UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.WASHINGTON, DC 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN
PROXY STATEMENT
SCHEDULE 14A
INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Securities Exchange Act of 1934 (Amendment
(Amendment No. 1 )
1)
Filed by the Registrant registrant x
Filed by a Partyparty other than the Registrant registrant o¨
Check the appropriate box:
x
| | | | | | | | |
| ☒ | | Preliminary Proxy Statement |
o☐ | | Confidential, for Useuse of the Commission Onlyonly (as permitted by Rule 14a-6(e)(2)) |
o
☐ | | Definitive Proxy Statement |
o¨ | | Definitive Additional Materials |
o¨ | | Soliciting Material Pursuant to §240.14a-12 |
MIMEDX GROUP, INC.
(Name of Registrantregistrant as Specified In Its Charter)specified in its charter)
Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Checkthe filing fee (check the appropriate box):
o¨ | | Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
| | (1) | | | Title of each class of securities to which transaction applies: |
| | (2) | | | Aggregate number of securities to which transaction applies: |
| | (3) | | | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): |
| | (4) | | | Proposed maximum aggregate value of transaction: |
o¨ | | Fee paid previously with preliminary materials. |
o¨ | | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2)0-11(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. |
| | (1) | | | Amount Previously Paid:previously paid: |
| | (2) | | | Form, Schedule or Registration Statement No.: |
| | (3) | | | Filing party: |
| | (4) | | | Date filed: |
PRELIMINARY PROXY STATEMENT – SUBJECT TO COMPLETION, DATED APRIL 26, 2021
April [30], 2021
Dear Fellow Shareholders:
Your officers and directors join us in inviting you to attend our 2021 annual meeting of shareholders to be held via a live webcast, at 10:00 a.m. Eastern Time on May 27, 2021, 2021, at www.cesonlineservices.com/mdxg21_vm. In order to attend the meeting, you must pre-register at www.cesonlineservices.com/mdxg21_vm by 10:00 a.m. Eastern time on May 25, 2021.
Included with this letter are the notice of annual meeting of shareholders, a proxy statement detailing the business to be conducted at the Annual Meeting and a WHITE proxy card or, if your shares are held in “street name,” a WHITE voting instruction form from your broker, bank, or other nominee.
The Annual Meeting will be held for the following purposes:
(1) The election of three Class II directors named in the accompanying proxy statement (Proposal 1);
(2) The election of one Class III director named in the accompanying proxy statement (Proposal 2);
(3) Advisory approval of executive compensation (“Say on Pay”)(Proposal 3);
(4) To ratify the appointment of Deloitte & Touche LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2021 (Proposal 4);
(5) To approve the amendment to the Company’s Restated Articles of Incorporation (the “Articles”) to declassify the board of directors of the Company (the “Board”) (Proposal 5);
(6) To approve an amendment to the Articles to reduce the ownership threshold to call a special shareholders’ meeting (Proposal 6);
(7) To approve an amendment to the Company’s Amended and Restated Bylaws to adopt proxy access (Proposal 7); and
(8) To transact such other business as may properly come before the meeting or any adjournment or any postponement thereof.
The Board has fixed 5:00 p.m. Eastern time on April 16, 2021 as the record date for determining those shareholders who will be entitled to notice of, and to vote at, the Annual Meeting.
In light of public health concerns regarding the coronavirus (COVID-19) outbreak, the Annual Meeting will be conducted in virtual format only (as described in the notice of annual meeting) in order to assist in protecting the health and well-being of our shareholders, directors and employees, and to provide access to our shareholders regardless of geographic location. There is no in-person meeting for you to attend.
As you may know, Prescience Point Capital Management, together with its affiliates (collectively, “Prescience Point”), has filed a preliminary proxy statement with a proposal to nominate four individuals, Eiad Asbahi, Alfred G. Merriweather, Charlotte E. Sibley and William F. Spengler (Mr. Asbahi, Mr. Merriweather, Ms. Sibley and Mr.
Spengler, collectively, the “Prescience Group”), each for election as a director at the Annual Meeting in opposition to the Board’s nominees, and has indicated an intent to solicit proxies on all of the proposals included in this Proxy Statement. You may receive proxy solicitation materials from the Prescience Group. The Company is not responsible for the accuracy of any information provided by or relating to the Prescience Group contained in solicitation materials filed or disseminated by or on behalf of the Prescience Group, or any other statements that any member of the Prescience Group may make. The Board does NOT endorse any of Prescience Point’s nominees and strongly recommends that you do NOT sign or return any GOLD proxy card sent to you by or on behalf of the Prescience Group. If you have previously submitted a GOLD proxy card sent to you by the Prescience Group, you can revoke that proxy and vote for the Board’s nominees at the Annual Meeting by signing, dating and returning the enclosed WHITE proxy card in the postage-paid envelope provided to you or by using the telephone or Internet method of voting as shown on the WHITE proxy card or, if shares are held in “street name,” on the WHITE voting instruction form that you received from your bank, broker or other nominee in lieu of a WHITE proxy card. Only your latest-dated vote will count.
THE BOARD UNANIMOUSLY RECOMMENDS VOTING FOR THE ELECTION OF THE BOARD’S NOMINEES USING THE ENCLOSED WHITE PROXY CARD OR WHITE VOTING INSTRUCTION FORM, AS APPLICABLE, THE BOARD URGES YOU NOT TO SIGN, RETURN OR VOTE ANY GOLD PROXY CARD OR GOLD VOTING INSTRUCTION FORM SENT TO YOU BY OR ON BEHALF OF THE PRESCIENCE GROUP.
It is extremely important that your shares be represented and voted at the Annual Meeting. Please vote as soon as possible. You are urged to sign, date, and return the WHITE proxy card or WHITE voting instruction form, as applicable, in the postage-paid envelope provided to you, or to use the Internet or telephone method of voting described on your proxy card or voting instruction form, as applicable.
If you have any question or need any assistance in voting your shares, please contact Morrow Sodali LLC, our proxy solicitor assisting us in connection with the annual meeting, toll-free at (800) 662-5200 or at (203) 658-9400 or by email to MDXG@investor.Morrowsodali.com.
| (3) | Filing Party: |
| Sincerely, |
|
| /s/ M. Kathleen Behrens |
M. Kathleen Behrens Chairperson of the Board |
Timothy R. Wright
Chief Executive Officer and Director
MIMEDX GROUP, INC
60 Chastain Center Blvd., Suite 60
Kennesaw, GA 30144
INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To be held on May 9, 201327, 2021
The 2021 annual meeting (the “Annual Meeting”) of Shareholdersshareholders of MiMedx Group, Inc. (“MiMedx”(the “Company,” “MiMedx,” or the “Company”“we”) will be held in virtual format only on May 9, 2013,27, 2021, at 2:10:00 p.m.a.m. Eastern Daylight Timetime at MiMedx Group, Inc., 1775 W. Oak Commons, Marietta Georgia 30062,www.cesonlineservices.com/mdxg21_vm for the following purposes:
| 1. | To elect three Class III directors; |
(1) The election of three Class II directors named in the accompanying proxy statement (Proposal 1);
| 2. | To approve an amendment to the Company’s Assumed 2006 Stock Incentive Plan; |
(2) The election of one Class III director named in the accompanying proxy statement (Proposal 2);
| 3. | To ratify the appointment of Cherry, Bekaert & Holland L.L.P. as our independent registered public accounting firm for the current fiscal year; |
(3) Advisory approval of executive compensation (“Say on Pay”)(Proposal 3);
| 4. | To conduct advisory vote on compensation of named executive officers; |
(4) To ratify the appointment of Deloitte & Touche LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2021 (Proposal 4);
| 5. | To conduct advisory vote on the frequency of an advisory vote on executive compensation; and |
(5) To approve the amendment to the Company’s Restated Articles of Incorporation (the “Articles”) to declassify the board of directors of the Company (the “Board”) (Proposal 5);
| 6. | To transact such other business as may properly come before the meeting or any adjournment thereof. |
(6) To approve an amendment to the Articles to reduce the ownership threshold to call a special shareholders’ meeting (Proposal 6);
(7) To approve an amendment to the Company’s Amended and Restated Bylaws to adopt proxy access (Proposal 7); and
(8) To transact such other business as may properly come before the meeting or any adjournment or any postponement thereof.
The BoardCompany’s board of Directorsdirectors (“Board”) has fixed the close of business5:00 p.m. Eastern time on March 15, 2013,April 16, 2021 as the record date for us to determine thosedetermining the shareholders entitled to notice of and to vote at the Annual Meeting of Shareholders.
Shareholders who cannot attend the Annual Meeting may vote their shares over the Internet or by telephone, or by completing and promptly returning the enclosed proxy card or voting instruction form. Internet and telephone voting procedures are described in the enclosed proxy statement and on the proxy card or, if shares are held in “street name,” on the voting instruction form that shareholders receive from their brokerage firm, bank or other nominee in lieu of a proxy card.
Please vote as promptly as possible, whether or not you plan to attend the Annual Meeting. Even though you submit your proxy, you may nevertheless attend the Annual Meeting and vote your shares in person if you wish. If you want to revoke your proxy at a later time for any reason, you may do so in the manner described in the attached proxy statement.
I look forward to welcoming you to the meeting.
April [30], 2021
| Very truly yours, | |
| |
| By Order of the Board of Directors |
|
/s/ Roberta L. McCaw |
| Roberta L. McCaw |
| Secretary |
April 3, 2013
| PageWilliam F. Hulse IV |
William F. Hulse IV, Secretary |
TABLE OF CONTENTS
| | | | | |
| NOTICE AND PROXY STATEMENT | |
| INFORMATION ABOUT THE ANNUAL MEETING | |
1BACKGROUND TO THE SOLICITATION | |
| PROPOSAL 1—ELECTION OF THREE CLASS II DIRECTORS | |
3PROPOSAL 2—ELECTION OF ONE CLASS III DIRECTOR | |
| BOARD OF DIRECTORS | |
11Biographies of Other Continuing Directors | |
| Director Independence | |
12Board Leadership Structure and Lead Director | |
| Board Risk Oversight | |
14CORPORATE GOVERNANCE | |
| Corporate Governance Guidelines | |
17Code of Business Conduct and Ethics | |
| Committees of the Board and Number of Meetings | |
18Additional Corporate Governance Matters | |
| Executive Officers | |
19Related Party Transactions | |
| Delinquent Section 16(a) Reports | |
21CEO Pay Ratio | |
| EXECUTIVE COMPENSATION DISCUSSION AND ANALYSIS | |
22SUMMARY COMPENSATION TABLE | |
| GRANTS OF PLAN-BASED AWARDS FOR 2020 | |
22OUTSTANDING EQUITY AWARDS ON DECEMBER 31, 2020 | |
| EQUITY COMPENSATION PLAN INFORMATION | |
| 2020 OPTION EXERCISES AND STOCK VESTED TABLE | |
| 2020 POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL | |
| 2020 DIRECTOR COMPENSATION | |
| PROPOSAL 3–ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION | |
| AUDIT MATTERS | |
Change in Registered Public Accounting Firm (Proposal 3) | |
28 Audit Firm Fees | |
| 29 |
| 30 |
| |
31PROPOSAL 4–RATIFICATION OF INDEPENDENT EXTERNAL AUDITOR | |
| PROPOSAL 5–AMENDMENT TO ARTICLES TO DECLASSIFY THE COMPANY’S BOARD OF DIRECTORS | |
32PROPOSAL 6–AMENDMENT TO ARTICLES TO REDUCE OWNERSHIP THRESHOLD TO CALL A SPECIAL SHAREHOLDERS’ MEETING | |
| PROPOSAL 7–AMENDMENT TO THE AMENDED AND RESTATED BYLAWS TO ADOPT PROXY ACCESS | |
32SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT | |
| OTHER MATTERS | |
33Participants in the Solicitation | |
| Proxy Solicitation Costs | |
| Other Matters Presented at the Annual Meeting | |
| | | | | |
| Shareholders Proposals and Director Nominations for the 2022 Annual Meeting of Shareholders | |
| Householding of Proxy Materials | |
| Additional Information | |
| ANNEX A – ADDITIONAL INFORMATION REGARDING PARTICIPANTS IN THE SOLICITATION | |
| Directors and Board Nominees | |
| Officers | |
| Information Regarding Ownership of the Company’s Securities by Participants | |
| Information Regarding Transactions of the Company’s Securities by Participants | |
| ANNEX B – PROPOSED ARTICLES OF AMENDMENT TO THE RESTATED ARTICLES OF INCORPORATION OF THE COMPANY TO DECLASSIFY THE BOARD OF DIRECTORS | |
| ANNEX C – PROPOSED ARTICLES OF AMENDMENT TO THE RESTATED ARTICLES OF INCORPORATION OF THE COMPANY TO REDUCE THE OWNERSHIP THRESHOLD TO CALL A SPECIAL SHAREHOLDERS’ MEETING | |
| ANNEX D – PROPOSED AMENDMENT NO. 1 TO THE AMENDED AND RESTATED BYLAWS OF THE COMPANY | |
| FORM OF PROXY CARD | |
MIMEDX GROUP, INC.
60 Chastain Center Blvd., Suite 60
Kennesaw, GA 30144
PRELIMINARY PROXY STATEMENT – SUBJECT TO COMPLETION, DATED APRIL 26, 2021
PROXY STATEMENT
FOR THE 2021 ANNUAL MEETING OF SHAREHOLDERS
To Be Held On May 9, 2013TO BE HELD ON MAY 27, 2021
INTRODUCTION
This proxy statement (including all appendices attached hereto, this “Proxy Statement”) is furnished in connection with the solicitation of proxies to be voted at the 2021 annual meeting of shareholders (including any adjournment or postponement thereof, the “Annual Meeting of Shareholders” or the “2021 Annual Meeting”) of MiMedx Group, Inc. (“MiMedx”MiMedx,” the “Company,” “we” or the “Company”“us”) to be held in virtual format only on May 9, 2013,27, 2021, at 2:10:00 p.m.a.m. Eastern Daylight Timetime at the MiMedx Group, Inc. 1775 W. Oak Commons, Marietta Georgia 30062.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR
THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON MAY 9, 2013
www.cesonlineservices.com/mdxg21_vm. The Notice of Annual Meeting of Shareholders, this Proxy Statement our(including a WHITEproxy card or WHITE voting instruction form, of proxyas applicable) and our 2012 Annual Report on Form 10-K for the year ended December 31, 2012, are available at
http://www.proxyvote.com
This Proxy Statement, our Annual Report on Form 10-K for the fiscal year ended December 31, 2012, and the enclosed proxy card2020 (the “2020 Annual Report”) are being first sent or given to shareholders on or about April 5, 2013.[30], 2021. The enclosed proxy card is solicited by the Company, on behalf of our Boardboard of Directors and will be voteddirectors (the “Board”), is soliciting your proxy to vote your shares at the Annual Meeting in accordance with your instructions. The Notice of Annual Meeting of Shareholders, this Proxy Statement, the 2020 Annual Report, and any adjournments thereof.our form of WHITE proxy card are available at www.cesvote.com.
Our principal executive offices are located at 1775 West Oak Commons Court, NE, Marietta, Georgia, 30062.
Shareholders
INFORMATION ABOUT THE ANNUAL MEETING
1.Who is soliciting my vote?
The Board is soliciting your vote on the matters before the Annual Meeting. For more information on the participants in the Board’s solicitation, please see “Participants in the Solicitation” beginning on page 67 of this Proxy Statement. The following table summarizes the Board’s recommendations with respect to the items of business expected to come before the Annual Meeting:
| | | | | | | | |
| Item | Description | Board Recommendation |
| 1 | Election of three Class II directors | FOR the Board nominees |
| 2 | Election of one Class III director | FOR the Board nominee |
| 3 | Advisory Vote to Approve Executive Compensation | FOR |
| 4 | Ratification of Registered Public Accounting Firm | FOR |
| 5 | Declassify the Board of Directors | FOR |
| 6 | Reduce Ownership Threshold to Call a Special Shareholders’ Meeting | FOR |
| 7 | Adopt Proxy Access | FOR |
Additionally, the Corporation has retained Morrow Sodali LLC (“Morrow Sodali”), a proxy solicitation firm, which may solicit proxies on the Board’s behalf. You may also be solicited by press releases issued by us, postings on our corporate website or other websites or otherwise.
2.Who is Prescience Point Capital Management?
Prescience Point Capital Management (“Prescience Point”) is a private investment manager that beneficially owned, along with its affiliates that make up the Prescience Group (as defined below), 9,058,250 shares of Company common stock (or approximately 8.1% of the outstanding shares of Company common stock) as of April 15, 2021, according to information reported by Prescience Point on its Schedule 13D/A (Amendment No. 1) filed on April 16, 2021.
Prescience Point has filed a preliminary proxy statement with a proposal to nominate Eiad Asbahi, Alfred G. Merriweather, Charlotte E. Sibley and William F. Spengler (Mr. Asbahi, Mr. Merriweather, Ms. Sibley and Mr. Spengler, collectively, the close“Prescience Group”) for election as directors at the Annual Meeting and has indicated an intent to solicit proxies on all of the proposals included in this Proxy Statement. You may receive proxy solicitation materials from or on behalf of the Prescience Group. The Company is not responsible for the accuracy of any information provided by or relating to the Prescience Group contained in proxy materials filed or disseminated by or on behalf of the Prescience Group or any other statements that any member of the Prescience Group may make.
Prescience Point has also indicated that it intends to present the following proposals for action at the Annual Meeting:
•Proposal to request the Board to take all necessary steps in its power to declassify the Board so that the directors are elected on an annual basis beginning at the next annual meeting of shareholders and phasing in over subsequent annual meetings such that previously elected directors’ unexpired terms are not affected; and
•Proposal to request the Board to take all necessary steps in its power to amend the appropriate governing documents of the Company to give shareholders owning not less than 25% of all votes entitled to be cast on any issue proposed to be considered at a meeting of shareholders the power to call a special meeting of shareholders by a request in writing to the Secretary of the Company.
The Board does not endorse any of Prescience Point’s nominees. Prescience Point’s business proposals are substantially similar to the ones set forth in this Proxy Statement, and in the case of the Company’s Proposals 5 and 6, Prescience Point has included in its preliminary proxy statement the Company’s formulation of those proposals rather than the versions from the Prescience Nomination Notice (as defined below). As such, the Board unanimously recommends that you vote FOR the election of each of the Board’s nominees and FOR each of the proposals set forth in this Proxy Statement on March 15, 2013, the WHITE proxy card or WHITE voting instructions form, as applicable. The Board strongly urges you to DISCARD any GOLD proxy card sent to you by or on behalf of the Prescience Group. Voting to “withhold” with respect to any of Prescience Point’s nominees on a GOLD proxy card sent to you by or on behalf of the Prescience Group is not the same as voting FOR the Board’s nominees because a vote to “withhold” with respect to any of Prescience Point’s nominees on the GOLD proxy card will revoke any WHITE proxy you may have previously submitted.
To support the Board’s nominees, you should vote FOR each of the Board’s nominees on the WHITE proxy card or WHITE voting instructions form, as applicable, and disregard, and NOT return, any GOLD proxy card sent to you by or on behalf of the Prescience Group. If you have previously voted using a GOLD proxy card sent to you by or on behalf of the Prescience Group, you can still change your vote to support the Board’s nominees by signing, dating and returning the enclosed WHITE proxy card in the postage-paid envelope provided, or by following the instructions on the WHITE proxy card to vote by telephone or by Internet. Only your latest dated proxy will count. Any proxy may be revoked at any time prior to its exercise at the Annual Meeting as described in this Proxy Statement.
3.Who is bearing the costs of the solicitation?
The Company will bear the expenses of calling and holding the Annual Meeting and the solicitation of proxies on behalf of the Board. These expenses will include, among other things, the costs of preparing, assembling, printing and mailing the proxy materials to shareholders of record and reimbursement paid to brokerage firms,
banks and other fiduciaries for their reasonable out-of-pocket expenses for forwarding proxy materials to beneficial owners and obtaining beneficial owners’ voting instructions. Proxies may be solicited through the mail, in person, by telephone or via email.
4.Who can vote at the Annual Meeting?
The record date for determining shareholders eligible to vote at the Annual Meeting is 5:00 p.m. Eastern time on April 16, 2021 (the “Record Date”). Holders of Company common stock, par value $0.001 per share (“Company common stock”), and holders of Company Series B Convertible Preferred Stock, par value $0.001 per share (“Series B Preferred Stock”), on the Record Date may vote at the Annual Meeting. As of the record date, 94,435,438Record Date, 111,718,544 shares of Company common stock were outstanding and 100,000 shares of Series B Preferred Stock were outstanding representing 19,657,609 votes, resulting in an aggregate of 131,376,153 shares entitled to vote. Shareholders have one vote non-cumulative, for each share of common stock held on the record date, including shares held directly in their name as “shareholder of record” and shares held in an account with a broker, bank or other nominee (shares held in “street name”). Street name holders generally cannot vote their shares directly and must instead instruct the brokerage firm, bank or nominee how to vote their shares.
This solicitation is being made by mail and may also be made in person or by fax, telephone or Internet by the Company’s officers, directors or employees. The Company will pay all expenses incurred in this solicitation. The Company will request banks, brokerage houses and other institutions, nominees and fiduciaries to forward the soliciting material to beneficial owners and to obtain authorization for the execution of proxies. The Company will, upon request, reimburse these parties for their reasonable expenses in forwarding proxy materials to beneficial owners.
Proposals for Shareholder Action
The matters proposed for consideration at the meeting are:
| ●
| The election of three Class III directors; |
| ●
| Approval of an amendment to the Company’s Assumed 2006 Stock Incentive Plan; |
| ●
| Ratification of the appointment of Cherry, Bekaert & Holland L.L.P. as our independent registered public accounting firm for the current fiscal year; |
| ●
| Conduct advisory vote on compensation of named executive officers; |
| ●
| Conduct advisory vote on the frequency of an advisory vote on executive compensation; and |
| ●
| The transaction of such other business as may come before the meeting or any adjournment thereof. |
Our Board of Directors recommends that you vote “FOR” the director nominees and the other proposals.
Voting
Shareholders of record may vote:
| ● | By Mail — To vote by mail using the enclosed proxy card, shareholders will need to complete, sign and date the proxy card and return it promptly in the envelope provided or mail it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. When the proxy card is properly executed, dated, and timely returned, the shares it represents will be voted in accordance with its instructions.
|
| ● | By Internet — Shareholders may vote over the Internet, by going to “www.proxyvote.com.” Shareholders will need to type in the Company Number and the Account Number indicated on the proxy card and follow the instructions.
|
| ● | By Telephone — Shareholders may vote over the telephone, by dialing 1-800-690-6903 in the United States or Canada from any touch-tone telephone and following the instructions. Shareholders will need the Company Number and the Account Number indicated on the proxy card.
|
| ● | By Attending the Meeting in Person — Shareholders may vote by attending the meeting in person and voting. Please contact Wendy Larey at 404.554.8023 or wlarey@mimedx.com in order to obtain directions to the Annual Meeting.
|
Internet and telephone voting facilities will close at 11:59 p.m., Eastern Daylight Time, on May 8, 2013.
In addition, a large number of banks and brokerage firms participate in online programs that provide eligible beneficial owners who hold their shares in “street name” rather than as a shareholder of record, with the opportunity to vote over the Internet or by telephone. “Street name” shareholders who elected to access the proxy materials electronically over the Internet through an arrangement with their brokerage firm, bank or other nominee should receive instructions from their brokerage firm, bank or other nominee on how to access the shareholder information and voting instructions. If shareholders hold shares in “street name” and the voting instruction form received from the brokerage firm, bank or other nominee does not reference Internet or telephone information, or if you prefer to vote by mail, please complete and return the paper voting instruction form. In order to vote shares held in “street name” in person at the Annual Meeting as of the record date.
