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.
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.
Stockholders and other parties may communicate directly with the board of directors or the relevant board member by addressing communications to:
IEC Electronics Corp.
All stockholder correspondence will be compiled by our Corporate Secretary and forwarded as appropriate.
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.
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.
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.
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.
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,
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.
Unless authority to soThe board of directors unanimously recommends that the stockholders vote is withheld,FOR the persons named in the proxy card intend to vote shares as to which proxies are received in favor of approval of the non-binding resolution approving the compensation paid to our named executive officers.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE APPROVAL OF THE COMPENSATION PAID TO OUR NAMED EXECUTIVE OFFICERS.
COMPENSATION OF NAMED EXECUTIVE OFFICERS AND DIRECTORS
Named Executive Officers
This proxy statement containsThe following tables and related narrative contain information aboutregarding the compensation paid to our named executive officers for our two most recently completed fiscal years, which ended on September 30, 2016 and September 30, 2015. Our named executive officers are our chief executive officer and our two other most highly compensated executive officers serving at the end of Fiscal 2014, and one former executive officer, who would have been one of our most highly compensated executive officers during Fiscal 2014 but for the fact that he was no longer serving as an executive officer at the end of Fiscal 2014 (collectively, the “named executive officers”).2016:
W. Barry GilbertJeffrey T. Schlarbaum - ChairmanPresident and Chief Executive Officer (“CEO”)
Michael T. Williams - Vice President, Finance and Chief Financial Officer (“CFO”)
Brett E. ManciniJens Hauvn - Senior Vice President, Business Development and Engineering Solutions (“VP”)Operations
Vincent A. Leo - Former Chief Financial Officer (“former CFO”)
General InformationSUMMARY COMPENSATION TABLE
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.
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| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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. |
Objective
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(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. |
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(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. |
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(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. |
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(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. |
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(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. |
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(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
The goal of our executive compensation program is to support the attainment of our long and short-term strategic and financial objectives, thereby aligning the interests of the Company’s executives with the interests of stockholders. Our executive compensation program is intended to provide a competitive program that enables us to attract, motivate, and retain the key executives required to enhance stockholder value.
The Company’s Approval and Decision Making Process
The compensation committee of our board of directors (the “Committee”) reviews and recommends to the full board all compensation decisions regarding our directors and chief executive officer, and reviews and approves all compensation decisions regarding our other named executive officers. The Committee approves equity awards for the Company’s other employees, including by delegation to the Company’s CEO the authority to award at his discretion up to a specified number of stock options to non-executive employees for special performance or recruitment to the Company. In Fiscal 2014, an aggregate of 50,500 options was granted to non-executive employees and new hires pursuant to such delegated authority. Additionally, an aggregate of 225,703 shares of restricted stock was issued by the Committee to key employees, including members of the senior management team.
In order to maintain market competitiveness the Committee periodically reviews relevant competitive data provided by third party compensation professionals for the purpose of understanding current compensation practices. The Committee last engaged a compensation consultant, Grahall Partners LLC, to assist the Committee in reviewing compensation for our executive officers and directors in the fiscal year ended September 30, 2012 ("Fiscal 2012"). The Committee does not have a formal policy of “benchmarking” named executive officer compensation or director compensation against a certain percentile of the market data or using the market data to establish the level or mix of compensation. Rather, it uses market data as one
reference point among a number of factors in evaluating compensation. The Committee also considers factors described in more detail below in “Compensation of Our Named Executive Officers – Elements”.
Starting in Fiscal 2013, the Committee considered the results of the stockholder advisory vote on executive compensation at the most recent annual meeting of stockholders. Approximately 86% of stockholders who voted on the say-on-pay proposal at the 2014 Annual Meeting voted to approve the Company’s executive compensation.
Compensation of Our Named Executive Officers – Elements
The compensation program for the named executive officers consists of the following elements:
Base salary compensation;
salary;
Annual cash incentive compensation;
incentive; and
Long-term equity incentive compensation; and
Perquisites and other personal benefits.incentive.
Our named executive officers are also entitled to participate in a deferred compensation plan and a 401(k) employee savings plan, both described below.
The Committee has designed an executive compensation program consisting of these elements, which are intended to work together to provide a total compensation package that is reasonable, competitive and related to both the Company’s performance and the individual performance of Company employees, includingBase Salary
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:
is competitivetheir employment agreements with the market in order to help attract, motivate and retain highly qualified employees and executives;
creates a performance-based link between executive compensation and the attainment of financial, operational and strategic goals that we believe are critical drivers of sustained value creation over the long term;
aligns our executives’ interests with the interests of our stockholders;
does not create excessive risk taking behavior by our employees and executives; and
fosters a long-term commitment by executives.
Mr. Leo, our former CFO, did not participate in any of the compensation programs described above. He was not an employee of the Company, but rather performed his services under an engagement letter between the Company and Insero more particularly described in “Certain Relationships and Related Person Transactions – Policies and Proceduresare subject to review for Review, Approval and Ratification of Related Person Transactions” on page 34.
Base Salary Compensation
Base salaries are used to provide a fixed amount of compensation for the named executive officer’s regular work. The salaries of the named executive officers are reviewed on an annual basis, as well as at the time of promotion or other change in responsibilities. Salaries are developed for each position using internal comparability, external market data collected through Grahall, affordability, the responsibilities and scope of each position, and experience, skills and leadership capabilities required to perform each position.
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.
Changes$357,000 to reflect a 2% cost of living adjustment. Pursuant to their employment agreements entered into with the Company in the CEO’s compensation are generally effective on November 1 of each year, and compensation changes for other executives are typically effective on January 1 of each year. With respect to executive officers servingSeptember 2015, Mr. Hauvn’s base salary was set at the end of Fiscal 2014, for Fiscal 2013, the Committee recommended, and the board approved, a 7% increase in Mr. Gilbert’s salary, from $326,000 to $350,000, and for Fiscal 2014 no change was made to his salary. In Fiscal 2014 Mr. Mancini’s salary of $183,000,$220,000 and Mr. Williams’s salary of $185,000, were approved by the Committee in connection with their appointments as executive officers on January 29, 2014 and February 8, 2014 respectively.
