UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No.)
☒ | Filed by the Registrant |
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☐ | Filed by a Party other than the Registrant |
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Check the appropriate box: | |
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☐ | Preliminary Proxy Statement |
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☐ | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
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☒ | Definitive Proxy Statement |
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☐ | Definitive Additional Materials |
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☐ | Soliciting Material Under §240.14a-12 |
Zivo Bioscience, Inc. |
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check all boxes that apply):
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| No fee required. |
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| Fee paid previously with preliminary materials. |
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| Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11. |
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS OF
ZIVO BIOSCIENCE, INC.
To be held July 28, 2022June 12, 2023
TO THE SHAREHOLDERS OF
Zivo Bioscience, Inc.:
We are pleased to invite you to attend our 20222023 Annual Meeting of Shareholders (the “Annual Meeting”) of Zivo Bioscience, Inc. to be held on Thursday, July 28, 2022,Monday, June 12, 2023, at 11:10:00 a.m. Eastern Time at 3600 Centerpoint Parkway, Pontiac, MI 48341.
The attached Proxy Statement describes the matters proposed by your Board of Directors to be considered and voted upon by our shareholders at our Annual Meeting. These items are more fully described in the following pages, which are hereby made part of this Notice.
The Annual Meeting will be held for the following purposes:
1. | To |
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2. | To ratify the appointment of our independent registered public accounting firm for the fiscal year ending December 31, |
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3. | To approve (on an advisory basis) the compensation of our named executive officers. |
The Board of Directors has fixed the close of business on June 28, 2022April 20, 2023 as the record date for determination of the shareholders entitled to notice of and to vote at the Annual Meeting or any adjournment thereof. Only holders of common stock of record at the close of business on June 28, 2022April 20, 2023 will be entitled to notice of, and to vote at, the Annual Meeting or at any adjournment or adjournments thereof.
We currently intend to hold the Annual Meeting in person. However, in the event we determine it is not possible or advisable to hold the Annual Meeting in person, we will publicly announce alternative arrangements for the Annual Meeting as promptly as practicable before the Annual Meeting, which may include holding the Annual Meeting solely by means of remote communication (i.e., a virtual-only Annual Meeting). Please monitor our website at www.zivobioscience.com for updated information.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE ANNUAL MEETING REGARDLESS OF THE NUMBER OF SHARES YOU HOLD. YOU ARE INVITED TO ATTEND THE MEETING IN PERSON, BUT WHETHER OR NOT YOU PLAN TO ATTEND, PLEASE COMPLETE, DATE, SIGN AND RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED ENVELOPE. IF YOU DO ATTEND THE MEETING, YOU MAY, IF YOU PREFER, REVOKE YOUR PROXY AND VOTE YOUR SHARES IN PERSON. THE PROXY MAY BE REVOKED AT ANY TIME PRIOR TO EXERCISE BY FILING WITH THE SECRETARY OF THE COMPANY A WRITTEN REVOCATION, BY EXECUTING A PROXY WITH A LATER DATE, OR BY ATTENDING AND VOTING AT THE ANNUAL MEETING.
IMPORTANT NOTICE REGARDING AVAILABILITY OF PROXY MATERIALS FOR THE SHAREHOLDER MEETING TO BE HELD ON JULY 28, 2022:
The Proxy Statement andEven if you are planning on attending the Annual ReportMeeting, please promptly submit your proxy vote via the Internet, by telephone, so your shares will be represented at the Annual Meeting. Instructions on voting your shares are on the proxy materials you received for the fiscal year ended December 31, 2021 are available at https://www.iproxydirect.com/index.php/ZIVO.Annual Meeting.
Zivo Bioscience, Inc.
21 E. Long Lake Road, Suite 100
Bloomfield Hills, MI 48304
(248) 452-9866
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JULY 28, 2022JUNE 12, 2023
INFORMATION CONCERNING SOLICITATION AND VOTING
Our Board of Directors (the “Board”) solicits your proxy on our behalf for the 20222023 Annual Meeting of Shareholders (the “Annual Meeting”) and at any postponement or adjournment of the Annual Meeting for the purposes set forth in this Proxy Statement. The Annual Meeting will be held at 3600 Centerpoint Parkway, Pontiac, MI 48341 on Thursday, July 28, 2022Monday, June 12, 2023 at 11:10:00 a.m. local time.
Accompanying thisOn or about April 28, 2023, we intend to mail to our shareholders of record a Notice of Internet Availability of Proxy Statement is the proxy card which you may useMaterials (the “Notice”). The Notice will contain instructions on how to indicate your vote as to the proposals described in this Proxy Statement. Our Annual Report on Form 10-K for the year ended December 31, 2021 also accompanies this Proxy Statement but does not constitute part of these proxy soliciting materials. We anticipate thataccess this Proxy Statement and our 2022 annual report to stockholders, through the accompanyingInternet and how to vote through the Internet. The Notice also will include instructions on how to receive such materials, at no charge, by paper delivery (along with a proxy cardcard) or by e-mail. Beneficial owners will be mailedreceive a similar notice from their broker, bank, or other nominee. Please do not mail in the Notice, as it is not intended to our shareholders onserve as a voting instrument. Notwithstanding anything to the contrary, we may send certain stockholders of record a full set of proxy materials by paper delivery instead of the notice or about July 5, 2022.in addition to sending the notice.
We currently intend to hold the Annual Meeting in person. However, in the event we determine it is not possible or advisable to hold the Annual Meeting in person, we will publicly announce alternative arrangements for the Annual Meeting as promptly as practicable before the Annual Meeting. Please monitor our website at www.zivobioscience.com for updated information.
Unless we state otherwise or the context otherwise requires, references in this proxy statement to “we,” “our,” “us”, or the “Company” are to Zivo Bioscience, Inc., a Nevada corporation.
Voting of Shares by Proxy
Shareholders may vote at the Annual Meeting by attending in person or by proxy. Execution of a proxy will not in any way affect a shareholder’s right to attend and vote at the Annual Meeting. Any proxy given pursuant to this solicitation may be revoked by the person giving it any time before it is voted. Proxies may be revoked by (1) filing with our Secretary, before the taking of the vote at the Annual Meeting, a written notice of revocation bearing a date later than the date of such proxy, (2) duly executing a later dated proxy relating to the same shares and delivering it to our Secretary before the taking of the vote at the Annual Meeting or (3) attending and voting at the Annual Meeting (although attendance at the Annual Meeting will not in and of itself constitute a revocation of a proxy). If your shares are held in “street name,” that is, you hold your shares in an account with a bank, broker or other holder of record, you must obtain a proxy, executed in your favor, from your broker or other holder of record, to be able to vote at the Annual Meeting. Any written notice of revocation or subsequent proxy should be sent to Zivo Bioscience, Inc., 21 E. Long Lake Road, Suite 100, Bloomfield Hills, MI 48304, attention: Corporate Secretary, at or before the taking of the vote at the Annual Meeting.
Record Date
The close of business on June 28, 2022April 20, 2023 has been fixed as the record date for the determination of shareholders entitled to notice of and to vote at the Annual Meeting or any adjournments thereof. As of June 28, 2022,April 20, 2023, we had outstanding 9,419,660 of our common stock, par value $0.001 (the “Common Stock”). A shareholder is entitled to cast one vote for each share held on the record date on all matters to be considered at the Annual Meeting.
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Quorum and Votes Required
The representation in person or by proxy of at least a majority of the outstanding shares of Common Stock entitled to vote at the Annual Meeting is necessary to establish a quorum for the transaction of business at the Annual Meeting. Votes withheld from a nominee, abstentions and broker “non-votes” are counted as present or represented for purposes of determining the presence or absence of a quorum. A “non-vote” occurs when a broker holding shares for a beneficial owner does not vote on a proposal because the broker does not have discretionary voting power and has not received instructions from the beneficial owner.
Directors will be elected by a plurality of the votes cast by shareholders entitled to vote at the Annual Meeting. Proposals 2 and 3 require the affirmative vote of the majority of the votes cast at the Annual Meeting. An automated system administered by our transfer agent tabulates the votes. The vote on each matter submitted to shareholders is tabulated separately. Abstentions and broker “non-votes” are included in the number of shares present or represented for purposes of determining whether there is a quorum, but are not considered as shares voting or as votes cast with respect to any matter presented at the Annual Meeting. As a result, abstentions and broker “non-votes” will not have any effect on any of the proposals.
The persons named as the proxies, John B. Payne and Keith R. Marchiando, and John B. Payne, were selected by the Board of Directors and are executive officers of the Company. All properly executed proxy cards returned in time to be counted at the Annual Meeting will be voted. Any shareholder giving a proxy has the right to withhold authority to vote for any individual nominee to the Board of Directors by writing that nominee’s name in the space provided on the proxy card.
All proxies will be voted in accordance with the shareholders’ instructions, and if no choice is specified, the enclosed proxy card (or any signed and dated copy thereof) will be voted in favor of the matters set forth in the accompanying notice of Annual Meeting of shareholders.
By order of the Board of Directors
Zivo Bioscience, Inc.