Holders of Series B Preferred Stock are entitled to vote their shares (together with unpaid dividends on such shares) on an as-converted basis (converted using a proxy issuedratio of $1,000 divided by $5.25 per share, or approximately 190 votes per share of Series B Preferred Stock) as a single class with the holders of Company common stock, subject to certain limitations on voting set forth in the owner’s name must be obtained fromArticles of Amendment to the record holder (typically your brokerage firm, bankCompany’s Articles of Incorporation. Thus, as of the Record Date, holders of Series B Preferred Stock held 19,657,609 votes, or other nominee) and presented14.8% of the aggregate voting power of shares entitled to vote at the Annual Meeting.
Shareholders5.How do I attend the virtual Annual Meeting? Can I vote and ask questions during the Annual Meeting?
In light of record and “street name” shareholders who vote overpublic health concerns regarding the Internet or by telephone need not return a proxy card or voting instruction form by mail, but may incur costs, such as usage charges, from telephone companies or Internet service providers, for whichcoronavirus (COVID-19) outbreak, the shareholder is responsible.
If no instructions are indicated, your proxyAnnual Meeting will be voted “FOR”conducted in virtual format only in order to protect the electionhealth and well-being of the director nomineesour shareholders, directors, and the other proposals.employees and to provide access to our shareholders regardless of geographic location. There is no in-person meeting for you to attend.
Other Matters
It is not anticipated that any other mattersYou will be considered atable to attend the Annual Meeting. If, however,Meeting online, vote your shares electronically during the meeting, and submit any other matter properly comes beforequestions by visiting www.cesonlineservices.com/mdxg21_vm.
Attendance at the Annual Meeting or any adjournment or postponement thereof will be limited to stockholders of the Company as of the close of business on the Record Date and guests of the Company. In order to attend the virtual meeting, you will need to pre-register by 10:00 a.m. Eastern Time on May 25, 2021. To pre-register for the meeting, please follow these instructions:
Registered Stockholders
Stockholders of record as of the Record Date may register to participate in the Annual Meeting remotely by visiting the website www.cesonlineservices.com/mdxg21_vm. Please have your proxy card containing your control number available, and follow the instructions to complete your registration request. After registering, stockholders will receive a confirmation email with a link and instructions for accessing the virtual Annual Meeting. Requests to register to participate in the Annual Meeting remotely must be received no later than 10:00 a.m., Eastern Time, on May 25, 2021.
Beneficial Stockholders
Stockholders whose shares are held through a broker, bank or other nominee as of the Record Date may register to participate in the Annual Meeting remotely by visiting the website www.cesonlineservices.com/mdxg21_vm.
Please have your Voting Instruction Form or other communication containing your control number available and follow the instructions to complete your registration request. After registering, stockholders will receive a confirmation email with a link and instructions for accessing the virtual Annual Meeting. Requests to register to participate in the Annual Meeting remotely must be received no later than 10:00 a.m., Eastern Time, on May 25, 2021.
We will have technicians ready to assist you with any technical difficulties you may have accessing the virtual meeting. If you encounter any difficulties accessing the virtual meeting during check-in or during the meeting, please call the technical support number that will be posted on the virtual shareholder meeting login page.
Questions on How to Pre-register
If you have any questions or require any assistance with pre-registering, please contact the Company’s proxy solicitor, Morrow Sodali: Shareholders Call Toll Free: (800) 662-5200; Banks, Brokers, Trustees and Other Nominees Call Collect: (203) 658-9400; Email: MDXG@investor.Morrowsodali.com.
6.How many votes do I have?
Each share of Company common stock you owned as of the Record Date is entitled to one vote for each matter presented at the Annual Meeting and described in this Proxy Statement (including one vote for each seat up for election at the Annual Meeting with respect to Proposals 1 and 2).
Holders of Series B Preferred Stock as of the Record Date are entitled to a number of votes equal to the number of shares of Company common stock into which the shares of Series B Preferred Stock are convertible, i.e., (i) the number of shares of Series B Preferred Stock times (ii) the quotient of $1,000 (together with unpaid dividends on such shares) divided by $5.25 (rounded down to the nearest whole number), or approximately 190 votes for each shares of Series B Preferred Stock. Holders of Series B Preferred Stock as of the Record Date will be entitled to an aggregate of 19,657,609 votes on each such matter (including on each seat up for election at the Annual Meeting with respect to Proposals 1 and 2).
You may NOT cumulate votes relating to any matter. Other than as described in this Proxy Statement, the Board knows of no other matters that may be properly presented for shareholder vote at the Annual Meeting. If any other matters are properly presented at the Annual Meeting, holders of Company common stock as of the Record Date will be entitled to one vote for each share of Company common stock they hold on each such matter (including on each seat up for election at the Annual Meeting with respect to Proposals 1 and 2), and holders of Series B Preferred Stock as of the Record Date will be entitled to a number of votes equal to the number of shares of Series B Preferred Stock times the quotient $1,000 (together with unpaid dividends on such shares), divided by $5.25 (rounded down to the nearest whole number), or approximately 190 votes for each shares of Series B Preferred Stock.
7.What is the difference between holding shares as a “shareholder of record” and as a “beneficial owner?”
If your shares are registered directly in your name with our transfer agent, you are considered the shareholder of record of those shares, and the proxy materials are being sent directly to you.
Most holders of Company common stock hold their shares beneficially through a broker, bank or other nominee rather than of record directly in their own name. If your shares are held in a stock brokerage account or by a bank or other nominee, you are considered the beneficial owner of the shares held in “street name,” and these proxy materials are being forwarded to you by your broker, bank or other nominee who is considered the shareholder of record of those shares. As the beneficial owner, you have the right to direct your broker, bank or other nominee on how to vote your shares, and you are also invited to attend the Annual Meeting. Your broker, bank or other nominee has enclosed a WHITE voting instruction form for you to use in directing your broker, bank or other nominee as to how to vote your shares.
You must follow these instructions in order for your shares to be voted. Your broker, bank or other nominee is required to vote your shares in accordance with your instructions. We urge you to instruct your broker, bank or other nominee, by following the instructions on the enclosed WHITE voting instruction form, to vote your shares FOR the Board’s nominees (Proposal 1 and Proposal 2), FOR the advisory vote to approve executive compensation (Proposal 3), FOR the ratification of Deloitte & Touche LLP as independent registered public accounting firm for the fiscal year ended December 31, 2021 (Proposal 4), FOR the amendment to the Restated Articles of Incorporation (the “Articles”) to declassify the Board (Proposal 5), FOR the amendment to the Articles to reduce the ownership threshold to call a
special shareholders’ meeting (Proposal 6), and FOR the amendment to the Company’s Amended and Restated Bylaws (the “Bylaws”) to adopt proxy access (Proposal 7).
8.What is a proxy?
A proxy is your legal designation of another person to vote the shares you own. That other person is called a “proxy.” If you designate someone as your proxy in a written document, that document is also called a proxy or a proxy card. The Board has designated William F. Hulse IV and David A. Wisniewski as the Company’s proxies for the Annual Meeting.
9.How can I vote my shares?
Shareholders of Record. Shareholders of record may vote their shares or submit a proxy to have their shares voted by one of the following methods:
By Internet - Log on through the Internet at www.cesvote.com and follow the instructions on that site.
By Telephone - Call 1-888-693-8683 and follow the simple voice prompts provided.
By Mail - Complete, sign, date and return the WHITE proxy card in the postage-paid envelope included.
During the Virtual Annual Meeting - Shareholders of Record who have pre-registered and logged in at www.cesonlineservices.com/mdxg21_vm may click on the 'Shareholder Ballot' link found in the 'Meeting Links' section of the webcast to vote during the Annual Meeting.
Beneficial Owners who have pre-registered and logged in at www.cesonlineservices.com/mdxg21_vm may click on the 'Shareholder Ballot' link found in the 'Meeting Links' section of the webcast to vote during the Annual Meeting. Beneficial owners who want to attend and also vote in person at the Annual Meeting will need to obtain a legal proxy, in PDF or Image (gif, jpg, or png) file format, from the organization that holds their shares giving them the right to vote their shares in person at the Annual Meeting and by presenting it with their online ballot during the meeting.
If you return your WHITE proxy card by mail, please ensure you leave enough time for your WHITE proxy card to be mailed and received. You are encouraged to sign, date and return the WHITE proxy card in the postage-paid envelope provided (or vote by Internet or by telephone) regardless of whether or not you plan to attend the virtual Annual Meeting.
Beneficial Owners. If you are the beneficial owner of your shares (that is, you hold your shares in “street name” through an intermediary such as a broker, bank or other nominee), you will receive instructions from your broker, bank or other nominee as to how to vote your shares or submit instructions to vote your shares.
You should instruct your broker, bank or other nominee how to vote your shares by following the directions provided by your broker, bank or other nominee.
Please follow the instructions provided by your broker, bank or other nominee. If you return your WHITE voting instruction form by mail, please ensure you leave enough time for your voting instruction form to be received by the deadline provided by your broker, bank or other nominee.
10. How will shares be voted by the WHITE proxy card?
Where a choice has been specified on the WHITE proxy card, the shares represented by the WHITE proxy card will be voted in accordance with the specifications. If you timely return a validly executed WHITE proxy card without indicating how your shares should be voted on a matter and you do not revoke your proxy, your proxy will be voted in accordance with the Board’s recommendation as follows:
| | | | | | | | | | | |
| Item | Description | Board
Recommendation | Page |
| 1 | Election of three Class II directors | FOR the nominees | |
| 2 | Election of one Class III director | FOR the nominee | |
| 3 | Advisory vote to approve Executive Compensation | FOR | |
| 4 | Ratification of Registered Public Accounting Firm | FOR | |
| 5 | Declassify the Board of Directors | FOR | |
| 6 | Reduce Ownership Threshold to Call a Special Shareholders’ Meeting | FOR | |
| 7 | Adopt Proxy Access | FOR | |
The Board is not aware of any matters that are expected to come before the Annual Meeting other than as described in this Proxy Statement. If any other matter is presented at the Annual Meeting upon which a vote may be properly taken, shares represented by all WHITE proxy cards received by the Company will be voted with respect thereto at the discretion of the persons named as proxies on the enclosed WHITE proxy card.
11. What if I receive more than one WHITE proxy or set of proxy materials?
If your shares are held in more than one account, you may receive more than one WHITE proxy card or set of proxy materials, and in that case, you can and are urged to vote all of your shares of Company common stock by signing, dating and returning any and all WHITE proxy cards and/or WHITE voting instruction forms you receive. If you choose to vote by telephone or via the Internet, please vote once for each WHITE proxy card and/or WHITE voting instruction form you receive to ensure that all of your shares are voted. Only your latest dated proxy for each account will count.
If Prescience Point proceeds with its previously announced alternative nominations and other business proposals, the Company will likely conduct multiple mailings prior to the Annual Meeting date to ensure shareholders have the Company’s latest proxy information and materials to vote. The Company will send you a new WHITE proxy card with each mailing, regardless of whether you have previously voted. We encourage you to vote every WHITE proxy card you receive. The latest dated proxy card you submit will be counted, and, if you wish to vote as recommended by the Board, then you should only submit a WHITE proxy card. The Board strongly urges you to discard any GOLD proxy card or GOLD voting instruction form sent to you by or on behalf of the Prescience Group. Voting to “withhold” with respect to any of Prescience Point’s nominees on a GOLD proxy card or GOLD voting instruction form will revoke any WHITE proxy card you may have previously submitted.
12. What should I do if I receive a GOLD proxy card or GOLD voting instruction form or other proxy materials from the Prescience Group?
Prescience Point has filed a preliminary proxy statement that includes a proposal to nominate four director candidates for election at the Annual Meeting in opposition to the Board’s nominees and has indicated an intent to solicit proxies on all of the proposals included in this Proxy Statement. You may receive proxy solicitation materials from the Prescience Group. The Company is not responsible for the accuracy of any information provided by or relating to Prescience Point or its nominees contained in proxy materials filed or disseminated by or on behalf of the Prescience Group or any other statements that anyone in the Prescience Group may make.
The Board does not endorse any of Prescience Point’s nominees. Prescience Point’s business proposals are substantially similar to the ones set forth in this Proxy Statement, and in the case of the Company’s Proposals 5 and 6, Prescience Point has included in its preliminary proxy statement the Company’s formulation of those proposals rather than the versions from the Prescience Nomination Notice. Because of these factors, the Board unanimously recommends that you vote FOR the election of each of the Board’s nominees and FOR each of the proposals set forth in this Proxy Statement on the enclosed WHITE proxy card or WHITE voting instruction form, as applicable. The Board strongly urges you NOT to sign or return any GOLD proxy card or GOLD voting instruction form sent to you by or on behalf of the Prescience Group.
Voting to “withhold” with respect to any of Prescience Point’s nominees on a GOLD proxy card or GOLD voting instruction form sent to you by or on behalf of the Prescience Group is not the same as voting for the Board’s nominees because a vote to “withhold” with respect to any of Prescience Point’s nominees on its GOLD proxy card or GOLD voting instruction form will revoke any WHITE proxy card you may have previously submitted. To support the Board’s nominees, you should vote FOR the Board’s nominees on the WHITE proxy card and disregard, and NOT return, any GOLD proxy card or GOLD voting instruction form sent to you by the Prescience Group. If you have previously voted using a GOLD proxy card sent to you by the Prescience Group, you can still change your vote and support your Board’s nominees by signing, dating and returning the enclosed WHITE proxy card in the postage-paid envelope provided, or by following the instructions on the WHITE proxy card to vote by telephone or by Internet. Only your latest dated proxy will votecount. Any proxy may be revoked at any time prior to its exercise at the Annual Meeting as described in this Proxy Statement.
13. Can I revoke my proxy in accordance with their best judgment on any such matter.or change my vote?
Yes.
RevocationShareholders of Proxies
EachRecord. A shareholder sendingof record who has properly executed and delivered a proxy will have the power tomay revoke itsuch proxy at any time before it is exercised. Thethe Annual Meeting in any of the four following ways:
•Timely date, sign and return a new proxy may be changed or revoked before it is exercised by sending a written revocation or a duly executed proxycard bearing a later date;
•Vote on a later date by using the telephone or Internet;
•Deliver a written notice to us at our principal offices at 60 Chastain Center Blvd., Suite 60, Kennesaw, Georgia 30144, Attention: Corporate Secretary. TheSecretary prior to the Annual Meeting by any means, including facsimile, stating that your proxy is revoked; or
•Attend the virtual Annual Meeting and vote in person during the meeting.
If you have previously submitted a GOLD proxy card sent to you by or on behalf of the Prescience Group, you may also be revokedchange your vote by attendingcompleting and returning the meetingenclosed WHITE proxy card in the accompanying postage pre-paid envelope, or by voting by telephone or by the Internet by following the instructions on the WHITE proxy card. Please note that submitting a GOLD proxy card sent to you by the Prescience Group will revoke votes you have previously made via the Company’s WHITE proxy card. Voting to “withhold” with respect to any of Prescience Point’s nominees on a GOLD proxy card sent to you by or on behalf of the Prescience Group is not the same as voting for the Board’s nominees because a vote to “withhold” with respect to any of Prescience Point’s nominees on its GOLD proxy card will revoke any WHITE proxy you may have previously submitted.
Beneficial Owners. If your shares are held of record by a broker, bank or other nominee, you may change your vote by submitting new voting instructions to your nominee in accordance with your nominee’s procedures.
If you have previously submitted voting instructions pursuant to a GOLD voting instruction form sent to you on behalf of the Prescience Group, you may subsequently change your voting instructions by completing and returning the enclosed WHITEvoting in person.
instruction form, or by voting by telephone or by the Internet by following the instructions on the WHITE proxy card. Please note that submitting instructions pursuant to a GOLD voting instruction form sent to you on behalf of the Prescience Group will revoke instructions you may have previously made via the WHITE voting instruction form. Voting to “withhold” with respect to any of
2Prescience Point’s nominees on a GOLD voting instruction form sent to you on behalf of the Prescience Group is not the same as submitting instructions to vote for the Board’s nominees because instructions to “withhold” with respect to any of Prescience Point’s nominees on its GOLD voting instruction form will revoke any WHITE voting instruction you may have previously submitted.
14. Will my shares be voted if I do nothing?QuorumNo. If your shares are registered in your name, you must sign and Vote Required
The presence,return a proxy card in order for your shares to be voted, unless you vote via telephone or the Internet or vote in person during the virtual Annual Meeting.
If your shares are held in “street name” (that is, held for your account by a broker, bank or other nominee) and you do not instruct your broker, bank or other nominee how to vote your shares, then, your broker, bank or other nominee will not have discretionary authority to vote your shares on Proposals 1 and 2 (election of directors), Proposal 3 (advisory vote to approve executive compensation), Proposal 5 (declassify the Board), Proposal 6 (reduce the ownership threshold to call a special shareholders’ meeting), and Proposal 7 (proxy access). Although votes on Proposal 4 (the ratification of our registered public accounting firm) are normally considered “routine” matters such that brokers may vote without instructions from their clients, to the extent that your broker provides you with the Prescience Group’s proxy materials, it will not be able to vote your shares on Proposal 4 without your specific instructions. We strongly encourage you to instruct your broker, bank or other nominee to vote your shares by following the instructions provided on the voting instruction form you receive from your broker, bank or other nominee.
YOUR VOTE IS VERY IMPORTANT. To assure that your shares are represented at the Annual Meeting, we urge you to date, sign and return the enclosed WHITEproxy card in the postage-paid envelope provided, or vote by telephone or the Internet as instructed on the WHITE proxy card, whether or not you plan to attend the virtual Annual Meeting. You can revoke your proxy at any time before the proxies you appointed cast your votes. If your broker, bank or other nominee is the holder of record of your shares (i.e., your shares are held in “street name”), you will receive voting instructions from your broker, bank or other nominee. You must follow these instructions in order for your shares to be voted. Your broker, bank or other nominee is required to vote those shares in accordance with your instructions. Because of the contested nature of the election, if you do not give instructions to your bank, broker or other nominee, it will not be able to vote your shares with respect to the election of directors. We urge you to instruct your broker, bank or other nominee, by following the instructions on the enclosed WHITE voting instruction form, to vote your shares FOR the Board’s nominees (Proposal 1 and Proposal 2), FOR the advisory vote to approve executive compensation (Proposal 3), FOR the ratification of the registered public accounting firm (Proposal 4), FOR the amendment to the Articles to declassify the Board (Proposal 5), FOR the amendment to the Articles to reduce the ownership threshold to call a special shareholders’ meeting (Proposal 6), and FOR the amendment to the Bylaws to adopt proxy access (Proposal 7).
15. What constitutes a quorum?
For purposes of the Annual Meeting, the holders of a majority of the issued and outstanding shares of the Company’s common stock and Series B Preferred Stock (taken together as a single class, with the Series B Preferred Stock treated on an as-converted basis (using a ratio of $1,000, together with unpaid dividends on such shares, divided by $5.25 per share, or approximately 190 shares of common stock per share of Series B Preferred Stock)) entitled to vote is necessary to constituteat a quorum at the Annual Meeting and at any adjournments thereof. Directions to withhold authority to vote for directors, abstentions and broker non-votes will be counted for purposesmeeting of determining if a quorum is present at the Annual Meeting. If a quorum is not present or represented at the Annual Meeting, the chairman of the meeting or the shareholders, holding a majority of the shares of common stock entitled to vote,virtually present in person or represented by proxy, have the power to adjourn the meeting from time to time without notice, other than an announcement at the meeting, untilconstitute a quorum is present or represented. Directors, officers and employees of the Company may solicit proxies for the reconvened meetingtransaction of business.
Votes cast virtually in person or by mail, telephone or telegram. At any such reconvened meeting at which a quorum is present or represented, any business may be transacted that might have been transacted at the meeting as originally scheduled.
Directors are elected by the affirmative vote of the holders of a plurality of the shares of our capital stock present in person or represented by proxy, and entitled to vote at the Annual Meeting of Shareholders. The affirmative vote of the holders of a majority of the shares of stock present in person or represented in proxy and entitled to vote is required to approve the other proposals.
Votes cast in person or by proxy; abstentions and broker non-votes will be tabulated by the inspector of election and will be considered in the determination of whether a quorum is present at the Annual Meeting. In the absence of a quorum, the chair of the Board or any officer entitled to preside at the Annual Meeting shall have the power to adjourn the meeting.
16. What vote is required to approve each matter, and how are the voting results determined?
| | | | | | | | | | | | | | |
| Item | Description | Vote Required | Abstentions and Broker Discretionary Voting | Page |
| 1 | Election of three Class II directors | If the number of nominees for director exceeds the number of directors to be elected, directors will be elected by a plurality of votes cast, meaning that the three nominees receiving the most votes FOR their election will be elected to the Board.
If the number of nominees for director does not exceed the number of directors to be elected, directors will be elected by a majority of the votes cast by the shares entitled to vote on the election. | Abstentions and broker non-votes will have no effect on the outcome of this proposal.
Under New York Stock Exchange rules, the matter is considered non-routine so brokers will not have discretion to vote upon the matter in the absence of instructions from the beneficial owner.
| |
| 2 | Election of one Class III director | If the number of nominees for director exceeds the number of directors to be elected, the director will be elected by a plurality of votes cast, meaning that the nominee receiving the most votes FOR its election will be elected to the Board.
If the number of nominees for director does not exceed the number of directors to be elected, directors will be elected by a majority of the votes cast by the shares entitled to vote on the election. | Abstentions and broker non-votes will have no effect on the outcome of this proposal.
Under New York Stock Exchange rules, the matter is considered non-routine so brokers will not have discretion to vote upon the matter in the absence of instructions from the beneficial owner.
| |
| 3 | Advisory vote to approve Executive Compensation | Votes cast FOR by the holders of shares represented at the meeting and entitled to vote on the matter must exceed the votes cast AGAINST | Abstentions and broker non-votes will have no effect on the outcome of this proposal.
Under New York Stock Exchange rules, the matter is considered non-routine so brokers will not have discretion to vote upon the matter in the absence of instructions from the beneficial owner.
| |
| 4 | Ratification of Registered Public Accounting Firm | Votes cast FOR by the holders of shares represented at the meeting and entitled to vote on the matter must exceed the votes cast AGAINST | Abstentions and broker non-votes will have no effect on the outcome of this proposal.
Under New York Stock Exchange rules, to the extent that holders are not provided with opposition proxy materials, the matter is considered routine so brokers will have discretion to vote upon the matter in the absence of instructions from the beneficial owner.
| |
| | | | | | | | | | | | | | |
| Item | Description | Vote Required | Abstentions and Broker Discretionary Voting | Page |
| 5 | Amendment to Articles to Declassify the Board of Directors | A majority of shares entitled to vote on the matter (i.e., shares outstanding) | The failure to vote, as well as abstentions and broker non-votes, will be counted as votes “AGAINST” this proposal.
Under New York Stock Exchange rules, the matter is considered non-routine so brokers will not have discretion to vote upon the matter in the absence of instructions from the beneficial owner. | |
| 6 | Amendment to Articles to Reduce the Ownership Threshold to Call a Special Shareholders’ Meeting | A majority of shares entitled to vote on the matter (i.e., shares outstanding) | The failure to vote, as well as abstentions and broker non-votes, will be counted as votes “AGAINST” this proposal.