Our former executive officer, Mr. Leo, served as our chief financial officer during Fiscal 2013 and until June 1, 2014, remained a principal and shareholder of Insero during the entire period of his service, and was compensated by Insero, as more fully described below under “Certain Relationships and Related Person Transactions”. The Company did not pay anyWilliams’ base salary directly towas set as $205,000. Before taking the position of Senior Vice President, Operations in September 2015, Mr. Leo.Hauvn’s base salary was $180,000.
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.
The 2014 MIP linked awards to performance results and was designed to provide cash incentive awards to the participating executive officers of the Company (“Participants”). For Fiscal 2014,2016, the Participants consisted of our CEO, our CFO and our VP. Because Mr. Leo, our former CFO, was not an employee ofcompensation committee set certain performance goals related to sales, as disclosed in the Company, he was not eligible to receive awards under the 2014 MIP. The 2014 MIP was finalized by the Committee on November 13, 2013.
Each Participant was eligible to receive an award, if any, determined on the basis of the degree of achievement of certain specified fiscal year performance objectives (“Goals”). For Fiscal 2014, Goals were based upon the following measurements:
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(i) | Net Income Before Taxes and Incentives -- Adjustments are made for gains or losses from non-operating events such as acquisition escrow clawbacks, and calculations exclude the impact of unbudgeted legal and accounting fees and director’s and officer’s insurance payments arising from the restatement of the Company’s earnings described in its Annual Report on Form 10-K/A and Quarterly Report on Form 10-Q/A, each filed with the Securities and Exchange Commission on July 3, 2013 |
(ii) Sales
The Committee assigned a weighting factor of 50%, to each Goal for each Participant, with the total of the weighting factors for each Participant being 100%.
The Compensation Committee established:
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(i) | as a precondition for payment of any awards, the Company had to have positive net income for Fiscal 2014 ("Plan Threshold"), |
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(ii) | minimum plan entry performance levels for each Goal for each Participant (“Minimum(s)”), set at a level in excess of prior fiscal year achievement to assure that stockholders receive the first portion of the benefit of increased value, |
(iii) a target goal (the “Target”) for each Goal for each Participant based on the Company budget, and
(iv) a maximum cap ("Maximum") of 200% of the Target percentage of base salary.
If all Targets were achieved, Awards would be earned by Participants equal to the following percentages of base salary: (i) for the CEO - 60%, (ii) for the CFO- 45%, pro rated for the portion of the year worked, with a minimum of $50,000 provided he remains employed on the date of filing of the Company’s Annual Report of Form 10-K for Fiscal 2014,2016, EBITDA, defined for purposes of the MIP as earnings before interest, taxes, depreciation and (iii)amortization, and cash flows, defined for purposes of the VP- 50%. If performanceMIP as the reduction in debt, net of cash year over year, as a precondition for payment of any MIP awards. The annual award target during Fiscal 2016 for Messrs. Schlarbaum, Williams and Hauvn was less than Target but at least the Minimum the Participants would receive a prorated Award
between the Minimum65 % of plan salary, 45% of plan salary, and the Target based upon actual performance. If achievement was in excess45% of Target, the Award would be prorated between the Target and the Maximum. At the Minimum, entry is at 5% of baseplan salary, for each Goal. For performance from Minimum to Target, and from Target to Maximum, Awards are measured prorated linearly. The Compensation Committee retained the right to review and consider performance above the 200% cap. No Award would be made with respect to a Goal if the applicable Minimum was not achieved.respectively.
AfterThe following table sets forth the endFiscal 2016 goals at the threshold, target and maximum performance levels, as well as actual amounts achieved, as well as the weight given each performance measure.
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Performance Measure | | Weight | | Threshold | | Target | | Maximum | | Actual |
($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.
Payment of any Award to a Participant is made within fifteen (15) days after receipt by the Company of the audited financial statementsquarterly reports on Forms 10-Q for the applicable fiscal year. In orderquarters ended December 26, 2014 and March 27, 2015. He also received $47,500 in Fiscal 2015 pursuant to receive an Award, a Participant must be an employee of the Company on the date such Award is to be paid.his employment agreement.
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.
W. Barry Gilbert, Chairman & CEO:
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| | | | 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 |
|
Michael T. Williams, Vice President, Finance and Chief Financial Officer:
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| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | 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 |
|
(1)For Fiscal 2014 only, subject to proration for portion of year worked and a minimum payout of $25,000 if employed on July 15, 2014 and additional $25,000 if employed at time of filing of Annual Report on Form 10-K ("2014 10-K")
Brett E. Mancini, Vice President, Business Development and Engineering Solutions:
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| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | 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 |
|
No MIP awards were earned related to Fiscal 2014 with the exception of the guaranteed minimum of $50,000 for Mr. Williams described above, $25,000 of which was earned on filing the Company's 10-K for fiscal 2014 during fiscal 2015. The actual cash incentive awards paid to our named executive officers for Fiscal 2013 and Fiscal 2014 performance are shown in the “Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table on page 28.
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.
Equity-based compensation and ownership is intended to ensure thatmotivate our named executive officers, and other key employees have a continuing investmentto encourage long-term performance by enabling our named executive officers to participate in the long-term growth and financial success of the Company. The Committee believes that methodsFor Fiscal 2016, we changed the long-term incentive portion of equity-based incentiveour compensation such asprogram by generally making grants in the form of restricted stock units, instead of restricted stock, and by using average annual EBITDA as the performance goal for performance-vesting awards.
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.
The Committee also establishes:
| |
(i) | a minimum entry performance level for the Performance Goal (“Performance Goal Minimum”), set at a level in excess of prior fiscal year achievement to assure that stockholders receive the first portion of the benefit of increased value, and |
| |
(ii) | a target goal (the “Target”) for the Performance Goal based on the Company budget. |
If the Performance Goal was achieved at Target, the respective Participants would earn awards with a value equal to the following percentages of base salary: (i) for the CEO - 60%, (ii) for the VP - 30% and (iii) for other Participants - 20%. For Fiscal 2014 the CFO, Mr. Williams, was not eligible to participate in the LTIP, and instead received a grant of 50,000 shares of restricted stock vesting 10%, 20%, 30% and 40%, respectively, on the second through fifth anniversary dates of his employment.
If performance was less than the Target, but at least the Performance Goal Minimum, the award would be pro rated, using a calculation base of 50% of the award at Target for achievement at exactly the Performance Goal Minimum. If the Target was surpassed, the award at Target would increase pro rata up to a cap of 200% of the Target level award. The Compensation
Committee reserved the right to review and consider performance above the 200% cap. No award would be made if the Performance Goal Minimum was not achieved.