/s/ Keith R. Marchiando
Keith R. Marchiando
Chief Financial Officer
July 5, 2022April 28, 2023
YOU MAY RELY ONLY ONIMPORTANT NOTICE REGARDING THE INFORMATION CONTAINED IN THISAVAILABILITY OF PROXY STATEMENT. ZIVO HAS NOT AUTHORIZED ANYONE TO PROVIDE INFORMATION DIFFERENT FROM THAT CONTAINED IN THIS PROXY STATEMENT.MATERIALS FOR THE DELIVERY OF THIS PROXY STATEMENT DOES NOT MEAN THAT INFORMATION CONTAINED IN THIS PROXY STATEMENT IS CORRECT AFTER THE DATE OF THIS PROXY STATEMENT. THIS PROXY STATEMENT IS NOT AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY COMMON STOCK IN ANY CIRCUMSTANCES UNDER WHICH THE OFFER OR SOLICITATION IS UNLAWFUL.ANNUAL MEETING
The Notice of 2023 Annual Meeting of Stockholders, the accompanying Proxy Statement, and the 2022 annual report are available at https://www.iproxydirect.com/index.php/ZIVO.
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QUESTIONS AND ANSWERS
Q:
| What may I vote on? |
A. | You may vote on the following proposals: |
1. | ELECTION OF DIRECTORS |
There are four nomineesis one nominee for election to the Company’s Board of Directors this year: (i) one Class I director named in the Proxy Statement to hold office until the 20232026 annual meeting of shareholders, (ii) one Class II director to hold office until the 2024 annual meeting of shareholders, and (iii) two Class III directors to hold office until the 2025 annual meeting of shareholders, each until their respective successors have been duly elected and qualified.meeting.
The following table provides information regarding the directors up for nomination:
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Your Board recommends a vote FOR each of the nominees.nominee.
2. | RATIFICATION OF AUDITOR |
We are requesting that shareholders approve the ratification of the appointment of our independent registered public accounting firm for the fiscal year ending December 31, 2022.2023.
Your Board recommends a vote FOR the ratification of the appointment of our independent registered public accounting firm for the fiscal year ending December 31, 2022.2023.
3. | ADVISORY VOTE ON EXECUTIVE COMPENSATION |
We are requesting that shareholders approve, on an advisory basis, the compensation of our named executive officers.
Your Board recommends a vote FOR the approval of the compensation of our named executive officers.
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A: | Shareholders of record as of the close of business April 20, 2023 are entitled to vote at the Annual Meeting. |
Q: | How do I vote? |
A: | Stockholders of Record. You may vote by internet, by phone or by completing, signing and returning the enclosed proxy card in the postage-paid envelope provided. To vote by internet or phone, you will need to use a control number provided to you in the materials with this proxy statement and follow the additional steps when prompted. The steps have been designed to authenticate your identity, allow you to give voting instructions, and confirm that those instructions have been recorded properly. |
Beneficial Owners. If you are a beneficial owner, you must vote your shares in the manner prescribed by your broker, bank or other nominee. You will receive a voting instruction card (not a proxy card) to use in directing the broker, bank or other nominee how to vote your shares. You may also have the option to vote your shares via the internet or phone. |
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A: | If you sign your proxy card or voting instruction card, but do not make any selections, you give authority to John B. Payne, Chief Executive Officer, and Keith R. Marchiando, Chief Financial Officer, to vote in their discretion on each proposal and any other matter that may properly come before the Annual Meeting. |
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Q: | How many shares can vote? |
A: | As of the close of business on the record date, April 20, 2023, there were 9,419,660 shares of Common Stock issued and outstanding. Every holder of Common Stock as of the close of business on April 20, 2023, the record date, is entitled to one vote for each share held. |
A: If you sign your proxy card, but do not make any selections, you give authority to Keith R. Marchiando, Chief Financial Officer and John B. Payne, Chief Executive Officer, to vote in their discretion on each proposal and any other matter that may properly come before the Annual Meeting.
Q: | What is a “quorum?” |
A: | The presence of the holders of a majority of the outstanding shares of Common Stock entitled to vote at the Annual Meeting, whether in person or by proxy, constitutes a “quorum” at the Annual Meeting. There must be a quorum for the Annual Meeting to be held. |
Q: | Who can attend the Annual Meeting? |
A: | All shareholders that held shares of our Common Stock on April 20, 2023, the record date, are entitled to attend. |
Q: | Can a shareholder nominate someone to be a director of ZIVO? |
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The Board of Directors has a standing Nominating and Corporate Governance Committee. The Nominating and Corporate Governance Committee, in selecting individuals to be nominated for election to the Board, of Directors, considers, among other things, the following qualifications in nominating an individual: diversity in background, age, experience, qualifications, attributes and skills, independence, integrity, business experience and acumen, education, accounting and financial expertise, reputation, civic and community relationships and industry knowledge and relationships. In nominating an existing director for re-election to the Board, of Directors, the Board of Directors will consider and review an existing director’s attendance, performance and length of service.
Q: Who is soliciting proxies?
A: The enclosed
Q: | Who is soliciting proxies? |
A: | Your proxy is being solicited by the Board |
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How can I access the Company’s proxy materials and annual report on Form 10-K? | |
A. | A: The “Investors” section of |
Q: How can I access the Company’s proxy materials and annual report on Form 10-K?
A: The “Investors” section of the Company’s website, http://www.zivobioscience.com, provides access, free of charge, to SEC reports as soon as reasonably practicable after the Company electronically files such reports with, or furnishes such reports to, the SEC, including proxy materials, Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to these reports. In addition, a copy of the Company’s Annual Report on Form 10-K for the year ended December 31, 2021the Company’s website, http://www.zivobioscience.com, provides access, free of charge, to SEC reports as soon as reasonably practicable after the Company electronically files such reports with, or furnishes such reports to, the SEC, including proxy materials, Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to these reports. In addition, a copy of the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 will be sent to any shareholder, without charge, upon written request sent to the Company, addressed to Keith R. Marchiando, Chief Financial Officer, Zivo Bioscience, Inc., 21 E. Long Lake Road, Suite 100, Bloomfield Hills, MI 48304. Alternatively, the Company’s Annual Report on Form 10-K and the proxy statement may be accessed at: https://www.iproxydirect.com/index.php/zivo.
The references to the website addresses of the Company in this proxy statement are not intended to function as a hyperlink and, except as specified herein, the information contained on such websites is not part of this proxy statement.
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ELECTION OF DIRECTORSCLASS I DIRECTOR
Introduction
John B. Payne (Chief Executive Officer), Christopher D. Maggiore, Nola E. Masterson,Our Board is divided into three classes. Members of each class serve staggered terms. Our Class I director will stand for election at this meeting. The terms of office of directors in Class II and Alison A. Cornell, each existing Directors, have been nominatedIII do not expire until the annual meetings of shareholders to be elected as members of the Board of Directors at the Annual Meeting. If elected, the nominee for Class I will holdheld in 2024 and 2025, respectively, each holding office until the 2023 annual meeting of shareholders, the nominee for Class II will hold office until the 2024 annual meeting of shareholders, and the two nominees for Class III will hold office until the 2025 annual meeting of shareholders, each until their respective successors have been duly elected and qualified. qualified, or until he or she becomes disabled or is otherwise removed.
The following table provides information regarding the directors up for nomination:Director Nominee
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EachOur Board has nominated Christopher D. Maggiore, age 57, for election as a Class I director to serve for a three-year term ending at the 2026 annual meeting, or until his successor is duly elected and qualified, or until he becomes disabled or is otherwise removed. Mr. Maggiore is a current member of the nomineesour Board and has consented to serve asif elected.
Mr. Maggiore will be elected by a director if elected; however, if any nominee is unable or declines to serve, which we do not expect to happen, proxy holders may vote the proxies in accordance with their best judgment for another qualified nominee. If anyplurality of the nominees becomes unavailable to stand for re-electionvotes present in person or represented by proxy at the Annual Meeting and entitled to vote. This means that the individual nominated for election to the Board at the Annual Meeting receiving the highest number of Directors may designate a substitute and proxies not withholding“FOR” votes for the original nominee will be cast forelected. You may either vote “FOR” the substitute.nominee or “WITHHOLD” your vote with respect to the nominee. Shares represented by proxies will be voted “FOR” the election of the Class I nominee, unless the proxy is marked to withhold authority to so vote. Proxies may not be voted for a greater number of persons to the Board of Directors than the number of nominees named herein. If the nominee is unable or unwilling to serve at the time of the Annual Meeting, which we do not expect to happen, the persons named as proxies may vote for a substitute nominee chosen by the present Board, or the Board will have a vacancy, which it may fill at a later date or reduce the size of the Board. We have no reason to believe that the nominee will be unwilling or unable to serve if elected as a director. Additional information regarding the director nominee and directors of the Company is set forth below.
Nominees
Christopher D. Maggiore
Age: 56
Director since 2013
Mr. Maggiore was appointed in August 2013 to serve as a director of the Company. He serves on the Audit Committee and Compensation Committee. Mr. Maggiore is a successful private investor and has been involved in real estate development, building and management of businesses for over 25 years. He currently owns and manages a portfolio of businesses and investments. Mr. Maggiore provides the Board of Directors with experiences as a successful entrepreneur and builder of business organizations.