Under New York Stock Exchange rules, the matter is considered non-routine so brokers will not have discretion to vote upon the matter in the absence of instructions from the beneficial owner. | |
| 7 | Amendment to the Bylaws to Adopt Proxy Access | A majority of shares entitled to vote on the matter (i.e., shares outstanding) | The failure to vote, as well as abstentions and broker non-votes, will be counted as votes “AGAINST” this proposal.
Under New York Stock Exchange rules, the matter is considered non-routine so brokers will not have discretion to vote upon the matter in the absence of instructions from the beneficial owner. | |
Under our governance documents, in the event an incumbent director fails to receive a majority of the votes cast (unless, as provided above, the director election standard is a plurality of the votes cast), the incumbent director shall promptly tender his or her resignation to the Board. The inspectorNominating and Corporate Governance Committee of the Board will make a recommendation to the Board on whether to accept or reject the resignation, or whether other action should be taken. The Board, taking into account the recommendation of the Nominating and Corporate Governance Committee, will determine whether to accept or reject such resignation, or what other action should be taken, within 100 days from the date of the certification of election results.
We urge you to support the Board’s nominees on the WHITE proxy card. It will treat shares representedNOT help elect any of the Board’s nominees if you sign and return a GOLD proxy card sent by executed proxies that abstain as shares that are present and entitledor on behalf of the Prescience Group, even if you vote to “Withhold” one or more of Prescience Point’s nominees on the GOLD proxy card. Doing so will cancel any previous vote you may have cast for the election of your Board’s nominees on the WHITE proxy card.
The only way to support all of the Board’s nominees is to vote for purposesFOR each of determining the approvalBoard’s nominees on the WHITE proxy card and to disregard, and NOT return, any GOLD proxy card that you receive from the Prescience Group.
17. What is the effect of abstentions and broker non-votes?
Broker non-votes occur when brokers do not have discretionary voting authority to vote certain shares held in “street name” on particular “non-routine” proposals, and the “beneficial owner” of those shares has not instructed the broker to vote on those proposals. Brokers have no discretionary authority to vote on the election of directors (Proposals 1 and 2), the advisory vote to approve executive compensation (Proposal 3), the amendment to our Articles to declassify our Board (Proposal 5), the amendment to our Articles to reduce the ownership threshold to call a special shareholders’ meeting (Proposal 6) and the amendment to the Bylaws to adopt proxy access (Proposal 7). Although votes on the ratification of our registered public accounting firm (Proposal 4) are normally considered “routine” matters such matterthat broker may vote without instructions from their clients, to the extent that your broker provides you with the Prescience Group’s proxy materials, it will not be able to vote your shares on Proposal 4 without your specific instructions. To the extent that your broker nominee does not provide you with the Prescience Group’s proxy materials, your broker will be able to vote on the ratification of the selection of our registered public accounting firm on the WHITE proxy card even if it does not receive your instructions.
If you specify that you wish to “abstain” from voting on a certain proposal, then your shares will not be voted on that particular proposal. Abstentions and broker non-votes are not treated as votes “cast” and will therefore have no effect on the outcome of Proposals 1, 2, 3, or 4. Abstentions and broker non-votes shall have the same effect as a vote against Proposals 5, 6 and 7.
18. How do I find out the proposal. If,results of the vote?
The voting results of the Annual Meeting will be published no later than four business days after the Annual Meeting on a Form 8-K filed with the Securities and Exchange Commission. You can access our Forms 8-K and the other reports we file with the Commission at our website at https://mimedx.gcs-web.com or at the Commission’s website at www.sec.gov. The information provided on these websites is for informational purposes only and is not incorporated by reference into this Proxy Statement.
19. Am I entitled to appraisal or dissenters’ rights with respect to any shares, a brokerproposal presented in this Proxy Statement?
No. Under applicable law, shareholders are not entitled to appraisal or other nominee submitsdissenters’ rights with respect to any proposal presented in this Proxy Statement.
20. Whom should I call with questions about the 2021 annual meeting?
Morrow Sodali is assisting us with our effort to solicit proxies. If you have any questions concerning the business to be conducted at the 2021 Annual Meeting, would like additional copies of this Proxy Statement or need help submitting a proxy cardfor your shares, please contact Morrow Sodali:
509 Madison Avenue Suite 1206
New York, NY 10022
Shareholders Call Toll Free: (800) 662-5200
Banks, Brokers, Trustees and Other Nominees Call Collect: (203) 658-9400
Email: MDXG@investor.Morrowsodali.com
BACKGROUND TO THE SOLICITATION
Prescience Point
Prescience Point is a private investment manager that beneficially owned, along with its affiliates that make up the Prescience Group, 9,058,250 shares of Company common stock (or approximately 8.0% of the outstanding shares of Company common stock) as of April 15, 2021, according to information reported on its Schedule 13D/A (Amendment No. 1) filed on April 16, 2021 (the “Prescience Schedule 13D/A”).
Chronology
This is the second proxy contest launched by Prescience Point within the last two years. The first began in May 2019, when Prescience Point (i) issued an open letter to shareholders of the Company and a corresponding press release in which it announced its intention to nominate four director candidates for election at the Company’s 2018 annual meeting of shareholders on June 17, 2019 (the “2018 Annual Meeting”), (ii) formally submitted to the Company a notice of its intention to nominate four director candidates—Dr. M. Kathleen Behrens, Mr. Richard J. Barry, Mr. K. Todd Newton and Mr. Melvin L. Keating—for election at such meeting (collectively, the “2019 Prescience Nominees”), and (iii) filed a proxy statement with the SEC recommending that shareholders of the Company elect the 2019 Prescience Nominees to the Board at the 2018 Annual Meeting.
Following Prescience Point’s filing of the proxy statement, the Company and Prescience Point entered into further discussions with a broker non-voteview towards reaching an amicable solution. As part of those ongoing discussions, the Board interviewed Prescience Point’s nominees (Dr. Behrens, Mr. Barry and Mr. Newton) and Prescience Point interviewed Mr. Wright, the Company’s newly appointed chief executive officer and director nominee, and Mr. James L. Bierman, a consensus candidate mutually agreed upon between the parties.
Following further discussions between the Company and Prescience Point, on one or more proposals, those shares willMay 29, 2019, Prescience Point, Dr. Behrens, Mr. Barry, Mr. Newton and the Company entered into a cooperation agreement (the “Cooperation Agreement”), pursuant to which the Company and Prescience Point agreed to, among other things, nominate (1) Dr. Behrens, (2) Mr. Newton and (3) Mr. Timothy Wright (who was appointed as Chief Executive Officer May 9, 2019 but was not be treated as present and entitled to vote for purposes of determining the approval of any such proposal.
No Appraisal Rights
No appraisal rights are available under Florida law or our Articles of Incorporation or bylaws if you dissent from or vote against anyyet a member of the proposals presentedBoard) as the only three Class II director candidates for consideration,election to the Board at the 2018 Annual Meeting. The Cooperation Agreement further provided that, in the event that the 2018 Annual Meeting (which was held on June 17, 2019) was held on or before September 15, 2019, then:
(i) promptly following (but no later than five business days after) the 2018 Annual Meeting, the Board would accept the resignation of Larry W. Papasan as a Class III director and we doappoint (1) Mr. Richard J. Barry (a party to the Cooperation Agreement) and (2) Mr. James L. Bierman (a candidate mutually agreed upon by the Company and Prescience Point in the Cooperation Agreement to be appointed to the Board) as Class III directors; and
(ii) promptly following such appointment of Messrs. Barry and Bierman, the Company and Prescience Point would identify an individual, to be mutually agreed upon between Prescience Point and the Company, to stand for election as a Class III director at the 2019 Annual Meeting (such director was not planidentified by the Company and Prescience Point prior to independently provide any suchtermination of the Cooperation Agreement by Prescience Point).
As a result of the agreements set forth in the Cooperation Agreement, Prescience Point was given the right to recommend, participate in, or select, directly or indirectly, up to six Board seats, four of which are held by directors (Dr. Behrens, Mr. Newton, Mr. Bierman and Mr. Wright) who continue to serve on the Board. Though Dr. Behrens, Mr. Newton and Mr. Wright were either recommended or agreed to by Prescience Point pursuant to the Cooperation Agreement, they are among the four incumbent directors that Prescience Point is now seeking to replace, as set forth in its preliminary proxy statement filed on April 20, 2021.
On June 29, 2020, the Company received a letter from Prescience Point purporting to be a notice that Prescience Point was terminating the Cooperation Agreement due to an alleged material breach of the Cooperation Agreement by
the Company. The Company informed Prescience Point that it disagreed with Prescience Point’s assertions, including that Prescience Point had a right to terminate the Cooperation Agreement pursuant to its terms. Prescience Point did not then seek to engage with the Company under the Cooperation Agreement, and instead filed a third amendment to their Schedule 13D stating that they deem the Cooperation Agreement to be terminated.
On August 3, 2020, the Company sent a letter to Prescience Point stating that, although the Company had not materially breached the Cooperation Agreement, the Company nevertheless confirmed that the Cooperation Agreement was terminated and expressly reserved all of its rights and remedies.
On November 20, 2020, the Company hosted its 2020 annual meeting of shareholders. During the meeting, Timothy R. Wright, Chief Executive Officer, presented an overview of the Company, Rohit Kashyap, Ph.D., Executive Vice President and Chief Commercial Officer, and Robert B. Stein, M.D., Ph.D., Executive Vice President, Research and Development, presented an overview of the Company’s product pipeline, commercial and R&D initiatives, including an update on estimated, potential market sizes of future expected products intended to treat knee osteoarthritis pain. On January 13, 2021, the Company presented at the J.P. Morgan Healthcare Conference and provided additional details regarding the status of its clinical trials, planned international expansion, and potential market sizes.
Between December 8, 2020 and December 10, 2020, Prescience Point purchased approximately 200,697 shares of the Company’s common stock according to the Prescience Schedule 13D filed on January 13, 2021 (the “Prescience Schedule 13D”), all of which they would sell within eight days of the purchase and within two days of its December 16, 2020 report, described below.
On December 16, 2020, Prescience Point published a document in which it purported to analyze the Company’s stock. In such report, Prescience Point stated, “Based on conservative assumptions, MDXG shares are worth $31.84 [per share].” Prescience Point’s analysis was based in part on information published by the Company on November 20, 2020 regarding potential market sizes or certain future products. In the same report, Prescience Point publicly released a document stating that “the Company has successfully resolved all of the key issues resulting from prior management’s misdeeds” and that each of Dr. Behrens and Mr. Newton were “highly reputable and accomplished executives.”
Notwithstanding Prescience Point’s statements to the public on December 16, 2020 that the Company’s common stock was worth at least $31.84 per share, according to the Prescience Point Schedule 13D filed January 13, 2021, Prescience Point sold approximately 214,597 shares of the Company’s common stock within two days of publishing its report, at prices ranging from $8.12 to $9.61, according to the Prescience Point Schedule 13D, representing a premium range of 23 % to 46% over the Company’s closing stock price on the trading day immediately prior to the issuance of the Prescience Point report.
This January 13, 2021 Prescience Point Schedule 13D reported beneficial ownership of 8,735,918 shares of Company common stock and disclosed that Prescience Point expected to continue to engage in constructive discussions with the Company to bring about positive changes in the Company’s messaging to the investment community. In the Prescience Schedule 13D, Prescience Point expressed its belief that, following the completion of and subsequent data readout from the Company’s Phase 2B Knee Osteoarthritis Investigational New Drug (IND) clinical trial, the Company should explore possible strategic alternatives, including a potential sale of the Company or AmnioFix® Injectable to a strategic buyer. Prescience Point also disclosed that it may, among other things, continue to engage in discussions with management and the Board of the Company, engage in discussions with shareholders of the Company and others, make proposals to the Company concerning changes to capital allocation strategy, capitalization, ownership structure, Board structure (including Board composition), operations of the Company, purchasing additional shares of the Company, selling some or all of its shares, engaging in short selling of or any hedging or similar transaction with respect to its shares.
On February 3, 2021 and March 9, 2021, the Company’s management (Tim Wright, Bob Stein, Pete Carlson), Marty Sutter and Bill Hawkins of the Board, and Eiad Asbahi and Chris Li of Prescience Point, spoke by telephone, during which Mr. Asbahi expressed a desire to appoint individuals to the Company’s Board. During the March 9, 2021 telephone conversation, the Company advised Mr. Asbahi of its plans to hold the Company’s 2021 Annual Meeting in the first half of 2021.
On March 29, 2021, Eiad Asbahi, the principal of Prescience Point, and Chris Li of Prescience Point, had a telephone conversation with certain members of the Company’s management (Messrs. Wright, Hulse and Carlson) and Board (Dr. Behrens and Mr. Sutter), in which Mr. Asbahi stated, among other things, that they wanted more public shareholder representation on the Board and wanted board seat turnover and for the Board to formally commit to a strategic review following the completion of and subsequent data readout from the Company’s Phase 2B Knee Osteoarthritis clinical trial. Mr. Asbahi indicated that they wanted three board seats up for election at the 2021 Annual Meeting and one additional board seat, which were in addition to the six Board seats over which Prescience Point had direct or indirect control pursuant to the Cooperation Agreement. During the call, the Company indicated that the Board was interested in continuing good faith discussions as to how Prescience Point and the Company might work together to the benefit of shareholders.
Also on April 5, 2021, the Company filed a Current Report on Form 8-K announcing that the 2021 Annual Shareholders’ Meeting would be held on May 27, 2021.
On April 5, 2021, Butch Hulse, General Counsel and Secretary of the Company, received a formal request from legal counsel to Prescience Point requesting from the Company the form of written questionnaire and agreement required to be completed by any director nominee nominated by a shareholder under the Bylaws.
On April 8, 2021, Messrs. Wright and Sutter, and Mr. Asbahi spoke by telephone. During the call, the Company offered Prescience Point the opportunity to explore other ways for Prescience Point to participate in the Company, an additional Board seat representing a newly created 10th board seat, the opportunity to work with the Company to hire an investor relations firm and have input on the Company’s messaging and non‐deal roadshow materials, and the opportunity to discuss strategy with Prescience Point in private and subject to a customary non-disclosure agreement. The offer was conditioned on Prescience Point entering into a standstill agreement consistent with the one previously entered in May 2019 in connection with the Cooperation Agreement. After further discussion, Prescience Point rejected the Company’s offer and informally sought an extension of the Company’s April 15, 2021 deadline to submit nominees so that Prescience Point and the Company could engage in further negotiations.
The Company provided to Prescience Point the Company’s form of written questionnaire and form of representation and agreement on April 9, 2021 and April 14, 2021, respectively, in each case in accordance with the terms of the advance notice provisions of the Bylaws.
On April 12, 2021, the Company sent a letter to Prescience Point as a follow-up to the April 8 conversation, formally rescinding its offer to Prescience Point provided during the April 8 conversation and indicating its intention to abide by the provisions of its Bylaws and the previously disclosed annual meeting schedule. The Company reiterated the Board’s commitment to all shareholders and its fiduciary responsibilities and indicated that it was willing to consider any counter-proposals that Prescience Point may wish to put forth.
On April 14, 2021, the day before the expiration of the deadline to submit shareholder proposals, the Company received a letter from Prescience Point, disputing the Company’s summary of the April 8 phone conversation and formally requesting an extension of the deadline for nominations of individuals to stand for election to the Board.
On April 15, 2021, Prescience Point formally submitted to the Company a notice of intention to nominate four candidates—Eiad Asbahi, Alfred G. Merriweather, Charlotte E. Sibley and William F. Spengler—for election as directors at the Company’s 2021 Annual Meeting and proposing two additional items for the 2021 Annual Meeting (the “Prescience Nomination Notice”).
On April 16, 2021, Prescience Point issued a press release announcing its intention to nominate four candidates for election as directors at the 2021 Annual Meeting. In its press release, Prescience Point also stated, “[T]he current management and Board have made . . . decisions which have destroyed significant shareholder value. In July of last year, despite our objections and offer to help it raise capital at a more opportune time, the Company raised $150 million of hugely dilutive capital from private equity firms EW and Hayfin Capital Management in the form of $100 million of convertible preferred stock and a $50 million term loan.” The transaction referred to by Prescience Point closed on July
2, 2020 and provided the Company with the resources to stabilize its business and fund critically important investments in R&D, manufacturing, and commercial operations, as well as fund ongoing legal obligations. The transaction referred to by Prescience Point closed on July 2, 2020 and announced on July 6, 2020. Since that time, through April 15, 2021, the Company’s stock price has increased from $4.99 per share to $12.30 per share, a return of 146%.
Also on April 16, 2021, the Company issued a press release responding to Prescience Point’s press release of April 16, 2021.
Also on April 16, 2021, Prescience Point filed the Prescience Schedule 13D/A, disclosing delivery of the Prescience Nomination Notice and disclosing that Prescience Point’s beneficial ownership of Company common stock had increased from 8,735,918 to 9,058,250 shares.
On April 19, 2021, the Board adopted certain amendments to the Company’s Bylaws, which were subsequently disclosed in a Current Report on Form 8-K filed on April 20, 2021. For further information about such amendments, please see “Corporate Governance—Amended Bylaws.”
On April 20, 2021, the Company and Prescience Point filed their respective preliminary proxy statements.
PROPOSAL 1 - ELECTION OF THREE CLASS II DIRECTORS
Class II Director Nominees—Terms Expiring at the 2024 Annual Meeting of Shareholders
M. Kathleen Behrens, Ph.D., age 68. Dr. Behrens has worked as an independent life sciences consultant and investor since December 2009. Dr. Behrens served as the Co-Founder, President and Chief Executive Officer, and as a director, of the KEW Group Inc., a private oncology services company, from January 2012 until June 2014. Earlier in her career, Dr. Behrens served as a general partner for selected venture funds for RS Investments, a mutual fund firm, from 1996 until December 2009. While Dr. Behrens worked at RS Investments, from 1996 to 2002, she served as a managing director at the firm and, from 2003 to December 2009, she served as a consultant to the firm. During that time, Dr. Behrens also served as a member of the President’s Council of Advisors on Science and Technology (PCAST) from 2001 to 2009 and as chairwoman of PCAST’s Subcommittee on Personalized Medicine, as well as the President, director and chairwoman of the National Venture Capital Association, an organization that advocates for public policy that supports the American entrepreneurial ecosystem, from 1993 until 2000. Prior to that, she served as a general partner and managing director for Robertson Stephens & Co., an investment company, from 1983 through 1996. Dr. Behrens has served as a member of the board of directors of each of Sarepta Therapeutics, Inc. (Nasdaq: SRPT), a medical research and drug development company, since March 2009 (Chairwoman of the Board since April 2015) and IGM Biosciences, Inc. (Nasdaq: IGMS), a clinical stage biotechnology company focused on creating and developing IgM antibodies, since January 2019. She served as a director of Amylin Pharmaceuticals, Inc. (formerly Nasdaq: AMLN), a biopharmaceutical company, from 2009 until its sale in 2012 to Bristol-Myers Squibb Co. Prior to that, she served on the board of directors of Abgenix, Inc. (formerly Nasdaq: ABGX), a biopharmaceutical company, from 2001 until the company was sold to Amgen, Inc. in 2006. From 1997 to 2005, Dr. Behrens was a director of Science, Technology and Economic Policy for the National Research Council. Dr. Behrens was also a Co-Founder of the Coalition for 21st Century Medicine, a trade association for new generation diagnostics companies. Dr. Behrens holds a B.S. in biology and a Ph.D. in microbiology from the University of California, Davis. Dr. Behrens has served on the Board since June 2019 and was nominated as a director because of her substantial experience in the financial services and biotechnology sectors, as well as in healthcare policy.
(PROPOSAL 1)K. Todd Newton, age 58. Mr. Newton presently serves as a consultant to, and previously served as Chief Executive Officer and as a member of the board of directors of Apollo Endosurgery, Inc. (Nasdaq: APEN), a medical device company, from July 2014 until March 2021. Earlier in his career, Mr. Newton served as Executive Vice President, Chief Financial Officer and Chief Operating Officer at ArthroCare Corporation (formerly Nasdaq: ARTC), a medical device company, from 2009 to June 2014. Prior to that, Mr. Newton served in a number of executive officer roles, including President and Chief Executive Officer and as a director, at Synenco Energy, Inc., a Canadian oil sands company, from 2004 until 2008. Mr. Newton was a Partner at Deloitte & Touche LLP, a professional services network and accounting organization, from 1994 to 2004. Mr. Newton holds a B.B.A. in accounting from the University of Texas at San Antonio. Mr. Newton has served on the Board since June 2019 and was nominated as a director because of his significant experience in the medical device sector as well as strong executive leadership experience.
Timothy R. Wright, age 63, joined the Company as its Chief Executive Officer on May 13, 2019. Mr. Wright has more than 30 years of executive experience in the pharmaceutical, biotech and medical devices industries.
Prior to joining the Company, Mr. Wright was a founder and partner at Signal Hill Advisors, LLC, a consulting practice, from 2010 to May 2019. Mr. Wright served as President and Chief Executive Officer of M2Gen Corp., a privately held cancer and health informatics company, between July 2017 and September 2018. Before that, Mr. Wright served as Executive Vice President, Mergers and Acquisitions, Strategy and Innovation for Teva Pharmaceutical Industries Ltd. (“Teva”), a pharmaceutical company specializing in generic medicines, from April 2015 until August 2017. Before joining Teva, Mr. Wright was the founding partner of The Ohio State University Comprehensive Cancer Drug Development Institute. Mr. Wright also served as Chairman, Interim Chief Executive Officer and a director of Curaxis Pharmaceutical Corporation (“Curaxis”), a pharmaceutical company specializing in the development of drugs for the treatment of Alzheimer’s disease and various cancers, from July 2011 to July 2012. Curaxis had been experiencing financial difficulties prior to Mr. Wright’s tenure and, as a result, the company filed for Chapter 11 bankruptcy in July 2012. Mr. Wright was appointed president of Tyco healthcare Imaging and Pharmaceuticals businesses in 2007, and worked with other executives to spin out of Tyco International forming Covidien. He restructured the Imaging and Pharmaceuticals business, divesting Mallinckrodt Baker, and then prepared the company’s IPO. Later, Covidien was acquired 2014 by Medtronic for $42 billion. From 1984 to 1999, Mr. Wright held executive roles at DuPont Pharma and DuPont Merck, where he served as brand champion of the company’s organ transplantation and plasma volume expansion businesses, and eventually became global Senior Vice President, Strategy and Corporate Business Development, as well as President of DuPont Merck, Canada and Senior VP DuPont Merck, Europe heading up Marketing and Business Development.
Mr. Wright has been a director of Agenus, Inc. (Nasdaq: AGEN), an immuno-oncology company, since 2006 and its lead director since 2009. Mr. Wright also serves as Chairperson of The Ohio State University Comprehensive Cancer Center Drug Development Institute, serves as director of The Ohio State Innovation Foundation and sits on The Ohio State University College of Pharmacy Dean’s Corporate Council, and over his career, has served on boards of directors for companies in North America, Europe and Asia. Mr. Wright earned a Bachelor’s of Science in Marketing from The Ohio State University. He has served on our Board may setsince June 2019 and was nominated as a director to bring the perspective of the Chief Executive Officer on the Board and also for the benefit of his many years of experience in the healthcare and pharmaceutical industry.
