (and for holders of certificated shares of common stock, surrender to the exchange agent of such certificate(s) representing such pre-split shares), if any, to receive payment in cash in lieu of any such resulting fractional shares of common stock as amended,the post-reverse split amounts of common stock will be rounded down to the nearest full share. Such cash payment in lieu of a fractional share of common stock will be calculated by multiplying such fractional interest in one share of common stock by the closing trading price of our common stock on the approvaltrading day immediately preceding the effective date of the compensationreverse stock split and rounded to the nearest cent. The ownership of our named executive officersa fractional share interest following a reverse stock split would not give the holder any voting, dividend or other rights, except to receive payment as described in the compensation tables and related material contained in this proxy statement in the section titled “Compensation of Executive Officers.” Because your vote is advisory, it will not be binding on our Compensation Committee or our Board of Directors. However, the Compensation Committee andabove.
If the Board of Directors elects to implement the proposed reverse stock split, stockholders owning, prior to the reverse stock split, less than the number of whole shares of common stock that will reviewbe combined into one share of common stock in the voting results and take them into consideration when making future decisions regarding executive compensation. We have determined to hold an advisory vote to approvereverse stock split would no longer be stockholders. The exact number by which the compensationnumber of holders of our named executive officers every three years, andcommon stock would be reduced will depend on the next such advisory vote will occur at the 2026 annual meeting of stockholders.
The compensation of our named executive officers is based on a design that ties a substantial percentage of an executive’s compensation to the attainment of financial and other performance measures that, the Board of Directors believes, promote the creation of long-term shareholder value and position the Corporation for long-term success. The mix of fixed and performance-based compensation and the terms of long-term incentive awards as well as the terms of executives’ employment agreements, are all designed to enable the Corporation to attract and maintain top talent while, at the same time, creating a close relationship between performance and compensation. The Compensation Committee and the Board of Directors believe that the design of the program, and hence the compensation awarded to named executive officers under the current program, fulfills this objective.
We pay our executive officers a base salary, which we review and determine annually. Effective as of April 1, 2023, the base salary for Dr. Gozani is $458,575 and the base salary for Mr. Higgins is $359,125.
Each executive officer has an annual bonus target which is expressed as a percentage of base salary. For 2023, executive officer bonus targets as a percentage of base salary are as follows: Dr. Gozani - 62.5% and Mr. Higgins – 50%.
The Compensation Committee has established a process for annual assessment of corporate performance which is the foundation for decisions regarding bonus payments to executive officers. Metrics are established following approvalspecific reverse stock split ratio adopted by the Board of Directors and the number of stockholders that hold less than that ratio as of the annual operating budget. These are monitored quarterly during the year and assessed after the endeffective date of the year. reverse stock split. As of the Record Date, there were approximately 47 holders of record of our common stock, of which 10 held fewer than eight shares of common stock.
Accounting Matters
The Compensation Committee evaluates performance against these metricsreverse stock split will not affect the common stock capital account on our balance sheet. However, because the par value of our common stock will remain unchanged on the effective date of the split, the components that make up the common stock capital account will change by offsetting amounts. The stated capital component will be reduced, and also applies judgment in arriving at an overall corporate performance rating or “factor”. In concept, the management bonus pool is activated by achievement of a single threshold or “gating” metric. Following activation, value is then created within the pool by achievement toward specific performance metrics.
In accordanceadditional paid-in capital component will be increased with the rulesamount by which the stated capital is reduced. The per share net loss and net book value of our common stock will be increased because there will be fewer weighted average shares of common stock outstanding. Prior periods’ common stock and additional paid-in capital balances and net loss per share amounts will be restated to reflect the SEC, the following resolution, commonly known as a “say-on-pay” vote, is being submitted for a stockholder vote at the 2023 annual meeting of stockholders:
“RESOLVED, that the compensation paid to the named executive officers of NeuroMetrix, Inc., as disclosed pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the compensation tables and the related material disclosed in this proxy statement, is hereby APPROVED.”
reverse stock split.