The equivalent dollar value of each award, as calculated based on the applicable percentage of base salary, is the “Calculated Value”. For Fiscal 2014, each award would be calculated in the following way. The number of shares of restricted stock awarded is equal to the Calculated Value divided by the average closing price of the Company’s common stock on the NYSE MKT for all trading days falling within the period beginning July 1, 2014 and ending September 30, 2014.
After the end of the fiscal year, the Committee determines the extent to which the Performance Goal has been achieved and approves the amount of the award to be paid to each participant. However, (i) based on his evaluation of a Participant’s performance, the CEO may recommend that the Calculated Value for that Participant be modified by plus or minus up to 25%, and (ii) the Committee may recommend that the Calculated Value for the CEO be modified by plus or minus up to 25%. All modifications to a Calculated Value for any participant must be approved by the Committee. Additionally, any modification to the Calculated Value for the CEO must be approved by the independent members of the board of directors. Use of the modification factor is not expected to be an annual event, but is to be used sparingly, when the actual results achieved, whether positive or negative, are not appropriately reflected in the Calculated Value.
All LTIP awards are evidenced by a Restricted Stock Award Agreement in the manner set forth in 2010 Plan. Each award would be subject to a five-year period of restriction, during which period the unvested restricted stock may not be sold or otherwise transferred. As to one half (1/2) of the restricted shares, the restrictions would lapse and the shares would vest on the date four (4) years after the date the award is granted. As to the other one half (1/2) of the shares, the restrictions would lapse and the shares would vest on the date five (5) years after the date the Award is granted. If a Participant’s employment with the Company is terminated for any reason whatsoever, other than death, disability, retirement or change in control, before the lapse of the restrictions, the unvested restricted stock would be deemed forfeited by the participant and would be returned to or cancelled by the Company. The Restricted Stock Award Agreements may contain such other terms and conditions deemed appropriate by the Compensation Committee. Such provisions need not be uniform among all grants of Awards among all Participants.
Awards earned as provided above generally are made within 15 days after receipt by the Company of the audited financial statements for the applicable fiscal year. In order to receive an award, a participant must be an employee of the Company on the date such award is granted. For purposes of the LTIP, the grant date is the date on which the Committee approves the awards for all Participants except the CEO, for whom the grant date is the date on which the board approves the award.
The Committee reserves the right in its discretion to modify categories or goals. In addition, (i) the Committee may adjust the plan for non-operating events that affect goals, and (ii) the Performance Goal set forth in the 2014 LTIP is based upon the organic growth of the Company. The impact of acquisitions would be reviewed separately by the Committee.
The following table sets forth the 2014 LTIP Performance Goal at the threshold, Target and maximum level.
|
| | | | | | | | | | | | |
Component | | Threshold | | Target | | Maximum |
Revenue (in thousands) | | $ | 148,694 |
| | $ | 159,026 |
| | $ | 166,775 |
|
To the extent the Performance Goal was achieved, the Calculated Value would be determined for each Participant.
Because equity awards under the LTIP are based on the prior fiscal year’s performance, they are not granted until after the end of the fiscal year and the completion of our audited financial statements. Therefore, awards related to performance in one fiscal year are not reflected in any of the compensation tables in this proxy statement for that fiscal year. Instead, they are included in the compensation tables for the following fiscal year. Thus, awards for Fiscal 2013 performance would be reflected in Fiscal 2014 and awards for Fiscal 2014 performance would be reflected in Fiscal 2015; provided, however, no awards were earned for either Fiscal 2013 or Fiscal 2014 performance.
The restricted share awards included in the Executive Officer Compensation Tables section that follows this section reflect awards granted to the CFO and VP in Fiscal 2014 outside the 2014 LTIP in connection with their appointments as executive officers. In recognition of his appointment as an executive officer in Fiscal 2014, Mr. Mancini, the VP, received a grant of 30,000 restricted shares vesting 10%, 20%, 30% and 40%, respectively, on the first through fourth anniversary dates of such appointment. Mr. Williams also received a grant of 50,000 restricted shares in connection with his employment by the Company as its Vice President, Finance, vesting on the same schedule.
Perquisites and Personal Benefits
In Fiscal 2014,Pursuant to the Company paid $17,941 in premiums in lieuterms of salary for long term care insurance contracts for Mr. Gilbertour employment agreements with Messrs. Schlarbaum, Williams and his wife, and $9,177 in premiums with respectHauvn, we are not obligated to life insurance policies maintained for his benefit. Although the Company pays only a portion of medical insurance premiums for all employees, the Companypay any perquisites or personal benefits to our current named executive officers. We previously paid the full premium for a family plan for Mr. Gilbert, resulting in payments over and above the Company plan of $5,022.
In Fiscal 2014, the Company paid $1,109 in premiums in lieu of salary for life insurance policies maintained for the benefit of Mr. Mancini.
Deferred Compensation
Effective January 1, 2009, the Company established the IEC Electronics Corp. Management Deferred Compensation Plan (the “Deferred Compensation Plan”) which allows certain designated employees, including the named executive officers, to defer up to 100% of their base salary and up to 100% of any performance-based incentive bonus on a tax-deferred basis. On the last day of each quarter, the Company credits the deferred account with interest which is based on the average interest rate paid by the Company to its senior lender. Deferred compensation will be paid to a participant upon separation from service on the date and in the manner elected by the participant in his/her deferred compensation agreement. If no election is made, the deferred account will be paid out in quarterly installments over ten years beginning January 1 of the year following separation from service. Deferred amounts may not be withdrawn prior to their payment start date, except to meet an “unforeseeable financial emergency” (in the Committee’s discretion) or in the event of a change in control of the Company. Payments to “key employees” as defined under the Federal tax laws are delayed at least six months after termination of employment. During Fiscal 2014, only Mr. Gilbert elected to defer a portion of his compensation. Amounts deferred by Mr. Gilbert are included in the Summary Compensation Table but were deducted from the Company’s cash salary payments to him and deferred by him pursuant to the Deferred Compensation Plan. In Fiscal 2014 and 2013 the average interest rate paid by the Company to its senior lender exceeded 120% of the applicable federal rate of interest (“AFR”). The amount of interest in excess of 120% of AFR was $1,313 and $275, for Fiscal 2014 and 2013, respectively. The excess interest is reflected in the Summary Compensation Table.Williams.
