IEC ELECTRONICS CORP.
105 NORTON STREET
NEWARK, NEW YORK 14513
(315) 331-7742
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held On
Dear Stockholder:
You are cordially invited to attend the annual meeting of stockholders of IEC Electronics Corp. The meeting will be held on Wednesday, January 28, 2015Tuesday, March 7, 2017 at 9:00 a.m. (local time) at ourthe offices 105 Norton Street, Newark,of Harter Secrest & Emery LLP located at 1600 Bausch & Lomb Place, 13th Floor, Rochester, New York, for the following purposes:
| 1. | To elect seven (7) directors to serve until the |
| 2. | To ratify the selection of Crowe Horwath LLP as |
| 3. | To approve, on |
| 4. | To transact such other business as may properly come before the meeting or any adjournment thereof. |
The record date for the annual meeting is December 1, 2014.January 13, 2017. Only stockholders of record at the close of business on that date may vote at the annual meeting or any adjournment thereof. Our transfer books will not be closed.
Whether or not you expect to attend the meeting, please complete, date, sign and return the enclosedWHITE proxy card as promptly as possible in order to ensure your representation at the meeting. Your vote is particularly important, this year, no matter how many shares you owned on the record date. A return envelope is enclosed for your convenience and needs no postage if mailed in the United States. You may also vote by telephone or Internet by following the instructions on the WHITEproxy card. Even if you have voted byWHITE proxy card, telephone or Internet, you may still vote in person if you attend the meeting. Please note, however, that if your shares are held of record by a broker, bank or other nominee and you wish to vote at the meeting, you must obtain a legal proxy issued in your name from that record holder.
Dated: December [__], 2014January 26, 2017 By Order of the Board of Directors
Newark, New York Beth Ela Wilkens,Jennifer M. Brown, Corporate Secretary
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE Our proxy statement and Annual Report to Stockholders, which are enclosed with this mailing, are also available online, at www.proxyvote.com |
IEC ELECTRONICS CORP.Electronics Corp.
105 NORTON STREETNorton Street
(315) 331-7742
QUESTIONS AND ANSWERS ABOUT THIS PROXY MATERIAL AND VOTING
Why am I receiving these materials?
We are sending you this proxy statement and the enclosed WHITE proxy card because the board of directors of IEC Electronics Corp. (“IEC”,IEC,” the “Company”, “we”, “our”,“Company,” “we,” “our,” or “us”) is soliciting your proxy to vote at the 2015 Annual Meeting2017 annual meeting of Stockholdersstockholders and any adjournment or postponement thereof. We invite you to attend the annual meeting and request that you vote on the proposals described in this proxy statement. The meeting will be held on Wednesday, January 28, 2015Tuesday, March 7, 2017 at 9:00 a.m. (local time) at our office, 105 Norton Street, Newark,the offices of Harter Secrest & Emery LLP located at 1600 Bausch & Lomb Place, 13th Floor, Rochester, New York. To obtain directions to be able to attend the Annual Meetingannual meeting and vote in person, please contact our Corporate Secretary, Beth Ela Wilkens,Jennifer Brown at (585) 419-8645.(315) 331-7742. However, you do not need to attend the meeting to vote your shares. Instead, you may simply complete, date, sign and return the enclosed WHITE proxy card, or vote by telephone or Internet following the instructions on the card.
We are mailing this proxy statement, the accompanying WHITE proxy card, and our Annual Report to Stockholders for the fiscal year ending Tuesday,ended September 30, 20142016 (“Fiscal 2014”2016”) on or about December [__], 2014January 26, 2017 to all stockholders of record entitled to vote at the annual meeting.
What am I voting on?
There are three matters scheduled for a vote, and the board of directors recommends that you vote “FOR” each of the Proposals:
Proposal 1: the election of seven directors to serve until the 20162018 Annual Meeting of Stockholders or until their successors are duly elected and qualified,
Proposal 2: the ratification of the selection of Crowe Horwath LLP as our independent registered public accounting firm for the fiscal year ending September 30, 2015,2017, and
Proposal 3: an advisory vote to approve the compensation paid to our named executive officers (“say-on-pay”).
Our board of directors does not intend to bring any other matters before the meeting and is not aware of anyone else who will submit any other matters to be voted on. However, if any other matters properly come before the meeting, the people named on the WHITEproxy card, or their substitutes, will be authorized to vote on those matters in their own judgment.
Who can vote at the annual meeting?
Only stockholders of record at the close of business on December 1, 2014,January 13, 2017, the record date for the annual meeting, will be entitled to vote at the annual meeting. As of the record date, there were [__________]10,277,047 shares of common stock outstanding and entitled to vote.
Stockholder of Record: Shares Registered in Your Name
If on December 1, 2014,January 13, 2017, your shares of IEC common stock were registered directly in your name with our transfer agent, Registrar and Transfer Company (now Computershare, Inc.), then you are a stockholder of record. As a stockholder of record, you may vote in person at the meeting or vote by proxy. WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, WE URGE YOU TO FILL OUT AND RETURN THE ENCLOSED WHITE PROXY CARD TO ENSURE YOUR VOTE IS COUNTED.
Beneficial Owner: Shares Registered in the Name of a Broker or Bank
If on December 1, 2014,January 13, 2017, your shares of IEC common stock were held in an account at a brokerage firm, bank, dealer or other similar organization, then you are the beneficial owner of shares held in “street name” and these proxy materials are being forwarded to you by that organization. The organization holding your account is considered the stockholder of record for purposes of voting at the annual meeting. As a beneficial owner, you have the right to direct your broker or other agent on how to vote the shares in your account. You are also invited to attend the annual meeting. However, since you are not the stockholder of record, you may notFor instructions on how to vote your shares in person at the annual meeting, unless you request and obtain a signed letter or other valid proxy from your broker or other agent.
How do I vote?
The procedures for voting are set forth below:
Stockholder of Record: Shares Registered in Your Name
If you are a stockholder of record, you may vote in person at the annual meeting or vote by proxy using the enclosed WHITE proxy card. Whether or not you plan to attend the meeting, we urge you to vote by submitting the WHITE proxy card, or following the telephone or Internet voting instructions on it to ensure your vote is counted. You may still attend the meeting and vote in person if you have already voted by proxy.
To vote in person, come to the annual meeting with photo identification and we will give you a ballot when you arrive.
To vote using the proxy card, simply complete, date and sign the enclosed WHITE proxy card and return it promptly in the envelope provided. If you return your signed proxy card to us before the annual meeting, we will vote your shares as you direct.
Only the latest proxy you submit will be counted.
Beneficial Owner: Shares Registered in the Name of Broker or Bank
If you hold your shares in “street name” and thus areas a beneficial owner of shares registered in the name of your broker, bank or other agent ("broker"(“broker”), you must vote your shares in the manner prescribed by your broker. Your broker has enclosed or otherwise provided a voting instruction card for you to use in directing the broker how to vote your shares. Check the voting forminstruction card used by that organization to see if it offers Internet or telephone voting. To vote in person at the annual meeting, you must obtainpresent photo identification and a validlegal proxy from your broker. Follow the instructions from your broker included with these proxy materials, or contactContact your broker to request a voting instruction card or a legal proxy form.to vote in person at the annual meeting.
On each matter to be voted upon, you have one vote for each share of common stock you owned as of January 13, 2017, the record date for the annual meeting.
What is the quorum requirement?
A quorum of stockholders is necessary to hold a valid meeting. A quorum will be present if at least a majority of the outstanding shares entitled to vote are present at the meeting. Your shares are counted as present at the meeting if:
You are present and vote in person at the meeting; or
You have properly submitted a proxy card;
You have voted by telephone or Internet; or
If your shares are held in street name, a proxy card is submitted by your broker on your instructions, or voted by your broker on a discretionary item.
Additionally, abstentions and broker non-votes on discretionary items will be counted towards the quorum requirement. If there is no quorum, a majority of the shares present at the meeting and entitled to vote may adjourn the meeting to another date.
How are votes counted?
You may either vote “FOR” or “WITHHOLD” authority to vote for our nominees for the board of directors in Proposal 1, or you may withhold authority to vote for a particular nominee by voting “FOR ALL EXCEPT” and writing the namenumber of one or more nominees in the designated space on the proxy card. You may vote “FOR”, “AGAINST” or “ABSTAIN” on ProposalsProposal 2 (ratification of the selection of our independent public accounting firm) and Proposal 3 (advisory vote to approve the compensation paid to our named executive officers).
If you submit your proxy but abstain from voting or withhold authority to vote on one or more matters, your shares will be counted as present at the meeting for the purpose of determining a quorum. Your shares also will be counted as present at the meeting for the purpose of calculating the required vote on the particular matter with respect to which you abstained from voting or withheld authority to vote.
If a broker receives proxy materials from both the Company and Vintage there will be a “contested election”. If you hold your shares in street name and do not provide voting instructions to your broker, under the rules of The New York Stock Exchange (“NYSE”):
the selection of the accounting firm), but not with respect to Proposal 1 (the election of directors) and Proposal 3 (advisory vote to approve the compensation paid to our named executive officers). We encourage you to provide instructions to your broker to vote your shares on all of the Proposals described in this proxy statement.Proposal 1 and Proposal 3.
How many votes are needed to approve each Proposal?
Proposal 1 -– Election of directors;directors
The outcome of this vote will be determined by a plurality of the votes cast. This means that the seven director nominees with the most affirmative votes will be elected. Withheld votes and broker non-votes will have no effect on the outcome of this matter.the election of directors.
Proposal 2 – Ratification of the selection of Crowe Horwath LLP as the independent registered public accounting firm of the Company for the fiscal year ending September 30, 2015;2017
Proposal 3 – AdvisoryAdvisory vote onto approve the compensation paid to our named executive officers:officers
Approval forof each of ProposalsProposal 2 and Proposal 3 requires the affirmative vote of a majority of the shares present in person or by proxy at the meeting and entitled to vote.vote at the meeting. Abstentions are counted and have the effect of a vote against the proposal,these proposals, because abstentions are deemed to be present and entitled to vote but are not counted toward the affirmative vote required to approve such proposal. Broker non-votes will not be consideredcount as present and entitled to vote on the proposal. Therefore, under applicable Delaware law, broker non-votes will have no effect on the number of affirmative votes required to adopt such proposal.against Proposal 3.
What if I return a proxy card but do not make specific choices? What are the recommendations of our board of directors?
If you return a signed and dated WHITE proxy card without marking any voting selections, the persons named as proxy holders on the proxy card will vote in accordance with the recommendations of the board of directors. The board’s recommendation is set forth below together with the description of each proposal in this proxy statement. In summary, the board recommends a vote:
FOR election of all of the nominated directors (see Proposal 1);
FOR ratification of Crowe Horwath LLP as the Company’s independent registered public accounting firm for the fiscal year ending September 30, 20152017 (see Proposal 2); and
FOR approval of the compensation paid to our named executive officers (see Proposal 3).
If you return a signed and dated WHITE proxy card, with respect to any other matter that properly comes before the meeting, the proxy holders will vote as recommended by the board of directors or, if no recommendation is given, in their own discretion.
Can I change my vote after submitting my proxy?
Yes. You can revoke your proxy at any time before the final vote at the meeting. If you are a stockholder of record, you may revoke your proxy in any one of three ways:
You may submit another properly completed proxy card, with a later date.or vote by telephone or Internet.
You may send a written notice that you are revoking your proxy to: Corporate Secretary, IEC Electronics Corp., 105 Norton Street, Newark, NYNew York 14513.