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Continuing Directors
The following table provides information regarding the directors who are serving for terms that end following the Annual Meeting as of April 28, 2023:
NAME | AGE | TITLE | CLASS | |||
Nola E. Masterson | 76 | Director | Class II | |||
John B. Payne | 75 | Director and Chief Executive Officer | Class III | |||
Alison A. Cornell | 61 | Director | Class III |
Nola E. Masterson
Age: 75
Director since 2014
Ms. Masterson was appointed in September 2014 to serve as a director of the Company. She serves on the Nominating and Corporate Governance Committee as Chair and on the Audit Committee. Since 1982, she has been the chief executive officer of Science Futures, Inc., an investment and advisory firm. Ms. Masterson is currently managing member and general partner of Science Futures LLC, I and II, which are venture capital funds invested in life science funds and companies. Ms. Masterson was a Venture Partner in TVM Capital, a large globalGlobal venture firm. She was a member of the board of directors of Repros Therapeutics Inc. (sold to Allergan plc [NYSE: AGN](NYSE: AGN) in January 2018) and served on the audit committee, nominating committee, and the compensation committee at that company. She iswas an Adjunct Professor in the Management School of the University of San Francisco. Ms. Masterson was a biotechnology analyst on Wall Street, working with Drexel Burnham Lambert and Merrill Lynch, and is a co-founder and CEO of Sequenom, Inc., a genetic analysis company located in San Diego, California which has been sold to LabCorp. Ms. Masterson is the Chair Emeritus of the California Life Science Association Institute, a 501(c)(3) organization, which promotes science education, workforce development and best practices as well as entrepreneurs in the bioeconomy. Ms. Masterson began her business career at Ames Company, a division of Bayer, and spent eight years at Millipore Corporation in sales and sales management and as Vice President of the Biotechnology Division. She received her Master’smaster’s degree in Biological Sciences from George Washington University, and continued Ph.D. work at the University of Florida. Ms. Masterson provides us with the benefit of her extensive experience as an entrepreneur and an analyst on Wall Street, as well as her 40 years of investment advisory expertise and experiences in the life sciences industry.
John B. Payne
Age: 74
Director since 2013
Mr. Payne was appointed to serve as President and Chief Executive Officer of the Company in January 2022, and as a director of the Company in July 2013. Mr. Payne is the Vice Chairman of the Board of National Veterinary Associates, and formerly President and CEO of Compassion-First Pet Hospitals from 2014 through 2020.(from 2014-2020), which he founded in 2014. Compassion-First Pet Hospitals is a family of specialty and emergency veterinary hospitals throughout the United States and is dedicated to changing the veterinary landscape and elevating patient outcomes. With 100+ hospitals across 22 states, Compassion-First has more than 3,000 employees and more than 230 board-certified veterinary specialists across a wide range of medical disciplines. Mr. Payne currently serves as the Chairman of the Board for American Humane and is Chairman of the Board for ZIVO Bioscience. He is the Vice Chairman of the Board of Regents at Ross University School of Medicine and School of Veterinary Medicine. He also served on the board of directors of Nexvet, a bio science company located in Dublin, Ireland until the company was sold to Zoetis in 2018. Prior to creating Compassion-First, Mr. Payne served as a member of the Global Leadership Team for Mars Pet Care. He also served as the President and CEO of Banfield Pet Hospitals and served as the President and General Manager of Bayer Healthcare’s North American Animal Health Division. Mr. Payne provides the Board of Directors with valuable insight and experience in the animal care and pharmaceutical fields.
Alison A. Cornell
Age: 60
Director since 2021
Ms. Cornell was appointed in February 2021 to serve as a director of the Company. She serves on the Audit Committee andas Chair, the Compensation Committee as Chair, and on the Nominating and Corporate Governance Committee. Ms. Cornell served as the Executive Vice President & Chief Financial Officer of Compassion-First Pet Hospitals from July 2017 through 2021. Previously, she served as Executive Vice President & Chief Financial Officer of International Flavors & Fragrances Inc. (NYSE: IFF, Euronext Paris: IFF) from July 2015 through October 2016, and before that, she served multiple roles at Covance, Inc. (NYSE: CVD) from 2004 through July 2015, including Corporate Senior Vice President & Chief Financial Officer. Ms. Cornell provides the Board of Directors with significant accounting,extensive business and financial and global business leadership experience.
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Votes Required to Elect Directors; Board Recommendation
Directors are elected by a plurality of the votes of the shares entitled to vote in the election and present, in person or by proxy, at the Annual Meeting.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE ELECTION OF CHRISTOPHER D. MAGGIORE NOLA E. MASTERSON, JOHN B. PAYNE, AND ALISON A. CORNELL AS DIRECTORSA DIRECTOR OF THE COMPANY.COMPANY.
INFORMATION WITH RESPECT TO THE BOARD OF DIRECTORS
The following is a brief description of the structure and certain functions of our Board of Directors.Board. Each of the current directors is serving until his or her respective successor is duly elected and qualified, subject to earlier resignation. The Board currently consists of four directors, one of whom is an employee director, eachand one of whom has been nominated for election as a director at this Annual Meeting. During 2021,2022, our Board determined that Mr. Maggiore, Ms. Cornell, Ms. Masterson and former director Mr. Rondeau were all independent within the meaning of the listing standards of the Nasdaq Stock Market LLC (“Nasdaq”). Mr. Payne was considered independent until his appointment as Chief Executive Officer on January 7, 2022. Under the rules of Nasdaq, a director will only qualify as an “independent director” if, in the opinion of that company’s board of directors, that person does not have a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. Each director was nominated based on his or her knowledge of the Company, his or her skills, expertise and willingness to serve as a director. The Board usually meets in scheduled meetings either in person, via conference telephone call or other remote means. The Board of Directors held 76 meetings during the fiscal year ended December 31, 2021.2022. Each of the directors attended at least 75% of the scheduled meetings of the Board, of Directors, and applicable committee meetings, if such director served on the committee, during the period. Members of the Board of Directors are strongly encouraged to attend the Company’s annual meeting of shareholders in person. If attendance in person is not possible, members of the Board of Directors are strongly encouraged to attend the Company’s annual meeting of shareholders via telephone or similar communication equipment. Each of the directors attended the annual meeting of shareholders in 2021.2022.
Structure and Operation of the Board
Mr. Payne acts as the Chairman of our Board and Chief Executive Officer. The Board has standing Audit, Compensation and Nominating and Corporate Governance committees. The following is a brief description of each of these committees.
Compensation Committee
The Compensation Committee, which is currently comprised of Ms. Cornell, as Chair, Ms. Masterson and Mr. Maggiore, may approve, depending on the availability of the full Board, of Directors, grants of awards to employees, may determine the terms and conditions provided for in each option grant, and may, as requested by our President and Chief Executive Officer, review and recommend to the Board of Directors the amount of compensation to be paid to our officers. The Compensation Committee generally convenes on an as needed basis. The Compensation Committee met 32 times during 2021.2022. The Board of Directors has determined that each member of the Compensation Committee is independent, as independence is defined under the rules of Nasdaq. Our Compensation Committee charter is available on our website, www.zivobioscience.com, under the “Investors“Investors - Corporate Governance”Governance” tab.
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Nominating and Corporate Governance Committee
The Nominating and Corporate Governance Committee is currently comprised of Ms. Masterson, as Chair, and Ms. Cornell. The Nominating and Corporate Governance Committee is responsible for, among other things, considering potential members of the Board, members, making recommendations to the full Board as to nominees for election to the Board and assessing the effectiveness of the Board. The Nominating and Corporate Governance Committee will consider director candidates recommended by shareholders. Any such candidates will be evaluated on the same basis as other candidates being evaluated by the Nominating and Corporate Governance Committee. Information with respect to such candidates should be sent to Zivo Bioscience, Inc., 21 East Long Lake Road, Ste 100, Bloomfield Hills, MI 48304, Attention: Secretary. The Nominating and Corporate Governance Committee considers the needs for the Board of Directors as a whole when identifying and evaluating nominees and, among other things, considers diversity in background, age, experience, qualifications, attributes and skills in identifying nominees, although it does not have a formal policy regarding the consideration of diversity. EachThe current director nominee was recommended by the Nominating and Corporate Governance Committee. The Nominating & Corporate Governance Committee met 1 timedid not meet in 2021.2022. The Board of Directors has determined that each member of the Nominating and Corporate Governance Committee is independent, as independence is defined under the rules of Nasdaq. Our Nominating and Corporate Governance Committee charter is available on our website, www.zivobioscience.com, under the “Investors“Investors - Corporate Governance”Governance” tab.
Audit Committee
The Audit Committee reviews with management and the Company’s independent public accountants the Company’s financial statements, the accounting principles applied in their preparation, the scope of the audit, any comments made by the independent accountants upon the financial condition of the Company and its accounting controls and procedures and such other matters as the Audit Committee deems appropriate.