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.
Executive Officer Compensation TablesEmployment Agreements and Other Arrangements
SUMMARY COMPENSATION TABLE
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 |
|
| |
(1)
| The “Salary” column reflects the base salary actually paid to 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. The amounts shown for Mr. Gilbert include any portion of base salary deferred and contributed by him to our Deferred Compensation Plan. |
| |
(2)
| Restricted share awards were granted to the named executive officers in Fiscal 2013 based upon the achievement of certain performance targets in Fiscal 2012. In Fiscal 2013 for Fiscal 2012 performance, Mr. Gilbert was awarded 19,616 restricted shares, and Mr. Mancini was awarded 3,012 restricted shares. All awards were made under the LTIP for Fiscal 2013 as described in the Company’s definitive proxy statement on Schedule 14/A filed with the SEC on December 27, 2013. Provided that the executive officer remains employed by the Company, 50% of awards granted in Fiscal 2013 will vest on each of November 26, 2016 and 2017. |
Restricted share awards granted in Fiscal 2014 were granted outside the 2014 LTIP, and were grantedOn March 20, 2015, we entered into a three-year employment agreement with Mr. Schlarbaum in connection with his election to the appointmentsoffice of President and Chief Executive Officer on February 6, 2015. Mr. Schlarbaum’s employment agreement entitles him to an annual base salary of $350,000, which the compensation committee will review for increases. In May 2016, the compensation committee increased Mr. Schlarbaum’s base salary to reflect a 2% cost of living adjustment. The employment agreement also entitles Mr. Schlarbaum to earn annual and long-term incentive awards on the terms established by the compensation committee for the applicable fiscal year. Mr. Schlarbaum’s employment agreement provided for a one-time sign-on award of a stock option to purchase shares of the Company’s common stock equal to four percent of the Company’s
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.
| |
(3)Change in Control Provisions | The amounts shown reflect the aggregate grant date fair value computed in accordance with FASB 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 common stock on the date of grant. 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. |
| |
(4)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. | The amounts shown reflect cash amounts paid for services performed in Fiscal 2014 under our 2014 MIP, described on page 23, “Annual Cash Incentive Awards,” and for services performed in Fiscal 2013 under our MIP for fiscal 2013 as described in the Company’s definitive proxy statement on Schedule 14/A filed with the SEC on December 27, 2013. Payouts were determined by our board, in the case of Mr. Gilbert, and by the Committee, in the case of the other named executive officers, in November 2014 for Fiscal 2014 performance, and in November 2013 for Fiscal 2013 performance. No awards were earned in Fiscal 2014 or Fiscal 2013 except by Mr. Williams. As a condition to his employment by the Company, Mr. Williams was guaranteed a minimum $25,000 payout under the 2014 MIP if he remained employed on July 15, 2014, and an additional $25,000 payout if he remained employed at the time the 2014 10-K was filed. He was employed on each of such dates. Thus, the first $25,000 payout was earned in Fiscal 2014 and the remaining payout was earned and will be reported in fiscal 2015. |
| |
(5)
| Amounts shown for Fiscal 2014 include $17,941 in premiums paid on long-term care insurance contracts for Mr. Gilbert and his wife, in accordance with Section 7702B of the Internal Revenue Code, $9,177 in insurance premiums paid with respect to policies of life insurance maintained for the benefit of Mr. Gilbert, and $12,967 being the full medical insurance premiums paid for Mr. Gilbert and his wife (of which $5,022 would otherwise be paid by the Company in connection with its non-discriminatory contribution to health insurance plans covering all employees). Amounts shown for Fiscal 2013 include $17,373 in premiums paid on long-term care insurance contracts for Mr. Gilbert and his wife, in accordance with Section 7702B of the Internal Revenue Code, $10,149 in insurance premiums paid with respect to policies of life insurance maintained for the benefit of Mr. Gilbert, and $11,430 being the full medical insurance premiums paid for Mr. Gilbert and his wife (of which $4,106 would otherwise be paid by the Company in connection with its non-discriminatory contribution to health insurance plans covering all employees). Amounts shown in Fiscal 2014 include $1,109 in insurance premiums paid with respect to policies of life insurance maintained for the benefit of Mr. Mancini. |
| |
(6)
| In the case of Mr. Leo, “All Other Compensation” for Fiscal 2014 and Fiscal 2013, respectively, reflects fees paid to Insero under the agreement between IEC and Insero pursuant to which Mr. Leo served as our chief financial officer. As a principal in and shareholder of Insero, Mr. Leo received a set distribution that was not affected by the arrangements in the engagement letter between the Company and Insero, provided, however, after the end of each year he was eligible for a bonus determined by a committee of Insero, of which he is not a member. The bonus was dependent upon performance of Insero as a whole as well as his individual contributions. Therefore, Mr. Leo’s compensation was not directly tied to the dollar value of the transactions between Insero and IEC. In addition, the Company also reimbursed Insero for Mr. Leo’s business expenses in accordance with the same policy applicable to all Company employees. |
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END
The following table sets forth information concerning stock options and stock awards held by the named executive officers at September 30, 2014.2016.