You may attend the annual meeting and vote in person. Simply attendingAttending the meeting will not, by itself, revoke your proxy.
If you hold your shares in street name, contact your broker or other nomineeorganization regarding how to revoke your proxyinstructions and change your vote.
How can I find out the voting results of the voting at the annual meeting?
Preliminary voting results will be announced at the annual meeting. Final voting results will be published in a Current Report on Form 8-K to be filed with the Securities and Exchange Commission (“SEC”) within four business days after the annual meeting.
What does it mean if I receive more than one WHITE proxy card or voting instruction card?
If you receive more than one WHITE proxy card or voting instruction card, your shares are registered in more than one name or are registered in different accounts. Please complete, date, sign and return each WHITE proxy card or voting instruction cardto ensure that all of your shares are voted.
Who is paying for this proxy solicitation?
IEC will pay for the entire cost of soliciting proxies. In addition to these mailed proxy materials, our directors, and nominees, and our officers and employees also may solicit proxies in person, by telephone, by email or by other means of communication such as mail, facsimile, telegraph, Internet or advertisements. Information regarding these possible participants (“Participants”) in our solicitation of proxies from our stockholders is set forth in Appendix A.communication. We will not pay our directors, officers and employees any additional compensation for soliciting proxies. In addition, we have retained the firm of InvestorCom, Inc., a professional solicitation firm, to assist us in the distribution and solicitation of proxies. It is anticipated that InvestorCom will employ approximately 30 persons to solicit stockholders for the Annual Meeting. InvestorCom, Inc. will be reimbursed for its expenses, and will be paid up to $60,000 depending on the services it provides during the course of, and the outcome of, the solicitation. It also will be indemnified against certain liabilities and expenses. IEC has requested banks, brokerage houses and other custodians, nominees and fiduciaries to forward all solicitation materials to the beneficial owners of the shares they hold of record. IEC will reimburse these record holders for their reasonable out-of-pocket expenses in so doing.
When are stockholder proposals and director nominations due for next year’s annual meeting?
At our annual meeting each year, our board of directors submits to stockholders its nominees for election as directors. In addition, the board of directors may submit other matters to the stockholders for action at the annual meeting.
Our stockholders also may submit proposals for inclusion in the proxy materials. These proposals must be made by stockholders satisfying eligibilitysatisfy the requirements of Rule 14a-8 of the SEC, and the proposal also must meet SEC requirements.Securities Exchange Act of 1934, as amended. To be considered for inclusion in next year’s proxy materials, you must submit your proposal in writing by August 21, 2015September 28, 2017 to our Corporate Secretary, IEC Electronics Corp., 105 Norton Street, Newark, New York 14513.
In addition, our by-laws provide that a stockholder may present from the floor a proposal that is not included in the proxy statement if the stockholder delivers written notice to our Corporate Secretary not less than 90 days before the date of the meeting. The notice must set forth your name, address and number of shares of stock you hold, a representation that you are a holder of record of our stock and you intend to appear in person or by proxy at the meeting to make the proposal, and a description of the business to be brought before the meeting, the reasons for conducting such business at the annual meeting, any material interest you have in the proposal, and such other information regarding the proposal as would be required to be included in a proxy statement.meeting. We have received no such notice for the 20152017 annual meeting. For the 2016Assuming a date of March 7, 2018 for our 2018 annual meeting of stockholders, written notice must be delivered to our Corporate Secretary at our principal office, 105 Norton Street, Newark, New York 14513, no later than October 29, 2015.December 7, 2017.
Our by-laws also provide that if a stockholder intends to nominate a candidate for election as a director at the annual meeting, the stockholder must deliver written notice of such intent to our Corporate Secretary. The notice must be delivered not less than 90 days before the date of a meeting of stockholders. The notice must set forth your name and address, and number of shares of stock you own, the name and address of
the person to be nominated, a representation that you are a holder of record of stock entitled to vote at the meeting, a representation that you intend to appear in person or by proxy at the meeting to nominate the person specified in the notice, a description of all arrangements or understandings between such stockholder and each nominee and any other person (naming such person) pursuant to which the nomination is to be made by such stockholder, the nominee’s business address and experience during the past five years, any other directorships held by the nominee, the nominee’s involvement in certain legal proceedings during the past ten years and such other information concerning the nominee as would be required to be included in a proxy statement soliciting proxies for the election of the nominee. In addition, the notice must include the consent of the nominee to serve as a director if elected. We receivedAssuming a noticedate of March 7, 2018 for the 2015 annual meeting from Vintage indicating that it intends to nominate Keith M. Butler, Charles P. Hadeed, Lynn J. Hartrick, Andrew M. Laurence, Jeremy R. Nowak, Jeffrey T. Schlarbaum and Eric Singer for election as directors. For the 2016our 2018 annual meeting of stockholders, written notice of a nomination must be delivered to our Corporate Secretary at our principal office, 105 Norton Street, Newark, New York 14513 no later than October 29, 2015.December 7, 2017.
SECURITY OWNERSHIPOWNERSIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table indicates the amount of IEC’s common stock beneficially ownedbelow presents certain information as of December 1, 2014 by (i) each person who isJanuary 13, 2017 about the persons known by us to beneficially ownbe the record or beneficial owner of more than 5% of our common stock. Percentages are based on 10,277,047 shares issued and outstanding.
| Name and Address of Beneficial Owner | Number of Shares of Common Stock Beneficially Owned | Percent of Class | ||
| Vintage Capital Management, LLC, et al 4705 S. Apopka Vineland Road, Suite 210 Orlando, Florida 32819 | 1,016,694 | (1) | 9.89 | % |
Tocqueville Asset Management L.P. 40 West 57th Street, 19th Floor New York, New York 10019 | 719,000 | (2) | 7.00 | % |
(1) | This information as to the beneficial ownership of shares of our common stock is based on an amendment to Schedule 13D dated February 2, 2015 filed with the SEC by Vintage Capital Management, LLC (“Vintage Capital”), Kahn Capital Management, LLC, a member and majority owner of Vintage Capital and Brian R. Kahn, manager of each of Vintage Capital and Kahn Capital, and subsequent Section 16 reports filed with the SEC by Andrew M. Laurence, a partner of Vintage Capital, and Jeremy R. Nowak, a partner and Chief Operating Officer of Vintage Capital. Vintage Capital, Kahn Capital Management, LLC and Brian R. Kahn each report shared voting and shared dispositive power with respect to all 1,016,694 shares. The amount indicated does not include shares directly held by Messrs. Laurence and Nowak. |
(2) | This information as to the beneficial ownership of shares of our common stock is based on the Schedule 13G dated December 31, 2015 filed with the SEC by Tocqueville Asset Management L.P., an investment adviser. Tocqueville Asset Management L.P. reports sole voting and sole dispositive power with respect to all 719,000 shares. |
SECURITY OWNERSIP OF MANAGEMENT
The table below presents certain information as of January 13, 2017 about shares of our common stock (ii)held by (1) each of our directors, (iii)directors; (2) each of our named executive officers identified in the Summary Compensation Table, below,officers; and (iv)(3) all of our directors and executive officers as a group. The information as to each person has been furnished by such person, and, except as noted, each person named in the table has sole voting and investment power with respect to the shares of common stock indicated as beneficially owned, and none of such shares have been pledged as security.
group:
| Name of Beneficial Owner | Number of Shares of Common Stock Beneficially Owned (1) | Percent of Class (1) | ||
| Directors | ||||
| Keith M. Butler | 21,670 | † | ||
| Charles P. Hadeed | 18,920 | † | ||
| Lynn J. Hartrick | 11,670 | † | ||
| Andrew M. Laurence | 11,670 | (2) | † | |
| Jeremy R. Nowak | 11,670 | (3) | † | |
| Jeffrey T. Schlarbaum | 9,900 | † | ||
| Eric B. Singer | 116,321 | (4) | 1.13% | |
| Named Executive Officers | ||||
| Jens Hauvn | 15,853 | † | ||
| Michael T. Williams | 33,934 | † | ||
| All directors and executive officers as a group (9 persons) | 251,608 | 2.45% | ||
| † |
(1) | The |
(2) |
(3) |
(4) | Includes |
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our directors, and executive officers and persons who own moregreater than 10% of a registered class of our equity securities,stockholders to file with the SEC reports of ownership and changes in ownership of our common stock andstock.
During Fiscal 2016, all of our other equity securities. Officers, directors and greater than 10% stockholders are required by SEC regulation to furnishofficers timely complied with the Company with copiesfiling requirements of all Section 16(a) forms they file.
PROPOSAL 1)1
ELECTION OF DIRECTORS
The number of directors is established by the board and is currently fixed at seven. At thisthe annual meeting, the seven persons listed below will be nominated as directors. All of the nominees for director, except Mr. Johnson, were elected at the last annual meeting. Mr. Johnson was appointed on February 8, 2014 to fill a vacancy on the board. The term of office of each person elected as a director will continue until the next annual meeting or until his or her successor has been elected and qualified, or until the director’s earlier death, resignation or removal.
All of the board’s nominees for director were elected at the last annual meeting, and have consented to serve if elected. We expectIn the event that each ofany nominee should be unable to serve or for good cause will not serve, the nominees will be available for election, but if any of them is not a candidate at the time the election occurs, the proxyproxies will be voted for the election of another nominee to be designated bysuch other persons as the nominating and governance committee of the board to fill any such vacancy.of directors may recommend.
Required Vote
NOMINEES FOR ELECTION AS DIRECTORS OF EACH OF THE NOMINEES LISTED BELOW.
| Name | Age | Year First Elected Director | Term to Expire | Independent? | ||||
| W. Barry Gilbert | 68 | 1993 | 2016 | No | ||||
| Florence D. Hudson | 55 | 2012 | 2016 | Yes | ||||
| John Carlton Johnson | 67 | 2014 | 2016 | Yes | ||||
| Edward W. Kay, Jr. | 59 | 2012 | 2016 | Yes | ||||
| Eben S. Moulton | 68 | 1992 | 2016 | Yes | ||||
| James C. Rowe | 66 | 2000 | 2016 | Yes | ||||
| Jerold L. Zimmerman | 67 | 2006 | 2016 | Yes | ||||
The following paragraphs provide additional information as of the date of this proxy statement about each nominee. The information presented includes information each director has given us about all positions they hold, their principal occupation and businessWe believe these nominees are highly qualified individuals with a diversity of experience. Several of the nominees have experience forserving on the past five years, andboards of directors of public companies and/or operational experience in the names of other publicly-held companies for which they currently serve as a director or have served as a director during the past five years. In addition, information is presented below regarding each nominee’s specific experience, qualifications, attributes and skills that led our board to the conclusion that such nominee should serve as a director.electronic contract manufacturing sector. We also believe that all of our nominees have a reputation for integrity, honesty and adherence to high ethical standards. In addition, each has demonstrated business acumen and an ability to exercise sound judgment, as well as a commitment of service to the Company and our board.
Keith M. Butler, age 58, has served as a director of the Company since 2015. He has been the Chief Operating Officer of RxSafe LLC, a pharmacy automation equipment company, since April 2014. From October 2013 to April 2014, Mr. Butler pursued personal interests. From September 2010 to October 2013, Mr. Butler was Executive Vice President of Operations for OnCore Manufacturing Services, LLC, an electronic contract manufacturer. Mr. Butler has served as a strategic advisory board member of Vintage Capital Management, LLC since March 2009.