Effect on Par Value
The proposed amendment to our Certificate of Incorporation will not affect the par value of our common stock, which will remain at $0.0001 per share.
No Going Private Transaction
Notwithstanding the anticipated decrease in the number of outstanding shares following the proposed reverse stock split, if effected, the Board of Directors does not intend for this transaction to be the first step in a “going private transaction” within the meaning of Rule 13e-3 under the Exchange Act.
Potential Anti-Takeover Effect
Although the increased proportion of unissued authorized shares to issued shares could, under certain circumstances, have an anti- takeover effect (for example, by permitting issuances that would dilute the stock ownership of a person seeking to effect a change in the composition of the Board of Directors or contemplating a tender offer or other transaction for the combination of the Company with another company), the Reverse Split Proposal is not being proposed in response to any effort of which we are aware to accumulate shares of our common stock or obtain control of the Company, nor is it part of a plan by management to recommend a series of similar amendments to the Board of Directors and stockholders. Other than the Reverse Split Proposal, the Board of Directors does not currently contemplate recommending the adoption of any other actions that could be construed to affect the ability of third parties to take over or change control of the Company.
No Dissenters’ Rights
Under the Delaware General Corporation Law, our stockholders are not entitled to dissenters’ rights with respect to any of the proposals being voted on at the Special Meeting, and we will not independently provide stockholders with any such right.
Material United States Federal Income Tax Consequences of the Reverse Stock Split
The following describes certain material U.S. federal income tax considerations of a reverse stock split that would be expected to apply generally to U.S. Holders (as defined below) of our common stock. This description is based upon current provisions of the Internal Revenue Code of 1986, as amended (the “Code”), existing Treasury Regulations under the Code and current administrative rulings and court decisions, all of which are subject to change or different interpretation. Any change, which may or may not be retroactive, could alter the tax consequences to us or our stockholders as described in this section. No ruling from the U.S. Internal Revenue Service (“IRS”) has been or will be requested in connection with a reverse stock split.
No attempt has been made to comment on all U.S. federal income tax consequences of a reverse stock split that may be relevant to particular U.S. Holders, including holders: (i) who are subject to special tax rules such as dealers, brokers and traders in securities, mutual funds, regulated investment companies, real estate investment trusts, insurance companies, banks or other financial institutions or tax-exempt entities; (ii) who are subject to the alternative minimum tax provisions of the Code; (iii) who acquired their shares in connection with stock options, stock purchase plans or other compensatory transactions; (iv) who hold their shares as a hedge or as part of a hedging, straddle, “conversion transaction,” “synthetic security,” integrated investment or any risk reduction strategy; (v) who are partnerships, limited liability companies that are not treated as corporations for U.S. federal income tax purposes, S corporations, or other pass-through entities or investors in such pass-through entities; (vi) who do not hold their shares as capital assets for U.S. federal income tax purposes (generally, property held for investment within the meaning of Section 1221 of the Code); (vii) who hold their shares through individual retirement or other tax-deferred accounts; (viii) whose shares constitute qualified small business stock within the meaning of Section 1202 of the Code; or (ix) who have a functional currency for U.S. federal income tax purposes other than the U.S. dollar.
In addition, the following discussion does not address the tax consequences of a reverse stock split under state, local and foreign tax laws. The discussion assumes that for U.S. federal income tax purposes, a reverse stock split would not be integrated or otherwise treated as part of a unified transaction with any other transaction. Furthermore, the following discussion does not address the tax consequences of transactions effectuated before, after or at the same time as a reverse stock split, whether or not they are in connection with a reverse stock split.
For purposes of this discussion, a “U.S. Holder” means a beneficial owner of our common stock who is: (i) an individual who is a citizen or resident of the U.S.; (ii) a corporation (or other entity taxable as a corporation for U.S. federal income tax purposes) created or organized in the U.S. or under the laws of the U.S. or any subdivision thereof; (iii) an estate the income of which is includible in gross income for U.S. federal income tax purposes regardless of its source; or (iv) a trust (other than a grantor trust) if (A) a court within the U.S is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust or (B) it has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person.