The functions of the Audit Committee include:
· | Selecting our independent auditors; |
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· | Reviewing the results and scope of the audit and other services provided by our independent auditors; and |
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· | Reviewing and evaluating our audit and control functions. |
The Audit Committee is currently comprised of Ms. Cornell, as Chair, and Ms. Masterson and Mr. Maggiore. The Board has determined that each of Ms. Cornell, Ms. Masterson, and Mr. Maggiore is “independent’ under Nasdaq independence standards. Additionally, the Board has determined that Ms. Cornell qualifies as an “audit committee financial expert” as that term is defined in rules promulgated by the SEC. The designation of an “audit committee financial expert” does not impose upon such persons any duties, obligations or liabilities that are greater than those generally imposed on each of them as a member of the Audit Committee and the Board, and such designation does not affect the duties, obligations or liabilities of any other member of the Audit Committee or the Board.
The Audit Committee met 5 times in 2021.2022. Our Audit Committee charter is available on our website, www.zivobioscience.com, under the “Investors“Investors - Corporate Governance”Governance” tab.
Audit Committee Report
The information contained in the following report is not considered to be “soliciting material,” “filed” or incorporated by reference in any past or future filing by us under the Securities Exchange Act of 1934, as amended (“Exchange Act”) or the Securities Act of 1933, as amended (“Securities Act”) unless and only to the extent that we specifically incorporate it by reference.
The Audit Committee has reviewed and discussed with our management and BDO USA, LLP (“BDO”) our audited consolidated financial statements as of and for the fiscal year ended December 31, 2021.2022. The Audit Committee has discussed with the independent registered public accounting firm the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board (“PCAOB”) and the SEC.
The Audit Committee has received and reviewed the written disclosures and the letter from BDO required by applicable requirements of the PCAOB regarding the independent accountant’s communications with the audit committee concerning independence, and has discussed with BDO its independence.
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Based on the review and discussions referred to above, the Audit Committee recommended to the Board that the audited financial statements be included in our company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021,2022, for filing with the SEC.
Audit Committee:
Alison A. Cornell
Christopher D. Maggiore
Nola E. Masterson
Risk Oversight
The Board of Directors oversees the Company’s risk management primarily through the following:
· | review and approval of an annual business plan; |
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· | review of a summary of risks and opportunities at meetings of the |
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· | review of business developments, business plan implementation and financial results; |
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· | oversight of internal controls over financial reporting; and |
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· | review of employee compensation and its relationship to our business plans. |
Communication with Shareholders
We have established a process for shareholders to communicate with the Board of Directors.Board. Shareholders wishing to communicate with the Board of Directors of ZIVO can send an email to investors@zivobioscience.com or write or telephone Keith R. Marchiando at the Company’s corporate offices:
Keith R. Marchiando
Zivo Bioscience, Inc.
21 E. Long Lake Road, Suite 100
Bloomfield Hills, MI 48304
Telephone: (248) 452-9866
All such communication must state the type and amount of Company securities held by the shareholder and must clearly state that the communication is intended to be shared with the Board of Directors.Board. Mr. Marchiando will forward all such communications to the members of the Board.
Code of Ethics
We have adopted a code of ethics that applies to the Principal Executive Officer and Principal Financial Officer, or those performing similar functions. A copy of the code of ethics is available on our website, www.zivobioscience.com, under the “Investors“Investors - Corporate Governance”Governance” tab and will be sent to any shareholder, without charge, upon written request sent to 21 East Long Lake Road, Ste 100, Bloomfield Hills, MI 48304, Attention: Secretary. Any amendments to the code of ethics will be posted on our website.
Hedging Policy
The Company, pursuant to the terms of its Insider Trading Policy, prohibits all directors, officers, employees, and certain contractors from engaging in hedging transactions including prepaid variable forwards, equity swaps, collars and exchange funds with respect to the Company’s securities.
11 |
Table of Contents |
Board Diversity Matrix (as of April 28, 2023)
The following matrix is provided in accordance with applicable Nasdaq listing requirements and includes all directors as of April 28, 2023.
|
| Female |
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| Male |
|
| Non-Binary |
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| Did Not Disclose Gender |
| ||||
Part I: Gender Identity |
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| ||||
Directors |
|
| 2 |
|
|
| 2 |
|
|
| - |
|
|
| - |
|
Part II: Demographic Background |
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|
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|
|
|
|
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|
African American or Black |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
Alaskan Native or American Indian |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
Asian |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
Hispanic or Latinx |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
Native Hawaiian or Pacific Islander |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
White |
|
| 2 |
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| 2 |
|
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| - |
|
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| - |
|
Two or More Races or Ethnicities |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
LGBTQ+ |
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|
|
|
|
|
| - |
|
| |||
Did Not Disclose Demographic Background |
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|
|
|
|
|
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| - |
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Board Diversity Matrix (as of July 5, 2022)
The following matrix is provided in accordance with applicable Nasdaq listing requirements and includes all directors as of July 5, 2022.
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| Female |
| Male |
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| Non-Binary |
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| Did Not Disclose Gender |
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| Female |
| Male |
| Non-Binary |
| Did Not Disclose Gender |
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Part I: Gender Identity |
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Directors |
| 2 |
| 2 |
| — |
| — |
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| 2 |
| 2 |
| - |
| - |
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Part II: Demographic Background |
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African American or Black |
| — |
| — |
| — |
| — |
|
| - |
| - |
| - |
| - |
| ||||||||||||||
Alaskan Native or American Indian |
| — |
| — |
| — |
| — |
|
| - |
| - |
| - |
| - |
| ||||||||||||||
Asian |
| — |
| — |
| — |
| — |
|
| - |
| - |
| - |
| - |
| ||||||||||||||
Hispanic or Latinx |
| — |
| — |
| — |
| — |
|
| - |
| - |
| - |
| - |
| ||||||||||||||
Native Hawaiian or Pacific Islander |
| — |
| — |
| — |
| — |
|
| - |
| - |
| - |
| - |
| ||||||||||||||
White |
| 2 |
| — |
| — |
| — |
|
| 2 |
| 2 |
| - |
| - |
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Two or More Races or Ethnicities |
| — |
| — |
| — |
| — |
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| - |
| - |
| - |
| - |
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LGBTQ+ |
|
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| — |
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| - |
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Did Not Disclose Demographic Background |
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| — |
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| - |
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Table of Contents |
Directors and Executive Officers
The following table sets forth the name, age and position of each of our executive officers and directors as of March 31, 2022:April 28, 2023:
Name |
| Age |
| Positions |
| Since |
| Age |
| Positions |
| Since |
John B. Payne |
| 74 |
| President and Chief Executive Officer / Director |
| 2013/2022 |
| 75 |
| President and Chief Executive Officer / Director |
| 2013/2023 |
Keith R. Marchiando |
| 59 |
| Chief Financial Officer |
| 2021 |
| 61 |
| Chief Financial Officer |
| 2021 |
Christopher D. Maggiore |
| 56 |
| Director |
| 2013 |
| 57 |
| Director |
| 2013 |
Nola E. Masterson |
| 75 |
| Director |
| 2014 |
| 76 |
| Director |
| 2014 |
Alison A. Cornell |
| 60 |
| Director |
| 2021 |
| 61 |
| Director |
| 2021 |
Information with respect to Mr. Maggiore, is contained herein under the caption “Proposal No. 1 – Election of Directors – Nominee.” Information regarding Ms. Masterson, Mr. Payne, and Ms. Cornell is contained herein under the caption “Proposal No. 1 - Election of Directors – Continuing Directors.”
Keith R. Marchiando
Chief Financial Officer
Mr. Marchiando was appointed Chief Financial Officer in January 2021. He joined the Company from New US Nonwovens, LLC (“Nonwovens”), a contract manufacturer of personal care and home care products, where he was Chief Financial Officer since August 2019. At Nonwovens, he was responsible for all aspects of the company’s financial activities, including strengthening corporate controls, implementing financial planning and developing the Company’s IT strategy. Prior to Nonwovens, he served as a consultant to Plante & Moran PLLC from January 2017 to August 2019, where he engaged in interim chief financial officer roles which included restructuring and transitioning companies in ownership changes, supporting M&A activities and enhancing financial functions and processes. Prior to this position, he served as CFO of Perceptron, Inc. beginning in February 2014, and then CFO of AP Exhaust LLC beginning in May 2015. Mr. Marchiando earned a Master’s Degree in Business Administration (MBA) in corporate finance from Carnegie Mellon University’s Tepper School of Management and an undergraduate degree in finance and economics at Lehigh University.
Information with respect to Mr. Maggiore, Ms. Masterson, Mr. Payne, and Ms. Cornell is contained herein under the caption “Proposal No. 1 – Election of Directors – Nominees.”
Each of the officers will serve as such until his or her respective successor is appointed and qualified, or until his or her earlier resignation or removal. AllOur Board is divided into three classes. Members of each class serve staggered terms. Our Class I director will stand for election at this meeting. The terms of office of directors hold their positions for one year orin Class II and III do not expire until the annual meetings of shareholders to be held in 2024 and 2025, respectively, each holding office until their respective successors arehave been duly elected and qualified, subject to their earlier resignation or removal.until he or she becomes disabled or is otherwise removed.
Family Relationships
There are no familial relationships between any of our officers and directors.