Vote Required
Because we have received notice that Prescience Point intends to nominate a slate of nominees for election to the Board at the Annual Meeting, we expect the number of nominees for director to exceed the number of directors to be elected at the Annual Meeting. Accordingly, pursuant to Article II, Section 9 of the Bylaws, directors will be elected by a plurality of the votes cast at the Annual Meeting. This means that the three Class II director nominees with the most votes on Proposal 1 will be elected as Class II directors. If the number of nominees for Class II directors does not exceed the number of Class II directors to be elected, Class II directors will be elected by a majority of the votes cast by the shares entitled to vote on the election of directors.
THE BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THE ELECTION OF
DR. BEHRENS, MR. NEWTON AND MR. WRIGHT ON THE WHITE PROXY CARD
PROPOSAL 2 - ELECTION OF ONE CLASS III DIRECTOR
Class III Director Nominee—Term Expiring at the 2022 Annual Meeting of Shareholders
Phyllis Gardner, M.D., age 70, is a nominee for election as a director of our Company. Dr. Gardner has spent over 35 years in academia, medicine and industry. Dr. Gardner has served on the board of directors of several public and private companies, including Revance Therapeutics, Inc. since 2006, Corium International, Inc. from November 2007 to December 2018, CohBar, Inc. from February 2019 to present. Dr. Gardner has also served as an advisor to Change Health Care, Inc. from April 2019 to present. From June 1999 to July 2014, she served in various consulting capacities including as an adjunct partner at a venture fund managed by Essex Woodlands Ventures, a venture capital firm that focused on the healthcare industry (and a predecessor to EW Healthcare Partners, a healthcare focused growth equity firm and holder of our Series B Preferred Stock). Additionally, Dr. Gardner has been a member of the Harvard Medical School Board of Fellows since April 2013 and is a scientific reviewer for the Cancer Prevention and Research Institute of Texas. She began her academic medical career at Stanford University, where she has held several positions including Senior Associate Dean for Education and Student Affairs and remains today as Professor of Medicine. From 1994 to 1998, she took a leave of absence from Stanford University to serve as Principal Scientist, Vice President of Research and Head of ALZA Technology Institute, a major drug delivery company. Dr. Gardner holds a B.S. from the University of Illinois and an M.D. from Harvard University. Our Board believes that Dr. Gardner’s medical, healthcare and operating experience and significant experience serving as a director of other healthcare companies make her qualified to serve on our Board.
Vote Required
Because we have received notice that Prescience Point intends to nominate a slate of nominees for election to the Board at the Annual Meeting, we expect the number of nominees for director to exceed the number of directors to be elected at the Annual Meeting. Accordingly, pursuant to Article II, Section 9 of the Bylaws, directors will be elected by a plurality of the votes cast at the Annual Meeting. This means that the one director nominee with the most votes on Proposal 2 will be elected as a Class III director. If the number of nominees for Class III director does not exceed the number of Class III directors to be elected, the Class III director will be elected by a majority of the votes cast by the shares entitled to vote on the election of directors.
THE BOARD UNANIMOUSLY RECOMMENDS
THAT YOU VOTE FOR THE ELECTION OF DR. GARDNER
ON THE WHITE PROXY CARD
Board of Directors
Set forth below is certain information regarding our current directors and director nominees as of April 30, 2021. There are no less than three.family relationships among any of our directors, director nominees, or executive officers.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Name | | Age | | Since | | Tenure | | Independent | | Committees |
| M. Kathleen Behrens | | 68 | | 2019 | | 2 | | ü | | COB, AC, NCG |
| James L. Bierman | | 68 | | 2019 | | 2 | | ü | | AC, CC* |
| Phyllis I. Gardner | | 70 | | 2021 | | < 1 | | ü | | to be determined |
| Michael J. Giuliani | | 66 | | 2020 | | < 1 | | ü | | CC, NCG |
| William A. Hawkins, III | | 67 | | 2020 | | < 1 | | ü | | EC* |
| Cato T. Laurencin | | 62 | | 2020 | | < 1 | | ü | | EC |
| K. Todd Newton | | 58 | | 2019 | | 2 | | ü | | AC*, EC |
| Martin P. Sutter | | 66 | | 2020 | | < 1 | | ü | | CC, NCG* |
| Timothy R. Wright | | 63 | | 2019 | | 2 | | | | — |
| | | | | | | | | | | |
Audit Committee | Compensation Committee | Ethics and Compliance Committee | Nominating & Corporate Governance Committee |
| K. Todd Newton* | James L. Bierman* | William A. Hawkins* | Martin P. Sutter* |
| M. Kathleen Behrens | Michael Giuliani | Cato Laurencin | M. Kathleen Behrens |
| James L. Bierman | Martin P. Sutter | K. Todd Newton | Michael Giuliani |
* = Chair; AC = Audit Committee; CC = Compensation Committee; COB = Chairperson of the Board; EC = Ethics & Compliance Committee; NCG = Nominating and Corporate Governance Committee.
At the 2010 annual meeting of shareholders, the Company’s shareholders overwhelmingly approved an amendment to our charter classifying the Board into three classes of directors such that only one-third of the Board is up for election at each annual meeting of shareholders. Our Board currently consists of tenseven directors who are divided into three classes.classes, plus up to two directors appointed by the holder of our Series B Preferred Stock. At each Annual Meetingannual meeting, the termsterm of one class of directors expireexpires and persons are elected to that class for termsa term of three years or until their respective successors are dulysuch director’s successor is elected and qualified, or until theirsuch director’s earlier death, resignation or removal. If the number of directors changes, any increase or decrease must be apportioned among the classes so as to maintain the number of directors in each class as nearly equal as possible.
On July 2, 2020, in connection with the sale of Series B Preferred Stock to Falcon Fund 2 Holding Company, L.P. (the “EW Purchaser”), an affiliate of EW Healthcare Partners, as described in the Company’s 2019 Annual Report on Form 10-K, the Company agreed that, for so long as the EW Purchaser beneficially owns (i) at least 10% of the total number of outstanding shares of Company common stock (calculated on a fully-diluted, as converted basis), the EW Purchaser will be entitled to designate two individuals to serve on the Board and (ii) at least 5% but less than 10% of the total number of outstanding shares of Company common stock (calculated on a fully-diluted, as converted basis), the EW Purchaser will be entitled to designate one individual to serve on the Board (such designated directors, the “Preferred Directors”). The Preferred Directors will not be members of any class of directors that is elected by the holders of Company common stock (a “Common Director”). However, the Board may, by notice to the EW Purchaser, either appoint any individual serving as a Preferred Director as a Common Director or nominate any individual serving as a Preferred Director for election as a Common Director, provided that (i) no such appointment or nomination takes place such that such individual would be up for election as a Common Director prior to the Company’s 2022 annual meeting of shareholders, and (ii) if any individual serving as a Preferred Director has been appointed or nominated as a Common Director prior to July 2, 2022, then no other individual serving as a Preferred Director may be appointed or nominated as a Common Director prior to July 2, 2022. From and after the time that no Series B Preferred Stock remains outstanding, the EW Purchaser’s right to designate directors in accordance with the preceding sentence will convert into a right,
subject to the same ownership thresholds described above, to designate up to two individuals to be nominated by the Company to serve on the Board as Common Directors. The initial Preferred Directors are Martin P. Sutter and William A. Hawkins, III, who were appointed to the Board as Preferred Directors on July 2, 2020.
Our Board has nominated M. Kathleen Behrens, K. Todd Newton, and Timothy R. Wright to serve as a Class II directors, and Phyllis Gardner to serve as a Class III director. If elected, Dr. Behrens and Mr. Newton and Mr. Wright will serve a term expiring at the 2024 annual meeting of shareholders, and until his or her successor is elected and qualified, and Dr. Gardner will serve a term expiring at the 2022 annual meeting of shareholders, and until her successor is elected and qualified.
Our current Board members, the classes in which they serve, and the expiration of their terms as directors are as set forth in the table below:
| | | | | | | | | | | | | | |
Class Designation | | Directors | | Term Expiration |
Class III | | J. Terry Dewberry
Larry W. Papasan
Parker H. Petit
| | 2013 Annual Meeting of Shareholders |
| | | | |
Class I | | Charles R. Evans
Charles E. Koob
William C. Taylor
Neil S. Yeston
Cato Laurencin
Michael Giuliani | | 2014Elected to terms expiring at the 2023 Annual Meeting of Shareholders |
| | | | and until their successors are elected and qualified.
|
| Class II | | Joseph G. Bleser
Steven Gorlin
Bruce L. Hack
M. Kathleen Behrens
K. Todd Newton
Timothy R. Wright | | Elected to terms expiring at the 2021 annual meeting of shareholders, and until their successors are elected and qualified. |
| Class III | | 2015James L. Bierman
Phyllis Gardner | | Elected or appointed to a term expiring at the 2022 Annual Meeting, and until his or her successor is elected and qualified. |
| Preferred Directors | | William A Hawkins, III
Martin P. Sutter | | The Preferred Directors are not members of Shareholdersany class of directors that is elected by the holders of Company common stock. See description above under “Board of Directors.” |
Based on the recommendation of the Nominating and Corporate Governance Committee ofour current directors have joined the Board as new members since that time. Dr. Behrens, Mr. Newton and Mr. Wright were all elected as directors in connection with the Board has nominated J. Terry Dewberry, Larry W. Papasan and Parker H. Petit for election as Class III Directors of the Company at the 20132018 Annual Meeting held in June 2019. Mr. Bierman was subsequently appointed as a director in connection with the Cooperation Agreement in June 2019. We welcomed four new directors to our Board of Shareholders. The Class III Directors’ next term expires atDirectors in 2020. Pursuant to the 2016 Annual Meeting or upon their respective successors being electedPreferred Stock Transaction described below, we increased the size of our Board of Directors, and qualified or until their earlier death, resignation, removal or termination. All nominees have consentedMr. Sutter and Mr. Hawkins were appointed to serve as directors if elected.
With respectPreferred Directors effective in July 2020. At the 2020 annual meeting held in November 2020, shareholders elected Dr. Giuliani and Dr. Laurencin to the election of directors, you may (i) vote “for” all of the nominees, or (ii) “withhold” with respect to some or all nominees. Directors are elected by the affirmative vote of the holders of a plurality of the shares of our capital stock present in person or represented by proxy and entitled to vote at the Annual Meeting of Shareholders. As a result, the three director nominees that receive the most votes will be elected. Broker non-votes will not be counted as votes for or against any nominee or director. In the event that any nominee should become unable or unwilling to serve as a director, it is the intention of the persons named in the proxy to vote for the election of such substitute nominee for the office of director asBoard. Also, Dr. Phyllis Gardner joined the Board effective as of Directors may recommend. It is not anticipated that any nominee will become unable or unwilling to serve as a director.March 2021.
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE ELECTION OF
THE NOMINEES TO SERVE AS DIRECTORS.
Biographies of Other Continuing Directors
Set forth below is certain information regarding our director nominees and other continuing directors, who will continue serving on the Board after the Annual Meeting, including certain individual qualifications and skills of our directors that contribute to the effectiveness of ourthe Board. There are no family relationships among any of our directors or executive officers.
DIRECTORS WHOSE TERMS EXPIRE AT THE 2013 ANNUAL MEETING,
CLASSClass I, II, and III
Directors
James L. BiermanJ. Terry Dewberry, age 69, serves on our Board of Directors. He became a Director of MiMedx Group, Inc. in September 2009.68. Mr. Dewberry is a private investor with significant experience at both the management and board levels in the healthcare industry. He has extensive experience in corporate mergers and takeovers on both the buy and sell sides at sizes up to $5 billion. He has served on the Boards of Directors of several publicly traded healthcare products and services companies, including Respironics, Inc. (Nasdaq:RESP) (1998-2008), Matria Healthcare, Inc. (Nasdaq:MATR) (2006-2008), Healthdyne Information Enterprises, Inc. (1996-2002), Healthdyne Technologies, Inc. (1993-1997), Home Nutritional Services, Inc. (1989-1994) and Healthdyne, Inc. (1981-1996). From March 1992 until March 1996, Mr. Dewberry was Vice Chairman of Healthdyne, Inc. From 1984 to 1992, heBierman served as President and Chief Executive Officer, and as a member of the board of directors, of Owens & Minor, Inc. (NYSE: OMI), a Fortune 500 company and a leading distributor of medical and surgical supplies, from September 2014 to June 2015. Previously, he served in various other senior roles at Owens & Minor, including President and Chief Operating Officer from August 2013 to September 2014, Executive Vice President and Chief Operating Officer from March 2012 to August 2013, Executive Vice President and Chief Financial Officer from April 2011 to March 2012, and Senior Vice President and Chief Financial Officer from June 2007 to April 2011. Earlier in his career, Mr. Bierman served as Executive Vice President and Chief Financial Officer at Quintiles Transnational Corp. (formerly Nasdaq: QTRN). Quintiles was a market leader in providing product development and commercialization solutions to the pharmaceutical, biotech, and medical device industries. Before joining Quintiles, Mr. Bierman was a partner with Arthur Andersen LLP from 1988 to 1998. Mr. Bierman currently serves on the board of directors of Tenet Healthcare Corporation (NYSE: THC), a Fortune 500 company and a diversified healthcare services company operating more than 500 facilities, acute care hospitals and outpatient centers, throughout the United States, and Novan, Inc. (Nasdaq: NOVN). Novan, Inc. is a clinical development-stage biotechnology company focused on leveraging its proprietary nitric oxide based technology platform to generate macromolecular New Chemical Entities to treat multiple indications in dermatology and other conditions. Mr. Bierman was recently nominated as an independent director of KL Acquisition Corp. (NASDAQ: KLAQU). The company is a newly incorporated blank check company (SPAC) whose business purpose is to effect a merger or similar business combination with businesses in the healthcare sector. He previously served as Lead Independent Director on the board of directors of Team Health Holdings, Inc. (formerly NYSE: TMH). Team Health is one of the largest suppliers of outsourced healthcare professional staffing and administrative services to hospitals and other healthcare providers in the United States. Mr. Bierman earned his B.A. from Dickinson College and his M.B.A. at Cornell University’s Johnson Graduate School of Management. Mr. Bierman has served on the Board since June 2019 and was nominated as a director because of his substantial operational and financial experience in the healthcare sector.
Michael J. Giuliani, age 66. Since July 2016, Dr. Giuliani has been a consultant for several small pharmaceutical companies and has provided expert testimony for Mallinckrodt Pharmaceuticals. In addition to advising these companies, he volunteers his time and expertise to assist individuals or entities attempting to bring a pharmaceutical product forward from the pre-concept phase. From November 2007 to June 2016, Dr. Giuliani served as Vice President, Research and Development, for Mallinckrodt plc (formerly known as the Pharmaceuticals Division of Covidien) (NYSE: MNK), a developer, manufacturer, and distributor of specialty pharmaceutical products and therapies for autoimmune and rare diseases in the areas of neurology, rheumatology, nephrology, ophthalmology, and pulmonology; and immunotherapy and neonatal respiratory critical care. During his tenure, the Company obtained FDA approval for 16 new products. Prior to joining Covidien, he served as the Chief Medical Officer and Executive Vice President of Healthdyne, Inc. Mr. DewberryXanodyne Pharmaceuticals, an integrated specialty pharmaceutical company focused on women's healthcare and pain management. Dr. Giuliani received a Bachelor of Electrical Engineeringhis B.S. from Georgia Institute of Technology in 1967Tulane University and a Masters of Public Accountinghis M.D. from GeorgiaOhio State University in 1972. Mr. DewberryUniversity. Dr. Giuliani was nominated to serve as a director due tobecause of his extensive businessclinical and financial backgroundregulatory experience with multiple FDA divisions, and development, regulatory and manufacturing experience as a member of the Boards of Directors of other publicly traded companies and a member of the Audit Committee of at least one other public company.for complex biologic products.
Cato T. Laurencin,Larry W. Papasan, age 72, serves on our Board of Directors. He became a Director of Alynx in February 2008 and of MiMedx Group, Inc. in March 2008. He was first elected as a Director of MiMedx, Inc. in April 2007. From July 1991 until his retirement in May 2002, Mr. Papasan served as President of Smith & Nephew Orthopaedics. Mr. Papasan served as a Director and Chairman of the Board of Directors of BioMimetic Therapeutics, Inc. (NasdaqGM:BMTI) from August 2005 until March 2013 . BioMimetic Therapeutics, Inc. is developing and commercializing bio-active recombinant protein-device combination products for the healing of musculoskeletal injuries and disease, including orthopedic, periodontal, spine and sports injury applications. Mr. Papasan has been a member of the Board of Directors of Reaves Utility Income Fund (NasdaqCM:UTG), a closed-end management investment company, since February 2003 and of Triumph Bankshares, Inc. (a bank holding company) since April 2005. Mr. Papasan also serves as a director of SSR Engineering, Inc., AxioMed Spine Corporation, BioMedical Tissue Technologies and Cagenix, Inc. Bio Nova Medical, Inc. and Six Fix, Inc. Mr. Papasan was nominated as a director due to his extensive business experience, including experience in the medical device field, as well as experience as a director of several other companies, both public and private.
Parker H. “Pete” Petit, age 73, joined the Company as Chairman of the Board of Directors, Chief Executive Officer and President in February 2009. From May 2008 until he joined the Company, Mr. Petit was the President of The Petit Group, LLC, a private investment company. Prior to that, Mr. Petit was the Chairman and CEO of Matria Healthcare, Inc., (Nasdaq: MATR), which was sold to Inverness Medical Innovations, Inc. in May 2008. Matria Healthcare was a former subsidiary of Healthdyne, Inc., which Mr. Petit founded in 1971. Mr. Petit served as Chairman and CEO of Healthdyne and some of its publicly traded subsidiaries after Healthdyne became a publicly traded company in 1981. Mr. Petit received his bachelor’s degree in Mechanical Engineering and Master of Science degree in Engineering Mechanics from Georgia Tech and an MBA degree in Finance from Georgia State University. At Georgia Tech, Mr. Petit funded a professorial chair for “Engineering in Medicine”, endowed the Petit Institute for Bioengineering and Bioscience, and assisted with the funding of the Biotechnology building which bears his name. At Georgia State University, he assisted with the funding of the Science Center building which also bears his name. In 1994, he was inducted into the Technology Hall of Fame of Georgia. In 2007, he was inducted into the Georgia State Business Hall of Fame. Mr. Petit62. Dr. Laurencin currently serves as a memberthe Albert and Wilda Van Dusen Distinguished Endowed Professor of the Board of Directors of the Georgia Research Alliance, which is chartered by the State of Georgia to promote high technology and scientific development in the State. In 2011, Mr. Petit was inducted into the National Academy of Engineering. He serves as a member of the Board of Directors of Intelligent Systems Corporation (NYSE MKT: INS). Mr. Petit was nominated as a director due to his extensive healthcare business experience and leadership success.
DIRECTORS WHOSE TERMS EXPIRE AT THE 2014 ANNUAL MEETING,
CLASS I
Charles R. Evans, age 65, serves on our Board of Directors. Mr. Evans became a director of the Company in September 2012. Mr. Evans has over 30 years of experience in the healthcare industry. He is currently President of the International Health Services Group, an organization he founded to support health services development in underserved areas of the world. He is also currently a senior advisor with Jackson Healthcare, a consortium of companies that provide physician and clinical staffing, anesthesia management and information technology solutions for hospitals, health systems and physician groups. In addition, Mr. Evans is a Fellow in the American College of Healthcare Executives having previously served as Governor of the College from 2004 to 2007 and as Chairman Officer from 2008 to 2011. In 2012, he attained the Board Leadership Fellow credential of the National Association of Corporate Directors. Previously, Mr. Evans was a senior officer with Hospital Corporation of America (HCA) and managed various HCA divisions. Mr. Evans currently serves on the Board of Directors of Jackson Healthcare and CareSpot Express Healthcare, and as a member of the Senior Advisory Board at MedAssets. Additionally, Mr. Evans serves on the boards of non-profit organizations including MedShare International and MedicalMissions.org, and he is Chairman of the Hospital Charitable Service Awards.
Charles E. (“Chuck”) Koob, age 68 , serves on our Board of Directors. He became a Director of Alynx in February 2008, and of MiMedx Group, Inc. in March 2008. He was first elected as a Director of MiMedx, Inc. in April 2007. Mr. Koob joined the law firm of Simpson Thacher & Bartlett, LLP in 1970 and became a partner in 1977. He retired from that firm on January 1, 2007. While at that firm, Mr. Koob was the co-head of the Litigation Department and served on the Firm’s Executive Committee. Mr. Koob specialized in competition, trade regulation and antitrust issues. Throughout his 37-year tenure, he represented clients before the Federal Trade Commission, the Antitrust Division of the Department of Justice, and numerous state and foreign competition authorities. His résumé includes the representation of Virgin Atlantic Airways, Archer Daniels Midland, and Kohlberg Kravis Roberts and Co. He received his B.A. from Rockhurst College in 1966 and his J.D. from Stanford Law School in 1969. Mr. Koob serves on the board of Stanford Hospital and Clinics. He also serves on the board of a private drug development company and MRI Interventions, a publicly traded medical device company . Mr. Koob was nominated as a director due to his 37 years of legal expertise in representing both publicly traded and privately held businesses.
William C. Taylor, age 44, became our President and Chief Operating Officer in September 2009. He became a Director of the Company in October 2011. He is an operating executive with more than 20 years’ experience in healthcare product design, development and manufacturing. From 2001 through 2008, Mr. Taylor was President and CEO of Facet Technologies, LLC, a Matria Healthcare, Inc. subsidiary, focused on medical device design, development, and manufacturing for OEM clients, such as Abbott, Bayer, BD, LifeScan (J&J), Roche, and Flextronics. Over his 14 year career at Facet and its predecessor company, he held various management positions, beginning with R&D, QA & Regulatory Affairs and progressing through General Management. Mr. Taylor was instrumental in growing the design and manufacturing business from $14 million in revenue to over $40 million at the time the company was sold to Matria Healthcare in March 2008. As President, he led the company to the number one market position in Microsampling and grew it to over $85 million in revenue. He also led the company as CEO for 18 months after it was sold to a private equity company. Mr. Taylor started his career in healthcare at Miles, Inc., Diagnostics Division (now Bayer Healthcare) as an engineering co-op, and then progressed to project management and senior mechanical engineering positions. A graduate of Purdue University, Mr. Taylor holds a Bachelor of Science degree in Mechanical Engineering and is co-inventor on eight patents. He currently serves on the Advisory Board of the Georgia Tech Institute for Bioengineering and Bioscience. Mr. Taylor was nominated as a director due to his extensive experience as an operating executive in the medical device sector.