HOLDERS OF OUR COMMON STOCK ARE ADVISED AND EXPECTED TO CONSULT THEIR OWN TAX ADVISORS REGARDING THE U.S. FEDERAL INCOME TAX CONSEQUENCES OF A REVERSE STOCK SPLIT IN LIGHT OF THEIR PERSONAL CIRCUMSTANCES AND THE CONSEQUENCES OF A REVERSE STOCK SPLIT UNDER STATE, LOCAL AND FOREIGN TAX LAWS.
Based on the assumptions above, a reverse stock split will be treated as a tax-free recapitalization for U.S. federal income tax purposes. Accordingly, if a reverse stock split is adopted:
•A U.S. Holder that receives a reduced number of shares of our common stock pursuant to such reverse stock split will not recognize any gain or loss, except with respect to the amount of cash (if any) received in respect of a fractional share;
•A U.S. Holder’s aggregate tax basis in such holder’s shares of common stock received in such reverse stock split will equal the aggregate tax basis of such stockholder’s shares of common stock held immediately before such reverse stock split, but not including the aggregate tax basis of shares surrendered in exchange for cash received in respect of a fractional share (if any);
•A U.S. Holder’s holding period of shares of our common stock received in such reverse stock split will include the holding period of the pre-reverse stock split shares exchanged therefor; and
•A U.S. Holder that receives cash in lieu of a fractional share of common stock generally will recognize gain or loss equal to the difference (if any) between the amount of cash received and the U.S. Holder’s tax basis in the shares of common stock surrendered therefor. Such capital gain or loss generally will be long-term capital gain or loss if the U.S. Holder’s holding period for the common stock surrendered in the reverse stock split exceeds one year at the effective time of the reverse stock split. Long-term capital gains of non-corporate U.S. Holders are generally subject to preferential tax rates. There are limitations on the deductibility of capital losses under the Code.
For purposes of determining the tax basis and holding period of shares of our common stock received in a reverse stock split, U.S. Holders that acquired different blocks of shares our common stock at different times for different prices must calculate their basis and holding periods separately for each identifiable block of such stock exchanged in the reverse stock split.
Certain of our stockholders may be required to attach a statement to their tax returns for the year in which a reverse stock split is consummated that contains the information listed in applicable Treasury Regulations. All of our stockholders are advised to consult their own tax advisors with respect to the applicable reporting requirements.
Interests of Directors and Executive Officers
Our directors and executive officers have no substantial interests, directly or indirectly, in the matters set forth in the Reverse Split Proposal except to the extent of their ownership of shares of our common stock.
Reservation of Right to Abandon Reverse Stock Split
We reserve the right to not file the certificate of amendment and to abandon any reverse stock split without further action by our stockholders at any time before the effectiveness of the filing with the Secretary of the State of Delaware of the certificate of amendment, even if the authority to effect this amendments is approved by our stockholders at the Special Meeting. By voting in favor of a reverse stock split, you are expressly also authorizing the Board of Directors to delay, not proceed with, and abandon, the proposed amendments if it should so decide, in its sole discretion, that such action is in the best interests of our stockholders.
Vote Required and Board of Directors’ Recommendation
The advisory vote on executive compensation will be approved uponaffirmative votes of the affirmative voteholders of a majority of the votes properly cast for and against such matter. Abstentions and broker non-votes are not included inshares voted at the number of votes cast for and against this matter and therefore have no effectSpecial Meeting by the stockholders entitled to vote on the vote on such matter.