We believe that continuing service of qualified incumbents promotes stability and continuityMr. Butler brings extensive operational experience in the board room, contributing to the board’s ability to work collaborativelycontract manufacturing sector. Mr. Butler’s past and present service as a collective body, while giving the Company the benefitfounder and executive of the familiarityseveral contract manufacturing companies provides him with significant experience and insight intorelative to our industry segment as well as the Company’s affairs that its directors have accumulated during their tenure. We have coupled this view with an understandingcompetitive advantages of the need for fresh perspectives in the board room and to that end three of the seven incumbent director nominees have joined the board since 2012.our operations.
We believe that Mr. Hadeed’s extensive management, financial and operational experience as a former chief executive officer, since January 2004chief financial officer and chief operating officer of a public company with a similar market capitalization to ours provides us with valuable experience at the board level. Mr. Hadeed’s prior experiences also include turnaround management of a public company that faced obstacles similar to ours and those experiences make him a valuable board member.
Lynn J. Hartrick, age 69, has served as actingdirector of the Company since 2015. He has been the President and owner of Business Leadership Professionals, LLC, an executive coaching and business advisory firm, since April 2010. For 3 years prior to that, Mr. Hartrick was the sole proprietor of Coyote Consulting, LLC, which provided contracted interim chief executive officer services. Additionally, Mr. Hartrick was Managing Partner of Vitalwork, a management consulting firm and before that, he worked for 26 years in multiple senior roles at Rochester Telephone Corporation, including roles in operations, personnel, construction, engineering, customer service and commercial operations.
We believe that Mr. Hartrick’s executive leadership and executive coaching experience make him a valuable addition to our board of directors. Mr. Hartrick has over 20 years of experience in advising executive teams as they pursue strategies to change
prior habits and effect change in organizations. The board believes his experiences bring significant value as it moves to effect positive change within our organization.
Andrew M. Laurence, age 42, has served as a director of the Company since 2015. He is a partner of Vintage Capital Management, LLC. Mr. Laurence joined Vintage Capital Management in January 2010 and is responsible for all aspects of Vintage’s transaction sourcing, due diligence and execution. Mr. Laurence has served as Corporate Secretary of API Technologies Corp. (NASDAQ: ATNY), a leading provider of high performance radio frequency microwave, microelectronic, power, and security solutions, since January 2011 until its sale in February 2016. Mr. Laurence also served as API’s Vice President of Finance and Chief Accounting Officer from January 2011 to June 2011. Mr. Laurence also serves on the Board of Directors of Energes Services, LLC, an oilfield services company.
We believe that Mr. Laurence’s experience investing in, growing and improving companies, some of which are within our industry segment, make him a valuable member of our board of directors.
Jeremy R. Nowak, age 41, is our Chairman of the Board and has served in such capacity since 2015. Mr. Nowak has been a partner and the Chief Operating Officer of Vintage Capital Management, LLC since July 2010. Mr. Nowak is responsible for Vintage’s business development, transactional due diligence and trading execution. Mr. Nowak joined Kahn Capital Management, LLC, a predecessor to Vintage, in September 2006.
Mr. Nowak’s financial and investment experience make him a valuable member of our board. Mr. Nowak’s experiences at Vintage provide a needed stockholder perspective of the change the Company intends to effect.
Jeffrey T. Schlarbaum, age 50, has served as a director and as our President and Chief Executive Officer since 2015. From February 2013 to June 2013 and from June 2002 until2014 to February 2015, Mr. Schlarbaum pursued personal interests. From June 2013 to June 2014, Mr. Schlarbaum served as Chief Operations Officer for LaserMax, Inc., a manufacturer of laser gun sights for law enforcement and the shooting sports community. From October 2010 to February 2013, Mr. Schlarbaum served as our President. Prior to that, time. HeMr. Schlarbaum served as our Executive Vice President and President of Contract Manufacturing from October 2008 to October 2010, Executive Vice President from November 2006 to October 2008 and Vice President, Sales and Marketing from May 2004 to November 2006.
We believe that Mr. Schlarbaum’s background as a senior executive of the Company provides him with extensive knowledge of our operating history. We believe that this long-term institutional knowledge of the Company, its customers and its executive team make Mr. Schlarbaum a significant asset to our board. Mr. Schlarbaum also brings general management, marketing and operational experience that is of value to the board.
Eric B. Singer, age 43, has been a director of the Company since February 1993 and chairman of the board since February 2001.2015. He is alsothe Chairman of VIEX Capital Advisors, LLC formerly Vertex Capital Advisors, LLC, a hedge fund which he founded in May 2014. From March 2012 to May 2014, Mr. Singer served as a co-managing member of Potomac Capital Management III, L.L.C., the general partner of Potomac Capital Partners III, L.P., and Potomac Capital Management II, L.L.C., the general partner of Potomac Capital Partners II, L.P. Previously, Mr. Singer served as an adjunct faculty member at the Simon School of Business at the University of Rochester. From 1991 until 1999, he was president of the Thermaladvisor to Potomac Capital Management, Group of Bowthorpe Plc. (now known as Spirent Plc) of Crawley, West Sussex, England. PriorL.L.C. and its related entities from May 2009 to that time he was corporate vice president and president, Analytical Products Division of Milton Roy Company, a manufacturer of analytical instrumentation.December 2014. Since March 2016, Mr. GilbertSinger has served on a number of charitable boards and advisory boards for privately-held companies. Mr. Gilbert received his M.B.A. degree from the University of Rochester. As our chairman of the board, and chief executive officer, Mr. Gilbert provides our board with invaluable institutional knowledge of the operations of our Company, its markets, its customersaudit committee, and the industry in which it operates. He became our acting chief executive officer innominating and corporate governance committee of Numerex Corp. (NASDAQ: NMRX), a provider of managed enterprise solutions. Since June 2002 during2016, Mr. Singer has served on the board, compensation committee, and nominating and governance committee of YuMe Inc. (NYSE: YUME), a particularly challenging periodmulti-screen video advertising technology company. Since June 2016, Mr. Singer has served on the board, audit committee, compensation committee, and nominating and governance committee for the Company. His extensive leadership, financialSupport.com (NASDAQ: SPRT), a provider of cloud-based software and management skills and his strategic initiatives contributed to the financial turnaround and growth the Company has experienced during his tenure as chief executive.services. Mr. Gilbert’s service with us, as well as his prior serviceSinger served as a senior executivedirector of other public companies, provides him with extensive knowledge of complex strategic, operations and management issues faced byTigerLogic Corporation (OTCQX: TIGR), a global provider in engagement solutions, from January 2015 to December 2016.
Corporate Governance Guidelines
Our business, property and affairs are managed under the direction of our board of directors. The board is committed to sound and effective corporate governance practices and, accordingly, has adopted Corporate Governance Guidelines that provide a system of best practices with respect to board function and communication. Our Corporate Governance Guidelines address matters including board composition, director responsibilities, director independence, selection of board nominees, board
membership criteria, mandatory retirement, meeting participation, executive sessions of our independent directors, evaluation of the performance of the chief executive officer, committees, succession planning, orientation and continuing education.
Director Independence
The listing requirements of the NYSE MKT requireCompany Guide requires that a majority of the members of a listed company’s board of directors be independent. The rules provide that noNo director will qualify as “independent” unless the board affirmatively determines that the director has no relationship with the Company or any of its subsidiaries that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. Based upon the NYSE MKT rulesCompany Guide and applicable SEC rules and regulations, our board has determined that each of ourthe following directors is an independent director, other than Mr. Gilbert, who serves as our chief executive officer.are independent: Messrs. Butler, Hadeed, Hartrick, Laurence, Nowak and Singer.
Board Leadership Structure and Role in Risk Oversight
Our board is responsible for the selection of the chairman of the board and the chief executive officer. OurThe current board does not requireof directors believes that separating the separation of the officesroles of chairman of the board and the chief executive officer best serves our interest in achieving effective corporate governance. The current board believes that separating these two positions allows each person to focus on his individual responsibilities, which is essential to the strategic focus on improving our operational and currentlyfinancial performance. Under this leadership structure, our chief executive officer can focus his attention on the positionsday-to-day operations and performance of the Company and can work to implement our long-term strategic plans. At the same time, our non-executive chairman of the board can focus his attention on addressing long-term strategic issues, working collaboratively with our other board members, and providing independent insight and guidance to our chief executive officer. In addition, maintaining a separation of the roles of chairman of the board and chief executive officer are held byaids the same person. The board believesin its oversight of our risk management. Although we believe that this is the most appropriate and suitable leadership structure forseparation of the Company atroles of chairman of the present time because Mr. Gilbert, our chairmanboard and chief executive officer is appropriate in the director most familiar withcurrent environment, our board leadership structure may change in the future as our business, and industry and their challenges and is, therefore, best able to identify the strategic priorities to be discussed by the board. Mr. Gilbert is the direct link between senior management and the board, and provides critical insight and perspective to the board, as well as feedback to senior management through his thorough understanding of the issues at hand.
The board of directors is responsible for overseeing risks that could affect our Company and management’s processes for managing risk. This oversight is conducted primarily through the board’s committees. Our audit committee focuses on risks and exposures associated with financial matters, particularly financial reporting, tax, accounting, disclosure, internal control over financial reporting, financial policies, credit and liquidity matters and compliance with legal and regulatory matters. Our nominating and governance committee focuses on the management of risks associated with board membership and structure, as well as corporate governance. Our compensation committee focuses on the management of risks arising from our compensation policies and programs.
While our board committees are focused on these specific areas of risk, the full board retains responsibility for general oversight of risk. ThisThe board satisfies this responsibility is satisfied throughby taking reports from each committee chairman regarding the risk considerations within each committee’s area of expertise, as well as throughexpertise. In addition, the board receives reports from members of our senior management team responsible for oversight of material risk to the Company.
As part of its risk oversight responsibilities, our board of directors and its committees review the processes that senior management uses to manage our risk exposure. In doing so, the board and its committees monitor our overall risk function and senior management’s establishment of appropriate systems and processes for managing areas of material risk to our company,Company, including, but not limited to, operational, financial, legal, regulatory and strategic risks.
Board Meetings and Attendance
During Fiscal 2014,2016, our board held sixfour in-person or telephonic meetings and acted five times by unanimous written consent. In addition, the directors considered Company matters and had frequent communication with the chairman of the board and other directors apart from the formal meetings.
During Fiscal 2014,2016, each incumbent director attended at least 75% of the meetings of the board, and of those committees upon which such director served, held during the period that he or she served.
Director Attendance at Annual Meetings
Board Committees
Our board has established fourthree standing committees to assist in the discharge of its responsibilities: the audit committee, the compensation committee, and the nominating and governance committee, and the executive committee. The following table indicates the committee(s) on which each director serves, and the identity of the chair of each such committee:committee, and the number of times each committee met during Fiscal 2016:
Committee Membership
| Director: | Audit | Compensation | Nominating and Governance |
| Keith M. Butler | — | x | — |
| Charles P. Hadeed | Chair | — | Chair |
| Lynn J. Hartrick | — | Chair | x |
| Andrew M. Laurence | x | — | — |
| Jeremy R. Nowak | x | x | — |
| Jeffrey T. Schlarbaum | — | — | — |
| Eric B. Singer | — | — | x |
| Total Meetings in Fiscal 2016: | 4 | 2 | 2 |
Each committee acts pursuant to a written charter adopted by the board. The charter of each of the audit, compensation and nominating and governance committees complies with the NYSE MKT corporate governance requirements. There are no NYSE MKT requirements with respect to the charter of the executive committee.listing standards. The committees regularly report their activities and actions to the full board at the next board meeting. Each committee’s charter is available on our website at www.iec-electronics.com under the heading, “Investors” and the subheading, “Corporate Governance.”