Neil S. Yeston, M.D., age 69, serves on our Board of Directors. Dr. Yeston became a director of the Company in September 2012. Dr. Yeston currently serves as Active Senior Staff, Department of Surgery at Hartford Hospital. During his association with Hartford Hospital, Dr. Yeston previously served in various roles including Vice President of Academic Affairs, Director of Corporate Compliance, Vice President of Quality Management and Director of the Section on Critical Care Medicine, Department of Surgery. Dr. Yeston has formerly served as Professor ofOrthopaedic Surgery at the University of Connecticut, and is one of two designated University Professors at the Assistantschool. He is also a materials scientist and engineer and is Professor of Materials Science and Engineering, Professor of Chemical and Biomolecular Engineering, and Professor of Biomedical Engineering at the University of Connecticut. He has been a professor at the University of Connecticut since 2008. He is the Chief Executive Officer of The Connecticut Convergence Institute for Translation in Regenerative Engineering. Previously, he served as Vice President for Health Affairs at the University of Connecticut Health Center and Dean Medical Education atof the University of Connecticut School of Medicine. Prior to his associations with Hartford HospitalFrom 2003 until 2008, Dr. Laurencin was the Lillian T. Pratt Distinguished Professor and Chair of the Department of Orthopedic Surgery at the University of Connecticut,Virginia. Dr. Yeston served with BostonLaurencin was also designated a University Medical Center inProfessor by the President of the University of Virginia. Prior to 2003, Dr. Laurencin held various positions of increasing
responsibility at Drexel University, including the Helen I. Moorehead Distinguished Professor of Chemical Engineering, Vice Chairman of the Department of Orthopedic Surgery Associateand Director of Shoulder Surgery, and at MCP-Hahnemann School of Medicine, where he served as Clinical Professor of Anesthesiology, Director Progressive Care UnitOrthopedic Surgery and Associate ProfessorsResearch Professor of Surgery.Pharmacology and Physiology. An International Fellow in Biomaterials Science and Engineering, he received the Founders Award from the Society for Biomaterials. He is an elected member of the National Academy of Medicine, the National Academy of Engineering, and the American Academy of Arts and Sciences. Dr. YestonLaurencin is the recipient of the National Medal of Technology and Innovation, our nation's highest honor for technological achievement. He has over 500 publications and patents. Dr. Laurencin received his B.S.E. degree in engineering from Princeton University, his Ph.D. in biochemical engineering and biotechnology from the Massachusetts Institute of Technology, and his M.D. from the Harvard Medical School. Dr. Laurencin was appointednominated to serve as a director because of his in-depth understandingexperience as a practitioner and professor of orthopedic surgery, as well as his deep technical, research, and clinical experience.
Directors Designated by Holders of Series B Preferred Stock
William A. Hawkins, III, age 67. Mr. Hawkins serves as a Senior Advisor to EW Healthcare Partners, a healthcare issuesfocused growth equity firm. Mr. Hawkins is the former Chairman and CEO of Medtronic, Inc., a global leader in medical technology. He was at Medtronic from 2002 until 2011. After retiring from Medtronic, he served as President and Chief Executive Officer of Immucor, Inc., a private equity backed global leader in transfusion and transplant medicine from October 2011 to July 2015. From 1998 to 2001 Mr. Hawkins served as President and Chief Executive Officer of Novoste Corporation (Nasdaq: NOVST), an interventional cardiology company. Prior to that, Mr. Hawkins served in a variety of senior roles at American Home Products, a consumer, pharma and medical device company, Johnson & Johnson, a healthcare company, Guidant Corporation, a medical products company, and Eli Lilly and Company, a global pharmaceutical company. Mr. Hawkins also serves as a director of Biogen Inc. (Nasdaq: BIIB), a biopharmaceutical company; Avanos Medical, Inc. (NYSE: AVNS), a medical technology company; as Chairman of Bioventus Inc. (Nasdaq: BVS), a global leader of innovations for active healing; and Cirtec, Virtue Labs, Immucor, Inc., Cereius, Inc. and Baebies, Inc., all of which are life science companies. He previously served on the board of Thoratec Corporation. Mr. Hawkins is Vice Chair of the Duke University Board of Trustees and is Chair of the Duke University Health System. Mr. Hawkins was elected as a member of the AIMBE College of Fellows and the National Academy of Engineering. He has a dual B.S.E.E. degree in Electrical and Biomedical Engineering from Duke University and a M.B.A. from the perspectiveUniversity of Virginia’s Darden School of Business. Mr. Hawkins has significant leadership experience as a chief executive officer, significant knowledge of, and experience in, the healthcare industry and significant international experience. He also has extensive governance and public company board experience. He was appointed to serve as a Preferred Director by the EW Purchaser.
Martin P. Sutter, age 66. Since 1985, Mr. Sutter has been the Co-Founder and a Managing Director of EW Healthcare Partners (previously known as Essex Woodlands Health Ventures), a healthcare-focused growth equity firm. Mr. Sutter has been directly involved with more than 30 of EW Healthcare Partners’ portfolio company investments. Educated in chemical engineering and finance, Mr. Sutter has more than 35 years of management experience in operations, marketing, finance and venture capital. Mr. Sutter holds a Bachelor of Science degree from Louisiana State University and a Master of Business Administration from the University of Houston. He currently serves on the Boards of Abiomed, Inc. (Nasdaq: ABMD), Bioventus Inc. (Nasdaq: BVS) and Prolacta Bioscience. He previously served on the boards of directors of the practitioner, academician, administratorfollowing EW Healthcare Partners’ portfolio investments: ATS Medical (later acquired by Medtronic, Inc.); BioForm Medical (later acquired by Merz GmbH & Co KGaA); LifeCell (later acquired by Kinetic Concepts); St. Francis Medical (later acquired by Kyphon, Inc./Medtronic, Inc.); Confluent Surgical (later acquired by Tyco International/Covidien); and executive.
DIRECTORS WHOSE TERMS EXPIRE AT THE 2015 ANNUAL MEETING,
CLASS II
Joseph G. Bleser, age 67, serves onRinat Neurosciences (later acquired by Pfizer, Inc.). We believe that Mr. Sutter’s in-depth knowledge of the medical device industry, his skills as an investor in developing medical device companies, his extensive board experience and his position as a representative of a large shareholder in our Company qualify him to serve as a member of our Board of Directors. He became a Director of MiMedx Group, Inc. in September 2009. He has been the Managing Member of J. Bleser, LLC, a financial consulting firm, since July 1998. Prior to July 1998, Mr. Bleser has over 15 years experience as a Chief Financial Officer and in other financial executive positions in various publicly traded companies, including HBO & Company, Allegiant Physician Services, Transcend Services, Inc. and Healthcare.com. Mr. Bleser is formerly a Certified Public Accountant with ten years of experience in public accounting with Arthur Andersen LLC, an international public accounting firm. Mr. Bleser was a member of the Board of Directors and the Corporate Governance Committee and Chairman of the Audit Committee of Transcend Services, Inc. [NASDAQ: TRCR] until it was acquired by Nuance Communications, Inc. in April 2012. Mr. Bleser also served as a Director and Chairman of the Audit Committee of Matria Healthcare, Inc. until it was acquired by Inverness Medical Innovations, Inc. in May 2008. In addition, Mr. Bleser serves on the Board of Directors of a privately held information technology solutions company. Mr. Bleser was nominated as a director due to his extensive financial background and experience as a member of the Audit Committee of other publicly traded companies.
Steve Gorlin, age 75, serves as a Director of the Company. He served as Chairman of the Board of Directors and a Director of Alynx Co. (“Alynx”), the Company’s predecessor, during February 2008, and MiMedx Group, Inc. from March 2008 to February 2009. Mr. Gorlin served as Chairman of MiMedx, Inc. from its inception in November 2006 to February 2009. Mr. Gorlin continuesappointed to serve as Vice Chairmana Preferred Director by the EW Purchaser.
Nominees for Election to the Board
The Board, upon the recommendation of the Company. He is presently Executive Chairman of DemeRx, Inc. and has served as its Chairman and Chief Executive Officer since its founding in 2010. Over the past 35 years, Mr. Gorlin has founded several biotechnology and pharmaceutical companies, including Hycor Biomedical, Inc., Theragenics Corporation, CytRx Corporation, Medicis Pharmaceutical Corporation, EntreMed, Inc., MRI Interventions, Inc., DARA BioSciences, Inc. [NasdaqCM:DARA], and Medivation, Inc. [NasdaqGM: MDVN]. Mr. Gorlin served as the Chief Executive Officer of Dara Bio Sciences, Inc. from July 2002 to January 2007, and served as either Chairman or Co-Chairman of the Board of Directors of Dara Bio Sciences, Inc. until August 2012. Mr. Gorlin also currently serves on the Board of Directors of the following private companies: Nano Technology Corporation (China) as the Chairman of the Board of Directors. Mr. Gorlin served for many years on the Business Advisory Council to the Johns Hopkins School of Medicine and presently serves on the boards of The Johns Hopkins Alliance for Science and Technology Development and The Johns Hopkins Bioengineering Advisory Board, as well as the board of the Andrews Foundation for Research and Education. He also founded a number of non-medical related companies, including Perma-Fix, Inc., Pretty Good Privacy, Inc., and Judicial Correction Services, Inc. He started The Touch Foundation, a nonprofit organization for the blind and was a principal financial contributor to the founding of Camp Kudzu for diabetic children. Mr. Gorlin was nominated as a director due to his extensive healthcare business experience and success in founding and nurturing biotechnology and pharmaceutical companies.
Bruce L. Hack, age 64, serves on our Board of Directors. He became a director of MiMedx Group, Inc. in December 2009. Mr. Hack was Vice Chairman of the Board of Directors and Chief Corporate Officer of Activision Blizzard (Nasdaq:ATVI) until 2009. Prior to that, Mr. Hack was Chief Executive Officer of Vivendi Games, from 2004 to 2008, Vice Chairman of the Board of Directors of Universal Music Group, from 1998 to 2001, and Chief Financial Officer of Universal Studios, from 1995 to 1998. From 1982-1994, Mr. Hack held several positions at The Seagram Company, including: Assistant to the Executive Vice President, Sales and Marketing for Seagram USA; Director, Strategic Planning, at The Seagram Company Ltd.; and Chief Financial Officer of Tropicana Products, Inc. Prior thereto, he was a trade negotiator for the U.S. Treasury. Mr. Hack earned a B.A. at Cornell University and an M.B.A. in finance at the University of Chicago. Mr. Hack was nominated as a director due to his business expertise, particularly as it relates to sales and marketing, and experience as a member of the Boards of Directors of other companies, both public and private. He currently serves as a director of Technicolor, Inc., a private entertainment services company.
Board of Directors Leadership Structure
Our Board of Directors has carefully considered the benefits and risks in combining the role of Chairman of the Board of Directors and Chief Executive Officer and has determined that Mr. Petit is the most qualified and appropriate individual to lead our Board of Directors as its Chairman. The Board of Directors believes there are efficiencies of having the Chief Executive Officer also serve in the role of Chairman of the Board of Directors. As our Chief Executive Officer, Mr. Petit is responsible for the day-to-day operation of the Company and for the implementation of the Company’s strategy. Mr. Petit serves as a bridge between management and our Board of Directors, ensuring that both groups act with a common purpose. Our Board of Directors further noted that the combined role of Chairman of the Board of Directors and Chief Executive Officer facilitates centralized leadership in one person so that there is no ambiguity about accountability. Our Board of Directors also considered Mr. Petit’s knowledge regarding our operations and the industries and markets in which we compete and his ability to promote communication, to synchronize activities between our Board of Directors and our senior management and to provide consistent leadership to both our Board of Directors and our Company.
In determining whether to combine the roles of Chairman of the Board of Directors and Chief Executive Officer, our Board of Directors closely considered our current system for ensuring significant independent oversight of management, including the following: (1) only three members of our Board of Directors, Mr. Petit, Mr. Taylor and Mr. Gorlin, also serve as employees; (2) each director serving on our Audit Committee, Compensation Committee, and Nominating and Corporate Governance Committee, is independent and (3)has determined that the Compensation Committee annually evaluatesBoard’s nominees meet the Chief Executive Officer’s performanceBoard’s standards for director qualifications and has nominated Dr. Gardner to stand for election to the authorityBoard for a term expiring at the 2022 annual meeting of shareholders, and Dr. Behrens and Messrs. Newton and Wright to retain independent compensation advisors.stand for election to the Board for a term expiring at the 2024 annual meeting of shareholders, and in each case until such director’s successor is elected and qualified, or until such director’s earlier death, resignation or removal. Please see the biographies for Drs. Behrens and Gardner, and Messrs. Newton and Wright above, which include a description of their respective qualifications, experience, attributes, and skills.
In addition to the information set forth below, Annex A sets forth information relating to the Company’s directors, the Board’s nominees for election as directors and certain of the Company’s officers who are “participants” in our solicitation under SEC rules by reason of their position as directors or nominees or because they will be soliciting proxies on our behalf.
Prescience Point has indicated that it intends to nominate Eiad Asbahi, Alfred G. Merriweather, Charlotte E. Sibley and William F. Spengler for election as directors at the Annual Meeting. You may receive proxy solicitation materials from or on behalf of the Prescience Group. The Company is not responsible for the accuracy of any information provided by or relating to the Prescience Group contained in proxy materials filed or disseminated by or on behalf of the Prescience Group or any other statements that any member of the Prescience Group may make.
The Board does not endorse any of Directors hasPrescience Point’s nominees and unanimously recommends that you vote FOR the election of each of the Board’s nominees on the enclosed WHITE proxy card. The Board strongly urges you NOT to sign or return any GOLD proxy card sent to you by or on behalf of the Prescience Group. Voting to “withhold” with respect to any of Prescience Point’s nominees on a GOLD proxy card sent to you by or on behalf of the Prescience Group is not designatedthe same as voting for the Board’s nominees because a lead independentvote to “withhold” with respect to any of Prescience Point’s nominees on the GOLD proxy card will revoke any WHITE proxy card you may have previously submitted.
To support the Board’s nominees, you should vote FOR the Board’s nominees on the WHITE proxy card and disregard, and not return, any GOLD proxy card sent to you by or on behalf of the Prescience Group. If you have previously voted using a GOLD proxy card sent to you by or on behalf of the Prescience Group, you can subsequently revoke that vote by signing, dating and returning the enclosed WHITE proxy card in the postage-paid envelope provided, or by following the instructions on the WHITE proxy card to vote by telephone or by Internet. Only your latest dated proxy will count. Any proxy may be revoked at any time prior to its exercise at the Annual Meeting as described in this Proxy Statement.
Because we have received notice that Prescience Point intends to nominate a slate of nominees for election to the Board at the Annual Meeting, we expect the number of nominees for director to exceed the number of directors to be elected at the Annual Meeting. Accordingly, pursuant to Article II, Section 9 of the Bylaws, directors will be elected by a plurality of the votes cast at the Annual Meeting. This means that the three director nominees with the most votes on Proposal 1 will be elected as Class II directors and the one director nominee with the most votes on Proposal 2 will be elected as a Class III director. If the number of nominees for directors does not exceed the number of directors to be elected, directors will be elected by a majority of the votes cast by the shares entitled to vote on the election of directors.
Director IndependenceBoard of Directors
WeSet forth below is certain information regarding our current directors and director nominees as of April 30, 2021. There are notno family relationships among any of our directors, director nominees, or executive officers.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Name | | Age | | Since | | Tenure | | Independent | | Committees |
| M. Kathleen Behrens | | 68 | | 2019 | | 2 | | ü | | COB, AC, NCG |
| James L. Bierman | | 68 | | 2019 | | 2 | | ü | | AC, CC* |
| Phyllis I. Gardner | | 70 | | 2021 | | < 1 | | ü | | to be determined |
| Michael J. Giuliani | | 66 | | 2020 | | < 1 | | ü | | CC, NCG |
| William A. Hawkins, III | | 67 | | 2020 | | < 1 | | ü | | EC* |
| Cato T. Laurencin | | 62 | | 2020 | | < 1 | | ü | | EC |
| K. Todd Newton | | 58 | | 2019 | | 2 | | ü | | AC*, EC |
| Martin P. Sutter | | 66 | | 2020 | | < 1 | | ü | | CC, NCG* |
| Timothy R. Wright | | 63 | | 2019 | | 2 | | | | — |
| | | | | | | | | | | |
Audit Committee | Compensation Committee | Ethics and Compliance Committee | Nominating & Corporate Governance Committee |
| K. Todd Newton* | James L. Bierman* | William A. Hawkins* | Martin P. Sutter* |
| M. Kathleen Behrens | Michael Giuliani | Cato Laurencin | M. Kathleen Behrens |
| James L. Bierman | Martin P. Sutter | K. Todd Newton | Michael Giuliani |
* = Chair; AC = Audit Committee; CC = Compensation Committee; COB = Chairperson of the Board; EC = Ethics & Compliance Committee; NCG = Nominating and Corporate Governance Committee.
At the 2010 annual meeting of shareholders, the Company’s shareholders overwhelmingly approved an amendment to our charter classifying the Board into three classes of directors such that only one-third of the Board is up for election at each annual meeting of shareholders. Our Board currently consists of seven directors divided into three classes, plus up to two directors appointed by the holder of our Series B Preferred Stock. At each annual meeting, the term of one class of directors expires and persons are elected to that class for a “listed company” under SEC rulesterm of three years or until such director’s successor is elected and are therefore not requiredqualified, or until such director’s earlier death, resignation or removal. If the number of directors changes, any increase or decrease must be apportioned among the classes so as to complymaintain the number of directors in each class as nearly equal as possible.
On July 2, 2020, in connection with the director independence requirementssale of Series B Preferred Stock to Falcon Fund 2 Holding Company, L.P. (the “EW Purchaser”), an affiliate of EW Healthcare Partners, as described in the Company’s 2019 Annual Report on Form 10-K, the Company agreed that, for so long as the EW Purchaser beneficially owns (i) at least 10% of the total number of outstanding shares of Company common stock (calculated on a fully-diluted, as converted basis), the EW Purchaser will be entitled to designate two individuals to serve on the Board and (ii) at least 5% but less than 10% of the total number of outstanding shares of Company common stock (calculated on a fully-diluted, as converted basis), the EW Purchaser will be entitled to designate one individual to serve on the Board (such designated directors, the “Preferred Directors”). The Preferred Directors will not be members of any securities exchange.class of directors that is elected by the holders of Company common stock (a “Common Director”). However, the Board may, by notice to the EW Purchaser, either appoint any individual serving as a Preferred Director as a Common Director or nominate any individual serving as a Preferred Director for election as a Common Director, provided that (i) no such appointment or nomination takes place such that such individual would be up for election as a Common Director prior to the Company’s 2022 annual meeting of shareholders, and (ii) if any individual serving as a Preferred Director has been appointed or nominated as a Common Director prior to July 2, 2022, then no other individual serving as a Preferred Director may be appointed or nominated as a Common Director prior to July 2, 2022. From and after the time that no Series B Preferred Stock remains outstanding, the EW Purchaser’s right to designate directors in determining whether ouraccordance with the preceding sentence will convert into a right,
subject to the same ownership thresholds described above, to designate up to two individuals to be nominated by the Company to serve on the Board as Common Directors. The initial Preferred Directors are Martin P. Sutter and William A. Hawkins, III, who were appointed to the Board as Preferred Directors on July 2, 2020.
Our Board has nominated M. Kathleen Behrens, K. Todd Newton, and Timothy R. Wright to serve as a Class II directors, and Phyllis Gardner to serve as a Class III director. If elected, Dr. Behrens and Mr. Newton and Mr. Wright will serve a term expiring at the 2024 annual meeting of shareholders, and until his or her successor is elected and qualified, and Dr. Gardner will serve a term expiring at the 2022 annual meeting of shareholders, and until her successor is elected and qualified.
Our current Board members, the classes in which they serve, and the expiration of their terms as directors are independent, we apply the standardsas set forth in the rulestable below:
| | | | | | | | | | | | | | |
| Class | | Directors | | Term Expiration |
| Class I | | Cato Laurencin
Michael Giuliani | | Elected to terms expiring at the 2023 Annual Meeting and until their successors are elected and qualified.
|
| Class II | | M. Kathleen Behrens
K. Todd Newton
Timothy R. Wright | | Elected to terms expiring at the 2021 annual meeting of shareholders, and until their successors are elected and qualified. |
| Class III | | James L. Bierman
Phyllis Gardner | | Elected or appointed to a term expiring at the 2022 Annual Meeting, and until his or her successor is elected and qualified. |
| Preferred Directors | | William A Hawkins, III
Martin P. Sutter | | The Preferred Directors are not members of any class of directors that is elected by the holders of Company common stock. See description above under “Board of Directors.” |
Additions to our Board
The Company’s Board has been 100% reconstituted since May 2019 as all of our current directors have joined the NASDAQ Capital Market. The NASDAQ Capital Market requireBoard as new members since that a majority of the members of Board of Directors be independent, which means that they are not officers or employees of the Companytime. Dr. Behrens, Mr. Newton and are free of any relationship that would interfereMr. Wright were all elected as directors in connection with the exercise of their independent judgment. The Board of Directors has determined that six of its current ten directors, Joseph G. Bleser, J. Terry Dewberry, Charles R. Evans, Bruce L. Hack, Larry W. Papasan and Neil S. Yeston are “independent,” as defined by the listing standards of the NASDAQ Capital Market, Section 10A(m)(3) of the Exchange Act, and the rules and regulations of the SEC. In addition, the Board determined Kurt M. Eichler who served2018 Annual Meeting held in June 2019. Mr. Bierman was subsequently appointed as a director in 2012 was “independent” under these same listing standards.
connection with the Cooperation Agreement in June 2019. We welcomed four new directors to our Board of Directors Risk Oversight
The Board as a whole is responsible for overseeingin 2020. Pursuant to the Company’s risk exposure as part of determining a business strategy that generates long-term shareholder value. Each ofPreferred Stock Transaction described below, we increased the Board’s standing committees focuses on risk areas associated with its area of responsibility.
Meetings and Committees of the Board of Directors
During the year ended December 31, 2012, there were five meetings of the Board of Directors, none of which were telephonic meetings.
In addition to other single purpose committees established from time to time to assist the Board of Directors with particular tasks, the Company’s Board of Directors has the following standing committees: an Audit Committee, a Nominating and Corporate Governance Committee and a Compensation Committee.
We strongly encourage each of our directors to attend in person each annual meeting of shareholders whenever attendance does not unreasonably conflict with the director’s other business and personal commitments. Eight of our ten then-current directors attended our 2012 Annual meeting of Shareholders, with two directors attending by telephone due to inclement weather.
Audit Committee and Audit Committee Financial Expert
We are not a “listed company” under SEC rules and are therefore not required to have an audit committee comprised of independent directors. However, our goal is to comply with the rules of the NASDAQ Capital Market, which requires the Audit Committee of the Board of Directors be comprised of at least three members, all of whom qualify as “independent” under the criteria set forth in Rule 10A-3 of the Exchange Act.
We established an Audit Committee comprised of three independent memberssize of our Board of Directors, and Mr. Sutter and Mr. Hawkins were appointed to serve as Preferred Directors effective in April 2008. We currently have four members onJuly 2020. At the 2020 annual meeting held in November 2020, shareholders elected Dr. Giuliani and Dr. Laurencin to the Board. Also, Dr. Phyllis Gardner joined the Board effective as of March 2021.
Biographies of Other Continuing Directors
Set forth below is certain information regarding our Audit Committee; J. Terry Dewberry (Chairman), Joseph G. Bleser, Larry W. Papasanother continuing directors, including certain individual qualifications and Charles R. Evans, eachskills of whom satisfiesour directors that contribute to the independence standardseffectiveness of the NASDAQ Capital Market rulesBoard.