RecommendationReverse Split Proposal is required to approve the amendment of our Certificate of Incorporation to effect a reverse stock split of our common stock.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE TO APPROVEAUTHORIZE THE COMPENSATIONBOARD OF DIRECTORS IN ITS DISCRETION TO AMEND THE CERTIFICATE OF INCORPORATION TO EFFECT A REVERSE STOCK SPLIT OF THE ISSUED AND OUTSTANDING SHARES OF OUR NAMED EXECUTIVE OFFICERS,COMMON STOCK (SUCH SPLIT TO COMBINE A NUMBER OF OUTSTANDING SHARES OF OUR COMMON STOCK BETWEEN TWO (2) AND EIGHT (8), INCLUSIVE, SUCH NUMBER CONSISTING OF ONLY WHOLE SHARES, INTO ONE (1) SHARE OF OUR COMMON STOCK). PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE VOTED IN FAVOR OF SUCH APPROVALTHE REVERSE SPLIT PROPOSAL UNLESS A STOCKHOLDER INDICATES OTHERWISE ON THE PROXY.
PROPOSAL 3: RATIFICATION2: APPROVAL OF APPOINTMENTTHE ADJOURNMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMTHE SPECIAL MEETING, IF NECESSARY, TO SOLICIT ADDITIONAL PROXIES IF THERE ARE NOT SUFFICIENT VOTES IN FAVOR OF THE REVERSE SPLIT PROPOSAL.
Introduction
The Audit CommitteeWe are asking our stockholders to vote on a proposal to approve the adjournment of the BoardSpecial Meeting, if necessary, to solicit additional proxies if there are not sufficient votes in favor of Directors has appointed Baker Tilly US, LLP, as our independent registered public accounting firm, to audit our financial statements for the fiscal year ending December 31, 2023. It is expected that a representative of Baker Tilly US, LLP will be present at the annual meeting with the opportunity to make a statement, if so desired, and will be available to respond to appropriate questions.
In deciding to appoint Baker Tilly US, LLP, the Audit Committee reviewed auditor independence issues and existing commercial relationships with Baker Tilly US, LLP and concluded that Baker Tilly US, LLP has no commercial relationship with the Corporation that would impair its independence for the fiscal year ending December 31, 2023.Reverse Split Proposal.
Vote Required and Board of Directors’ Recommendation
The selectionApproval of our independent registered public accounting firm for the year ending December 31, 2023 will be ratified uponAdjournment Proposal, if necessary, to solicit additional proxies if there are not sufficient votes in favor of the Reverse Split Proposal requires the affirmative vote of the holders of a majority of the votes properly cast forshares of common stock present and against such matter. Abstentions will have no effectentitled to vote on the vote on such matter. However, brokerage firms have authority to vote customers’ unvoted shares heldmatter either in person or by proxy at the firms in street name on this proposal. If a broker does not exercise this authority, such broker non-votes will have no effect on the results of this vote. The ratification of this selection by our stockholders is not required under the laws of the State of Delaware, where we are incorporated, but the results of this vote will be considered by the Audit Committee in selecting auditors for future years.
RecommendationSpecial Meeting.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” RATIFICATION OF THE SELECTION OF BAKER TILLY US, LLP TO SERVE AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE YEAR ENDING DECEMBER 31, 2023. PROPERLY AUTHORIZED PROXIES SOLICITED BY THE BOARD WILL BE VOTED “FOR” THE RATIFICATION UNLESS A STOCKHOLDER INDICATES OTHERWISE ON THE PROXY.
ADJOURNMENT PROPOSAL.
ACCOUNTING FEESOTHER MATTERS
Aggregate fees for professional services rendered by Baker Tilly US, LLP for the years ended December 31, 2022 and 2021 are as follows:
Audit Fees
The audit fees for Baker Tilly US, LLP for professional services rendered for the 2022 audit of our annual financial statements and the reviewAs of the financial statements includeddate of this proxy statement, the Board of Directors knows of no other business which will be presented to the Special Meeting. If any other business is properly brought before the Special Meeting, proxies will be voted in our quarterly reports on Form 10-Q, issuance of consents, and review of documents filedaccordance with the SEC totaled $311,000, of which $118,000 was billed in 2022 and $193,000 was billed or accrued in 2023.