Audit Committee
The audit committee oversees our corporate accounting and financial reporting processes. Itprocesses and the audits of our financial statements. The audit committee is responsible for a separately-designated standing committee established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as amended. Its responsibilities include:
the appointment, dismissal,retention, termination, compensation and oversight of our independent auditors, including an evaluation of the engagementqualifications, performance and independence of our auditors for the next fiscal year, independent auditors;
the review with the independent auditors and approval of the plan of the audit engagement, the review with the independent auditors of the results of their audit, the inquiry as to the adequacy of our internal accounting controls and our disclosure controls and procedures, the approval of audit and non-audit services to be provided to us by the independent auditors, and overseeing compliance matters for us. The audit committee reviewsdiscussion with management and the independent auditors of the financial statements and related disclosures included in our annual reportreports on Form 10-K and the interim financial statements prior to the filing of our quarterly reports on Form 10-Q. The audit committee also monitors compliance with10-Q;
the oversight of management’s implementation of internal controls and procedures and disclosure controls and procedures;
the establishment of procedures for the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters, including procedures for the confidential and anonymous submission by employees regarding questionable accounting or auditing matters;
administration and oversight of our Code of Business Conduct and Ethics, our conflictEthics; and
the review and approval of interest policy, our policy concerning trading in our securitiesrelated persons transactions.
The audit committee has authority to engage independent counsel and our related person transactions policy.other advisers as necessary to carry out its responsibilities. In Fiscal 2014,addition, the audit committee whose current members are Mr. Kay (Chairman), Mr. Rowehas sole authority to determine the fees payable to such independent counsel and Dr. Zimmerman, held nine meetings and acted onceadvisers, which fees shall be paid by unanimous consent. the Company.
The board of directors in its business judgment has determined that each member of the audit committee is “independent” as defined in Section 803A of the NYSE MKT LLC Company Guide and, in addition, meets the more stringent independence standards set forth in SEC Rule 10A-3 and the independence and financial literacy standards set forth in Section 803B ofrequirements applicable to audit committee members under the NYSE MKT LLC Company Guide. The board of directors has further determined that Mr. Kay, Mr. Rowe and Dr. Zimmerman each qualifyHadeed qualifies as an “audit committee financial expert” in accordance with the applicable rules and regulations of the SEC. For
Compensation Committee
The compensation committee assists the audit committee’s report relatingboard in its discharge of responsibilities with respect to Fiscal 2014, see “Audit Committee Report”. The audit committee’s charter, which sets forth more specifically executive and director compensation. Its responsibilities include:
the dutiesoversight and responsibilities of the committee, is available on our website at www.iec-electronics.com under the heading of “Investors” and subheading of “Corporate Governance”.
the review and approvesapproval of the compensation for all executive officers other than the chief executive officer, reviews and recommendsofficer;
the recommendation to the independent members of the board of the compensation of the chief executive officer, reviews and approves performance goals and objectives with respect to incentive plans for all executive officers, oversees officer;
the evaluation of the chief executive officer, reviewsofficer;
the review and recommendsrecommendation to the board of the terms of any employment, severance, change in control, termination or retirement arrangements for all executive officers,officers;
the review and reviews and recommendsrecommendation to the board of the compensation paid to directors. In Fiscal 2014,directors; and
the assessment of the independence of any compensation consultant, independent legal counsel or other adviser retained by the committee.
The compensation committee approves equity awards for our other employees, including the delegation of authority to our chief executive officer to award up to a specified number of stock options to non-executive employees for special performance or recruitment to the Company.
The compensation committee has sole authority, in its discretion, to retain or obtain advice of a compensation consultant, independent legal counsel or other adviser to assist the compensation committee held eight meetingsin carrying out its responsibilities. The compensation committee is responsible for the oversight and actedcompensation of any compensation consultant, independent legal counsel or other adviser it retains. We are responsible for paying such compensation as determined by unanimous written consent three times.the compensation committee. The compensation committee retained a compensation consultant, The Burke Group, for Fiscal 2016. The Burke Group conducted a review and analysis of our executive compensation program in order to validate our current memberscompensation strategy. The Burke Group reviewed senior executive team positions and provided summary reports on current trends for executive compensation in similar companies, established the peer group, assessed base salaries, annual cash incentive compensation and long term incentives against published survey data and peer group data and provided observations and recommendations for all components of our executive compensation program.
The board of directors has determined that each member of the compensation committee are Dr. Zimmerman (Chairman), Ms. Hudson, Mr. Johnson and Mr. Moulton, each of whom has been determined bymeets the boardindependence requirements applicable to be “independent” as defined in Section 803A ofcompensation committee members under the NYSE MKT LLC Company Guide. The compensation committee’s charter, which sets forth more specifically the duties and responsibilities of the committee, is available on our website at www.iec-electronics.com under the heading of “Investors” and subheading of “Corporate Governance”. For more information on executive officer and director compensation and the role of the compensation committee, see “Compensation of Named Executive Officers and Directors”.
Nominating and Governance Committee
The nominating and governance committee identifies and recommends to the board individuals to serve as directors and as nominees for election as directors of the Company and develops, recommends and reviews corporate governance principles applicable to the Company. In Fiscal 2014,The nominating and governance committee’s responsibilities include:
the development and recommendation to the board of director qualification criteria;
the development and periodic review of corporate governance principles;
the oversight of the board’s self-evaluation process; and
development of the board’s chief executive officer succession policies.
The board of directors has determined that each member of the nominating and governance committee met three times and acted by unanimous written consent three times. The current members ofmeets the committee are Messrs. Moulton (Chairman), Kay and Rowe, each of whom has been determined by the board to be “independent” as defined in Section 803Adirector independence requirements of the NYSE MKT LLC Company Guide. The nominating and governance committee charter, which sets forth more specifically the duties and responsibilities of the committee, is available on our website at www.iec-electronics.com under the heading of “Investors” and subheading of “Corporate Governance”.
Nominating Process
The process followed by the nominating and governance committee to identify and evaluate candidates includes requests to board members, the chief executive officer, and others for recommendations, meetings from time to time to evaluate biographical information and background material relating to potential candidates and their qualifications, and interviews of selected candidates. The nominating and governance committee also will consider director candidates recommended by stockholders. Nominations of persons for election to our board may be made at a meeting of stockholders only (i) by or aton the direction of the board; or (ii) by any stockholder who has complied with the notice procedures set forth in our bylaws and in the section entitled “Questions and Answers About This Proxy Material and Voting – When are stockholder proposals and director nominations due for next year’s annual meeting?”. In addition, stockholderssame basis it considers other potential candidates. Stockholders who wish to recommend a prospective nominee for the nominating and governance committee’s consideration should submit the candidate’s name and qualifications to: Corporate Secretary, IEC Electronics Corp., 105 Norton Street, Newark, New York 14513.
In evaluating the suitability of candidates to serve on the board of directors, including stockholder nominees,recommendations, the nominating and governance committee seeks candidates who are independent pursuant to the NYSE MKT independence standards and meet certain selection criteria established by the committee. The specific criteria required for the selection of each board member will be determined from time to time within the context of the current member composition of the board of directors and the evolving needs of the Company based on business strategy and current senior management competencies. The committee also considers an individual’s skills, character and professional ethics, judgment, leadership experience, business experience and acumen, familiarity with relevant industry issues, and other relevant criteria that may contribute to our success. This evaluation is performed in light of the skill set and other characteristics that would most complement those of the current directors, including the diversity, maturity, skills and experience of the board as a whole. We do not have a formal policy regarding board diversity in the identification of nominees, but diversity is one of several factors that the nominating and governance committee takes into account when evaluating candidates. The committee believes that diversity includes perspective gained from different educational, cultural and business backgrounds and life experiences.
Code of Ethics and Whistleblower Policy
We have a Code of Business Conduct and Ethics, which applies to all of our directors, officers (including our principal executive officer, principal financial officer, principal accounting officer and other executive officers) and employees. It is a statement of the Company’sour high standards for ethical behavior, legal compliance and financial disclosure. We also maintain a whistleblower policy, which encourages the Company’sour employees to report illegal activities and business conduct that would damage the Company’sour good name, business interests and its relationships with stockholders, suppliers, residents and the community at large. The Code of Business Conduct and Ethics and the Whistleblower Policy are distributed to all employees of the Companyour employees who in turn acknowledge, in writing, receipt of this information.
Availability of Corporate Governance Documents
We make available to the public a variety of corporate governance information on our website (www.iec-electronics.com) under “Investors– Corporatethe heading “Investors” and the subheading, “Corporate Governance”. Information on our website includes our Code of Business Conduct and Ethics, our Corporate Governance Guidelines, the Audit Committee Charter, the Compensation Committee Charter, the Nominating and Governance Committee Charter, the Executive Committee Charter, our Related Person Transactions Policies and Procedures, and our Whistleblower Policy. Information regarding any amendment to, or waiver from, the Code of Business Conduct and Ethics that applies to our principal executive officer, principal financial officer or principal accounting officer will also be posted in that section of our website.
Communications with the Board of Directors
Stockholders and other parties may communicate directly with the board of directors or the relevant board member by addressing communications to:
[Name of director(s) or Board of Directors]
IEC Electronics Corp.
c/o Corporate Secretary
105 Norton Street
Newark, New York 14513
All stockholder correspondence will be compiled by our Corporate Secretary and forwarded as appropriate.
PROPOSAL 2)2
RATIFICATION OF THE SELECTION OF THE COMPANY’S
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR FISCAL 20152017
The audit committee has selected the accounting firm of Crowe Horwath LLP (“Crowe Horwath”) to serve as the Company’s independent registered public accounting firm for the fiscal year ending September 30, 2015. Crowe Horwath was selected by the audit committee to replace EFP Rotenberg LLP2017 (“EFPR”) who served as the Company’s independent registered public accounting firm from May 2002 through completion of the Company’s audited consolidated financial statements for Fiscal 2014 and filing of the Company’s Annual Report on Form 10-K in November 2014.2017”). The stockholders are being asked to ratify the audit committee’s appointmentselection of Crowe Horwath.
Stockholder ratification of the selection of Crowe Horwath is not required by our by-laws or otherwise. However, the board is submitting the selection of our independent registered accounting firm to the stockholders for ratification as a matter of good corporate practice.governance. If the stockholders fail to ratify this appointment, the audit committee may, but is not required to, reconsider whether to retain Crowe Horwath. Even if the appointment is ratified, the audit committee in its discretion may direct the appointment of a different accounting firm at any time during the year if it determines that such a change would be in the best interests of the Company and its stockholders. Representatives of EFPR and Crowe Horwath will be present at the annual meeting, will be given the opportunity to make statements if they so desire and will be available to respond to appropriate questions.
The following table shows the fees that were billed by EFPRCrowe Horwath for professional services listed below related to our last two fiscal years, Fiscal 20142016 and the fiscal year endingended September 30, 20132015 (“Fiscal 2013”2015”).