|
| | | | | | | | | | | | | | | | | | | | |
| | Option Awards | | Stock Awards |
Name | | Number of securities underlying unexercised options (#) exercisable | | Number of securities underlying unexercised options (#) unexercisable | | Option exercise price ($) | | 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) | StockOption awards included in the above table to W. Barry Gilbert reflect restricted share awards granted in Fiscal 2013 and 2012 and were based upon the achievement of certain performance targets in Fiscal 2012 and 2011, respectively. Stock awards included in the above table to Brett E. Mancini reflect restricted share awards granted in Fiscal 2014, 2013 and 2012, some of which were based upon the achievement of certain performance targets in Fiscal 2012 and 2011. All unvested restricted share awards were granted under the 2010 Plan. |
| |
(2)
| In connection with termination of Insero’s arrangement to provide Mr. Leo’s services as CFO in June 2014, all of Mr. Leo’s unvested restricted stock was forfeited under the terms of the applicable award agreement. As a result, Mr. Leo did not hold any unvested restricted stock at September 30, 2014. |
| |
(3)
| 2016. Awards shown in the table are subject to the following vesting periods: |
| |
a. | Awards to Mr. Gilbert not fully vested on September 30, 2014Schlarbaum’s stock options were granted on March 20, 2015 and vests on the dates below,shown below: |
|
| | |
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 the unvested portionsAugust 9, 2016 and vest on the dates shown below: |
|
| | |
Grant DateVesting Dates | Remaining Vesting Dates/ | Amounts |
February 1, 2012September 8, 2017 | February 1, 2016 | 8,30810,000 shares |
September 8, 2018 | February 1, 2017 | 8,30715,000 shares |
November 26, 2012September 8, 2019 | November 26, 2016 | 9,80820,000 shares |
| November 26,August 9, 2017 | 9,808 | 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:
| |
b.a. | Awards to Mr. Williams not fully vested on September 30, 2014 wereSchlarbaum's restricted stock award was granted on the dates below,June 7, 2016 and the unvested portions vestvests on the dates shown below: |
|
| | |
Grant DateVesting Dates | Remaining Vesting Dates/ | Amounts |
February 11, 2014June 7, 2017 | February 11, 2016 | 5,0001,875 shares |
June 7, 2018 | February 11, 2017 | 10,0001,875 shares |
June 7, 2019 | February 11, 2018 | 15,0001,875 shares |
June 7, 2020 | February 11, 2019 | 20,0001,875 shares |
| |
c.b. | Awards to Mr. Mancini not fully vested on September 30, 2014 wereWilliam’s restricted stock award was granted on the dates below,June 14, 2016, and the unvested portions vestvests on the dates shown below: |
|
| | |
Grant DateVesting Dates | Remaining Vesting Dates/ | Amounts |
January 6, 2012June 14, 2017 | January 6, 2016 | 1,500895 shares |
June 14, 2018 | January 6, 2017 | 1,500895 shares |
November 26, 2012June 14, 2019 | November 26, 2016 | 1,506895 shares |
June 14, 2020 | November 26, 2017 | 1,506 shares |
January 29, 2014 | January 29, 2015 | 3,000 shares |
| January 29, 2016 | 6,000 shares |
| January 29, 2017 | 9,000 shares |
| January 29, 2018 | 12,000895 shares |
| |
d. | During the applicable restriction period, the unvested restricted shares cannot be sold or otherwise transferred in any manner. Vesting of all restricted share grants is generally subject to each such named executive officer continuing to be employed by us on the vesting date, and shares vest upon specified events such as a change in control of the Company. |
| |
(4)(3) The awards to Messrs. Schlarbaum, Williams and Hauvn of 12,258, 4,970 and 5,344 restricted stock units, respectively, vest on April 18, 2019, assuming such named executive officer continues his service through such date.
| The market value shown was determined by multiplying the number of restricted shares that have not vested by the $4.51 closing market price per share of IEC common stock on the NYSE MKT on September 30, 2014, the last trading day of our fiscal year. |
Employment Agreements and Change in Control Agreements
Employment Agreement – W. Barry Gilbert
The Company entered into an Amended and Restated Employment Agreement with Mr. Gilbert dated December 16, 2013 (the “2013 Agreement”). The 2013 Agreement provides for Mr. Gilbert’s continued employment as IEC’s Chief Executive Officer until the Board terminates his status as CEO (the “CEO Term”). In addition, the 2013 Agreement provides that upon the expiration of the CEO Term, the Company will employ Mr. Gilbert for a twelve-month period to assist with transition matters, unless earlier terminated (the “Transition Term”). It further provides that Mr. Gilbert will render advisory services to the Board for seven years following the CEO Term (the “Advisory Term”).
During the CEO Term, Mr. Gilbert is entitled to receive an annual initial base salary of $350,000, which is subject to annual review for increases. In Fiscal 2014, Mr. Gilbert’s base salary was $350,000. During the Transition Term, Mr. Gilbert
will continue to receive base salary at the rate in effect at the end of the CEO Term. During the Advisory Term, Mr. Gilbert is entitled to receive annual compensation of $89,286, adjusted annually by the Consumer Price Index.
During the CEO Term, Mr. Gilbert is eligible to participate in IEC’s cash and equity(4) Equity incentive plans and programs on the same basis as other senior executives. If the CEO Term ends other than at the end of a fiscal year, Mr. Gilbert will receive half the incentives he would have received at budget and half the incentives he would have received based on actual results, payable after the end of the fiscal year at the same time as payments to other Company executives.
Under the 2013 Agreement, during both the CEO and Transition Terms, Mr. Gilbert is eligible to participate in such health and other group insurance and other employee benefit plans on the same basis as other senior executives, and the Company will pay the full cost of medical insurance for Mr. Gilbert and his wife, or past age 65 the cost of Medicare supplemental insurance. In addition, through the end of the Advisory Term (or if earlier, policy expiration) the Company will maintain a life insurance policyplan awards included in the amount of $400,000 expiringabove table reflect restricted stock unit awards granted in 2019, and an additional policy inFiscal 2016 using the amount of $750,000 expiring in 2024, each payable to Mr. Gilbert’s estate.
If the Board terminates Mr. Gilbert without Cause (astarget payout range, as defined in the 2013 Agreement, Cause being deemed notapplicable award agreements. These awards were granted on April 18, 2016 and subject to include death or disability) or Mr. Gilbert terminates hiscontinued employment for Good Reason (as defined inwill have a three-year cliff vest based upon the 2013 Agreement) priorlevel of achievement of the performance goal set forth on an exhibit to the end ofapplicable award agreements, which is based on the Transition Term, Mr. Gilbert is entitledCompany’s average annual EBITDA, for the period from October 1, 2015 to continue to receiveSeptember 30, 2018. See the salary and benefits to which he otherwise would have been entitled through the end of the Transition Term. Additionally, if Mr. Gilbert is terminated without Cause or terminates for Good Reason after a Change in Control (as defined in the 2013 Agreement), Mr. Gilbert will continue to receive the Advisory Term payments to which he otherwise would have been entitled. Any provisions in Mr. Gilbert’s restricted stock agreements providing for forfeiture upon termination of employment also are waived and to the extent not yet vested, 50% of the remaining restricted stock will vest on each of the first and second anniversaries of his termination date.
The 2013 Agreement contains provisions which are customary for an executive employment agreement of this type. These include covenants relating to confidentiality, non-competition, non-solicitation of employees, and non-interference with business relationships and apply during the CEO, Transition and Advisory Terms andtable above under “Annual Cash Incentive Awards” for a periodreconciliation of 36 months thereafter.EBITDA to net income.