The audit fees for Baker Tilly US, LLP for professional services rendered for the 2021 audit of our annual financial statements and the reviewsjudgment of the financial statements included in our quarterly reports on Form 10-Q, issuance of consents, and review of documents filed with the SEC totaled $217,500, of which $192,500 was billed in 2021 and $25,000 was billed in 2022.persons named therein.
Audit-Related Fees
The audit-related fees for Baker Tilly US, LLP in 2022 totaled $46,000 and zero in 2021.
All Other Fees
There were no other fees for Baker Tilly US, LLP in 2022 and 2021.
Tax Fees
There were no tax fees for Baker Tilly US, LLP in 2022 and 2021.
Pre-Approval Policies and Procedures
The Audit Committee approved all audit and non-audit services provided to us by Baker Tilly US, LLP during the 2022 and 2021 fiscal years.
STOCKHOLDER PROPOSALS
Any stockholder proposals submitted pursuant to Exchange Act Rule 14a-8 for inclusion in ourthe Company’s proxy statement and form of proxy for ourits 2024 annual meeting of Stockholdersstockholders must be received by usthe Company on or before December 1, 2023, in order to be considered for inclusion in ourits proxy statement and form of proxy. Such proposals must also comply with the requirements as to form and substance established by the SEC if such proposals are to be included in the proxy statement and form of proxy. Any such proposal should be mailed to:to our principal executive offices: NeuroMetrix, Inc., 4b4 Gill Street, Suite B, Woburn, Massachusetts 01801, Attention: Secretary.
Stockholder proposals to be presented at our 2024 annual meeting of Stockholders,stockholders, other than stockholder proposals submitted pursuant to Exchange Act Rule 14a-8 for inclusion in our proxy statement and form of proxy for our 2024 annual meeting of Stockholders,stockholders and recommendations for candidates to be considered for election to the Board of directors at our 2024 annual meeting of stockholders, must be presented and received in accordance with the provisions of our by-laws. Our by-laws state that the stockholder must provide timely written notice of any nomination or proposal and supporting documentation. A stockholder’s notice will be timely if received by us at our principal executive office not less than 90 days (or February 2, 2024) nor more than 120 days (or January 3, 2024) prior to the anniversary date of the immediately preceding annual meeting (the “Anniversary Date”); provided, however, that in the event the annual meeting is scheduled to be held on a date more than 30 days before the Anniversary Date (or April 2, 2024) or more than 60 days after the Anniversary Date (or July 1, 2024), a stockholder’s notice shall be timely if received by us at ourits principal executive office not later than the close of business on the later of (1) the 90th day prior to the scheduled date of such annual meeting or (2) the 10th day following the day on which public announcement of the date of such annual meeting is first made by us. In the event that the number of directors to be elected to our Board of Directors is increased and there is no public announcement naming all of the nominees for director or specifying the size of the increased Board of Directors made by us at least 85 days prior to the first anniversary of the preceding year’s annual meeting, a stockholder’s notice will also be considered timely, but only with respect to nominees for any new positions created by such increase, if it is delivered to us at our principal executive offices not later than the close of business on the 10th day following the day on which such public announcement is first made by us. Proxies solicited by our Board of Directors will confer discretionary voting authority with respect to these proposals, subject to SEC rules and regulations governing the exercise of this authority. Any such proposals shall be mailed to: NeuroMetrix, Inc., 4b4 Gill Street, Suite B, Woburn, Massachusetts 01801, Attention: Secretary.