Class I, II, and III Directors
James L. Bierman, age 68. Mr. Bierman served as President and Chief Executive Officer, and as a member of the board of directors, of Owens & Minor, Inc. (NYSE: OMI), a Fortune 500 company and a leading distributor of medical and surgical supplies, from September 2014 to June 2015. Previously, he served in various other senior roles at Owens & Minor, including President and Chief Operating Officer from August 2013 to September 2014, Executive Vice President and Chief Operating Officer from March 2012 to August 2013, Executive Vice President and Chief Financial Officer from April 2011 to March 2012, and Senior Vice President and Chief Financial Officer from June 2007 to April 2011. Earlier in his career, Mr. Bierman served as Executive Vice President and Chief Financial Officer at Quintiles Transnational Corp. (formerly Nasdaq: QTRN). Quintiles was a market leader in providing product development and commercialization solutions to the pharmaceutical, biotech, and medical device industries. Before joining Quintiles, Mr. Bierman was a partner with Arthur Andersen LLP from 1988 to 1998. Mr. Bierman currently serves on the board of directors of Tenet Healthcare Corporation (NYSE: THC), a Fortune 500 company and a diversified healthcare services company operating more than 500 facilities, acute care hospitals and outpatient centers, throughout the United States, and Novan, Inc. (Nasdaq: NOVN). Novan, Inc. is a clinical development-stage biotechnology company focused on leveraging its proprietary nitric oxide based technology platform to generate macromolecular New Chemical Entities to treat multiple indications in dermatology and other conditions. Mr. Bierman was recently nominated as an independent director of KL Acquisition Corp. (NASDAQ: KLAQU). The company is a newly incorporated blank check company (SPAC) whose business purpose is to effect a merger or similar business combination with businesses in the healthcare sector. He previously served as Lead Independent Director on the board of directors of Team Health Holdings, Inc. (formerly NYSE: TMH). Team Health is one of the largest suppliers of outsourced healthcare professional staffing and administrative services to hospitals and other healthcare providers in the United States. Mr. Bierman earned his B.A. from Dickinson College and his M.B.A. at Cornell University’s Johnson Graduate School of Management. Mr. Bierman has served on the Board since June 2019 and was nominated as a director because of his substantial operational and financial experience in the healthcare sector.
Michael J. Giuliani, age 66. Since July 2016, Dr. Giuliani has been a consultant for audit committee members.several small pharmaceutical companies and has provided expert testimony for Mallinckrodt Pharmaceuticals. In addition to advising these companies, he volunteers his time and expertise to assist individuals or entities attempting to bring a pharmaceutical product forward from the pre-concept phase. From November 2007 to June 2016, Dr. Giuliani served as Vice President, Research and Development, for Mallinckrodt plc (formerly known as the Pharmaceuticals Division of Covidien) (NYSE: MNK), a developer, manufacturer, and distributor of specialty pharmaceutical products and therapies for autoimmune and rare diseases in the areas of neurology, rheumatology, nephrology, ophthalmology, and pulmonology; and immunotherapy and neonatal respiratory critical care. During his tenure, the Company obtained FDA approval for 16 new products. Prior to joining Covidien, he served as the Chief Medical Officer and Executive Vice President of Xanodyne Pharmaceuticals, an integrated specialty pharmaceutical company focused on women's healthcare and pain management. Dr. Giuliani received his B.S. from Tulane University and his M.D. from Ohio State University. Dr. Giuliani was nominated to serve as a director because of his extensive clinical and regulatory experience with multiple FDA divisions, and development, regulatory and manufacturing experience for complex biologic products.
Cato T. Laurencin, age 62. Dr. Laurencin currently serves the Albert and Wilda Van Dusen Distinguished Endowed Professor of Orthopaedic Surgery at the University of Connecticut, and is one of two designated University Professors at the school. He is also a materials scientist and engineer and is Professor of Materials Science and Engineering, Professor of Chemical and Biomolecular Engineering, and Professor of Biomedical Engineering at the University of Connecticut. He has been a professor at the University of Connecticut since 2008. He is the Chief Executive Officer of The Connecticut Convergence Institute for Translation in Regenerative Engineering. Previously, he served as Vice President for Health Affairs at the University of Connecticut Health Center and Dean of the University of Connecticut School of Medicine. From 2003 until 2008, Dr. Laurencin was the Lillian T. Pratt Distinguished Professor and Chair of the Department of Orthopedic Surgery at the University of Virginia. Dr. Laurencin was also designated a University Professor by the President of the University of Virginia. Prior to 2003, Dr. Laurencin held various positions of increasing
responsibility at Drexel University, including the Helen I. Moorehead Distinguished Professor of Chemical Engineering, Vice Chairman of the Department of Orthopedic Surgery and Director of Shoulder Surgery, and at MCP-Hahnemann School of Medicine, where he served as Clinical Professor of Orthopedic Surgery and Research Professor of Pharmacology and Physiology. An International Fellow in Biomaterials Science and Engineering, he received the Founders Award from the Society for Biomaterials. He is an elected member of the National Academy of Medicine, the National Academy of Engineering, and the American Academy of Arts and Sciences. Dr. Laurencin is the recipient of the National Medal of Technology and Innovation, our nation's highest honor for technological achievement. He has over 500 publications and patents. Dr. Laurencin received his B.S.E. degree in engineering from Princeton University, his Ph.D. in biochemical engineering and biotechnology from the Massachusetts Institute of Technology, and his M.D. from the Harvard Medical School. Dr. Laurencin was nominated to serve as a director because of his experience as a practitioner and professor of orthopedic surgery, as well as his deep technical, research, and clinical experience.
Directors Designated by Holders of Series B Preferred Stock
William A. Hawkins, III, age 67. Mr. Hawkins serves as a Senior Advisor to EW Healthcare Partners, a healthcare focused growth equity firm. Mr. Hawkins is the former Chairman and CEO of Medtronic, Inc., a global leader in medical technology. He was at Medtronic from 2002 until 2011. After retiring from Medtronic, he served as President and Chief Executive Officer of Immucor, Inc., a private equity backed global leader in transfusion and transplant medicine from October 2011 to July 2015. From 1998 to 2001 Mr. Hawkins served as President and Chief Executive Officer of Novoste Corporation (Nasdaq: NOVST), an interventional cardiology company. Prior to that, Mr. Hawkins served in a variety of senior roles at American Home Products, a consumer, pharma and medical device company, Johnson & Johnson, a healthcare company, Guidant Corporation, a medical products company, and Eli Lilly and Company, a global pharmaceutical company. Mr. Hawkins also serves as a director of Biogen Inc. (Nasdaq: BIIB), a biopharmaceutical company; Avanos Medical, Inc. (NYSE: AVNS), a medical technology company; as Chairman of Bioventus Inc. (Nasdaq: BVS), a global leader of innovations for active healing; and Cirtec, Virtue Labs, Immucor, Inc., Cereius, Inc. and Baebies, Inc., all of which are life science companies. He previously served on the board of Thoratec Corporation. Mr. Hawkins is Vice Chair of the Duke University Board of DirectorsTrustees and is Chair of the Duke University Health System. Mr. Hawkins was elected as a member of the AIMBE College of Fellows and the National Academy of Engineering. He has determineda dual B.S.E.E. degree in Electrical and Biomedical Engineering from Duke University and a M.B.A. from the University of Virginia’s Darden School of Business. Mr. Hawkins has significant leadership experience as a chief executive officer, significant knowledge of, and experience in, the healthcare industry and significant international experience. He also has extensive governance and public company board experience. He was appointed to serve as a Preferred Director by the EW Purchaser.
Martin P. Sutter, age 66. Since 1985, Mr. Sutter has been the Co-Founder and a Managing Director of EW Healthcare Partners (previously known as Essex Woodlands Health Ventures), a healthcare-focused growth equity firm. Mr. Sutter has been directly involved with more than 30 of EW Healthcare Partners’ portfolio company investments. Educated in chemical engineering and finance, Mr. Sutter has more than 35 years of management experience in operations, marketing, finance and venture capital. Mr. Sutter holds a Bachelor of Science degree from Louisiana State University and a Master of Business Administration from the University of Houston. He currently serves on the Boards of Abiomed, Inc. (Nasdaq: ABMD), Bioventus Inc. (Nasdaq: BVS) and Prolacta Bioscience. He previously served on the boards of directors of the following EW Healthcare Partners’ portfolio investments: ATS Medical (later acquired by Medtronic, Inc.); BioForm Medical (later acquired by Merz GmbH & Co KGaA); LifeCell (later acquired by Kinetic Concepts); St. Francis Medical (later acquired by Kyphon, Inc./Medtronic, Inc.); Confluent Surgical (later acquired by Tyco International/Covidien); and Rinat Neurosciences (later acquired by Pfizer, Inc.). We believe that Mr. Dewberry is an “audit committee financial expert” within the meaning of Item 407(d)(5)(ii) of Securities and Exchange Commission (“SEC”) Regulation S-K. The current charter for the Audit Committee is posted on our website at www.mimedx.com. The Audit Committee held eight meetings during the year ended December 31, 2012.
As part of its duties, the Audit Committee:
| ● | Oversees the accounting and financial reporting processes of the Company and the audits of the Company’s financial statements; |
| ● | Reviews the Company’s financial statements with management and the Company’s outside auditors, and recommends to the Board of Directors whether the audited financial statements should be included in the Company’s Annual Report on Form 10-K; |
| ● | Establishes policies and procedures to take, or recommends that the full Board of Directors take, appropriate action to oversee the independence of the outside auditors; |
| ● | Establishes policies and procedures for the engagement of the outside auditors to provide permitted non-audit services; |
| ● | Takes responsibility for the appointment, compensation, retention, and oversight of the work of the Company’s outside auditors and recommends their selection and engagement; |
| ● | Ensures that the outside auditors report directly to the Audit Committee; |
| ● | Reviews the performance of the outside auditors and takes direct responsibility for hiring and, if appropriate, replacing any outside auditor failing to perform satisfactorily; |
| ● | Provides, as part of any proxy filed pursuant to SEC regulations, the report required by SEC regulations; and |
| ● | Establishes procedures for handling complaints received by the Company regarding accounting, internal accounting controls, or auditing matters. |
Compensation Committee
We are not a “listed company” under SEC rules and are therefore not required to have a compensation committee comprised of independent directors. However, our goal is to comply with the rulesSutter’s in-depth knowledge of the NASDAQ Capital Market, which requires the Compensation Committeemedical device industry, his skills as an investor in developing medical device companies, his extensive board experience and his position as a representative of a large shareholder in our Company qualify him to be comprised of at least two members, all of whom qualifyserve as “independent” under the criteria set forth in Rule 10C-1 of the Exchange Act.
We established a Compensation Committee comprised of three independent membersmember of our Board of Directors in 2008. Currently, its membership consists of Joseph G. Bleser (Chairman), Larry W. Papasan and Neil S. Yeston. In 2012, Kurt M. Eichler servedDirectors. He was appointed to serve as a member and as Chairman ofPreferred Director by the Compensation Committee until he resigned in September 2012. The Compensation Committee held five meetings during the year ended December 31, 2012. All members of the Compensation Committee meet the independence standards of the NASDAQ Capital Market rulesEW Purchaser.
Nominees for compensation committee members.
Pursuant to its charter, the Compensation Committee is responsible for establishing the Company’s overall compensation philosophy and programs and exercising the authority of the Board of Directors in the administration of all compensation plans and programs. The Compensation Committee also is charged with reviewing the performance of the Company’s Chief Executive Officer, reviewing and approving, or in the case of named executive officers, recommendingElection to the Board compensation arrangements for and contractual arrangements with
The Board, upon the Company’s executive officers, and reviewing and recommending to the full Boardrecommendation of Directors for approval incentive and equity-based compensation plans and directors’ compensation. The Compensation Committee is authorized to delegate responsibilities to sub-committees of the Compensation Committee as necessary or appropriate. The current charter for the Compensation Committee is posted on our website at www.mimedx.com. The Committee establishes compensation for executive officers and directors based on peer data, the Company’s resources and, with respect to executive officers, the qualifications and experience of the executive. With respect to compensation of executive officers other than the Chairman and Chief Executive Officer, the Committee considers recommendations of the Chairman and Chief Executive Officer.
Nominating and Corporate Governance Committee; Procedures by which Security Holders May Recommend Nominees to the Board of Directors
We established our Nominating and Corporate Governance Committee in April 2008. Its membership currently consists of three (3) independent directors, Larry W. Papasan (Chairman), J. Terry Dewberry and Bruce L. Hack. The charter for this Committee requires that it annually present to the Board of Directors a list of individuals, who meet the criteria for Board of Directors membership, recommended for nomination for election to the Board of Directors at the annual meeting of shareholders and also consider suggestions received from shareholders regarding director nominees in accordance with any procedures adopted from time to time by the Nominating and Corporate Governance Committee. All of the Committee members meet the independence requirements of the NASDAQ Capital Market rules for nominating and corporate governance committee members. The charter for the Nominating and Corporate Governance Committee, is posted on our website at www.mimedx.com. The Nominatinghas determined that the Board’s nominees meet the Board’s standards for director qualifications and Corporate Governance Committee held three meetings during the year ended December 31, 2012.
No material changes have been madehas nominated Dr. Gardner to the procedures by which our shareholders may recommend nominees to our Board of Directors since we last described these procedures in the Form 10-K/A filed with the SEC on July 29, 2008. However our Nominating and Corporate Governance Committee adopted a formal policy consistent with those procedures and our bylaws in March 2010.
Evaluation of Director Candidates
In evaluating and recommending director candidates, the Nominating and Corporate Governance Committee takes into consideration such factors as it deems appropriate based on current needs. These factors may include leadership skills, business judgment, relevant expertise and experience, whether the candidate has a general understanding of marketing, finance, and other disciplines relevant to the success of a publicly-traded company in today’s business environment, relevant regulatory experience, decision-making ability, interpersonal skills, community activities and relationships, and the interrelationship between the candidate’s experience and business background and other Board members’ experience and business background, as well as the candidate’s ability to devote the required time and effort to serving on the Board of Directors.
To date, nomineesstand for appointment and election to our Board of Directors have been selected pursuant to an informal process. Each person selected has been based upon a recommendation made to the Nominating and Corporate Governance Committee or the Board of Directors (prior to formation of that Committee). The Nominating and Corporate Governance Committee has not established a policy for consideration of diversity in its nominating process.
In accordance with our bylaws, the Nominating and Corporate Governance Committee will consider for nomination candidates recommended by shareholders if the shareholders comply with the following requirements. If a shareholder wishes to recommend a director candidate to the Board of Directors for consideration as a nominee toterm expiring at the Board of Directors, such shareholder must submit in writing to the Secretary of the Company:
| ● | The name, age and address of each proposed nominee; |
| ● | The principal occupation of each proposed nominee; |
| ● | The nominee’s qualifications to serve as a director; |
| ● | Such other information relating to such nominee as required to be disclosed in solicitation of proxies for the election of directors pursuant to the rules and regulations of the SEC; |
| ● | The name and residence address of the notifying shareholder; |
| ● | The number of shares owned by the notifying shareholder, and |
| ● | The nominee’s written consent to being named a nominee and serving as a director if elected. |
This information must be delivered or mailed to the Secretary of the Company: (a) in the case of an2022 annual meeting of shareholders, that is calledand Dr. Behrens and Messrs. Newton and Wright to stand for election to the Board for a date that is within 30 days before or afterterm expiring at the anniversary date of the immediately preceding2024 annual meeting of shareholders, and in each case until such director’s successor is elected and qualified, or until such director’s earlier death, resignation or removal. Please see the biographies for Drs. Behrens and Gardner, and Messrs. Newton and Wright above, which include a description of their respective qualifications, experience, attributes, and skills.
In addition to the information set forth below, Annex A sets forth information relating to the Company’s directors, the Board’s nominees for election as directors and certain of the Company’s officers who are “participants” in our solicitation under SEC rules by reason of their position as directors or nominees or because they will be soliciting proxies on our behalf.
Prescience Point has indicated that it intends to nominate Eiad Asbahi, Alfred G. Merriweather, Charlotte E. Sibley and William F. Spengler for election as directors at the Annual Meeting. You may receive proxy solicitation materials from or on behalf of the Prescience Group. The Company is not less than 120 daysresponsible for the accuracy of any information provided by or relating to the Prescience Group contained in proxy materials filed or disseminated by or on behalf of the Prescience Group or any other statements that any member of the Prescience Group may make.
The Board does not endorse any of Prescience Point’s nominees and unanimously recommends that you vote FOR the election of each of the Board’s nominees on the enclosed WHITE proxy card. The Board strongly urges you NOT to sign or return any GOLD proxy card sent to you by or on behalf of the Prescience Group. Voting to “withhold” with respect to any of Prescience Point’s nominees on a GOLD proxy card sent to you by or on behalf of the Prescience Group is not the same as voting for the Board’s nominees because a vote to “withhold” with respect to any of Prescience Point’s nominees on the GOLD proxy card will revoke any WHITE proxy card you may have previously submitted.
To support the Board’s nominees, you should vote FOR the Board’s nominees on the WHITE proxy card and disregard, and not return, any GOLD proxy card sent to you by or on behalf of the Prescience Group. If you have previously voted using a GOLD proxy card sent to you by or on behalf of the Prescience Group, you can subsequently revoke that vote by signing, dating and returning the enclosed WHITE proxy card in the postage-paid envelope provided, or by following the instructions on the WHITE proxy card to vote by telephone or by Internet. Only your latest dated proxy will count. Any proxy may be revoked at any time prior to such anniversary date; and (b)its exercise at the Annual Meeting as described in this Proxy Statement.
Because we have received notice that Prescience Point intends to nominate a slate of nominees for election to the caseBoard at the Annual Meeting, we expect the number of an annual meetingnominees for director to exceed the number of shareholders that is called for a date that is not within 30 days before or afterdirectors to be elected at the anniversary dateAnnual Meeting. Accordingly, pursuant to Article II, Section 9 of the immediately preceding annual meetingBylaws, directors will be elected by a plurality of shareholders, or in the casevotes cast at the Annual Meeting. This means that the three director nominees with the most votes on Proposal 1 will be elected as Class II directors and the one director nominee with the most votes on Proposal 2 will be elected as a Class III director. If the number of nominees for directors does not exceed the number of directors to be elected, directors will be elected by a special meetingmajority of shareholders, not later than the close of businessvotes cast by the shares entitled to vote on the tenth day following the day on which the noticeelection of meeting is mailed or public disclosure of the date of the meeting is made, whichever occurs first.directors.
A shareholder making any proposal shall also comply with all applicable requirements of the Exchange Act.
Candidates properly submitted for consideration by shareholders will receive the same consideration as candidates presented by other persons. Nominations or proposals not made in accordance herewith may be disregarded by the chairman of the meeting in his discretion, and upon his instructions all votes cast for each such nominee or for such proposal may be disregarded.
Shareholder Communications with the Board of Directors
MiMedx shareholders may communicate with the Board of Directors, or individual specified directors, in writing addressed to:
Board of Directors
c/o
Set forth below is certain information regarding our current directors and director nominees as of April 30, 2021. There are no family relationships among any of our directors, director nominees, or executive officers.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Name | | Age | | Since | | Tenure | | Independent | | Committees |
| M. Kathleen Behrens | | 68 | | 2019 | | 2 | | ü | | COB, AC, NCG |
| James L. Bierman | | 68 | | 2019 | | 2 | | ü | | AC, CC* |
| Phyllis I. Gardner | | 70 | | 2021 | | < 1 | | ü | | to be determined |
| Michael J. Giuliani | | 66 | | 2020 | | < 1 | | ü | | CC, NCG |
| William A. Hawkins, III | | 67 | | 2020 | | < 1 | | ü | | EC* |
| Cato T. Laurencin | | 62 | | 2020 | | < 1 | | ü | | EC |
| K. Todd Newton | | 58 | | 2019 | | 2 | | ü | | AC*, EC |
| Martin P. Sutter | | 66 | | 2020 | | < 1 | | ü | | CC, NCG* |
| Timothy R. Wright | | 63 | | 2019 | | 2 | | | | — |
| | | | | | | | | | | |
Audit Committee | Compensation Committee | Ethics and Compliance Committee | Nominating & Corporate Governance Committee |
| K. Todd Newton* | James L. Bierman* | William A. Hawkins* | Martin P. Sutter* |
| M. Kathleen Behrens | Michael Giuliani | Cato Laurencin | M. Kathleen Behrens |
| James L. Bierman | Martin P. Sutter | K. Todd Newton | Michael Giuliani |
* = Chair; AC = Audit Committee; CC = Compensation Committee; COB = Chairperson of the Board; EC = Ethics & Compliance Committee; NCG = Nominating and Corporate SecretaryGovernance Committee.
60 Chastain Center Blvd.
Suite 60At the 2010 annual meeting of shareholders, the Company’s shareholders overwhelmingly approved an amendment to our charter classifying the Board into three classes of directors such that only one-third of the Board is up for election at each annual meeting of shareholders. Our Board currently consists of seven directors divided into three classes, plus up to two directors appointed by the holder of our Series B Preferred Stock. At each annual meeting, the term of one class of directors expires and persons are elected to that class for a term of three years or until such director’s successor is elected and qualified, or until such director’s earlier death, resignation or removal. If the number of directors changes, any increase or decrease must be apportioned among the classes so as to maintain the number of directors in each class as nearly equal as possible.
Kennesaw, Georgia 30144On July 2, 2020, in connection with the sale of Series B Preferred Stock to Falcon Fund 2 Holding Company, L.P. (the “EW Purchaser”), an affiliate of EW Healthcare Partners, as described in the Company’s 2019 Annual Report on Form 10-K, the Company agreed that, for so long as the EW Purchaser beneficially owns (i) at least 10% of the total number of outstanding shares of Company common stock (calculated on a fully-diluted, as converted basis), the EW Purchaser will be entitled to designate two individuals to serve on the Board and (ii) at least 5% but less than 10% of the total number of outstanding shares of Company common stock (calculated on a fully-diluted, as converted basis), the EW Purchaser will be entitled to designate one individual to serve on the Board (such designated directors, the “Preferred Directors”). The Preferred Directors will not be members of any class of directors that is elected by the holders of Company common stock (a “Common Director”). However, the Board may, by notice to the EW Purchaser, either appoint any individual serving as a Preferred Director as a Common Director or nominate any individual serving as a Preferred Director for election as a Common Director, provided that (i) no such appointment or nomination takes place such that such individual would be up for election as a Common Director prior to the Company’s 2022 annual meeting of shareholders, and (ii) if any individual serving as a Preferred Director has been appointed or nominated as a Common Director prior to July 2, 2022, then no other individual serving as a Preferred Director may be appointed or nominated as a Common Director prior to July 2, 2022. From and after the time that no Series B Preferred Stock remains outstanding, the EW Purchaser’s right to designate directors in accordance with the preceding sentence will convert into a right,
subject to the same ownership thresholds described above, to designate up to two individuals to be nominated by the Company to serve on the Board as Common Directors. The initial Preferred Directors are Martin P. Sutter and William A. Hawkins, III, who were appointed to the Board as Preferred Directors on July 2, 2020.
Our Board has nominated M. Kathleen Behrens, K. Todd Newton, and Timothy R. Wright to serve as a Class II directors, and Phyllis Gardner to serve as a Class III director. If elected, Dr. Behrens and Mr. Newton and Mr. Wright will serve a term expiring at the 2024 annual meeting of shareholders, and until his or her successor is elected and qualified, and Dr. Gardner will serve a term expiring at the 2022 annual meeting of shareholders, and until her successor is elected and qualified.
Our current Board members, the classes in which they serve, and the expiration of their terms as directors are as set forth in the table below:
| | | | | | | | | | | | | | |
| Class | | Directors | | Term Expiration |
| Class I | | Cato Laurencin
Michael Giuliani | | Elected to terms expiring at the 2023 Annual Meeting and until their successors are elected and qualified.
|
| Class II | | M. Kathleen Behrens
K. Todd Newton
Timothy R. Wright | | Elected to terms expiring at the 2021 annual meeting of shareholders, and until their successors are elected and qualified. |
| Class III | | James L. Bierman
Phyllis Gardner | | Elected or appointed to a term expiring at the 2022 Annual Meeting, and until his or her successor is elected and qualified. |
| Preferred Directors | | William A Hawkins, III
Martin P. Sutter | | The Preferred Directors are not members of any class of directors that is elected by the holders of Company common stock. See description above under “Board of Directors.” |
Additions to our Board
The Company’s Board has been 100% reconstituted since May 2019 as all of our current directors have joined the Board as new members since that time. Dr. Behrens, Mr. Newton and Mr. Wright were all elected as directors in connection with the 2018 Annual Meeting held in June 2019. Mr. Bierman was subsequently appointed as a director in connection with the Cooperation Agreement in June 2019. We welcomed four new directors to our Board of Directors in 2020. Pursuant to the Preferred Stock Transaction described below, we increased the size of our Board of Directors, and Mr. Sutter and Mr. Hawkins were appointed to serve as Preferred Directors effective in July 2020. At the 2020 annual meeting held in November 2020, shareholders elected Dr. Giuliani and Dr. Laurencin to the Board. Also, Dr. Phyllis Gardner joined the Board effective as of March 2021.