Procedures for Shareholders to Nominate Directors
Our bylaws provide a procedure for shareholders to nominate directors. Nominations for the election of directors may be made by the Board of Directors or by any shareholder entitled to vote for the election of directors. Subject to compliance with applicable United States securities laws and the rules and regulations of the SEC, nominations by shareholders may be made by notice in writing to the Secretary of the Company not less than 14 days nor more than 60 days prior to any meeting of the shareholders called for the election of directors; provided, however, that if less than 21 written days’ notice of the meeting is given to shareholders, such notice of nomination by a shareholder shall be given to the Secretary of the Company not later than the close of the fifth day following the day on which notice of the meeting was mailed to shareholders.
13 |
Table of Contents |
Delinquent Section 16(a) Reports
Section 16 of the Exchange Act requires our directors, executive officers and any persons who own more than 10% of our common stock (“insiders”) to file initial reports of ownership and reports of changes in ownership with the SEC. Based solely on our review of the copies of such forms filed with the SEC and written representations from our directors and executive officers, we believe that during fiscal 2021 each of our insiders timely complied with applicable reporting requirements for transactions in our equity securities, except for the following: Ms. Cornell filed a late Form 3, and each of Ms. Cornell, Mr. Maggiore, Ms. Masterson, and Mr. Payne filed a late Form 4 to report one transaction, of a Company grant of a stock option.and Mr. Maggiore filed three late Form 4s, one to report one transaction, one to report two transactions, and one to report three transactions.
14 |
Table of Contents |
Summary Compensation Table for Fiscal Years 20212022 and 20202021
The following table summarizes the compensation paid to our named executive officers during or with respect to fiscal 20212022 and 20202021 for services rendered to us in all capacities.
Name and Principal Position |
| Year |
| Salary ($) |
|
| Bonus ($) |
|
| Option Awards ($) (1) |
|
| Non-Equity Incentive Plan Compensation ($) |
|
| Total ($) |
|
| Year |
| Salary ($) |
|
| Bonus ($) |
|
| Option Awards ($) (1) |
|
| Non-Equity Incentive Plan Compensation ($) |
|
| Total ($) |
| ||||||||||
Andrew A. Dahl |
| 2021 |
| $ | 454,000 | (2) |
| - |
| 1,414,636 |
| - |
| $ | 1,882,636 |
| ||||||||||||||||||||||||||||
Former Chief Executive Officer and Director |
| 2020 |
| $ | 440,000 | (2) |
| - |
| - |
| - |
| $ | 440,000 |
| ||||||||||||||||||||||||||||
John B. Payne |
| 2022 |
| 397,754 |
| - |
| 449,999 |
| 175,000 |
| 1,022,753 |
| |||||||||||||||||||||||||||||||
Chief Executive Officer and Director(2) |
| 2021 |
| 12,055 |
| - |
| 677,252 |
| - |
| 689,307 |
| |||||||||||||||||||||||||||||||
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|
|
| ||||||||||||||||||
Keith Marchiando |
| 2021 |
| 291,667 |
| 72,916 |
| 2,875,163 |
| 50,000 |
| $ | 3,309,746 |
|
| 2022 |
| 312,000 |
| - |
| 211,768 |
| 50,505 |
| 574,273 |
| |||||||||||||||||
Chief Financial Officer |
| 2020 |
| 26,400 | (3) |
| - |
| - |
| - |
| $ | 26,400 |
|
| 2021 |
| 291,667 |
| 72,916 |
| 2,795,959 |
| 50,000 |
| 3,210,542 |
| ||||||||||||||||
|
|
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| ||||||||||||||||||
Philip M. Rice II |
| 2021 |
| 280,000 | (4) |
| - |
| - |
| 50,000 |
| $ | 330,000 |
| |||||||||||||||||||||||||||||
Former Chief Financial Officer and Director |
| 2020 |
| $ | 304,852 |
| - |
| 297,248 |
| - |
| $ | 602,100 |
| |||||||||||||||||||||||||||||
Andrew A. Dahl |
| 2022 |
| 4,368 |
| - |
| - |
| - |
| 4,368 |
| |||||||||||||||||||||||||||||||
Former Chief Executive Officer and Director(4) |
| 2021 |
| 454,000 |
| - |
| 1,301,598 |
| - |
| 1,882,636 |
|
(1) | The amounts reported reflect the grant date fair value (excluding the effect of estimated forfeitures). The grant date fair value of each warrant is calculated using the Black Scholes option-pricing model computed in accordance with FASB ASC Topic 718 and does not correspond to the actual amount that will be realized upon exercise by the named executive officers. For valuation assumptions used in determining the grant date fair value of stock options using the Black Scholes pricing model, see Note |
|
|
(2) |
|
|
|
(3) | Includes payments made to Mr. Marchiando pursuant to a consulting arrangement, prior to his appointment as Chief Financial Officer of the Company. |
|
|
(4) |
|
Executive Compensation Programs
In 2021,2022, the Compensation Committee reviewed financial information and other performance metrics relative to the historical compensation of executive management and comparative information prepared internally. The Compensation Committee also reviewed management’s recommendations for compensation levels of all of the Company’s senior executive officers and considered these recommendations with reference to relative compensation levels of like-size institutions. The totality of the information reviewed by the Compensation Committee was considered when establishing current executive salary levels, and similar analysis is expected to be considered when reviewing and establishing future salaries and long term incentives. The Company’s compensation policies and practices are designed to ensure that they do not foster risk taking above the level of risk associated with the Company’s business model. For this purpose, the Compensation Committee generally considers the Company’s financial performance, comparing that performance to the performance metrics included in the Company’s strategic plan. The Compensation Committee also generally evaluates management’s compensation in light of other specific risk parameters. Based on this assessment, the Compensation Committee believes that the Company has a balanced pay and performance program that does not promote excessive risk taking.
15 |
Table of Contents |
The Company’s compensation programs are aimed at enabling it to attract and retain the best possible executive talent and rewarding those executives commensurate with their ability and performance. The Company’s compensation programs consist primarily of base salary and bonus.
Base Salary. Base salaries for executive officers are determined in the same manner as those other salaried employees. Salary guidelines are established by comparing the responsibilities of the individual’s position in relation to similar positions in other nutraceutical companies of similar size. Individual salaries were determined this year by considering respective levels of responsibility, position and industry information.
Bonuses.In 2021, each of2022, the named executive officers had specific metricsBoard established weighted performance targets for fiscal 2022 that it would consider in approving bonus payments for fiscal 2022. These targets included in their respective employment agreements that, if met, would entitle themvarious corporate objectives related to bonus payments. As a result of the Company’s uplisting offering in June 2021 in which the Company received gross proceeds of $13.8 million, each of Mr. Marchiando and Mr. Rice received $50,000 in bonus payments.
Additionally, inregulatory milestones. In March 2022,2023, the Compensation Committee determined to provide discretionary bonusesthat based on 2021Company and individual performance to its employees, including a bonus totargets, Mr. Payne should be awarded $175,000 and Mr. Marchiando of $72,916.should be awarded $50,505.
Equity Grants. In January 2021, in connection with his appointment as Chief Financial Officer ofOn August 29, 2022, the Company,Compensation Committee awarded Mr. Marchiando received a grant of stock optionoptions under the 2019 Omnibus Long-Term Incentive2021 Plan (the “2019 Plan”) exercisable for 162,50062,000 shares of Common Stock, at $11.20$3.94 per share. 37,50015,500 shares underlying the stock option vested immediately, with 15,62515,500 vesting every six months thereafter.
In October 2021,on the Company adoptedfirst, second and third anniversaries of the Zivo Bioscience, Inc. 2021 Equity Incentive Plandate above. On December 16, 2022, the Compensation Committee awarded Mr. Payne 191,016 shares of Common Stock (the “2021 Plan”),equivalent of approximately $450,000 worth; $400,000 owed to Mr. Payne pursuant to the Payne Contract (as described below) and the Board granted$50,000 awarded to Mr. Payne in recognition of his forgoing any cost of living adjustment for 2023) of fully vested stock options under the 2021 Plan, to certain directors and officers, including stock option grants to Mr. Marchiando and Mr. Dahl exercisable for 288,000 and 376,000 shares, respectively, at $5.50an exercise price of $2.86 per share. The options vest as follows: 25% upon acceptance of the grant, and 25% on each of the next three calendar anniversaries of the grant.
Employment Agreements
As of December 31, 2021,2022, we had an employment agreement in place with our formercurrent President & Chief Executive Officer and our current Chief Financial Officer, and a transition agreement with our former Chief Financial Officer.
Mr. Dahl’sPayne’s Employment Agreement:
TheOn February 15, 2022, the Company entered into a written agreement concerning Mr. Payne’s employment (the “Payne Contract”). Under the terms of the Payne Contract, Mr. Payne will serve as the Company’s formerPresident and Chief Executive Officer Andrew Dahl, served as Chief Executive Officer under the terms ofon an amended and restated employment agreement dated November 15, 2019 (“Dahl Agreement”) that superseded all prior employment agreements and understandings.at will basis. Mr. Dahl receivedPayne will receive an annual base salary, commencing on June 1, 2019,February 15, 2022, of $440,000 (“$400,000. Mr. Payne is eligible for an annual performance bonus of no less than fifty percent (50%) but no more than one hundred twenty-five percent (125%) of Mr. Payne’s effective salary for the applicable bonus year.