EXPENSES AND SOLICITATION
The cost of solicitation of proxies will be borne by us, and inIn addition to solicitingsatisfying all of the requirements under our by-laws, any stockholders by mail through our regular employees, we may request banks, brokers, and other custodians, nominees and fiduciarieswho intend to solicit their customers who have stockproxies in support of director nominees other than the Company’s nominees at the 2024 annual meeting of stockholders must also comply with all applicable requirements of Rule 14a-19 under the Exchange Act. The advance notice requirement under Rule 14a-19 does not override or supersede the longer advance notice requirement under our company registered in the names of a nominee and, if so, we will reimburse such banks, brokers, and other custodians, nominees and fiduciaries for their reasonable out-of-pocket costs. Solicitation by our officers and employees may also be made of some stockholders in person or by mail, telephone, e-mail, or other form of electronic communication following the original solicitation. We have engaged Alliance Advisors LLC (“Alliance”) to advise us on certain proposals and to manage the production and distribution of this proxy statement. We may engage them to assist with the solicitation of proxies for the annual meeting. We expect to pay Alliance approximately $32,000 for their services.
MULTIPLE STOCKHOLDERS SHARING THE SAME ADDRESS
SEC rules concerning the delivery of annual disclosure documents allow us or stockholders’ brokers to send a single notice or, if applicable, a single set of our proxy materials to any household at which two or more of our stockholders reside, if we or stockholders’ brokers believe that the stockholders are members of the same family. This practice, referred to as “householding,” benefits both stockholders and us. It reduces the volume of duplicate information received by stockholders in the same household and helps to reduce our expenses. The rule applies to our notices, annual reports, proxy statements and information statements.
As such, owners of common stock in street name may receive a notice from their broker or bank stating that only one annual report or proxy statement will be delivered to multiple security holders sharing an address. However, if any stockholder residing at such an address wishes to receive a separate annual report or proxy statement, the Corporation will promptly deliver a separate copy to any stockholder upon written or oral request to the Corporation’s investor relations department at NeuroMetrix, Inc., 4b4 Gill Street, Suite B, Woburn, Massachusetts 01801 or by telephone at (781) 890-9989 or by e-mail at neurometrix.ir@neurometrix.com.
DELINQUENT SECTION 16(A) REPORTS
Our records reflect that all reports which were required to be filed with the SEC pursuant to Section 16(a) of the Securities Exchange Act of 1934, as amended, with respect to fiscal year 2022 were filed on a timely basis, except that Form 4s, covering an aggregate of nine transactions involving vesting of previously reported equity grants, were filed late by Dr. Gozani, Mr. Fluegel and Mr. Higgins.
CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS
We did not engage in any related person transactions during the years ended December 31, 2022 and December 31, 2021. Pursuant to our audit committee charter currently in effect, the audit committee is responsible for reviewing and approving, prior to our entry into any such transaction, all transactions in which we are a participant and in which any parties related to us has or will have a direct or indirect material interest.
NEUROMETRIX, INC.
Annual Meeting of Stockholders May 2, 2023
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned, revoking all other prior proxies, hereby appoints Shai N. Gozani, M.D., Ph.D. and Thomas T. Higgins and each of them (with full power to act alone), the attorneys and proxies of the undersigned, with full power of substitution to each, to vote all shares of common stock, par value $0.0001 per share, of NeuroMetrix, Inc. (the “Corporation”) registered in the name provided in this Proxy which the undersigned is entitled to vote at the Annual Meeting of Stockholders of the Company, to be held in a virtual format only on Tuesday, May 2, 2023 at 10:00 a.m. Eastern Time and at any adjournments or postponements thereof, with all powers the undersigned would possess if present, upon the matters set forth in the Notice of Annual Meeting of Stockholders and related Proxy Statement dated March 30, 2023, a copy of which has been received by the undersigned. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON ANY OTHER BUSINESS THAT MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENTS OR POSTPONEMENTS THEREOF. Attendance by the undersigned at the meeting or at any adjourned or postponed session thereof will not be deemed to revoke this proxy unless the undersigned affirmatively indicates at the meeting the intention of the undersigned to vote said shares in person. In order to attend the meeting, you must register at http://viewproxy.com/neurometrix/2023/htype.asp by 11:59 p.m. Eastern Time on April 29, 2023. On the day of the meeting, if you have properly registered, you may enter the meeting by clicking on the link provided and the password you received via email in your registration confirmations.