Employment Agreements - Mr. Williams
On February 8, 2014, the Company and Mr. Williams entered into a letter agreement, dated February 11, 2014, and an Employment Agreement, dated February 11, 2014 (collectively, the “Williams Agreements”). Pursuant to the Williams Agreements, Mr. Williams receives a base salary of $185,000 per year, subject to adjustment in the discretion of the Compensation Committee. He participates in Company benefit plans generally applicable to other employees and executives.
Mr. Williams participates in the MIP, generally on the terms established by the Compensation Committee for the applicable fiscal year. In Fiscal 2014, however, contingent upon his being employed on the applicable payment dates, he earned $25,000 payable in the first payroll period after July 15, 2014 and $25,000 payable upon filing of the Company’s Annual Report on Form 10-K for fiscal 2014, or if greater, a payout under terms of the MIP (45% of his base salary at target) pro rated for the portion of fiscal 2014 during which he is employed.
Mr. Williams will not participate in the Company’s LTIP until fiscal 2015, at which time he will participate in the LTIP on the terms established by the Compensation Committee for the applicable fiscal year. In connection with his appointment as an executive officer, Mr. Williams received a grant of 50,000 shares of restricted stock on February 11, 2014, vesting 0%/10%/20%/30%/40% over five years.
If Mr. Williams’s employment is terminated by the Company without Cause (as defined in the Williams Agreements) in the first year of his employment he will receive severance in the form of salary continuation for a period of six months, and if his employment is terminated by the Company without cause thereafter, he will receive severance in the form of salary continuation for a period of twelve months. He also will receive twelve months of severance in the form of salary continuation if he or the Company terminates his employment other than for Cause after a Change in Control (as defined in the Williams Agreements). Mr. Williams’s rights to payments are contingent on confidentiality obligations, and for a period ending eighteen months after his employment terminates on his non-competition and non-solicitation of customers and employees.
Employment Arrangements - Mr. Mancini
The Company has the following arrangements with Brett E. Mancini, Vice President, Business Development and Engineering Solutions.
Mr. Mancini’s base salary is $183,000 per year. He participates in the MIP and the LTIP on the terms established by the Compensation Committee for the applicable fiscal year. Additionally, Mr. Mancini received an award of 30,000 restricted shares on January 29, 2014 in connection with his promotion as an executive officer of the Company. The shares vest over four years (10%, 20%, 30%, and 40%). The Company maintains an $800,000 life insurance policy on Mr. Mancini’s life, payable to his designee.
Mr. Mancini and the Company entered into a Salary Continuation and Non-Competition Agreement effective as of January 29, 2014 (“Mancini Agreement”). The Mancini Agreement provides for at-will employment, and provides for salary continuation payments for a period of one year upon certain terminations of employment. Circumstances that would trigger payments include termination: (a) by the Company without Cause (as defined in the Mancini Agreement), except upon death or disability, prior to or within twelve months following a Change in Control (as defined in the Mancini Agreement); or (b) by Mr. Mancini with Good Reason (as defined in the Mancini Agreement) at any time prior to a Change in Control or for any reason within the twelve months following a Change in Control. The Mancini Agreement provides that he will not (a) disclose confidential information of the Company during or after his employment with the Company; (b) solicit the Company’s customers for fifteen months after termination; (c) solicit the Company’s employees for twelve months after termination; or (d) directly or indirectly compete with the Company during the term of his employment and for fifteen months after termination.DIRECTOR COMPENSATION
Change in Control
Our 2001 Stock Option and Incentive Plan and our 2010 Omnibus Incentive Compensation Plan, and the stock option and restricted stock award agreements executed thereunder, provide that upon a change in control (as defined in the 2010 Plan), unless the board otherwise determines, all outstanding options and restricted stock will immediately become fully vested and exercisable.
Director Compensation
Cash Compensation Paid to Non-Employee Directors
The following table shows non-employee director compensationDirector fees for Fiscal 2014:2016 were as follows:
|
| | |
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
In Fiscal 2014,We provide each non-employee director was entitled towith an annual grant of restricted stock, issued under the 2010 Plan, with a grant-date fair value of $25,000, awarded at$25,000. We make these grants pursuant to the time of the2010 Plan. The grant date typically coincides with our annual meeting of shareholders.stockholders. The restrictions will lapse and the shares will vest in three (3) equal installments as follows: 1/3 on the first anniversary of the date of grant, 1/3 on the second anniversary of the date of grant, and the balance on the third anniversary of the date of grant.
At the time of the 2014 annual meeting of stockholders (January 29, 2014),On March 8, 2016, each of the non-employee directors received the annual restricted share award of 6,1275,760 shares at a market value of $4.08$4.34 per share, (thewhich was the closing price of the Company’s common stock on the grant date as reported on the NYSE MKT).
Upon his appointment as a director on February 11, 2014, John Carlton Johnson received a grant of 6,068 shares of restricted stock issued under the 2010 Plan, with a market value of $4.12 per share (the closing price of the Company’s common stock on the grant date as reported on the NYSE MKT). The restrictions will lapse and the shares will vest in three (3) equal installments as follows: 1/3 on the first anniversary of the date of grant, 1/3 on the second anniversary of the date of grant, and the balance on the third anniversary of the date of grant.
MKT.
Director Compensation Table
The following table summarizes the cash and equity compensation earned by non-employee directors during Fiscal 2014.