:
| Description of Fees | Fiscal 2014 | Fiscal 2013 | ||||||
Audit Fees(1) | $ | 178,000 | $ | 255,895 | ||||
| Audit-Related Fees | — | — | ||||||
Tax Fees(2) | 900 | 1,400 | ||||||
All Other Fees(3) | 33,025 | 8,500 | ||||||
| TOTAL EFPR Fees | $ | 211,925 | $ | 265,795 | ||||
| Description of Fees | Fiscal 2016 | Fiscal 2015 | ||||||
| Audit Fees | $ | 240,000 | $ | 314,500 | ||||
Audit fees represent amounts billed for the audit of our annual consolidated financial statements for the fiscal year and the reviews of financial statements included in our quarterly reports on Form 10-Q for the fiscal year. There were no audit-related fees, tax fees or other fees paid to Crowe Horwath during Fiscal 2016 or Fiscal 2015. |
Pre-Approval of Fees by Audit Committee
In accordance with applicable laws, rules and regulations, our audit committee charter and pre-approval policies established by the audit committee require that the audit committee review in advance and pre-approve all audit and permitted non-audit fees for services provided to us by our independent registered public accounting firm. The audit committee pre-approved all services performed by, and all fees to be paid to, EFPRCrowe Horwath in Fiscal 2014 and Fiscal 2013.2016.
Independence Analysis by Audit Committee
The audit committee has considered whether the provision of the services described above was compatible with maintaining the independence of EFPRCrowe Horwath and determined that it was compatible with the firm’s independence. For each of Fiscal 20142016 and Fiscal 2013, EFPR2015, Crowe Horwath provided no services other than those services described above.
Required Vote
The affirmative vote of the holders of a majority of the shares of common stock present in person or represented by proxy at the annual meeting and entitled to vote onat the mattermeeting is needed to ratify the appointment of Crowe Horwath as our independent registered public accounting firm for the fiscal year ending September 30, 2015. Under Delaware law, an2017. An abstention will have the same legal effect as a vote against the ratification of Crowe Horwath, and broker non-votes will have no effect on the outcome of the ratification of the independent registered public accounting firm.proposal.
Unless authority to so vote is withheld,you specify otherwise, the persons named in the proxy card intend to vote shares as to which proxies are received IN FAVOR OFfor the approval of ratification of the selection of Crowe Horwath as our independent registered public accounting firm for the fiscal year ending September 30, 2017.
The audit committee and our board of directors unanimously recommend that the stockholders vote FOR the ratification of the appointment of Crowe Horwath as our independent registered public accounting firm for the fiscal year ending September 30, 2015.2017.
AUDIT COMMITTEE REPORT[1]
Based on the auditors’ independence,review and considered the compatibility of non-audit services with the auditors’ independence.
Charles P. Hadeed, Chair
Jeremy R. Nowak
THE COMPANY’SCOMPANY’S NAMED EXECUTIVE OFFICERS
General
In accordance with Section 14A of the Securities Exchange Act of 1934, as amended, we are requesting stockholder approval ofthat our stockholders approve on a non-binding, advisory resolution approvingbasis the compensation paid to our named executive officers as disclosed pursuant to the compensation disclosure rules of the Securities and Exchange Commission,SEC, including the compensation tables and narrative discussion in this proxy statement under the caption “Compensation of Named Executive Officers and Directors” beginning on page 21Officers” of this proxy statement. At our 2013 annual meeting of stockholders, we recommended, and our stockholders approved, that we hold this non-binding, advisory vote on executive compensation on an annual basis.
The board of directors requests that stockholders approve the following advisory resolution:
RESOLVED, that the compensation paid to the Company’s named executive officers, as disclosed pursuant to Item 402402(m)-(q) of Regulation S-K, including the compensation tables and narrative discussion, is hereby APPROVED.
We urge stockholders to read the section entitled “Compensation of Named Executive Officers and Directors” beginning on page 21” of this proxy statement, including the 2014 Summary Compensation table and relatedcompensation tables and narrative included within that section, which provide detailed information on IEC’s compensation policies and practices and the compensation of our named executive officers. As discussed in greater detail in that section,
Each named executive officer is a party to an employment agreement with us. We believe these agreements and other incentives granted to these named executive officers align our named executive officers’ interests with those of our stockholders. Our compensation committee and board of directors continue to evaluate our executive compensation program consists of four principal components: (1) base salary, (2) annual cash incentive compensation, (3) long-term equity compensation, and (4) perquisites and personal benefits. We believe that we have established reasonable base salaries as well as total compensation for our executive officers based on internal comparability and external market data, as well as individual responsibilities and performance. We believe that the cash bonuses paid under our annual incentive plan should and do reward the named executive officers for business and individual performance, encourage effective short-term performance while balancing that approach with a long-term focus, and put a significant portion of total compensation opportunity at risk. We believe that awards granted under our long-term equity incentive plan giveview toward motivating our named executive officers a meaningful equity staketo meet our strategic operational and financial goals in the best interests of our business and encourage performance by our named executive officers that increases long-term stockholder return, and also serve as an effective tool in attracting and retaining experienced and skilled executive officers. The perquisites and personal benefits paid to our named executive officers are minimal.stockholders.
Non-Binding ResolutionVote
This advisory resolution,vote, commonly referred to as a “say-on-pay” resolution,vote, is not binding on the Company, the board of directors or the compensation committee of the board of directors, and may not be construed as overruling any decision made by the board. However, the board and the compensation committee will take the voting results into account when evaluating our executive compensation program and considering future compensation arrangements.
Required Vote
The affirmative vote of the holders of a majority of the shares of common stock present in person or represented by proxy at the annual meeting and entitled to vote onat the mattermeeting is needed to approve the non-binding resolution approving the compensation paid to our named executive officers. Under Delaware law, an abstention will have the same legal effect as a vote against approval of this non-binding resolution,Abstentions and broker non-votes will have no effect on the outcome of the vote.count as votes against this proposal.
COMPENSATION OF NAMED EXECUTIVE OFFICERS AND DIRECTORS
Named Executive Officers
Michael T. Williams - Vice President, Finance and Chief Financial Officer (“CFO”)
The following discussion provides a summary of ourtable sets forth information concerning total compensation policies and the compensation decisions made with respectearned or paid to our named executive officers.officers for Fiscal 2016 and Fiscal 2015. We present more detailed information regarding these items of compensation in the footnotes and in the narrative that follows the table.
| Name and Principal Position | Year | Salary (1) | Bonus (2) | Stock Awards (3) (4) | Option Awards (5) | Non-Equity Incentive Plan Compensation (6) | All Other Compensation (7) | Total | ||||||||||||||||||||||
| Jeffrey T. Schlarbaum | 2016 | $ | 352,692 | $ | — | $ | 433,076 | $ | — | $ | 351,273 | $ | 1,801 | $ | 1,138,842 | |||||||||||||||
| CEO | 2015 | 222,865 | 50,000 | — | 602,263 | 95,000 | — | $ | 970,128 | |||||||||||||||||||||
| Michael T. Williams | 2016 | 205,000 | — | 176,793 | — | 141,568 | 2,720 | $ | 526,081 | |||||||||||||||||||||
| CFO | 2015 | 197,748 | 15,000 | — | — | 25,000 | 4,001 | $ | 241,749 | |||||||||||||||||||||
| Jens Hauvn | 2016 | 220,000 | 5,700 | 173,249 | 83,363 | 151,927 | 3,046 | $ | 637,285 | |||||||||||||||||||||
| Senior VP, Operations | 2015 | 175,639 | 9,500 | 70,650 | 69,233 | — | 2,688 | $ | 327,710 | |||||||||||||||||||||
(1) | The “Salary” column reflects the base salary earned by each of our named executive officers during the applicable fiscal year, which may differ from the salary described in “Compensation of Named Executive Officers - Base Salary Compensation” due to effective dates for increases that do not fall on the first day of the fiscal year and pay periods that may overlap fiscal years. |
(2) | Amounts reflect cash sign-on bonuses for Messrs. Schlarbaum and Hauvn (portions of which were paid in Fiscal 2016 and Fiscal 2015), and a cash payment to Mr. Williams in connection with his acceptance of his employment agreement. |
(3) | In April 2016, we granted Messrs. Schlarbaum, Williams and Hauvn time-vesting restricted stock units covering 12,258 shares, 4,970 shares and 5,334 shares, respectively, and performance-vesting restricted stock units covering 49,030 shares, 19,881 shares and 21,336 shares, respectively, pursuant to the 2010 Omnibus Incentive Compensation Plan (the “2010 Plan”). In June 2016, we granted restricted stock awards to Messrs. Schlarbaum and Williams of 7,500 shares and 3,580 shares, respectively, pursuant to the 2010 Plan. We granted restricted stock awards in Fiscal 2015 to Mr. Hauvn upon his hiring as an inducement award. This award automatically vested upon the election of our new board of directors at our 2015 annual meeting of shareholders. |
(4) | The amounts shown reflect the aggregate grant date fair value computed in accordance with FASB ASC 718 (“ASC 718”). Under ASC 718, the fair value of such stock awards is determined as of the date of grant using the closing market price of our common stock on the date of grant. For awards subject to performance conditions, the amounts included in this column are calculated based on the probable satisfaction of the performance conditions at the grant date, which represents the highest level of performance achievement. These amounts reflect our accounting for these awards and do not correspond to the actual values that may be realized by the named executive officers and do not represent actual cash compensation paid to the recipient. Pursuant to SEC rules, we disregarded the estimates of forfeitures related to service-based vesting conditions. |
(5) | In August 2016, we granted Mr. Hauvn an option to purchase 50,000 shares under the 2010 Plan as part of a relocation award under his employment agreement after the compensation committee waived the requirement that Mr. Hauvn relocate to the greater Rochester, New York area. In Fiscal 2015, we granted an inducement option award for 16,145 shares to Mr. Schlarbaum, and we also granted option awards to Messrs. Schlarbaum and Hauvn for 400,000 shares and 50,000 shares, respectively, in connection with their appointments as executive officers of the Company. Valuation assumptions used to determine grant date fair value as required by ASC 718 are disclosed in Note 11- Stock-Based Compensation to our consolidated financial statements included in our annual report on Form 10-K for Fiscal 2016. |
(6) | For Fiscal 2016, Mr. Schlarbaum earned $351,273, Mr. Williams earned $141,568 and Mr. Hauvn earned $151,927 in connection with the annual management incentive plan payout as described in the “Narrative to Summary Compensation Table” section below. For Fiscal 2015, Mr. Schlarbaum earned an annual cash incentive of $95,000 pursuant to his employment agreement. As a condition to his employment by the Company, Mr. Williams was guaranteed a minimum $25,000 payout if he remained employed on July 15, 2014, and an additional $25,000 payout if he remained employed at the time the Form 10-K for Fiscal 2015 was filed. He was employed on each of such dates. Thus, the first $25,000 payout was earned in the fiscal year ended September 30, 2014 (“Fiscal 2014”) and the remaining payout was earned in Fiscal 2015. |
(7) | Amounts shown in Fiscal 2016 and Fiscal 2015 for Messrs. Schlarbaum, Williams and Hauvn include the Company match portion of the 401(k) Employee Savings Plan, as described below. Amounts shown for Mr. Williams for Fiscal 2015 also include $895 in insurance premiums paid with respect to policies of life insurance maintained for his benefit. |
NARRATIVE TO SUMMARY COMPENSATION TABLE
Elements of Our Compensation Program
Base salary compensation;
salary;
Annual cash incentive compensation;
incentive; and
Long-term equity incentive compensation; and
Our named executive officers are also entitled to participate in a deferred compensation plan and a 401(k) employee savings plan, both described below.