CONTINUED AND TO BE SIGNED ON REVERSE
PLEASE DETACH ALONG PERFORATED LINE AND MAIL IN THE ENVELOPE PROVIDED.neurometrix.ir@neurometrix.com
Woburn, Massachusetts
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders to be held on May 2, 2023.
The Proxy Statement and the Corporation’s 2022 Annual Report to Stockholders are available at: [https://www.viewproxy.com/neurometrix/●], 2023
Form of Proxy Card
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE DIRECTOR NOMINEE AND FOR PROPOSALS 2 AND 3.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE
APPENDIX A
FORM OF CERTIFICATE OF AMENDMENT TO EFFECT REVERSE STOCK SPLIT
NeuroMetrix, Inc. (the “Corporation”), a corporation organized and existing under the laws of the State of Delaware, hereby certifies as follows:
1.Proposal to elect one memberThe name of the Corporation is NeuroMetrix, Inc.
2.The Corporation’s original Certificate of Incorporation was filed with the Secretary of State of the State of Delaware (the “Secretary of State”) on April 25, 2001 under the name “New NeuroMetrix, Inc.” A Certificate of Merger was filed with the Secretary of State on May 14, 2001. An Amended and Restated Certificate of Incorporation was filed on December 19, 2002. Certificates of Amendment to the BoardAmended and Restated Certificate of DirectorsIncorporation were filed on March 12, 2004 and June 21, 2004. A Second Amended and Restated Certificate of Incorporation was filed on July 15, 2004. A Third Amended and Restated Certificate of Incorporation was filed on July 17, 2004. Certificates of Amendment to the Third Amended and Restated Certificate of Incorporation were filed on September 1, 2011, February 15, 2013, December 1, 2015, May 11, 2017 and November 18, 2019.
3.The Corporation’s Third Amended and Restated Certificate of Incorporation, as Class I Director,amended, is hereby further amended by striking out the first two paragraphs of the section titled “Capital Stock” of Article IV in their entirety and by substituting in lieu thereof the following three paragraphs:
“The total number of shares of capital stock which the Corporation shall have authority to serveissue is thirty million (30,000,000) shares, of which (i) twenty-five million (25,000,000) shares shall be a class designated as common stock, par value $0.0001 per share (the “Common Stock”), and (ii) five million (5,000,000) shares shall be a class designated as preferred stock, par value $0.001 per share, of which twenty-five thousand (25,000) shares shall be designated as Series A Junior Participating Cumulative Preferred Stock, par value $0.001 per share, one thousand sixty-seven (1,067) shares shall be designated as Series A-1 Convertible Preferred Stock, par value $0.001 per share, three thousand three hundred seventy-one (3,371) shares shall be designated as Series A-2 Convertible Preferred Stock, par value $0.001 per share, two thousand six hundred twenty-two (2,622) shares shall be designated as Series A-3 Convertible Preferred Stock, par value $0.001 per share, four thousand twenty-three (4,023) shares shall be designated as Series A-4 Convertible Preferred Stock, par value $0.001 per share, one hundred forty-seven thousand (147,000) shares shall be designated as Series B Convertible Preferred Stock, par value $0.001 per share, thirteen thousand eight hundred (13,800) shares shall be designated as Series C Convertible Preferred Stock, par value $0.001 per share, twenty-one hundred thousand three hundred (21,300) shares shall be designated as Series D Convertible Preferred Stock, seven thousand (7,000) shares shall be designated as Series E Convertible Preferred Stock, ten thousand six hundred and twenty-one (10,621) shares shall be designated as Series F Convertible Preferred Stock, and four million seven hundred seventy-four thousand eight hundred seventeen (4,764,196) shares shall be undesignated preferred stock, par value $0.001 per share (the “Undesignated Preferred Stock”).