|
| | | | | | | | | | | | | | | | |
Director (1) | | Fees Earned or Paid in Cash ($) 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) | W. Barry Gilbert, the Company’s Chairman of the Board, is not included in this tableDue to his role as he is an employeeexecutive officer of the Company, and receives noJeffrey T. Schlarbaum did not receive compensation for his servicesservice as a director. Compensation earned by Mr. Gilbert duringWe report his compensation for Fiscal 2014 is reflected2016 in the Summary Compensation Table on page 28section “Compensation of Named Executive Officers” of this proxy statement. |
| |
(2) | The fees set forth in this column reflect compensation paid in cash or in stock to each director in respect of Fiscal 20142016 for board retainers, committee chair retainers, supplemental fees and meeting fees. EachDirectors have the ability to elect to receive their board and committee chair payment in stock, but during Fiscal 2016 each director elected to receive the board and committee chair retainer payments in cash. Payments for board meetings were paid in cash in Fiscal 2014.2016. Each of Messrs. MoultonHadeed and Kay and Dr. ZimmermanHartrick received an annual retainerretainers for serving as a committee chair during Fiscal 2014.2016. |
| |
(3) | The amounts shown reflect the aggregate grant date fair value computed in accordance with FASB 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. These amounts reflect our accounting for these awards and do not correspond to the actual values that may be realized by the directors and do not represent actual cash compensation paid to the directors. Pursuant to SEC rules, we disregarded the estimates of forfeitures related to service-based vesting conditions. The closing market price on the grant date was $4.08$4.34 per share on January 29, 2014 and $4.12 per share on February 11, 2014.March 8, 2016. |
| |
(4) | The aggregate number of unvested restricted stock awards at the end of Fiscal 20142016 for each non-employee director was: Florence D. Hudson - 8,635 shares, John Carlton Johnson - 6,068 shares, Edward D. Kay, Jr. - 8,635 shares, Eben S. Moulton - 9,947 shares, James C. Rowe - 9,947 shares, and Jerold L. Zimmerman - 9,947 shares. |
|
| | | |
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 20142016 in connection with the policy of term life insurance provided to each non-employee director in the amount of $50,000. |
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.
In Fiscal 2012, IEC entered into an engagement letter with Insero pursuant to which Vincent A. Leo, a principal and shareholder of Insero, served as IEC’s interim chief financial officer from January 2012 through May 2012, and as IEC’s chief financial officer from May 2012 through February 2014. During Fiscal 2014 and Fiscal 2013, IEC compensated Insero for Mr. Leo’s services at a monthly rate of $25,000, resulting in fees paid to Insero of $329,000 in Fiscal 2013 and $237,500 in Fiscal 2014. During Fiscal 2013, IEC also paid Insero $16,500 of additional compensation due to Mr. Leo’s incremental time related to the restatement of the Company’s financial statements, and IEC paid Insero $4,122 in reimbursement of legal fees incurred by Insero in connection with IEC’s ongoing SEC investigation and stockholder litigation.
Other than the restricted share award granted to Mr. Leo in May 2012 as described above under “Compensation of Named Executive Officers and Directors”, Mr. Leo did not receive any compensation directly from IEC and throughout his service for IEC he continued to be a principal and shareholder of, and was compensated by, Insero. Further, as a principal in and shareholder of Insero, Mr. Leo receives a set distribution from Insero that is not affected by the arrangements in the Insero Agreement, provided, however, after the end of each year he is eligible for a bonus determined by a committee (of which he is not a member) of Insero. The bonus is dependent upon performance of Insero as a whole as well as his individual contributions. Therefore, Mr. Leo’s compensation is not directly tied to the dollar value of the transactions between Insero and IEC, and the approximate dollar amount of his interest in the transaction cannot be determined.
As described above under “Compensation of Named Executive Officers and Directors”, we were advised when the restricted shares were granted to Mr. Leo in Fiscal 2012 that Mr. Leo had agreed with Insero to hold such shares for the benefit of Insero. Of the 20,000 restricted shares granted to him, 8,000 shares vested during Fiscal 2013 and 2014 and the remainder were forfeited upon Mr. Leo’s departure from the Company in February 2014. Mr. Leo later advised the Company that Insero, as part of Insero’s compensation arrangements with Mr. Leo, agreed that 2,000 of the vested shares would no longer be held for the benefit of Insero and would be held by Mr. Leo without further beneficial interest of Insero.
In addition to the services under the engagement letter described above, Insero has provided various services to the Company, including acquisition support, out-sourced accounting services, Sarbanes-Oxley/internal audit support, tax services, and accounting research services. During Fiscal 2013 and 2014, IEC incurred fees payable to Insero of approximately $87,024 and $59,675 in connection with such services.
Except as described above, during Fiscal 2013 and Fiscal 2014, no other transactions were entered into or proposed that required disclosure pursuant to SEC rules regarding related person transactions.
OTHER MATTERS
Other than the Vintage Nomination for directors described above, theThe board of directors knows of no other matters that will be presented for consideration at the annual meeting, but if other matters properly come before the meeting, the persons named as proxies in the enclosed proxy will vote according to their best judgment. Stockholders are urged to date and sign the enclosed WHITE proxy and to mail it promptly in the enclosed postage-paid envelope. If you attend the annual meeting, you may revoke your proxy at that time and vote in person, if you wish. Otherwise your proxy will be voted for you.
Dated: January 26, 2017 By Order of the Board of Directors
Beth Ela Wilkens,
Newark, New York Jennifer M. Brown, Corporate Secretary
Dated: December [__], 2014
Newark, New York
|
|
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, 20142016 (without exhibits) as filed with the Securities and Exchange Commission. Copies of exhibits to our Form 10-K will be made available, upon your written request and payment to us of the reasonable costs of reproduction and mailing, if any. Written requests should be made to: Michael T. Williams, Chief Financial Officer, IEC Electronics Corp., 105 Norton Street, Newark, New York 14513. |
APPENDIX A
SUPPLEMENTAL INFORMATION REGARDING PARTICIPANTS
The following tables (“Directors and Nominees” and “Executive Officers”) set forth the name, present principal occupation and business address of our directors and nominees, and our officers, who, under the rules of the SEC, may be considered to be participants (“Participants”) in our solicitation of proxies from our stockholders in connection with our 2015 annual meeting.
Directors and Nominees
The names of our directors, and the name and address of any corporation or organization in which any of them is employed, are set forth below
|
| |
W. Barry Gilbert | IEC Electronics Corp.
105 Norton Street, Newark, NY 14513
|
Florence D. Hudson | IBM Corporation
One New Orchard Road, Armonk, NY 10504
|
John Carlton Johnson | Sandavista, LLC
PO Box 1093, Clark, CO 80428
|
Edward W. Kay, Jr. | Retired |
Eben S. Moulton | Seacoast Capital Corporation
55 Ferncroft Road, Danvers, MA 01923
|
James C. Rowe | Rowe & Company
3510 N. Lake Drive, Milwaukee, WI 53211
|
Jerold L. Zimmerman | Simon School of Business, University of Rochester
500 Joseph C. Wilson Blvd., Rochester, NY 14627
|
Our directors' respective principal occupations are set forth in Proposal 1 of this proxy statement under the caption “Election of Directors”. The business address for all of our directors is c/o IEC Electronics Corp., 105 Norton Street, Newark, New York 14513.