Base salaries for our named executive officers. The philosophy guiding the Committeeofficers generally are set forth in establishing the Company’s compensation policies and practices is to establish a program that:
increases. For the named executive officers other than the CEO,chief executive officer, the CEO prepares achief executive officer makes recommendations for salary recommendation following a review of individual performance and the factors described above. The recommendation is presentedincreases to the Committee.compensation committee. The Committee relies in part oncompensation committee reviews the CEO’s evaluation of each other namedchief executive officer’s performance in deciding whether to make an adjustment to each executive’sbase salary in a given year. In the case of a change in role, careful consideration is givenand makes recommendations to the new responsibilities, internal pay practices and external market data, in addition to past performance and experience. With respect to theboard of directors for increases.
The compensation committee set Mr. Schlarbaum’s base salary of the CEO, the board considers individual and Company performance, as well as affordability forat $350,000 when he joined the Company and external market practices priorin February 2015. Mr. Schlarbaum’s base salary was adjusted in May 2016 to recommending any changes.
Annual Cash Incentive Awards
Our employed named executive officers generally are eligible for awards of annual cash bonusesincentive awards under our annual management incentive plan, (“MIP”).which we refer to as the MIP. Our named executive officers earn their MIP awards based on achievement of performance goals for the fiscal year. The compensation committee generally sets target incentive plan for Fiscal 2014 (the “2014 MIP”) was designed to reward executives and management for overall Company performance with respect to increases in net income before taxes and incentives and sales. The incentive bonuses under the MIP are generally grantedaward opportunities based on a percentage of each named executive officer’s base salary earned during the fiscal year. We believe this variable performance plan aligns the interests of our named executive officers with our stockholders’ interest in improving the financial strength of the Company as it continues to grow.
| Performance Measure | Weight | Threshold | Target | Maximum | Actual | |||||||||||||
| ($in millions) | ||||||||||||||||||
| Sales | 30% | $ | 121.0 | $ | 128.0 | $ | 135.7 | $ | 127.0 | |||||||||
| EBITDA | 40% | 8.1 | 8.5 | 9.5 | 9.2 | |||||||||||||
| Cash Flow | 30% | 6.7 | 7.0 | 8.0 | 11.8 | |||||||||||||
A reconciliation of EBITDA follows:
| Year Ended | |||
| September 30, 2016 | |||
| (in thousands) | |||
| Net income (loss) | $ | 4,786 | |
| Provision for/(benefit from) income taxes | 70 | ||
| Depreciation and amortization expense | 3,106 | ||
| Interest expense | 1,392 | ||
| EBITDA | $ | 9,354 | |
Using its discretion, the compensation committee reduced EBITDA used in the calculation of MIP for certain expenses incurred in Fiscal 2017 that the compensation committee determined should be reflected in Fiscal 2016 for purposes of the MIP calculation.
The threshold, target and maximum goals are subject to an adjustment factor of 10%, 100% and 200%, respectively, resulting from our actual performance between the target and the respective goal.
The compensation committee evaluates achievement of performance goals after fiscal year the Compensation Committee determines the extentend and may increase or decrease payouts by up to which25%, subject to the Goals have been achieved by each respective Participant and calculates the amount of the Award to be paid to each (the “Calculated Award”). However, the Compensation Committee with approval of the independent members of the Boardboard of Directorsdirectors with respect to the chief executive officer’s incentive award. No adjustments were made to the payouts in the caseFiscal 2016. The payment of MIP awards generally will be made within 15 days after receipt of the CEO,audited financial statements for the fiscal year. Generally, in order to receive awards under the MIP, participants must be employed at the time the awards are paid.
In the event of an accounting restatement participating employees may be required to reimburse us for all or any part of the amount of any payment under the MIP. Forfeitures and clawbacks of payments will also be required to the Compensation Committee in consultationextent necessary to comply with the CEO in the case of other Participants, may modify the Calculated Award by plusapplicable laws or minus up to 25%.regulations.
The Compensation Committeecompensation committee reserved the right in its discretion to modify or waive categories or goals. Among others,goals, however other than the Goals set forth inEBITDA adjustments described above, no such modifications or waivers were made during Fiscal 2016. For Fiscal 2016 we paid awards of $351,273, $141,568 and $151,927 to Messrs. Schlarbaum, Williams and Hauvn, respectively, based on the 2014results for Fiscal 2016 under the MIP are based uponperformance measures.
For Fiscal 2015, Mr. Schlarbaum earned an annual cash incentive of $95,000 pursuant to his employment agreement with the organic growth ofCompany. Under his employment agreement, he earned $47,500 when the Company met its deadline of May 11, 2015 for filing its amended annual report on Form 10-K for Fiscal 2014 and do not reflect the impact of any acquisitions, the impact of which, if any, would be separately reviewed by the Compensation Committee.
The following tables set forth thecompensation committee established a minimum of Net Income Before Taxes of $900,000 for Fiscal 2014 Targets (weighted2015 as a percentage of targeted bonus) and potential payout amountsprecondition for each of the named executive officers, at the threshold, targeted and maximum performance levels. The threshold award level must have been exceeded after taking into consideration the impact of the payment of any bonusMIP awards. This threshold was not met for Fiscal 2015, so the Company did not pay any annual incentive plan awards under the MIP before there can be any payout.with respect to Fiscal 2015.
| Entry Threshold | Target | Maximum | |||||||||||||||||||||||||
| Component | Weight | Goal | Payout | Goal | Payout | Goal | Payout | ||||||||||||||||||||
| (in thousands) | (in thousands) | (in thousands) | |||||||||||||||||||||||||
| NIBT & Incentive | 50 | % | $ | 1,118 | $ | 17,500 | $ | 9,463 | $ | 105,000 | $ | 15,853 | $ | 210,000 | |||||||||||||
| Sales | 50 | % | 148,694 | 17,500 | 159,026 | 105,000 | 166,775 | 210,000 | |||||||||||||||||||
| Total Potential: | 100 | % | $ | 35,000 | $ | 210,000 | $ | 420,000 | |||||||||||||||||||
| Entry Threshold | Target | Maximum | |||||||||||||||||||||||||
| Component | Weight | Goal | Payout(1) | Goal | Payout | Goal | Payout | ||||||||||||||||||||
| (in thousands) | (in thousands) | (in thousands) | |||||||||||||||||||||||||
| NIBT & Incentive | 50 | % | $ | 1,118 | $ | 9,250 | $ | 9,463 | $ | 41,625 | $ | 15,853 | $ | 83,250 | |||||||||||||
| Sales | 50 | % | 148,694 | 9,250 | 159,026 | 41,625 | 166,775 | 83,250 | |||||||||||||||||||
| Total Potential: | 100 | % | $ | 18,500 | $ | 83,250 | $ | 166,500 | |||||||||||||||||||
| Entry Threshold | Target | Maximum | |||||||||||||||||||||||||
| Component | Weight | Goal | Payout | Goal | Payout | Goal | Payout | ||||||||||||||||||||
| (in thousands) | (in thousands) | (in thousands) | |||||||||||||||||||||||||
| NIBT & Incentive | 50 | % | $ | 1,118 | $ | 9,150 | $ | 9,463 | $ | 45,750 | $ | 15,853 | $ | 91,500 | |||||||||||||
| Sales | 50 | % | 148,694 | 9,150 | 159,026 | 45,750 | 166,775 | 91,500 | |||||||||||||||||||
| Total Potential: | 100 | % | $ | 18,300 | $ | 91,500 | $ | 183,000 | |||||||||||||||||||
Long-Term Equity Incentive Awards
Long-term incentives in the form of equity are a significant part of our compensation program for our named executive officers. The purposeobjective of the Company’s Long-Term Incentive Plan (“LTIP”)these long-term incentives is to motivate the Company’s executivesretain and certain designated key employees to enhance the long-term value of the Company by aligning their interests with those of the stockholders. Because Mr. Leo, our former chief financial officer, was not an employee of the Company, he was not eligible to participate in the LTIP during Fiscal 2014. However, in Fiscal 2012, Mr. Leo received an award of 20,000 shares of restricted stock in connection with his appointment as our chief financial officer. 2,000 of these shares vested in Fiscal 2013 and an additional 6,000 shares vested in Fiscal 2014. The remaining unvested shares were forfeited when Mr. Williams replaced Mr. Leo as our CFO. We have been advised that originally Mr. Leo held the restricted such shares for the benefit of Insero, but as part of Insero’s compensation arrangements with Mr. Leo, Insero agreed that 2,000 of the vested shares would no longer be held for the benefit of Insero and instead would be held by Mr. Leo without further beneficial interest of Insero.
Messrs. Schlarbaum, Williams and Hauvn received grants of performance-vesting restricted stock units covering 49,030 shares, 19,881 shares and 21,336 shares, respectively, under the 2010 Plan in Fiscal 2016, which reflected a number of shares with a grant date value of approximately 65% of base salary for Mr. Schlarbaum, and approximately 45% of base salary each for Messrs. Williams and Hauvn. Subject to continued employment, these restricted stock units generally vest based upon the level of achievement of the performance goal set forth on an exhibit to the applicable award agreements, which is based on the Company’s average annual EBITDA, for the period from October 1, 2015 to September 30, 2018. The threshold, target and maximum average annual EBITDA levels under the performance goal are critical in motivating$7,600,000, $9,500,000 and $11,875,000,
respectively. Achievement of the long-term creationperformance goal at threshold, target or maximum would cause 50%, 100% or 150% of stockholder valuethe shares, respectively, to vest, with the percentage of shares that vest based on achievement between threshold and in attractingtarget or between target and retaining key employees with outstanding abilities and skills. For Fiscal 2014, equity-based compensation awardedmaximum determined using straight line interpolation. These restricted stock units are intended to create an incentive for the retention of our named executive officers wasand to encourage long-term performance.
In addition, we awarded time-vesting restricted stock units to Messrs. Schlarbaum, Williams and Hauvn covering 12,258 shares, 4,970 shares and 5,334 shares, respectively, under the 2010 Plan in Fiscal 2016. For each named executive officer, the performance-vesting restricted stock units and the time-vesting restricted stock units reflected 80% and 20%, respectively, of the total number of shares underlying all of the restricted stock units granted during Fiscal 2016. Subject to continued employment, these restricted stock units generally vest on the third anniversary of the grant date, and are intended to create an incentive for the retention of our named executive officers.
Messrs. Schlarbaum and Williams also received grants of 7,500 shares and 3,580 shares, respectively, of time-vesting restricted stock awards under the 2010 Plan in Fiscal 2016. Subject to continued employment, these awards of restricted stock generally vest one-quarter upon the first, second, third and fourth anniversary of their respective grant dates and are intended to provide additional one-time compensation in recognition of the services provided by Messrs. Schlarbaum and Williams.
In addition, Mr. Hauvn received an option to purchase 50,000 shares of the Company’s stockholder-approvedcommon stock under the 2010 Omnibus Incentive Compensation Plan (the “2010 Plan”).in Fiscal 2016. This option was intended as payment of a relocation award under Mr. Hauvn’s employment agreement after the Company’s compensation committee waived the requirement that Mr. Hauvn relocate to the greater Rochester, New York area. Subject to continued employment, the option generally vests and becomes exercisable with respect to 10%, 30%, 60% and 100% of the covered shares on August 9, 2017, August 9, 2018, August 9, 2019 and August 9, 2020, respectively. During Fiscal 2015, we granted option awards to Messrs. Schlarbaum and Hauvn for 400,000 shares and 50,000 shares, respectively, in connection with their appointments as executive officers of the Company.
The LTIPlong-term incentive plan for Fiscal 2014 (the “2014 LTIP”)2015, which we refer to as the LTIP, provided for awards of time-vesting restricted stock to be made under the 2010 Plan, to enable and encourage participants to increase their ownership in the Company by rewarding achievement of a high level of corporate financial performance through providing opportunities to participate in stockholder gains. The 2014 LTIP was approved by the Committee at its meeting on November 13, 2013.