If Mr. Payne’s employment is terminated for any reason by either the Company or Mr. Payne, Mr. Payne shall be entitled to receive the following: any accrued but unpaid Base Salary”),Salary through the date of termination; reimbursement for unreimbursed expenses properly incurred by Mr. Payne prior to the date of termination; and such employee benefits, if any, to which $7,500 per month was deferred until eitherMr. Payne may be entitled under the Company’s employee benefit plans as of the following events occur: (i) within five (5) years afterdate of termination.
On December 22, 2022, the effective date,Board approved an amendment to the Payne Contract (the “Payne Amendment”) modifying the terms of Mr. Payne’s Long Term Incentive Compensation (as defined in the Payne Amendment). Under the Payne Amendment, the Company enters into a term sheet to receive at least $25,000,000 in equity or other formshall award Mr. Payne that number of investment or debt on terms satisfactorystock options pursuant to the board2021 Plan with an approximate value of directors$400,000 on the date of the Company including funding at closing on suchgrant, determined in accordance with, and subject to the terms and conditions of, at least $10 million; or (ii) within 12 months after the effective date that2021 Plan and the Company receives revenue of at least $10 million.applicable award agreement.
Mr. Marchiando’s Employment Agreement:
On January 1, 2021, the Company entered into an employment letter with Mr. Marchiando (“Marchiando(the “Marchiando Agreement”). Under the terms of the Marchiando Agreement, Mr. Marchiando will serve as Chief Financial Officer of the Company for one year, with successive automatic renewals for one year terms, unless either party terminates the Marchiando Agreement on at least sixty days’ notice prior to the expiration of the then current term of the Marchiando Agreement. Mr. Marchiando will receive an annual base salary, commencing on January 1, 2021, of $280,000 (“Marchiando Base Salary”). The Marchiando Base Salary shall increasehas increased to $300,000 if within one (1) year after the effective date, pursuant to the Company entersCompany’s entering into a term sheet and receives the related financing to receive at least $10,000,000 in equity or other form of investment or debt (“Third Party Financing”) on terms satisfactory to the board of directors of the Company.Company’s Board. Mr. Marchiando shallhas also receivereceived $25,000 upon the closing, prior to December 31, 2021, of a Third Party Financing that raisesraised at least $10,000,000. If,Mr. Marchiando has received the maximum bonus of $50,000, upon the closing prior to December 31, 2021 of a Third Party Financing that raisesraised over $13,000,000 for the Company, Mr. Marchiando shall receive a maximum bonus of $50,000, as long as Mr. Marchiando is employed at the time of closing.Company.
16 |
Table of Contents |
If Mr. Marchiando’s employment is terminated by the Company due to death or Disability, or without Cause, or if Mr. Machiando resigns for Good Reason (each as defined in the Marchiando Agreement) or if either party does not renew the employment term, Mr. Marchiando will be entitled to receive the following severance benefits: a continuation of the Marchiando Base Salary for one year, payment of an amount equal to Mr. Marchiando’s target bonus in the year of termination and a fully-vested, nonqualified stock option to purchase 12,500 shares of Common Stock. Additionally, all outstanding and contingent nonqualified options owned directly or beneficially by Mr. Marchiando shall be converted immediately into vested options, with terms as specified in the applicable award agreement.
The Marchiando Agreement provides that if a Change of Control (as defined in the Marchiando Agreement) occurs and Mr. Marchiando resigns for Good Reason (as defined in the Marchiando Agreement) or Mr. Marchiando’s employment is terminated without Cause (as defined in the Marchiando Agreement) during the 24-month period following the Change of Control or during the sixty (60) days immediately preceding the date of a Change of Control, 100% of Mr. Marchiando’s unvested options will be fully vested and the restrictions on his restricted shares will lapse. The Marchiando Agreement also provides for severance payments of, amongst other things, a lump sum payment of 200% of the Marchiando Base Salary, 200% of Mr. Marchiando’s Performance Bonus (as defined in the Marchiando Agreement) earned in the last 12 months preceding the Change of Control and payment of 24 months of the Marchiando Base Salary in such event.
Mr. Rice’sDahl’s Employment Arrangement:Agreement:
On MarchMr. Dahl served as our Chief Executive Officer until January 4, 2020,2022. He previously served under the Company entered intoterms of an amended and restated employment letter with Philip Rice, Chief Financial Officer of the Companyagreement dated November 15, 2019 (“RiceDahl Agreement”) that superseded all prior employment understandingsagreements and agreements. Under the terms of the Rice Agreement,understandings. Mr. Rice will serve as Chief Financial Officer of the Company for one year, with successive automatic renewals for one year terms, unless either party terminates the Rice Agreement on at least sixty days’ notice prior to the expiration of the then current term of the Rice Agreement. Mr. Rice will receiveDahl received an annual base salary, commencing on JanuaryJune 1, 2020,2019, of $280,000$440,000 (“Rice Base Salary”). The Rice Base Salary shall increase to $300,000, when, of which $7,500 per month was deferred until either of the following event occurs:events occur: (i) within one (1) yearfive (5) years after the effective date, the Company enters into a term sheet and receives the related financing to receive at least $15,000,000$25,000,000 in equity or other form of investment or debt (“Third Party Financing”) on terms satisfactory to the board of directors of the Company.
On January 7, 2021, the Company and Rice entered into a written agreement concerning Rice’s departure from the Company (the “Separation Agreement”). Pursuant to the Separation Agreement, Mr. Rice resigned from his position as Chief Financial OfficerBoard of the Company including funding at closing on such terms of at least $10 million; or (ii) within 12 months after the effective on January 1, 2021, and following a transition period, agreed to resign from all positions as an officer or employee ofdate that the Company effective asreceives revenue of at least $10 million. The Dahl Agreement was terminated in January 31, 2021 (the “Separation Date”). The Separation Agreement provides that Mr. Rice will receive certain benefits that he is entitled to receive under his employment agreement dated March 4, 2020. Accordingly, under the Separation Agreement, subject to non-revocation of a general release and waiver of claims in favor of the Company, the Company has agreed to pay Mr. Rice his base salary of $280,000 for one year and three weeks, beginning on the Separation Date, and grant him an option to purchase 12,500 shares of Common Stock.2022.
Outstanding Equity Awards at Fiscal Year-End 20212022
The following table provides information on the outstanding equity awards held by our named executive officers as of December 31, 2021.2022.