Biographies of Other Continuing Directors
Set forth below is certain information regarding our other continuing directors, including certain individual qualifications and skills of our directors that contribute to the effectiveness of the Board.
Class I, II, and III Directors
James L. Bierman, age 68. Mr. Bierman served as President and Chief Executive Officer, and as a member of the board of directors, of Owens & Minor, Inc. (NYSE: OMI), a Fortune 500 company and a leading distributor of medical and surgical supplies, from September 2014 to June 2015. Previously, he served in various other senior roles at Owens & Minor, including President and Chief Operating Officer from August 2013 to September 2014, Executive Vice President and Chief Operating Officer from March 2012 to August 2013, Executive Vice President and Chief Financial Officer from April 2011 to March 2012, and Senior Vice President and Chief Financial Officer from June 2007 to April 2011. Earlier in his career, Mr. Bierman served as Executive Vice President and Chief Financial Officer at Quintiles Transnational Corp. (formerly Nasdaq: QTRN). Quintiles was a market leader in providing product development and commercialization solutions to the pharmaceutical, biotech, and medical device industries. Before joining Quintiles, Mr. Bierman was a partner with Arthur Andersen LLP from 1988 to 1998. Mr. Bierman currently serves on the board of directors of Tenet Healthcare Corporation (NYSE: THC), a Fortune 500 company and a diversified healthcare services company operating more than 500 facilities, acute care hospitals and outpatient centers, throughout the United States, and Novan, Inc. (Nasdaq: NOVN). Novan, Inc. is a clinical development-stage biotechnology company focused on leveraging its proprietary nitric oxide based technology platform to generate macromolecular New Chemical Entities to treat multiple indications in dermatology and other conditions. Mr. Bierman was recently nominated as an independent director of KL Acquisition Corp. (NASDAQ: KLAQU). The company is a newly incorporated blank check company (SPAC) whose business purpose is to effect a merger or similar business combination with businesses in the healthcare sector. He previously served as Lead Independent Director on the board of directors of Team Health Holdings, Inc. (formerly NYSE: TMH). Team Health is one of the largest suppliers of outsourced healthcare professional staffing and administrative services to hospitals and other healthcare providers in the United States. Mr. Bierman earned his B.A. from Dickinson College and his M.B.A. at Cornell University’s Johnson Graduate School of Management. Mr. Bierman has served on the Board since June 2019 and was nominated as a director because of his substantial operational and financial experience in the healthcare sector.
Michael J. Giuliani, age 66. Since July 2016, Dr. Giuliani has been a consultant for several small pharmaceutical companies and has provided expert testimony for Mallinckrodt Pharmaceuticals. In addition to advising these companies, he volunteers his time and expertise to assist individuals or entities attempting to bring a pharmaceutical product forward from the pre-concept phase. From November 2007 to June 2016, Dr. Giuliani served as Vice President, Research and Development, for Mallinckrodt plc (formerly known as the Pharmaceuticals Division of Covidien) (NYSE: MNK), a developer, manufacturer, and distributor of specialty pharmaceutical products and therapies for autoimmune and rare diseases in the areas of neurology, rheumatology, nephrology, ophthalmology, and pulmonology; and immunotherapy and neonatal respiratory critical care. During his tenure, the Company obtained FDA approval for 16 new products. Prior to joining Covidien, he served as the Chief Medical Officer and Executive Vice President of Xanodyne Pharmaceuticals, an integrated specialty pharmaceutical company focused on women's healthcare and pain management. Dr. Giuliani received his B.S. from Tulane University and his M.D. from Ohio State University. Dr. Giuliani was nominated to serve as a director because of his extensive clinical and regulatory experience with multiple FDA divisions, and development, regulatory and manufacturing experience for complex biologic products.
Cato T. Laurencin, age 62. Dr. Laurencin currently serves the Albert and Wilda Van Dusen Distinguished Endowed Professor of Orthopaedic Surgery at the University of Connecticut, and is one of two designated University Professors at the school. He is also a materials scientist and engineer and is Professor of Materials Science and Engineering, Professor of Chemical and Biomolecular Engineering, and Professor of Biomedical Engineering at the University of Connecticut. He has been a professor at the University of Connecticut since 2008. He is the Chief Executive Officer of The Connecticut Convergence Institute for Translation in Regenerative Engineering. Previously, he served as Vice President for Health Affairs at the University of Connecticut Health Center and Dean of the University of Connecticut School of Medicine. From 2003 until 2008, Dr. Laurencin was the Lillian T. Pratt Distinguished Professor and Chair of the Department of Orthopedic Surgery at the University of Virginia. Dr. Laurencin was also designated a University Professor by the President of the University of Virginia. Prior to 2003, Dr. Laurencin held various positions of increasing
responsibility at Drexel University, including the Helen I. Moorehead Distinguished Professor of Chemical Engineering, Vice Chairman of the Department of Orthopedic Surgery and Director of Shoulder Surgery, and at MCP-Hahnemann School of Medicine, where he served as Clinical Professor of Orthopedic Surgery and Research Professor of Pharmacology and Physiology. An International Fellow in Biomaterials Science and Engineering, he received the Founders Award from the Society for Biomaterials. He is an elected member of the National Academy of Medicine, the National Academy of Engineering, and the American Academy of Arts and Sciences. Dr. Laurencin is the recipient of the National Medal of Technology and Innovation, our nation's highest honor for technological achievement. He has over 500 publications and patents. Dr. Laurencin received his B.S.E. degree in engineering from Princeton University, his Ph.D. in biochemical engineering and biotechnology from the Massachusetts Institute of Technology, and his M.D. from the Harvard Medical School. Dr. Laurencin was nominated to serve as a director because of his experience as a practitioner and professor of orthopedic surgery, as well as his deep technical, research, and clinical experience.
Directors Designated by Holders of Series B Preferred Stock
William A. Hawkins, III, age 67. Mr. Hawkins serves as a Senior Advisor to EW Healthcare Partners, a healthcare focused growth equity firm. Mr. Hawkins is the former Chairman and CEO of Medtronic, Inc., a global leader in medical technology. He was at Medtronic from 2002 until 2011. After retiring from Medtronic, he served as President and Chief Executive Officer of Immucor, Inc., a private equity backed global leader in transfusion and transplant medicine from October 2011 to July 2015. From 1998 to 2001 Mr. Hawkins served as President and Chief Executive Officer of Novoste Corporation (Nasdaq: NOVST), an interventional cardiology company. Prior to that, Mr. Hawkins served in a variety of senior roles at American Home Products, a consumer, pharma and medical device company, Johnson & Johnson, a healthcare company, Guidant Corporation, a medical products company, and Eli Lilly and Company, a global pharmaceutical company. Mr. Hawkins also serves as a director of Biogen Inc. (Nasdaq: BIIB), a biopharmaceutical company; Avanos Medical, Inc. (NYSE: AVNS), a medical technology company; as Chairman of Bioventus Inc. (Nasdaq: BVS), a global leader of innovations for active healing; and Cirtec, Virtue Labs, Immucor, Inc., Cereius, Inc. and Baebies, Inc., all of which are life science companies. He previously served on the board of Thoratec Corporation. Mr. Hawkins is Vice Chair of the Duke University Board of Trustees and is Chair of the Duke University Health System. Mr. Hawkins was elected as a member of the AIMBE College of Fellows and the National Academy of Engineering. He has a dual B.S.E.E. degree in Electrical and Biomedical Engineering from Duke University and a M.B.A. from the University of Virginia’s Darden School of Business. Mr. Hawkins has significant leadership experience as a chief executive officer, significant knowledge of, and experience in, the healthcare industry and significant international experience. He also has extensive governance and public company board experience. He was appointed to serve as a Preferred Director by the EW Purchaser.
Martin P. Sutter, age 66. Since 1985, Mr. Sutter has been the Co-Founder and a Managing Director of EW Healthcare Partners (previously known as Essex Woodlands Health Ventures), a healthcare-focused growth equity firm. Mr. Sutter has been directly involved with more than 30 of EW Healthcare Partners’ portfolio company investments. Educated in chemical engineering and finance, Mr. Sutter has more than 35 years of management experience in operations, marketing, finance and venture capital. Mr. Sutter holds a Bachelor of Science degree from Louisiana State University and a Master of Business Administration from the University of Houston. He currently serves on the Boards of Abiomed, Inc. (Nasdaq: ABMD), Bioventus Inc. (Nasdaq: BVS) and Prolacta Bioscience. He previously served on the boards of directors of the following EW Healthcare Partners’ portfolio investments: ATS Medical (later acquired by Medtronic, Inc.); BioForm Medical (later acquired by Merz GmbH & Co KGaA); LifeCell (later acquired by Kinetic Concepts); St. Francis Medical (later acquired by Kyphon, Inc./Medtronic, Inc.); Confluent Surgical (later acquired by Tyco International/Covidien); and Rinat Neurosciences (later acquired by Pfizer, Inc.). We believe that Mr. Sutter’s in-depth knowledge of the medical device industry, his skills as an investor in developing medical device companies, his extensive board experience and his position as a representative of a large shareholder in our Company qualify him to serve as a member of our Board of Directors. He was appointed to serve as a Preferred Director by the EW Purchaser.
Nominees for Election to the Board
The Board, upon the recommendation of the Nominating and Corporate Governance Committee, has determined that the Board’s nominees meet the Board’s standards for director qualifications and has nominated Dr. Gardner to stand for election to the Board for a term expiring at the 2022 annual meeting of shareholders, and Dr. Behrens and Messrs. Newton and Wright to stand for election to the Board for a term expiring at the 2024 annual meeting of shareholders, and in each case until such director’s successor is elected and qualified, or until such director’s earlier death, resignation or removal. Please see the biographies for Drs. Behrens and Gardner, and Messrs. Newton and Wright above, which include a description of their respective qualifications, experience, attributes, and skills.
In addition to the information set forth below, Annex A sets forth information relating to the Company’s directors, the Board’s nominees for election as directors and certain of the Company’s officers who are “participants” in our solicitation under SEC rules by reason of their position as directors or nominees or because they will be soliciting proxies on our behalf.
Prescience Point has indicated that it intends to nominate Eiad Asbahi, Alfred G. Merriweather, Charlotte E. Sibley and William F. Spengler for election as directors at the Annual Meeting. You may receive proxy solicitation materials from or on behalf of the Prescience Group. The Company is not responsible for the accuracy of any information provided by or relating to the Prescience Group contained in proxy materials filed or disseminated by or on behalf of the Prescience Group or any other statements that any member of the Prescience Group may make.
The Board does not endorse any of Prescience Point’s nominees and unanimously recommends that you vote FOR the election of each of the Board’s nominees on the enclosed WHITE proxy card. The Board strongly urges you NOT to sign or return any GOLD proxy card sent to you by or on behalf of the Prescience Group. Voting to “withhold” with respect to any of Prescience Point’s nominees on a GOLD proxy card sent to you by or on behalf of the Prescience Group is not the same as voting for the Board’s nominees because a vote to “withhold” with respect to any of Prescience Point’s nominees on the GOLD proxy card will revoke any WHITE proxy card you may have previously submitted.
To support the Board’s nominees, you should vote FOR the Board’s nominees on the WHITE proxy card and disregard, and not return, any GOLD proxy card sent to you by or on behalf of the Prescience Group. If you have previously voted using a GOLD proxy card sent to you by or on behalf of the Prescience Group, you can subsequently revoke that vote by signing, dating and returning the enclosed WHITE proxy card in the postage-paid envelope provided, or by following the instructions on the WHITE proxy card to vote by telephone or by Internet. Only your latest dated proxy will count. Any proxy may be revoked at any time prior to its exercise at the Annual Meeting as described in this Proxy Statement.
Because we have received notice that Prescience Point intends to nominate a slate of nominees for election to the Board at the Annual Meeting, we expect the number of nominees for director to exceed the number of directors to be elected at the Annual Meeting. Accordingly, pursuant to Article II, Section 9 of the Bylaws, directors will be elected by a plurality of the votes cast at the Annual Meeting. This means that the three director nominees with the most votes on Proposal 1 will be elected as Class II directors and the one director nominee with the most votes on Proposal 2 will be elected as a Class III director. If the number of nominees for directors does not exceed the number of directors to be elected, directors will be elected by a majority of the votes cast by the shares entitled to vote on the election of directors.
Director Independence
Nasdaq’s listing standards require that a majority of the members of the Board be independent, which means that they are not officers or employees of the Company and are free of any relationship that would interfere with the exercise of their independent judgment. The Board has determined that Drs. Behrens, Gardner, Giuliani, and Laurencin, and Messrs. Bierman, Hawkins, Newton, and Sutter, are “independent” under Nasdaq listing standards. The Company is also subject to certain requirements pursuant to that certain Stipulation and Agreement of Settlement, dated as of September 4, 2020 (the “Settlement Agreement”), as previously disclosed that impose additional independence requirements on the Board. The additional independence requirements set forth in the Settlement Agreement provide that a director shall not be considered independent if such director (1) has a substantial personal or business relationship with any officer or
director of the Company, including, but not limited to: (i) a relationship by blood, marriage, or adoption within three levels of removal or (ii) a partnership, joint venture, or similar business arrangement; (2) is (or within the last ten calendar years has been) employed or paid to provide services as an executive officer of the Company or a business (private or public) of which an executive officer or director of the Company is (or within the last ten calendar years was) an officer or director; (3) has been employed by the Company or by any of its direct or indirect subsidiaries in any capacity within the last five calendar years; (4) during the current calendar year or any of the three immediately preceding calendar years, has had any business relationship with the Company for which the Company has been required to make disclosure under Regulation S-K promulgated under the Securities Act of 1933, as amended, other than for service as a director or in connection with a relationship for which no more than de minimis remuneration was received in any one such year; (5) has beneficial ownership interest of 5% or more in an entity that has received remuneration, other than de minimis remuneration, from the Company, its subsidiaries, or affiliates in the preceding two years (other than in respect of its equity or debt securities holdings); or (6) is an employee, officer, or director of a not-for-profit entity that received contributions from the Company or the Company’s executive officers totaling a minimum of $100,000 or at least 1% of the entity’s total revenues (whichever is higher) in the preceding two years.
Each of the Board nominees has consented to be named in this Proxy Statement and to serve as a director of the Company if elected. Proxies may not be voted for a greater number of persons than the number of nominees named in this Proxy Statement. The Board is not aware that any Board nominee will be unwilling or unable to serve as a director. However, if a Board nominee is unable to serve or for good cause will not serve as a director, the Board may choose a substitute nominee. If any substitute nominee is designated, we will file a supplement to this Proxy Statement that, as applicable, identifies the substitute nominee, discloses that such nominee has consented to being named in the revised proxy statement and to serve as a director of the Company if elected, and includes certain biographical and other information about such nominee required by SEC rules. Absent the Company’s receipt of instructions to the contrary, the persons named as proxies on the Company’s WHITE proxy card will vote for the Board nominee and substitute nominee chosen by the Board, if applicable.
Board Leadership Structure and Lead Director
The Board has been led by an independent Chair since July 2018. Pursuant to the Company’s Bylaws, as recently amended, the Chair of the Board must be a non-employee who is an “independent director” as defined by Rule 5605 of the Nasdaq Listing Rules. For further information about such requirement, please see “Corporate Governance—Amended Bylaws.” Dr. Behrens was appointed Chair of the Board following her election in June 2019 and currently serves in that role. The Board does not currently have a Lead Director since the Chair is independent.
Board Risk Oversight
The Board as a whole is responsible for overseeing the Company’s risk exposure as part of determining a business strategy that generates long-term shareholder value. Each of the Board’s standing committees focuses on risk areas associated with its area of responsibility. The Board believes its leadership structure discussed above supports a risk oversight function that enhances a unified leadership through a single person and allows for effective input from our independent Board members, all of whom are fully engaged in Board deliberations and decisions.
CORPORATE GOVERNANCE
Corporate Governance Guidelines
In September 2020, the Company entered into the Settlement Agreement to settle three shareholder derivative complaints against the Company consolidated on December 6, 2018 by the United States District Court for the Northern District of Georgia (Evans v. Petit, et al. filed September 25, 2018, Georgalas v. Petit, et al. filed September 27, 2018, and Roloson v. Petit, et al. filed October 22, 2018). Pursuant to the requirements of the Settlement Agreement, the Board has adopted Corporate Governance Guidelines that provide a framework for fulfillment of the Board’s corporate governance duties and responsibilities, taking into consideration certain corporate governance best practices, recent developments and applicable laws and regulations. The Corporate Governance Guidelines address a number of matters applicable to directors, including director independence requirements, share ownership guidelines, Board responsibilities, Board and committee service limitations, and meetings of non-management directors. Our Corporate Governance Guidelines are available on the Investor Relations section of our website, under the heading “Corporate Governance.”
Amended Bylaws
On April 19, 2021, the Board amended and restated the Company’s Bylaws to (1) require that the Chair of the Board be a non-employee who is an “independent director” as defined by Rule 5605 of the Nasdaq Listing Rules; and (2) to limit the maximum number of boards of directors of public companies on which members of the Company’s Board may serve. All of the amendments were required pursuant to the terms of the Settlement Agreement.
Code of Business Conduct and Ethics
We have adopted a Code of Business Conduct and Ethics that applies to all of our employees, officers and directors, a copy of which is on our website at https://mimedx.gcs-web.com/corporate-governance/highlights. Any amendments to or waivers of the Code of Business Conduct and Ethics that require disclosure under applicable law or listing standards will be disclosed on our website at www.mimedx.com. We undertake to provide a copy to any person, without charge, upon written request to Secretary, MiMedx Group, Inc., 1775 West Oak Commons Court, NE Marietta, Georgia 30062.
Committees of the Board and Number of Meetings
During the year ended December 31, 2020, there were 25 meetings of the Board. In addition to single purpose committees established from time to time to assist the Board with particular tasks, the Board has the following standing committees: an Audit Committee; a Compensation Committee; an Ethics & Compliance Committee; and a Nominating and Corporate Governance Committee. In 2020, each incumbent director attended more than 75% of the aggregate of all meetings of the Board held while he or she was a director and any committees on which that director served. Although we do not have a formal policy, we strongly encourage each of our directors to attend all annual meetings of shareholders. All of our current directors attended the Company’s 2020 annual meeting of shareholders other than Drs. Gardner, Giuliani, and Laurencin, who were not yet directors of the Company at the time such meeting was held. The Settlement Agreement requires our Board and its committees to meet a minimum number of times annually as described in greater detail in each of the committee charters.
Audit Committee and Audit Committee Financial Expert
The following directors serve on the Audit Committee: K. Todd Newton (Chair), M. Kathleen Behrens, and James L. Bierman, each of whom satisfies Nasdaq’s independence standards for audit committee members. The Board has determined that each of Messrs. Bierman and Newton is an “audit committee financial expert” as that term is defined by the SEC in Item 407(d)(5)(ii) of Regulation S-K.
The current charter for the Audit Committee is posted on the Company’s website at https://mimedx.gcs-web.com/corporate-governance/highlights. The Audit Committee held 10 meetings during the year ended December 31, 2020.
The Audit Committee’s charter states that the purpose of the Audit Committee is to assist the Board in its duty to oversee the Company’s accounting and financial reporting processes, and the audits of the Company’s financial statements, and the Company’s internal controls over financial reporting.
The Audit Committee’s charter requires that it be comprised of not less than three members of the Board, each of whom must, as determined by the Board, (a) meet the independence and experience requirements under the rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”) and the rules and regulations, as applicable, of the Nasdaq Stock Market; (b) not have participated in the preparation of financial statements of the Company or any current subsidiary of the Company at any time during the past three years; (c) be able to read and understand fundamental financial statements, including the Company's balance sheet, income statement, and cash flow statement; and (d) be free of any relationship that, in the opinion of the Board, would interfere with the member’s independent judgment. The Company’s Corporate Governance Guidelines require that at least two members of the Audit Committee have a financial background that would qualify each of them as an “audit committee financial expert” as that term is defined by in Item 407(d)(5)(ii) of Regulation S-K.
The Audit Committee’s charter requires that it, among other things:
•assist the Board in its duty to oversee and monitor the accounting and financial reporting processes of the Company, the Company’s internal and outside auditors, and the audits of the Company’s financial statements and internal control over financial reporting;
•take reasonable steps to confirm the integrity, accuracy, completeness, and timeliness of the Company’s financial statements and related public filings and disclosures, including reviewing and discussing with management and the Company’s independent auditors the Company’s annual audited financial statements, quarterly financial statements, any Company financial statements contained in other periodic reports filed with the SEC, and any earnings press releases as well as financial information and earnings guidance provided to analysts and rating agencies;
•review and discuss with management and the Company’s independent auditors, before release, the Company’s audited financial statements, the Company’s internal control report, the auditor’s attestation report, and Management’s Discussion and Analysis included in the Company’s Annual Report on Form 10-K and recommend to the Board whether the audited financial statements should be included in the Company’s Annual Report on Form 10-K;
•review and discuss with management and the Company’s internal auditors, before any public release, the Company’s unaudited interim financial statements, critical accounting estimates, significant balance sheet accounts and any applicable reports (including receivables, inventory and accruals), liquidity and capital management summaries, and the Management’s Discussion and Analysis to be included in the Company’s subsequent Quarterly Report on Form 10-Q;
•review and discuss with the Company’s independent auditors the Company’s audited financial statements and audit findings and discuss with the independent auditors those matters required to be discussed by applicable requirements as may be imposed by the Public Company Accounting Oversight Board (“PCAOB”);
•take responsibility for the appointment, compensation, retention and oversight of the work of any public accounting firm engaged for the purpose of preparing or issuing audit reports or performing other audit, review or attest services and ensure that each such registered public accounting firm reports directly to the Audit Committee;
•establish policies and procedures to take, or recommend that the full Board take, appropriate action to oversee the independence of the outside auditors;
•preapprove the hiring of employees or former employees of the independent auditor who were involved in the Company’s audits in prior years, and consult with such independent auditor to determine if such hiring would impair the outside auditor’s independence, and recommend to the Board any other such policies they deem appropriate for the Company’s hiring of employees or former employees of the outside auditor;
•establish policies and procedures for the engagement of the independent auditors to provide permitted non-audit services;
•review with the Company’s independent auditors, internal auditors, and management the adequacy of the Company’s internal financial controls and reporting systems, including, but not limited to, those related to inventory control and revenue recognition;
•review and discuss with management and the Company’s independent auditors (1) all critical accounting policies and practices to be used in the audit, including, but not limited to, those related to inventory control and revenue recognition; (2) all alternative treatments of financial information within generally accepted accounting principles that have been discussed with management, the ramifications of the use of such alternative treatments and the treatment preferred by the independent auditors; and (3) other material written communications between the independent auditors and management;
•provide, as part of any proxy statement filed pursuant to SEC regulations, any Audit Committee report required by SEC regulations;
•establish procedures for the receipt, retention and treatment of complaints or concerns received by the Company regarding accounting, internal controls or auditing matters;
•review and pre-approve related party transactions with reporting persons specified in Section 16 of the Exchange Act of 1934, as amended (the “Exchange Act”), for potential conflicts of interest and review and approve related party transactions; and
•conduct an annual review of the Audit Committee’s performance, annually review and reassess the adequacy of the Audit Committee charter and make recommendations to the Board with respect and changes to the Audit Committee charter.