Plan. The LTIP measuresmeasured Company performance over a one-year fiscal period and the award is paid outany restricted stock awards would have been granted, if at all, at the end of the fiscal periodyear based on the attainment of annualcompany-wide performance goals, measured company-wide and pre-established bygoals. For Fiscal 2015, the Committee. The Committeecompensation committee established arevenue growth as the single performance goal (“Performance Goal”) forgoal. No awards were granted during Fiscal 2014, revenue growth, which is2015 because the metric that the Committee believes is key to building long-term stockholder value. Revenue growththreshold performance measure was chosen as an objective measure of building long-term stockholder value because it best captures the nature of the Company’s business strategy. The Company’s customers seek contract manufacturing partners that provide high quality, long-term stable capabilities that enhance their supply chain. Establishing and growing these relationships requires several years to build trust, and once that trust is established, these relationships can extend over several years. Moreover, potential customers often rely on the Company’s current customers as tangible signals of the Company’s capabilities. Growing revenues today generates future revenues and hence future value for the shareholders.not met.
| Component | Threshold | Target | Maximum | |||||||||
| Revenue (in thousands) | $ | 148,694 | $ | 159,026 | $ | 166,775 | ||||||
Perquisites and Personal Benefits
Retirement Benefits
All employees, including our named executive officers, are eligible to participate in the Company’s 401(k) Employee Savings Plan (“Savings(the “Savings Plan”). The Savings Plan is a defined contribution tax-qualified retirement savings plan pursuant to which employees are able to contribute a portion of their eligible cash compensation to the Savings Plan. The Company matches up to 1.5% of contributions made by participating employees of our IEC Electronics Corp – Albuquerque subsidiary and beginning June 28, 2014, 2014, up to 1.5% of contributions made by other participating Company employees. None of our named executive officers is covered by a pension plan or non-qualified deferred compensation plan.
The following table sets forth information concerning totalemployment agreements we entered into in Fiscal 2015 with Messrs. Schlarbaum, Williams and Hauvn contain clawback provisions for recovering certain compensation earned or paid to our named executive officers for Fiscal 2014 and Fiscal 2013. A description of the material factors necessary to understand the information in the table is contained above inevent of an accounting restatement resulting from the “Base Salary Compensation,” “Annual Cash Incentive Awards,” and “Long-Term Equity Incentive Awards” subsections of “Compensation of Named Executive Officers and Directors - General Information. More detailed information also is presented in the other tables and in the footnotes to the tables.executives’ willful or grossly negligent conduct or financial dishonesty.
Jeffrey T. Schlarbaum, President and Chief Executive Officer
Name and Principal Position | Year | Salary (1) | Stock Awards (2) (3) | Option Awards | Non-Equity Incentive Plan Compensation (4) | All Other Compensation (5) (6) | Total | |||||||||||||||||||
| W. Barry Gilbert, | 2014 | $ | 359,093 | $ | — | $ | — | $ | — | $ | 33,453 | $ | 392,546 | |||||||||||||
| Chairman & CEO | 2013 | $ | 348,154 | $ | 135,547 | $ | — | $ | — | $ | 31,903 | $ | 515,604 | |||||||||||||
| Michael T. Williams | 2014 | $ | 111,742 | $ | 206,000 | $ | — | $ | 25,000 | $ | — | $ | 342,742 | |||||||||||||
| VP and CFO | 2013 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||||||
| Brett E. Mancini | 2014 | $ | 187,374 | $ | 122,400 | $ | — | $ | — | $ | 1,109 | $ | 310,883 | |||||||||||||
| VP | 2013 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||||||
| Vincent A. Leo, | 2014 | $ | — | $ | — | $ | — | $ | — | $ | 237,500 | $ | 237,500 | |||||||||||||
| Former CFO | 2013 | $ | — | $ | — | $ | — | $ | — | $ | 329,000 | $ | 329,000 | |||||||||||||
common stock outstanding on the date of grant. Thus, on March 20, 2015, we granted Mr. Schlarbaum an option to purchase 400,000 shares of our common stock under the 2010 Plan and an option to purchase 16,145 shares as an inducement award outside of the 2010 plan, each at an exercise price of $4.10 per share. One-fourth of the sign-on option (representing the option to purchase 104,036 shares of our common stock) vested on March 20, 2016 and the remaining portion vests and becomes exercisable in equal installments on each of the second, third and fourth anniversaries of March 20, 2015, the date of the employment agreement.
In the event of Mr. Schlarbaum’s termination without “cause” by us or by Mr. Schlarbaum for “good reason,” as such terms are defined in his employment agreement, we will pay or provide the following termination benefits:
salary continuation at his base salary then in effect for one year following termination;
a pro rata annual incentive award;
accelerated vesting of his sign-on option;
accelerated vesting of any outstanding long-term incentive awards; and
continued coverage under our health insurance plan for twelve months following termination.
In the event of Mr. Schlarbaum’s termination without “cause” by us or by Mr. Schlarbaum for “good reason” within two years of a “change-in-control,” as such terms are defined in his employment agreement, we will pay or provide all of the compensation and benefits referred to immediately above, except that continued coverage under our health insurance plan will continue for twenty-four months following termination.
In connection with his joining the Company in Fiscal 2015, Mr. Schlarbaum also received a cash sign-on bonus of $50,000.
Michael T. Williams, Vice President, Finance and Chief Financial Officer
In September 2015, we entered into an at-will employment agreement with Mr. ManciniWilliams that superseded his prior employment agreement with us dated February 11, 2014. In consideration for entering into the employment agreement, Mr. Williams received a one-time cash payment of $15,000. The employment agreement entitles Mr. Williams’ to a base salary of $205,000. The chief executive officer periodically will review Mr. Williams’ salary and make recommendations to the compensation committee regarding any increases. We may not decrease Mr. Williams’ base salary as provided under the employment agreement except as necessary to enforce the clawback provisions.
Pursuant to the terms of the employment agreement, in the event of Mr. William’s termination without “cause” by us or by Mr. Williams for “good reason,” as such terms are defined in his employment agreement, we will pay or provide the following termination benefits:
salary continuation at his base salary then in effect for one year following termination;
a pro rata annual incentive award; and
continued coverage under our health insurance plan for six months following termination.
In the event of Mr. Williams’ termination without “cause” by us or by Mr. Williams for “good reason” within two years of a “change-in-control,” as such terms are defined in his employment agreement, we will pay or provide all of the compensation and benefits referred to immediately above, except that vesting of any of Mr. Williams’ outstanding long-term incentive awards will be accelerated.
Mr. Williams participates in our benefit plans generally applicable to other employees and executives. In addition, the employment agreement entitles Mr. Williams to receive annual and long-term incentive awards, generally on the terms established by the compensation committee for the applicable fiscal year.
Jens Hauvn, Senior Vice President, Operations
On September 8, 2015, we entered into an at-will employment agreement with Mr. Hauvn to serve as our Senior Vice President, Operations. Mr. Hauvn’s employment agreement entitles him to an annual base salary of $220,000, which the chief executive officersofficer periodically will review for increases. We may not decrease Mr. Hauvn’s base salary as provided under the employment agreement except as necessary to enforce the clawback provisions. The employment agreement also entitles Mr. Hauvn to earn annual and long-term incentive awards on the terms established by the compensation committee for the applicable fiscal year. Mr. Hauvn’s employment agreement provided for one-time awards of (i) a stock option to purchase 50,000 shares of the Company’s common stock, (ii) a stock option to purchase 50,000 shares of the Company’s common stock upon Mr. Hauvn’s relocation of his primary residence to the greater Rochester, New York area, and (iii) a cash signing bonus of $9,500. On August 9, 2016, the compensation committee waived the requirement that Mr. Hauvn relocate to the greater Rochester, New
York area to receive the option to purchase 50,000 shares. Accordingly, on such date, Mr. Hauvn was granted an option to purchase 50,000 shares of common stock at $5.25 per share under the 2010 Plan. Subject to his continuous employment, the option vests and becomes exercisable as follows: 10% on August 9, 2017, 20% on August 9, 2018, 30% on August 9, 2019 and 40% on August 9, 2020.
Mr. Hauvn participates in Company benefit plans generally applicable to other senior executives.
In the event of Mr. Hauvn’s termination without “cause” by the Company or by Mr. Hauvn for “good reason,” as such terms are defined in his employment agreement, the Company will pay or provide the following termination benefits:
salary continuation at his base salary then in effect for six months following termination;
a pro rata annual incentive award;
the right to exercise any vested option(s) before the option’s expiration date and one year following termination, whichever is earlier;
accelerated vesting of any outstanding long-term incentive awards; and
continued coverage under our health insurance plan for six months following termination.
As of September 30, 2016, Mr. Hauvn did not utilize health insurance coverage through the Company.
Change in Control Provisions |
Our 2001 Stock Option and Incentive Plan, our 2010 Plan, and the stock option, restricted stock award and restricted stock unit award agreements executed thereunder, provide that upon a change in control, as defined in the plans, unless the board otherwise determines, all outstanding options and restricted stock will immediately become fully vested and exercisable. |
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END
The following table sets forth information concerning stock options and stock awards held by the named executive officers at September 30, 2014.2016.