|
| Option Awards |
| Option Awards | ||||||||||||||||||||||||||||||||
Name |
| Grant Date |
| Number of securities underlying unexercised options exercisable |
|
| Number of securities underlying unexercised options unexercisable |
| Equity incentive plan awards: Number of securities underlying unexercised unearned options |
|
| Option / Warrant Exercise Price ($) |
|
| Option / Warrant Expiration Date |
| Grant Date |
| Number of securities underlying unexercised options exercisable |
| Number of securities underlying unexercised options unexercisable |
| Option / Warrant Exercise Price ($) |
| Option / Warrant Expiration Date | |||||||||||
Andrew A. Dahl |
| 11/15/2019 |
| 350,000 |
|
|
|
|
| $ | 8.00 |
| 11/15/2029 | |||||||||||||||||||||||
|
| 12/6/2019 |
| 12,500 |
|
|
|
|
| $ | 11.20 |
| 12/6/2029 | |||||||||||||||||||||||
John B. Payne |
| 10/12/2021 |
| 11,416 |
| - |
| 4.48 |
| 10/11/2031 | ||||||||||||||||||||||||||
|
| 11/8/2017 |
| 125,000 | * |
|
|
|
|
| $ | 6.40 |
| 11/8/2022 |
| 10/21/2021 |
| 192,000 |
| - |
| 5.50 |
| 10/20/2031 | ||||||||||||
|
| 11/15/2019 |
|
|
| 75,000 |
|
| $ | 8.00 |
| 11/15/2029 |
| 12/16/2022 |
| 191,016 |
| - |
| 2.86 |
| 12/15/2031 | ||||||||||||||
|
| 10/25/2021 |
| 94,000 |
| 282,000 |
|
| $ | 5.50 |
| 10/20/2031 |
|
|
|
|
|
|
|
|
|
| ||||||||||||||
Keith R. Marchiando |
| 1/1/2021 |
| 53,125 |
| 109,375 |
|
| $ | 11.20 |
| 12/31/2030 |
| 1/1/2021 | (1) |
| 84,375 |
| 78,125 |
| 11.20 |
| 12/31/2030 | |||||||||||||
|
| 10/25/2021 |
| 72,000 |
| 216,000 |
|
| $ | 5.50 |
| 10/20/2031 |
| 10/25/2021 | (2) |
| 144,000 |
| 144,000 |
| 5.50 |
| 10/20/2031 | |||||||||||||
Philip M. Rice II |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||
|
| 10/28/2019 |
| 625 | * |
|
|
|
|
| $ | 6.40 |
| 10/28/2024 |
| 8/29/2022 | (2) |
| 15,500 |
| 46,500 |
| 3.94 |
| 8/28/2032 | |||||||||||
|
| 9/26/2019 |
| 6,250 | * |
|
|
|
|
| $ | 6.40 |
| 9/26/2024 | ||||||||||||||||||||||
|
| 8/7/2019 |
| 625 | * |
|
|
|
|
| $ | 8.00 |
| 8/7/2024 | ||||||||||||||||||||||
|
| 5/13/2019 |
| 625 | * |
|
|
|
|
| $ | 8.00 |
| 5/13/2024 | ||||||||||||||||||||||
|
| 2/13/2019 |
| 625 | * |
|
|
|
|
| $ | 8.00 |
| 2/13/2024 | ||||||||||||||||||||||
|
| 11/14/2018 |
| 625 | * |
|
|
|
|
| $ | 11.20 |
| 11/14/2023 | ||||||||||||||||||||||
|
| 9/28/2018 |
| 6,250 | * |
|
|
|
|
| $ | 11.20 |
| 9/28/2023 | ||||||||||||||||||||||
|
| 8/14/2018 |
| 625 | * |
|
|
|
|
| $ | 9.60 |
| 8/14/2023 | ||||||||||||||||||||||
|
| 4/23/2018 |
| 625 | * |
|
|
|
|
| $ | 8.00 |
| 4/23/2023 | ||||||||||||||||||||||
|
| 2/21/2018 |
| 625 | * |
|
|
|
|
| $ | 8.00 |
| 2/21/2023 | ||||||||||||||||||||||
|
| 11/8/2017 |
| 75,000 | * |
|
|
|
|
| $ | 6.40 |
| 11/8/2022 | ||||||||||||||||||||||
|
| 10/19/2017 |
| 625 | * |
|
|
|
|
| $ | 7.20 |
| 10/19/2022 | ||||||||||||||||||||||
|
| 9/11/2017 |
| 6,250 | * |
|
|
|
|
| $ | 5.60 |
| 9/11/2022 | ||||||||||||||||||||||
|
| 8/11/2017 |
| 625 | * |
|
|
|
|
| $ | 4.80 |
| 8/11/2022 | ||||||||||||||||||||||
|
| 5/12/2017 |
| 625 | * |
|
|
|
|
| $ | 7.20 |
| 5/12/2022 | ||||||||||||||||||||||
|
| 3/31/2017 |
| 625 | * |
|
|
|
|
| $ | 6.40 |
| 3/21/2022 |
(1) | 37,500 shares underlying the stock option vested immediately, with 15,625 vesting every six months thereafter. |
(2) | 25% vested upon acceptance of the grant, and 25% on each of the next three calendar anniversaries of the grant. |
*Includes compensatory warrants not issued pursuant to an equity compensation plan, prior to the Company’s listing on the Nasdaq Capital Market.
17 |
Table of Contents |
Non-Employee Director Compensation
In October 2021, our Board of Directors adopted a non-employee director cash and equity compensation plan. Under this policy, the Company agreed to pay each of its non-employee directors a cash stipend for service on its board of directors and, if applicable, on the Audit Committee, Compensation Committee and Nominating and Corporate Governance committee. Each of the Company’s non-employee directors receives an additional stipend for service as the chairperson of the compensation committee, nominating and corporate governance committee or audit committee or service as the non-executive chairperson. The stipends payable to each non-employee director for service on the Company’s Board of Directors are as follows:
|
| Member Annual Service Stipend(1) |
|
| Chairperson Additional Annual Service Stipend |
|
| Member Annual Service Stipend(1) |
|
| Chairperson Additional Annual Service Stipend |
| ||||
Board of directors |
| $ | 40,000 |
| $ | 5,000 |
| |||||||||
Board of Directors |
| $ | 40,000 |
| $ | 5,000 |
| |||||||||
Audit committee |
| 4,000 |
| 2,000 |
|
| 4,000 |
| 2,000 |
| ||||||
Compensation committee |
| 4,000 |
| 2,000 |
|
| 4,000 |
| 2,000 |
| ||||||
Nominating and corporate governance committee |
| 4,000 |
| 2,000 |
|
| 4,000 |
| 2,000 |
|
(1) |
Each non-employee director is automatically granted a stock option to purchase shares of Common Stock with an approximate target value of $50,000 at the close of business on the date of each annual meeting. Such stock options will vest in four equal quarterly installments.
Non-Employee Director Compensation in
The following table sets forth summary information concerning the compensation awarded to, paid to, or earned by the non-employee members of our board of directors for the fiscal year ended December 31,
We are providing the following information about the relationship between executive compensation actually paid (CAP) and certain financial performance of the Company as required by SEC rules. Please see “Compensation Discussion and Analysis” for discussion of our compensation philosophy and how the Compensation and Talent Committee structures our compensation program to support our business objectives and align with our financial performance.
_______________________________________________
Analysis of Information Presented in the Pay Versus Performance Table The Company is providing the following descriptions of the relationships between information presented in the Pay versus Performance table, including CAP, as required by Item 402(v) of Regulation S-K. The Compensation and Talent Committee utilizes several performance measures to align executive compensation with Company performance, and only some of those Company measures are presented in the Pay versus Performance table above and the graphs below.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED SHAREHOLDER MATTERS
The following table sets forth certain information regarding each person who is known to us to beneficially own more than 5% of our issued and outstanding shares of Common Stock, and the number of shares of our Common Stock beneficially owned by each of our directors and named executive officers, and all officers and directors as a group. All percentages are based on 9,419,660 shares of Common Stock issued and outstanding as of
Security Ownership of Certain Beneficial Owners:
Security Ownership of
* Less than 1%
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Policies and Procedures for Related Party Transactions
We have adopted a formal policy that our executive officers, directors, holders of more than 5% of any class of our voting securities, and any member of the immediate family of and any entity affiliated with any of the foregoing persons, are not permitted to enter into a related party transaction with us without the prior consent of our Audit Committee, or other independent members of our
Related Party Transactions
We describe below transactions and series of similar transactions, since January 1,
Other than as described below, there has not been, nor is there any currently proposed, transactions or series of similar transactions to which we have been or will be a party.
HEP Investments
11% Convertible Notes
On December 2, 2011, the Company and HEP Investments entered into the following documents, effective as of December 1, 2011, as amended through May 16, 2018: (i) a Loan Agreement under which the HEP Investments agreed to advance up to $20,000,000 to the Company, subject to certain conditions, (ii) an 11% Convertible Secured Promissory Note in the principal amount of $20,000,000 (“Convertible Note”) (of which a total of $18,470,640 was funded, with a total of $14,380,298 converted into 1,796,287 shares of common stock, leaving a balance advanced of $4,090,342 as of December 31, 2020), (iii) a Security Agreement, under which the Company granted HEP Investments a security interest in all of its assets, (iv) warrants issued to HEP Investments to purchase 20,833 shares of common stock at an exercise price of $9.60 per share (including a cashless exercise provision) which expired September 30, 2016, (v) a Registration Rights Agreement with respect to all the shares of common stock issuable to HEP Investments in connection with the Loan Agreement, in each case subject to completion of funding of the full $20,000,000 called for by the Loan Agreement, and (vi) an Intellectual Property security agreement under which the Company and its subsidiaries granted HEP Investments a security interest in all their respective intellectual properties, including patents, in order to secure their respective obligations to HEP Investments under the Convertible Note and related documents. The Convertible Note was originally convertible into the Company’s common stock at $8.00 per share. In addition, the Company’s subsidiaries guaranteed the Company’s obligations under the Convertible Note. On March 31, 2021, HEP Investments entered into a “Debt Extension and Conversion Agreement” with the Company providing that the Convertible Notes, including principal and accrued interest, would automatically convert into shares of common stock upon consummation of an underwritten public offering of the Company’s common
On June 2, 2021, in accordance with the Debt Extension and Conversion Agreement, all of the outstanding debt and accrued interest for the Convertible Notes was automatically converted into common stock of the Company. The principal amount of $4,090,342 and the accrued interest to June 2, 2021, of $2,161,845 totaled $6,252,187; this total amount was converted into 781,524 shares of common stock (calculated at $8.00 per share). As of December 31, 2021, the Company has no further remaining financial obligations to the HEP Investments under the terms of the Loan Agreement, the Convertible Note or the Registration Rights Agreement. Additionally, as of the conversion of the total outstanding principal and accrued interest balance, HEP Investments no longer retains a security interest in the Company’s intellectual property or other assets.
In January 2019, and in connection with the Convertible Note, HEP Investments entered into a life insurance policy for Andrew Dahl, our former Chief Executive Officer. On February 23, 2021, the Company and HEP Investments entered into a Letter Agreement in which the Company agreed to pay certain premiums of $2,565 per month under the life insurance policy while payments under the Convertible Note remained outstanding. Upon conversion of the Convertible Notes on June 2, 2021, the Company immediately stopped paying the premiums under the life insurance policy.