Executive Officers
The names and principal occupations of our executive officers are set forth below
W. Barry Gilbert, Chairman and Chief Executive Officer
Michael T. Williams, Vice President, Finance and Chief Financial Officer
Brett E. Mancini, Vice President, Business Development and Engineering Solutions
The principal occupations refer to each person’s position with the Company, and the address at which they are carried on and business address for each of them is c/o IEC Electronics Corp., 105 Norton Street, Newark, New York 14513.
Information Regarding Ownership of Company Securities by the Participants
The number of shares of the Company’s common stock beneficially owned by each of the Participants, each person who was an executive officer during the last fiscal year and each associate of each Participant is set forth in the “Security Ownership of Certain Beneficial Owners and Management” section of this proxy statement. Except as noted in that section, to our knowledge each Participant has sole voting and investment power with respect to the securities they hold, other than any property rights of spouses.
Information Regarding Transactions in IEC Securities by Participants
The following table sets forth information regarding purchases and sales of IEC securities by each Participant during the past two years. Unless otherwise indicated, all transactions were in the public market. None of the purchase price or market value of these securities is represented by funds borrowed or otherwise obtained for the purpose of acquiring or holding such securities, and none of the Participants is or was within the past year a party to any contract or understanding with any person with respect to securities of the Company except pursuant to the Company’s equity incentive plans.
|
| | |
Participant | Date | Purchase (Sale) |
W. Barry Gilbert | 11/18/2013 | (4,891) (1)
|
11/15/2013 | (5,469) (1)
|
4/17/2013 | 1,517 (2)
|
11/29/2012 | (500) (3)
|
11/27/2012 | (4,000) (3)
|
11/26/2012 | 19,616 (4)
|
Florence D. Hudson | 1/29/2014 | 6,127 (4)
|
1/30/2013 | 3,743 (4)
|
1/30/2013 | 150 (5)
|
12/17/2012 | 3,000 (6)
|
John Carlton Johnson | 2/11/2014 | 6,068 (4)
|
10/22/2013 | 3,700 |
Edward W. Kay, Jr. | 1/29/2014 | 6,127 (4)
|
1/30/2013 | 3,743 (4)
|
1/30/2013 | 150 (5)
|
1/3/2013 | 2,000 (6)
|
Eben S. Moulton | 1/29/2014 | 6,127 (4)
|
1/30/2013 | 3,743 (4)
|
1/30/2013 | 150 (5)
|
James C. Rowe | 1/29/2014 | 6,127 (4)
|
1/30/2013 | 3,743 (4)
|
1/30/2013 | 150 (5)
|
Jerold L. Zimmerman | 1/29/2014 | 6,127 (4)
|
1/30/2013 | 3,743 (4)
|
1/30/2013 | 150 (5)
|
Michael T. Williams | 2/11/2014 | 50,000 (4)
|
Brett E. Mancini | 4/12/2014 | 333 (1)
|
1/29/2014 | 30,000 (4)
|
11/26/2012 | 3,012 (4)
|
(1) Shares withheld to cover withholding tax obligations in connection with vesting of restricted shares
(2) Shares purchased under Employee Stock Purchase Plan
(3) Open market transaction to cover withholding tax obligation for November 26, 2012 grant
(4) Grant of restricted shares under Company’s 2010 Omnibus Incentive Compensation Plan
(5) Grant of unrestricted shares under Company’s 2010 Omnibus Incentive Compensation Plan
(6) Private transaction purchase
Information Regarding Related Party Transactions and Understandings
None of the Participants or their associates is a party to any related party transaction requiring disclosure under Item 404(a) of the SEC’s Regulation S-K, and except for officer employment arrangements described in the proxy statement none of them have any arrangement or understanding regarding future employment or transactions with IEC.
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xPLEASE MARK VOTESAS IN THIS EXAMPLE
| REVOCABLE PROXY
IEC ELECTRONICS CORPCORP. 105 NORTON STREET NEWARK, NY 14513 | | VOTE BY INTERNET - www.proxyvote.com Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time on Monday, March 6, 2017 (the day before the meeting date). Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. |
ANNUAL MEETING | ELECTRONIC DELIVERY OF STOCKHOLDERSFUTURE PROXY MATERIALS If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years. |
. | | VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time on Monday, March 6, 2017 (the day before the meeting date). Have your proxy card in hand when you call and then follow the instructions. |
WEDNESDAY, JANUARY 28, 2015 | | VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. |
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TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:x | | | | |
| | M98767-P71713 | | KEEP THIS PORTION FOR YOUR RECORDS |
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| | | | DETACH AND RETURN THIS PORTION ONLY |
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED |
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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 | | | | | | | | | | | |
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| 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 | | ¨ | ¨ | ¨ | |
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| | 3. | To approve, on an advisory basis, the compensation paid to our named executive officers. | | ¨ | ¨ | ¨ | |
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| | 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. | | | | | |
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| | 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. | | | | | | |
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| | Signature [PLEASE SIGN WITHIN BOX] | Date | | | Signature (Joint Owners) | | Date | | |
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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. |
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| 1. Election of seven (7) directors |
| | | For | Withhold | For All Except |
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| 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. |
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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.
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Detach above card, sign, date and mail in postage paid envelope provided. | | |
| | M98768-P71713 |
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| 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 PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY CARD PROMPTLY IN THE ENCLOSED POSTAGE-PAID ENVELOPEAnnual Meeting has been proposed by the Board of Directors of the Company.
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| 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. | |
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| 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. | |
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| | Continued and to be signed on reverse side | |
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THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE SIGNING STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR ELECTION OF THE NOMINEES FOR DIRECTOR SPECIFIED IN THE PROXY STATEMENT, FOR RATIFICATION OF THE SELECTION OF CROWE HORWATH, LLP AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR FISCAL 2015, AND FOR APPROVAL OF THE ADVISORY VOTE ON NAMED EXECUTIVE OFFICER COMPENSATION.
IF YOUR ADDRESS HAS CHANGED, PLEASE CORRECT THE ADDRESS IN THE SPACE PROVIDED BELOW AND RETURN THIS PORTION WITH THE PROXY IN THE ENVELOPE PROVIDED.
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