| Option Awards | Stock Awards | |||||||||||||||||||
| Name | Number of securities underlying unexercised options (#) exercisable | Number of securities underlying unexercised options (#) unexercisable | Option exercise price ($) | Option expiration date | Number of Shares or Units of Stock That Have Not Vested (#)(1)(2)(3) | Market Value of Shares or Units of Stock That Have Not Vested ($)(4) | ||||||||||||||
| W. Barry Gilbert | — | — | $ | — | — | 36,231 | $ | 163,402 | ||||||||||||
| Michael T. Williams | — | — | — | — | 50,000 | $ | 225,500 | |||||||||||||
| Brett E. Mancini | 40,000 | — | $ | 1.88 | 1/21/2015 | 36,012 | $ | 162,414 | ||||||||||||
| Vincent A. Leo | — | — | — | — | — | — | ||||||||||||||
| Option Awards | Stock Awards | ||||||||||||||||||||||||
| Name | Number of securities underlying unexercised options (#) exercisable | Number of securities underlying unexercised options (#) unexercisable (1) | Option exercise price ($) | Option expiration date | Number of Shares or Units of Stock That Have Not Vested (#) (2) (3) | Market Value of Shares or Units of Stock That Have Not Vested ($) | Equity Incentive plan awards: Number of unearned shares, units or other rights that have not vested (#)(4) | Equity Incentive plan awards: Market of payout value of unearned shares, units or other rights that have not vested ($) | |||||||||||||||||
| Jeffrey T. Schlarbaum | 100,000 | 300,000 | $ | 4.10 | 3/20/2025 | — | — | — | — | ||||||||||||||||
| 4,036 | 12,109 | $ | 4.10 | 3/20/2025 | — | — | — | — | |||||||||||||||||
| — | — | — | — | 7,500 | 35,775 | — | — | ||||||||||||||||||
| — | — | — | — | 12,258 | 58,471 | — | — | ||||||||||||||||||
| — | — | — | — | — | — | 49,030 | 233,873 | ||||||||||||||||||
| Michael T. Williams | — | — | — | — | 3,580 | 17,077 | — | — | |||||||||||||||||
| — | — | — | — | 4,970 | 23,707 | — | — | ||||||||||||||||||
| — | — | — | — | — | — | 19,881 | 94,832 | ||||||||||||||||||
| Jens Hauvn | 5,000 | 45,000 | 4.25 | 9/8/2022 | — | — | — | — | |||||||||||||||||
| — | 50,000 | 5.25 | 8/9/2023 | — | — | — | — | ||||||||||||||||||
| — | — | — | — | 5,334 | 25,443 | — | — | ||||||||||||||||||
| — | — | — | — | — | — | 21,336 | 101,773 | ||||||||||||||||||
(1) |
| 2016. Awards |
| a. |
| Vesting Dates | Amounts | |
| March 20, 2017 | 104,036 shares | |
| March 20, 2018 | 104,036 shares | |
| March 20, 2019 | 104,037 shares | |
| b. | Mr. Hauvn’s stock options were granted on September 8, 2015 and |
| Amounts | |||
| September 8, 2018 | |||
| 5,000 shares | |||
| August 9, 2018 | 15,000 shares | ||
| August 9, 2019 | 30,000 shares | ||
(2) Stock awards included in the above table reflect awards granted in Fiscal 2016. Awards are subject to the following vesting periods:
| Amounts | ||
| June 7, 2018 | ||
| June 7, 2019 | ||
| June 7, 2020 | ||
| Amounts | ||
| June 14, 2018 | ||
| June 14, 2020 | ||
Cash Compensation Paid to Non-Employee Directors
Annual Board Retainer (1) | $32,000, payable in cash or stock (5) | |
Annual Committee Chair Retainer (2) | $8,000, payable in quarterly installments in cash | |
Board Meeting Fee (3) | $4,000 payable in quarterly installments at the end of each quarter in cash or stock (5) | |
Supplemental Fee (4) | $1,000, payable in cash at the end of the fiscal year | |
| Reimbursement for expenses incurred in attending board meetings | ||
(1) | Payable in quarterly installments at the beginning of each quarter. |
(2) | Payable in $2,000 installments at the beginning of each quarter. |
(3) | Payable in $1,000 installments in connection with each regular quarterly meeting actually attended. |
(4) | The supplemental payment will be paid in cash, at the end of the fourth quarter of each fiscal year. |
(5) | Non-employee directors may elect to receive payment of their annual board retainer and quarterly meeting fees in cash or in shares of the Company’s common stock. |
Equity Compensation Paid to Non-Employee Directors
MKT.
Director Compensation Table
The following table summarizes the cash and equity compensation earned by non-employee directors during Fiscal 2014.
2016.
Director (1) | Fees Earned or Paid in Cash ($) or Stock (2) | Stock Awards ($) (3)(4) | All Other Compensation ($)(5) | Total ($) | ||||||||||||
| Florence D. Hudson | $ | 37,000 | $ | 24,998 | $ | 72 | $ | 62,070 | ||||||||
| John Carlton Johnson | $ | 18,000 | $ | 25,000 | $ | 72 | $ | 43,072 | ||||||||
| Edward W. Kay, Jr. | $ | 42,333 | $ | 24,998 | $ | 72 | $ | 67,403 | ||||||||
| Eben S. Moulton | $ | 45,000 | $ | 24,998 | $ | 72 | $ | 70,070 | ||||||||
| James C. Rowe | $ | 39,667 | $ | 24,998 | $ | 72 | $ | 64,737 | ||||||||
| Jerold L. Zimmerman | $ | 45,000 | $ | 24,998 | $ | 72 | $ | 70,070 | ||||||||
Name(1) | Fees Earned or Paid in Cash ($)(2) | Stock Awards ($) (3)(4) | All Other Compensation ($)(5) | Total ($) | ||||||||
| Keith M. Butler | 37,000 | 24,999 | 52 | 62,051 | ||||||||
| Charles P. Hadeed | 53,000 | 24,999 | 52 | 78,051 | ||||||||
| Lynn J. Hartrick | 45,000 | 24,999 | 52 | 70,051 | ||||||||
| Andrew M. Laurence | 37,000 | 24,999 | 52 | 62,051 | ||||||||
| Jeremy R. Nowak | 37,000 | 24,999 | 52 | 62,051 | ||||||||
| Eric B. Singer | 37,000 | 24,999 | 52 | 62,051 | ||||||||
(1) |
(2) | The fees set forth in this column reflect compensation paid in cash |
(3) | The amounts shown reflect the aggregate grant date fair value computed in accordance with |
(4) | The aggregate number of unvested restricted stock awards at the end of Fiscal |
| Keith M. Butler | 9,720 | ||
| Charles P. Hadeed | 9,720 | ||
| Lynn J. Hartrick | 9,720 | ||
| Andrew M. Laurence | 9,720 | ||
| Jeremy R. Nowak | 9,720 | ||
| Eric B. Singer | 9,720 | ||
(5) | Reflects the dollar value of insurance premiums paid by the Company during Fiscal |
Deferred Compensation Plan
Effective January 1, 2009, the board established the IEC Electronics Corp. Board of Directors Deferred Compensation Plan (“Directors Deferred Plan”) which allows the non-employee directors of the Company the opportunity to defer all or part of their cash compensation. No director elected to participate in the Directors Deferred Plan in Fiscal 2014.2016.
CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS
Policies and Procedures for Review, Approval or Ratification of Related Person Transactions
Our board has adopted a written policy addressing the Company’s procedures with respect to the review, approval and ratification of transactions with related persons that are required to be disclosed pursuant to SEC rules. The policy provides that any transaction, arrangement or relationship with a “related person” (as defined in the policy) in which the Company participates and in which the related person has or will have a direct or indirect material interest and in which the amount involved is expected to exceed $90,000 in any fiscal year, will be subject to the prior review and approval or ratification by the audit committee.
OTHER MATTERS
Dated: January 26, 2017 By Order of the Board of Directors
Newark, New York Jennifer M. Brown, Corporate Secretary
| We will make available at no cost, upon your written request, a copy of our annual report on Form 10-K for the fiscal year ended September 30, |
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| IEC ELECTRONICS CORP. | To withhold authority to vote for any individual nominee(s), mark "For All Except" and write the number(s) of the nominee(s) on the line below. | ||||||||||||||
| For All | Withhold All | For All Except | |||||||||||||
The Board of Directors recommends you vote FOR all the nominees listed. | ¨ | ¨ | ¨ | ||||||||||||
| 1. | Election of Directors | ||||||||||||||
| Nominees: | |||||||||||||||
| 01) | Keith M. Butler | 05) | Jeremy R. Nowak | ||||||||||||
| 02) | Charles P. Hadeed | 06) | Jeffrey T. Schlarbaum | ||||||||||||
| 03) | Lynn J. Hartrick | 07) | Eric B. Singer | ||||||||||||
| 04) | Andrew M. Laurence | ||||||||||||||
| The Board of Directors recommends you vote FOR proposals 2 and 3. | |||||||||||||||
| For | Against | Abstain | |||||||||||||
| 2. | To ratify the selection of Crowe Horwath LLP as our independent registered public accounting firm for the fiscal year ending September 30, 2017 | ¨ | ¨ | ¨ | |||||||||||
| 3. | To approve, on an advisory basis, the compensation paid to our named executive officers. | ¨ | ¨ | ¨ | |||||||||||
NOTE: In their discretion, and in accordance with applicable law, the named proxies may vote upon such other matters that may properly come before the meeting or any adjournment or adjournments thereof. | |||||||||||||||
| Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer. | |||||||||||||||
| Signature [PLEASE SIGN WITHIN BOX] | Date | Signature (Joint Owners) | Date | ||||||||||||
The undersigned, revoking all prior proxies, hereby appoints W. Barry Gilbert and Eben S. Moulton, and either one of them with full power of substitution, as proxy or proxies to vote for the undersigned, in the name of the undersigned, all of the Common Stock of IEC Electronics Corp. (the “Company”) of the undersigned, as if the undersigned were personally present and voting at the Company’s Annual Meeting of Stockholders to be held at the office of the Company, 105 Norton Street, Newark, New York 14513, on Wednesday, January 28, 2015 at 9:00 a.m. (the “Annual Meeting”), and at any and all adjournments and postponements thereof, upon the matters specified below and, in their discretion, upon such other matters as may properly come before the meeting. | The Board of Directors recommends a vote FOR the election of the following nominees for director. | ||||||||
1. Election of seven (7) directors | |||||||||
| For | Withhold | For All Except | |||||||
| ¨ | ¨ | ¨ | |||||||
| 01 | W. Barry Gilbert | 02 | Florence D. Hudson | ||||||
| 03 | John Carlton Johnson | 04 | Edward W. Kay, Jr. | ||||||
| 05 | Eben S. Moulton | 06 | James C. Rowe | ||||||
| 07 | Jerold L. Zimmerman | ||||||||
| INSTRUCTION: To withhold authority to vote for any individual nominees, mark “For All Except” and write the name or number of the nominee(s) in the space provided below. | |||||||||
Authorized Signature: This Section must be completed for your vote to be counted. Please sign and date below. | The Board of Directors recommends a vote FOR proposals 2 and 3. | ||||||||
| Date: | For | Against | Abstain | ||||||
| 2. | Ratification of the selection of Crowe Horwath LLP as the Company’s independent registered public accounting firm FOR FISCAL 2015. | ¨ | ¨ | ¨ | |||||
| Sign Above | Co-holder (if any) sign above | ||||||||
Please sign exactly as your name appears hereon. Joint owners should each sign. When signing as an attorney, administrator, executor, corporate officer, trustee, guardian or custodian, please give full title. | 3. | Advisory vote on named executive officer compensation (say-on-pay vote). | ¨ | ¨ | ¨ | ||||
| 4. | In their discretion, transaction of such other business as may properly come before the Annual Meeting or any adjournment or postponement thereof. | ||||||||
| THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF IEC ELECTRONICS CORP. | |||||||||
Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting to be held on March 7, 2017:
The Notice and Proxy Statement and Annual Report with Form 10-K are available at www.proxyvote.com.
| M98768-P71713 | |||
| IEC ELECTRONICS CORP. | |||
| Annual Meeting of Stockholders | |||
| March 7, 2017 at 9:00 AM | |||
This proxy is solicited by the Board of Directors and each matter to be voted on at the | |||
The undersigned hereby appoints Jeremy R. Nowak and Jeffrey T. Schlarbaum, and each of them, each with power of substitution, as proxies to attend the Annual Meeting of Stockholders of IEC Electronics Corp. to be held at the offices of Harter Secrest & Emery LLP located at 1600 Bausch & Lomb Place, 13th Floor, Rochester, NY 14604, on Tuesday, March 7, 2017 at 9:00 a.m., Eastern Time, and any adjournment thereof, and to vote as directed by the undersigned on the reverse side of this proxy, the number of shares the undersigned would be entitled to vote if personally present at such meeting. | |||
| l | This proxy will be voted as specified by you, and it revokes any prior proxy given by you. | ||
| l | Unless you withhold authority to vote for one or more of the nominees according to the instruction on the reverse side of this proxy, your signed proxy will be voted FOR the election of the seven director nominees listed on the reverse side of this proxy and described in the accompanying proxy statement. | ||
| l | Unless you specify otherwise, your signed proxy will be voted FOR Proposals 2 and 3 listed on the reverse side of this proxy and described in the accompanying proxy statement. | ||
| l | You acknowledge receipt with this proxy of a copy of the notice of annual meeting and proxy statement dated January 26, 2017, describing more fully the proposals listed in this proxy. | ||
| Continued and to be signed on reverse side | |||