Upon effectiveness of this Certificate of Amendment (the “Effective Time”), the shares of Common Stock issued and outstanding immediately prior to the Effective Time and the shares of Common Stock issued and held in the treasury of the Corporation immediately prior to the Effective Time are reclassified into a smaller number of shares such that each [•] shares of issued and outstanding Common Stock immediately prior to the Effective Time is reclassified into one validly issued, fully paid and non-assessable share of Common Stock without any further action by the Corporation or the holder thereof, subject to the treatment of fractional share interests as described below (the “Reverse Stock Split”). Notwithstanding the immediately preceding sentence, no fractional shares shall be issued as a result of the reverse stock split. Instead, any stockholder who would otherwise be entitled to a fractional share of our Common Stock as a result of the Reverse Stock Split shall be entitled to receive a cash payment (without interest), upon the submission of a transmission letter by a holder holding the shares in book-entry form and, where shares are held in certificated form, upon the surrender of the holder’s Old Certificates (as defined below), equal to the product of such resulting fractional interest in one share of our Common Stock multiplied by the closing trading price of our Common Stock as reported on the Nasdaq Capital Market on the trading day immediately preceding the effective date of the reverse stock split. Notwithstanding the foregoing, the Corporation shall not be obliged to issue certificates evidencing the shares of Common Stock outstanding as a result of the reverse stock split or cash in lieu of fractional shares, if any, unless and until the Corporation’s 2026 annual meetingcertificates evidencing the shares held by a holder prior to the reverse stock split are either delivered to the Corporation or its transfer agent, or the holder notifies the Corporation or its transfer agent that such certificates have been lost, stolen or destroyed and executes an agreement satisfactory to the Corporation to indemnify the Corporation from any loss incurred by it in connection with such certificates.
Each stock certificate that, immediately prior to the Effective Time, represented shares of stockholdersCommon Stock that were issued and until his respective successoroutstanding immediately prior to the Effective Time (the “Old Certificates”) shall, from and after the Effective Time, automatically and without the necessity of presenting the same for exchange, represent the number of whole shares of Common Stock after the Effective Time into which the shares of Common Stock formerly represented by such certificate shall have been reclassified (as well as the right to receive a cash payment in lieu of a fractional share of Common Stock),
provided, however, that each person of record holding an Old Certificate shall receive, upon surrender of such certificate, a new certificate evidencing and representing the number of whole shares of Common Stock after the Effective Time into which the shares of Common Stock formerly represented by such certificate shall have been reclassified (including the right to receive a cash payment in lieu of a fractional share of Common Stock).”
4.The Amendment of the Amended and Restated Certificate of Incorporation, as amended, herein certified has been duly elected and qualified or until his earlier death, resignation or removal.adopted in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware.
5.The Effective Time of this Certificate of Amendment shall be on [•] at [•], Eastern Time.
0a.IN WITNESS WHEREOF, the Corporation has caused this Certificate of Amendment to be signed by its duly authorized officer on this [•] day of [•], 2023.
NEUROMETRIX, INC.
By: Shai N. Gozani, M.D., Ph.D.FOR WITHHOLD AUTHORITY
Chairman, Chief Executive Officer and President
B.Proposal to approve by a non-binding, advisory vote, the compensation of our named executive officers, as disclosed in our proxy statement.
FOR AGAINST ABSTAIN
C.Proposal to ratify the appointment of Baker Tilly US, LLP as the Corporation’s independent registered public accounting firm for fiscal year ended December 31, 2023.
FOR AGAINST ABSTAIN
Please sign your name exactly as it appears hereon. When signing as attorney, executor, administrator, trustee, guardian, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name, by authorized officer.
| | | | | | | | | | | |
Date: | | | |
| | | |
Signature | | |
| | | |
Signature (if held jointly) | | |
VIRTUAL CONTROL NUMBER
PLEASE DETACH ALONG PERFORATED LINE AND MAIL IN THE ENVELOPE PROVIDED.
VIRTUAL CONTROL NUMBER
PROXY VOTING INSTRUCTIONS
Please have your 11 digit control number ready when voting by Internet or Telephone