License Co-Development Participation Agreement
Between August 2020 and May 2021, HEP Investments invested $310,000 into License Co-Development Participation Agreements (including the conversion of $100,000 of a working capital loan), and in connection with such arrangement, received warrants exercisable for (i) 8,438 shares of
Strome
Convertible Notes
On June 6, 2018, HEP Investments and Strome Mezzanine Fund LP and Strome Alpha Fund LP (“Strome”), a holder of over 5% of our Common Stock, entered into the First Amended and Restated Participation Agreement (amending the June 17, 2017 agreement) whereby Strome agreed to fund a total of $691,187 (“the committed funding”), through HEP Investment’s 11% convertible note (at a conversion price of $8.00). Additionally, in June 2018, the Company issued to Strome a warrant exercisable for 312,500 shares of Common Stock at an exercise price of $8.00 for a term of 5 years, in exchange for $2 million.
On June 2, 2021, in accordance with the Debt Extension and Conversion Agreement between Strome and the Company, all of the $2,191,187 in principal outstanding debt and $419,096 in the convertible notes was automatically converted into 326,286 shares of
Other
On June 2, 2021, the Company completed its planned public offering of common stock shares and common stock On April 3, 2023, Zivo Bioscience, Inc. the Company entered into a Subscription Agreement (the “Subscription Agreement”) with the Company’s Chief Executive Officer (the “Subscriber”), pursuant to which the Company, in a private placement (the “Private Placement”), agreed to issue and sell to the Subscriber a 10% promissory note with a principal amount of $1 million (the “Note”) and a warrant (the “Warrant”) to purchase 390,000 shares of the Company’s common stock, par value $0.001 per share (“Common Stock”) at an exercise price of $2.91.
The Note bears interest at a fixed rate of 10% per annum and requires us to repay the principal and accrued and unpaid interest thereon on October 2, 2023 (the “Maturity Date”), with an option to extend the Maturity Date an additional six months. There is no penalty on prepayment of the Note. The Warrants is exercisable commencing on the date of issuance and expires on the three year anniversary of the issuance date. The exercise price and number of the shares of our common stock issuable upon exercising the Warrants will be subject to adjustment in the event of any stock dividends and splits, reverse stock split, recapitalization, reorganization or similar transaction, as described therein. Bridge Loan On April 3, 2023, the Company entered into a Subscription Agreement with John Payne, the Company’s Chief Executive Officer (the “Subscriber”), pursuant to which the Company, in a private placement, agreed to issue and sell to the Subscriber a 10% promissory note with a principal amount of $1 million (the “Note”) and a warrant (the “Warrant”) to purchase 390,000 shares of the Company’s common stock, par value $0.001 per share (“Common Stock”) at an exercise price of $2.91. The Note bears interest at a fixed rate of 10% per annum and requires us to repay the principal and accrued and unpaid interest thereon on October 2, 2023 (the “Maturity Date”), with an option to extend the Maturity Date an additional six months. There is no penalty on prepayment of the Note. The Warrant is exercisable commencing on the date of issuance and expires on the three year anniversary of the issuance date. The exercise price and number of the shares of our common stock issuable upon exercising the Warrants will be subject to adjustment in the event of any stock dividends and splits, reverse stock split, recapitalization, reorganization or similar transaction, as described therein.
PROPOSAL NO. 2
The Audit Committee has appointed BDO as the independent registered public accounting firm to audit the
At the Annual Meeting, the shareholders are being asked to ratify the appointment of BDO as our independent registered public accounting firm for the fiscal year ending December 31,
Audit Services and Fees
Change in Independent Registered Public Accounting Firm
On
BDO, acting as our independent auditors, has reported on our December 31,
Prior to the Audit Committee’s formation in 2021, it was the Board’s policy and practice to review and approve in advance all services, audit and non-audit, to be rendered by the Company’s independent auditors. The Board does not delegate this responsibility to Company management.
The following table shows the fees for professional services rendered to us by BDO
Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Registered Public Accounting Firm
Our Audit Committee generally pre-approves all audit and permitted non-audit and tax services provided by the independent registered public accounting firm. Pre-approval is detailed as to the particular service or category of services and is generally subject to a specific budget. The independent registered public accounting firm and management are required to periodically report to the Audit Committee regarding the extent of services provided by the independent registered public accounting firm in accordance with this pre-approval, and the fees for the services performed to date. Our Audit Committee may also pre-approve particular services on a case-by-case basis. During 2021, prior to the creation of our Audit Committee, our Board
OUR BOARD
PROPOSAL NO. 3
Our Board
Our named executive officer compensation program is designed to attract, motivate, and retain our named executive officers, who are critical to our success, and ensure alignment of such persons with shareholders. Under this program, our named executive officers are rewarded for their service to the Company and the realization of increased shareholder value. We believe our executive officer compensation programs also are structured appropriately to support our Company and business objectives and to conserve our scarce cash resources.
Please read the “Executive Compensation - Summary Compensation Table”, for additional details about our named executive officer compensation program.
In a non-binding advisory vote on the frequency of the say-on-pay proposal held at our 2020 annual meeting of shareholders, a majority of shareholders voted in favor of holding say-on-pay votes annually. In light of this result and other factors, the Board determined that the Company would hold advisory say-on-pay votes on an annual basis until the next required advisory vote on such frequency, which must be held no later than
We are asking our shareholders to indicate their support for our named executive officer compensation as described in this proxy statement. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our named executive officers and the philosophy, policies and practices described in this proxy statement. Accordingly, we will ask our shareholders to vote “FOR” the following resolution at the Annual Meeting:
“RESOLVED, that the Company’s shareholders approve, on an advisory basis, the compensation of the named executive officers, as disclosed in the Company’s Proxy Statement for the
The say-on-pay vote is advisory, and therefore not binding on the Company or our Board. We value the opinions of our shareholders and to the extent there is any significant vote against the named executive officer compensation as disclosed in this proxy statement, we will consider our shareholders’ concerns and the Board will evaluate whether any actions are necessary to address those concerns.
Vote Required
The affirmative vote of a majority of the votes cast at the annual meeting will be necessary to approve the compensation of our named executive officers. Abstentions and broker non-votes will have no effect on the outcome of the vote.
Householding
The SEC’s rules permit us to deliver a single Annual Report on Form 10-K and proxy materials to one address shared by two or more of our shareholders. This delivery method is referred to as “householding” and can result in significant cost savings to us. To take advantage of this opportunity, we have delivered only one Annual Report on Form 10-K and proxy materials to multiple shareholders who share an address, unless we received contrary instructions from the impacted shareholders prior to the mailing date. We agree to deliver promptly, upon written or oral request, a separate copy of the Annual Report on Form 10-K and proxy materials, if applicable, to any shareholder at the shared address to which a single copy of these documents was delivered. If you prefer to receive separate copies of the Annual Report on Form 10-K and proxy materials now or in the future, contact in writing: Issuer Direct Corporation, 1981 Murray Holladay Road, Suite 100, SLC UT, 84117 (www.issuerdirect.com). Any shareholders who share the same address and currently receive multiple copies of our Annual Report on Form 10-K and other proxy materials who wish to receive only one copy in the future can contact their bank, broker, or other holder of record to request information about “householding” or Issuer Direct Corporation at the address or telephone number listed above.
Shareholder Proposals
Deadline for Submission of Shareholder Proposals and Recommendations for Director
Shareholder proposals for inclusion in our proxy materials for the
Regarding proposals that shareholders otherwise desire to introduce at our annual meeting in
The notice should set forth: (a) for each nominee (i) information as would be required to be included in a proxy statement filed pursuant to the proxy rules of the SEC, and (ii) written consent of the nominee to be named in the proxy statement and to serve as director if so elected; (b) a brief description of any proposed business including (i) the text of such proposal and any accompanying resolutions, (ii) the reasons for conducting such business at the meeting, (iii) any material interest held by the proposing shareholder or any beneficial owner on whose behalf the proposal is made; and (c) proposing shareholder and/or beneficial owner information including, (i) name and address, (ii) the class and number of shares of capital stock held, (iii) a representation that they are the holder of record, are entitled to vote, and intend to appear in person or by proxy and propose such business or nomination, and (iv) a representation of intention to either deliver proxy statements to holders of the necessary percentage of shares or to solicit proxies in support of the proposal. The shareholder can alternatively satisfy the notice requirement by submitting proposals in compliance with SEC requirements and inclusion of such proposal within a proxy statement prepared by us.
To comply with the universal proxy rules (once effective),
Expenses of Solicitation
All costs of solicitation of proxies will be borne by the Company. In addition to solicitations by mail, certain of our Directors, officers and regular employees, without additional remuneration, may solicit proxies in person or by telephone or electronic mail. Brokers, custodians and fiduciaries will be requested to forward proxy soliciting material to the owners of stock held in their names, and we will reimburse them for their reasonable out-of-pocket costs. Solicitation by our officers and employees may also be made of some shareholders in person or by mail, telephone or telegraph following the original solicitation.
FINANCIAL MATTERS AND FORM 10-K REPORT
As noted above under “Questions and Answers
IMPORTANT NOTICE REGARDING AVAILABILITY OF PROXY MATERIALS FOR THE SHAREHOLDER MEETING TO BE HELD ON
The Proxy Statement and the ZIVO Annual Report for the fiscal year ended December 31,
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