The Audit Committee is authorized to delegate responsibilities to subcommittees or the Chair of the Audit Committee as necessary or appropriate.
Compensation Committee
The following directors serve on the Compensation Committee: James L. Bierman (Chair), Martin P. Sutter, and Michael Giuliani, each of whom satisfies Nasdaq’s independence standards for compensation committee members. The current charter for the Compensation Committee is posted on the Company’s website at https://mimedx.gcs-web.com/corporate-governance/highlights. The Compensation Committee held 6 meetings during the year ended December 31, 2020.
The primary purpose of the Compensation Committee is to aid the Board in discharging its responsibilities relating to the compensation of the Company’s executive officers. The Compensation Committee has overall responsibility for evaluating and approving the Company’s equity compensation plans, policies and programs for all levels within the Company, and certain other compensation programs, including for the named executive officers identified in the Compensation Discussion and Analysis (“CD&A”) section, below (the “NEOs”). The Compensation Committee must be comprised of at least three directors, each of whom must be independent. The Compensation Committee’s charter requires that it, among other things:
•annually review and determine the annual compensation, including amounts and terms of base salary, bonus, incentive compensation, perquisites and all other compensation for the Company’s executive officers, and recommend their annual compensation for approval by the Board;
•annually evaluate the performance of the Company’s Chief Executive Officer;
•annually, at the Compensation Committee meeting coincident with the Company’s annual meeting of shareholders, review and determine the compliance of the Company’s executive officers with the stock ownership guidelines applicable to them and report such compliance to the Board;
•prepare an annual Compensation Committee report as required by SEC rules to be included in the Company’s proxy statement or annual report on Form 10-K stating that the Compensation Committee has reviewed and discussed the CD&A with management and based on that review and discussion, recommend to the Board that the CD&A be included in the Company’s annual report on Form 10-K and in the Company’s proxy statement;
•annually review executive compensation strategies and equity programs, and supplemental executive benefits programs (if any) not provided to all eligible employees generally;
•recommend to the Board the compensation for directors (including retainer, committee and committee chair fees, stock incentive awards, and other similar items, as appropriate);
•review employment agreements, severance arrangements, and change in control agreements and provisions, as well as any related special supplemental benefits, for the executive officers and recommend any and all such agreements, arrangements, provisions and benefits for approval by the Board; and review change in control arrangements and provisions and any related special supplemental benefits for all employees and recommend any and all such agreements, provisions and benefits for approval by the Board;
•review and make recommendations to the Board with respect to the adoption and amendment of equity-based plans, and establish criteria for the terms of awards granted to participants under such plans. Grant awards in accordance with such criteria and approved forms, and exercise all authority granted to the Compensation Committee under such plans, or by the Board in connection with such plans;
•review and approve proposed equity grants for all participants other than executive officers, and review and recommend for approval by the Board proposed equity grants for executive officers;
•review and recommend for approval by the Board incentive-based cash compensation plans for the CEO, COO, executive officers and other executives reporting directly to the CEO or COO. Establish criteria for the terms and measurements of incentives earned under such plans; and
•oversee Management’s efforts to monitor and improve all aspects of the engagement of the Company’s human resources during their collective pursuit of the Company’s strategic initiatives and objectives, to include, but not limited to, the timely, efficient and effective hiring, orientation, deployment, utilization, performance, supervision, development, dedication, motivation, loyalty, accountability, evaluation, counseling, incentive based cash compensation, teamwork and retention of such human resources, and review and oversee the Company’s policies and programs for diversity and inclusion; and
•review the Company’s incentive compensation arrangements to determine whether they encourage excessive risk-taking, to review and discuss at least annually the relationship between risk management policies and practices and compensation, and to evaluate compensation policies and practices that could mitigate any such risk;
•annually receive and review reports of the Ethics and Compliance Committee, including with respect to the Chief Executive Officer, Chief Financial Officer, and the Chief Compliance Officer;
•review, adopt and amend compensation recoupment policies, related agreements, and other policies and procedures, including with respect to termination of officers who participate in violations of law or disregard supervisory responsibilities with respect thereto; and
•oversee the Company’s compliance with SEC rules and regulations regarding shareholder approval of executive compensation matters and the disclosure of compensation related actions, including advisory votes on executive compensation and the frequency of such votes, and consider the results of such votes.
The Compensation Committee is authorized to delegate responsibilities to subcommittees of the Compensation Committee as necessary or appropriate.
Ethics and Compliance Committee
Our Ethics and Compliance Committee currently consists of three directors: William A. Hawkins (Chair), Cato Laurencin, and K. Todd Newton. Each of the Committee members meets the independence requirements of the Nasdaq rules for independence. The current charter for the Ethics and Compliance Committee is posted on our website at https://mimedx.gcs-web.com/corporate-governance/highlights. The Ethics and Compliance Committee held 5 meetings during the year ended December 31, 2020. The Ethics and Compliance Committee is required to be comprised of at least three directors, all of whom must be independent, and at least one of whom must have a substantial compliance background.
The principal role of the Ethics and Compliance Committee is to assist the Board in its duty to oversee the Company’s establishment and management of its corporate ethics and compliance program. In establishing this Ethics and Compliance Committee, the Board recognizes that healthcare fraud and abuse laws and regulations are complex and
subject to evolving interpretation and enforcement discretion which may affect the Company’s ability to operate. The Ethics and Compliance Committee’s charter requires that it, among other things:
•oversee and monitor the activities of Company management and pertinent outside consultants, including distributors of the Company’s products, with respect to the Company’s establishment and management of its corporate ethics and compliance program;
•oversee the efforts of the Chief Compliance Officer, including:
◦approve of decisions regarding the appointment and removal of the Chief Compliance Officer;
◦review the budget, resource plan and organizational structure of the Compliance function;
◦review the Company’s efforts that demonstrate the Company’s commitment to the elements of an effective ethics and compliance program as initially outlined in the Federal Sentencing Guidelines for Organizations and refined over time; and
◦review the performance of the Chief Compliance Officer and concur with any changes to his or her compensation;
•receive reports and complaints regarding officers and directors, oversee investigations into any such reports, and present findings and recommendations regarding any appropriate disciplinary or other remedial actions to the Board;
•assess on an annual basis regarding certain executive officer’s contribution to the Company’s culture of ethics and compliance with applicable laws, rules, and regulations;
•review any pre-approval requests for waivers of compliance with the Company’s Code of Conduct; and
•conduct an annual review of the Committee’s performance.
The Ethics and Compliance Committee is authorized to delegate responsibilities to subcommittees of the Ethics and Compliance Committee as necessary or appropriate.
Nominating and Corporate Governance Committee
The following directors serve on the Nominating and Corporate Governance Committee: Martin P. Sutter (Chair), M. Kathleen Behrens, and Michael Giuliani, each of whom meets the independence requirements of the Nasdaq rules for independence. The current charter for the Nominating and Corporate Governance Committee is posted on our website at https://mimedx.gcs-web.com/corporate-governance/highlights. The Nominating and Corporate Governance Committee held 12 meetings during the year ended December 31, 2020.
The primary purposes of the Nominating and Corporate Governance Committee are to make recommendations to the Board concerning the composition and structure of the Board, identify individuals qualified to become Board members, recommend to the Board the director nominees for the next annual meeting of shareholders and in the event of any vacancies on the Board, develop and recommend to the Board a set of corporate governance principles applicable to the Company. The Nominating and Corporate Governance Committee must be comprised of at least two directors, each of whom must be independent. The Nominating and Corporate Governance Committee’s charter requires that it, among other things:
•annually present to the Board a list of individuals who meet the criteria for Board membership, recommend such individuals for nomination for election to the Board at the annual meeting of shareholders and consider suggestions received from shareholders regarding director nominees in accordance with any procedures adopted
from time to time by the Nominating and Corporate Governance Committee and pursuant to the Corporate Governance Guidelines;
•evaluate and report to the Board on the performance and effectiveness of the Board to facilitate the directors fulfilling their responsibilities in a manner that serves the interests of the Company’s shareholders including an assessment of the Board’s compliance with general corporate governance guidelines and identification of areas in which the Board could improve its performance;
•review shareholder proposals relating to corporate governance and other matters and recommend to the Board the Company’s response to such proposals, as required or advisable;
•consider and recommend to the Board the optimum size, classifications, terms of office of nominees, members and criteria for Board and committee membership;
•recommend the functions of the various committees of the Board, the members of the committees and the chairs of the committees;
•annually conduct a review of the Nominating and Corporate Governance Committee’s performance and annually review the self-evaluations by the other committees of the Board and report to the Board on the conclusions reached with respect to the performance of the other committees of the Board;
•recommend the functions of the various committees or subcommittees of the Board, the members of the committees or subcommittees, and the chairpersons of the committees or subcommittees;
•assist the full Board in determining the independence of its members and nominees at least annually;
•review and make recommendations to the Board concerning the adoption of corporate governance policies and principles for the Company;
•review and recommend to the Board proposed changes to the Company’s Articles and Bylaws, as required or advisable;
•ensure compliance with and routinely review and update the Corporate Governance Guidelines;
•make recommendations to the Board concerning orientation, training, and continuing education of members of the Board and various committees or subcommittees of the Board; and
•annually, at the Nominating Committee’s meeting coincident with the Company’s annual meeting of shareholders, review and determine the compliance of the Company’s directors with the Stock Ownership Guidelines applicable to directors, and report such compliance to the full Board.
The Nominating and Corporate Governance Committee is authorized to delegate responsibilities to subcommittees of the Nominating and Corporate Governance Committee as necessary or appropriate.
Evaluation of Director Candidates
The Board, in part through its delegation to the Nominating and Corporate Governance Committee, seeks to recommend qualified individuals to become members of the Board, and takes into consideration such factors as it deems appropriate based on current needs. The Board considers many factors when evaluating the suitability of, and selecting, individual director nominees, including, but not limited to, the following criteria applicable to all director nominees: (i) a commitment to the Company’s basic beliefs as set forth in the Company’s Code of Business Conduct and Ethics; (ii) integrity, intelligence and strength of character; (iii) reputations, both personal and professional, consistent with the image and reputation of the Company; (iv) strong leadership skills; (v) the ability to exercise sound business judgment; (vi) relevant expertise and experience, including educational or professional backgrounds, and an ability to offer advice and guidance to management of the Company based on that expertise and experience; (vii) a general understanding of marketing, finance and other disciplines relevant to the success of a publicly-traded company in today’s business environment, (viii) relevant regulatory experience, (ix) independence and decision-making ability, (x) interpersonal skills, (xi) community activities and relationships, (xii) the interrelationship between the candidate’s experience and business background and other Board members’ experience and business background, and (xiii) a willingness to commit the necessary time and effort to attend and participate in Board meetings and related Board activities, and also to ensure an active Board whose members work well together. The Board composition is also subject to the requirements set forth in our Corporate Governance Guidelines.
Although the Nominating and Corporate Governance Committee has not established a specific policy for consideration of diversity in its nominating process, one of its goals is to foster diversity and inclusion on the Board. The Board currently consists of nine persons, two of whom are women (including the Chair, Dr. Behrens, and Dr. Gardner), and one of whom is African American (Dr. Laurencin).
Four current members of the Board were identified and recommended in 2018 pursuant to the Cooperation Agreement (as described above): Dr. Behrens, Mr. Bierman, Mr. Newton and Mr. Wright, our chief executive officer. Additionally, in July 2020, the EW Purchaser designated Martin P. Sutter and William A. Hawkins, III to serve on the Board as Preferred Directors, and they were appointed to the Board as Preferred Directors on July 2, 2020. The Preferred Directors are not currently members of any class of directors that is elected by the holders of Company common stock.
Procedures by which Security Holders May Nominate Individuals for Election to the Board
To nominate a person for election as a director at an annual meeting of shareholders, the Company’s Amended and Restated Bylaws require that timely notice of the nomination in proper written form, including all required information as specified in the Amended and Restated Bylaws, be mailed to the Secretary, at 1775 West Oak Commons Court, NE, Marietta, Georgia 30062. The Nominating and Corporate Governance Committee will consider for nomination candidates recommended by shareholders on the same basis as candidates recommended by members of the Board or other sources. Any proposed director candidate must satisfy the criteria for Board membership set forth in the charter of the Nominating and Corporate Governance Committee or otherwise approved by the Nominating and Corporate Governance Committee and the Board from time to time.
Shareholder Communications with the Board
Company shareholders may communicate with the Board, or individual specified directors, by sending such communications in writing to: MiMedx Group, Inc., Board of Directors, c/o Secretary, 1775 West Oak Commons Court, NE, Marietta, Georgia 30062.
The Secretary will review each shareholder communication. The Corporate Secretary will forward to (i) the entire Board, of Directors, (ii) the non-management members of the Board, of Directors, if so addressed, or (iii) the members of a Board of Directors committee, if the communication relates to a subject matter clearly within that committee’s area of responsibility, each communication that (a) relates to the Company’s business or governance, (b) is not offensive and is legible in form and reasonably understandable in content and (c) does not merely relate to a personal grievance against MiMedxthe Company or a team member or further a personal interest not shared by other shareholders generally.
Code of Business Conduct and Ethics
We have adopted a Code of Business Conduct and Ethics that applies to our Chief Executive Officer (our principal executive officer), Chief Financial Officer (our principal accounting officer), controller, and persons performing similar functions. A copy is posted on our website at www.mimedx.com. In the event that we amend any of the provisions of the Code of Business Conduct and Ethics that require disclosure under applicable law, SEC rules or applicable listing standards, we intend to disclose the amendment on our website.
Any waiver of the Code of Business Conduct and Ethics for any executive officer or director must be approved by the Board of Directors and will be disclosed on a Form 8-K filed with the SEC, along with the reasons for the waiver.31
Executive Officers
In addition to Messrs. Petit and Taylor, who are also directors, theThe following persons currently serve as our executive officers:
Timothy R. Wright, 63, became the Company’s Chief Executive Officer in May 2019. The biography for Mr. Wright can be found under the heading “Board of Directors” above.
Peter M. Carlson,Michael J. Senken, age 54,57, was appointed Chief Financial Officer in March 2020. He joined the Company as Executive Vice President - Finance in December 2019. From 2017 to 2018, Mr. Carlson served as Chief Operating Officer at Brighthouse Financial, Inc., where he helped establish the $200 billion (assets) U.S. life and annuity insurance company as a separate entity following its August 2017 spin-off from MetLife, Inc., one of the world’s leading financial services companies. He was the Chief Accounting Officer at MetLife, Inc. from 2009 to 2017 where his global responsibilities included accounting, financial planning, tax, and investment finance. Prior to joining MetLife in 2009, Carlson was the Corporate Controller at Wachovia Corporation. He currently serves as a director of White Mountains Insurance Company (NYSE: WTM). Mr. Carlson holds a Bachelor of Science from Wake Forest University and is a trustee of the university. He is licensed as a certified public accountant in North Carolina and New York.
Mark P. Graves, age 56, was appointed Senior Vice President and Chief Compliance Officer in January 2010.July 2018. Prior to joining the Company, he served as the U.S. leader for the global Patient Experience & Value function in the neurology division of UCB, Inc., a biopharmaceutical company. From 2011 to 2015, he was UCB’s Deputy Compliance Officer involved in all aspects of compliance including the implementation and management of the company’s corporate integrity agreement. Prior to that, Graves was Senior Director in the Office of Ethics and Compliance for the Pharmaceutical Products Division of Abbott Laboratories, as well as Deputy Ethics & Compliance Officer for Takeda Pharmaceuticals North America, Inc. and TAP Pharmaceutical Products, Inc., where he also managed the Company’s corporate integrity agreement. Prior to his pharmaceutical and biotech career, he practiced labor and employment law. Mr. Graves holds a B.A. in Criminology and Law, and a J.D., from the University of Florida, and an MBA from the University of Chicago Booth School of Business.
William F. “Butch” Hulse IV, age 47, has served as General Counsel and Secretary since December 2019. Prior to joining the Company, Mr. Hulse was a member of Dykema Gossett, PLLC, a national law firm since 2017. Prior thereto, he was with Acelity, LP, Inc. (formerly Kinetic Concepts, Inc.), a global medical technology company with leadership positions in advanced wound care, surgical solutions and regenerative medicine, from 2008 to 2017 in a variety of roles of increasing responsibility. From 2013 to 2017, he served as Acelity’s Chief Compliance Officer and Senior Vice President for Enterprise Risk Management, Quality, and Regulatory. Prior to that, he served as Division General Counsel for Acelity’s advanced wound care business unit and as Associate General Counsel for litigation matters. Mr. Hulse holds a Bachelor of Arts from Angelo State University and a J.D. from the Baylor University School of Law.
Rohit Kashyap, Ph.D., age 50, joined the Company as Executive Vice President and Chief FinancialCommercial Officer in August 2020. Dr. Kashyap has more than 20 years of Park ‘N Fly,experience in the medical device sector. Most recently, he served as the President of Global Commercial at Acelity, L.P. Inc. from August 2007 to September 2009. From August 2005 to August 2007, Mr. Senken was Vice President and Chief Financial Officer of Patient Portal Technologies (OTCBB:PPRG). From June 2005 to August 2005, Mr. Senken was a consultant for JC Jones LLC. From 2002 to 2004, Mr. Senken was Senior Vice President and General Manager-Broadband Consumer Lifestyle for Philips Consumer Electronics.(formerly known as Kinetic Concepts, Inc.), an advanced wound therapeutics company, since April 2019. Prior thereto, Mr. Senken was employed by Philips Broadband Networks, servingDr. Kashyap served as Senior ViceAcelity’s President of Americas, from January 2017 to April 2019, and General ManagerPresident of North America, from 1996-2002, as Vice President and Chief Financial Officer from 1986October 2014 to 2002, and as Controller from 1983January 2017. Prior to 1986. From 1980 to 1983, Mr. Senken was an auditor for Philips Electronics North America.
Roberta L. McCaw, age 57 , was appointed General Counsel and Secretary in September 2009. Ms. McCaw is a lawyer in private practice and had been a consultant to the Company since January 2009. From February 2006 through May 2008, Ms. McCawthat, Dr. Kashyap served as Senior Vice President of Strategy and Business Development at Acelity, Inc. from 2012 to 2014, and as Senior Vice President of Corporate Development at Acelity, Inc. from 2007 to 2010, with responsibility for the development of global strategic planning initiatives that incorporated organic growth, licensing, and strategic acquisitions. At Acelity, Inc., Dr. Kashyap also held roles in the R&D, Licensing and Acquisition, and Global Marketing groups, including as Commercial Leader for international and emerging markets. Dr. Kashyap earned his bachelor’s degree in Instrumentation and Control from the L.D. College of Engineering in Ahmedabad, India, and his master’s degree and doctorate in Biomedical Engineering from Case Western Reserve University. He also holds an MBA from the Kellogg School of Management at Northwestern University.
Robert B. Stein, M.D., Ph.D., age 70, has served as our Executive Vice President, Research and Development since August 2020.Dr. Stein received his M.D. and Ph.D. in Physiology and Pharmacology from Duke University and his B.S. in biology and chemistry from Indiana University. Following residency, Dr. Stein served in increasing roles of responsibility at Merck, Sharp and Dohme Research Laboratories from 1982 to 1990 with contributions to three new products, Cozaar (a prescription drug), Sustiva (an HIV antiviral), and Gardasil (a vaccine). From 1990 to 1996 he served as the first head of Research and Development for Ligand Pharmaceuticals. In 1996, he became Executive Vice President, Research and Pre-clinical Development for DuPont-Merck and DuPont pharmaceuticals, leading to the registration of Sustiva and Innohep and the discovery and advancement of blockbuster Eliquis, subsequently registered by Bristol Myers Squibb Company. Following the acquisition of DuPont by Bristol Myers Squibb, from November 2001 to September 2003 he served as President, R&D and Chief Scientific Officer of Incyte Pharmaceuticals. From September 2003 to January 2007, he served as President of Roche Palo Alto LLC. From August 2008 to May 2010, he served as Chief Executive Officer of Kinemed, Inc., a translational medicine company. In August, 2012, Dr. Stein personally filed a petition under Chapter 7 of the Bankruptcy Code. Following Kinemed, from January 2014 to September 2015, he served as Chief Scientific Officer, and from September 2015 to March 2017 as President, R&D, for Agenus Inc, an immuno-oncology company. He then served as a full-time Senior Advisor, R&D, to Agenus and AgenTus from March 2017 to October 2019. During this time, Agenus advanced 13 monoclonal antibodies into the clinic and formed significant partnerships with Incyte, Merck, UCB, and Gilead.
Scott M. Turner, age 55, has served as Senior Vice President, Operations and Procurement since April 2017. Mr. Turner oversees supply chain operations including donor recovery services, planning, procurement, processing, distribution, and facilities. Mr. Turner joined the Company in April 2016 as Vice President, Procurement. Prior to joining the Company, Mr. Turner served as a director with Alvarez & Marsal North America, LLC in their Corporate Performance Improvement group from October 2015 until March 2016. Prior thereto, Mr. Turner served as Vice President, Supply Chain, with Larson-Juhl, a Berkshire Hathaway company, from June 2013 until September 2015. Additionally, Mr. Turner has more than 20 years of Supply Chain and Procurement leadership in life sciences at Shionogi and Johnson & Johnson, spanning the consumer, medical device, and pharmaceutical sectors domestically and internationally. Mr. Turner holds a Bachelor of Science in Commerce & Engineering from Drexel University and a President / Key Executives MBA from Pepperdine University.
Policies and Procedures for Approval of Related Party Transactions
Under its charter, the Audit Committee is responsible for reviewing and approving all transactions or arrangements between the Company and Section 16 reporting persons and any of their respective affiliates, associates or related parties. In determining whether to approve or ratify a related party transaction, the Audit Committee considers all relevant facts and circumstances available to it, such as:
•Whether the terms of the transaction are fair to the Company and at least as favorable to the Company as would apply if the transaction did not involve a related party;
•Whether there are demonstrable business reasons for the Company to enter into the transaction;
•Whether the transaction would impair the independence of an outside director; and
•Whether the transaction would present an improper conflict of interest for any director or executive officer, taking into account the size of the transaction, the direct or indirect nature of the related party’s interest in the transaction and the ongoing nature of any proposed relationship, and any other factors the Audit Committee deems relevant.
Related Party Transactions
The Company has employed Dr. Thomas Koob as its Chief Scientific Officer (a non-executive officer) since 2006. Thomas Koob is the brother of a former director, Charles Koob. Subsequent to the Company’s employment of Dr. Thomas Koob, Charles Koob was appointed as a director of the Company in March 2008. Charles Koob's term as a Director expired at the 2020 annual meeting held on November 20, 2020. In 2020, the Company paid Dr. Thomas Koob an annual salary of $217,426 and provided equity, incentive compensation and other compensation of $304,248.
Delinquent Section 16(a) Reports
Section 16(a) of the Exchange Act requires the Company’s executive officers and directors, and any beneficial owner of more than ten percent of a registered class of the Company’s equity securities, to file reports (Forms 3, 4 and 5) of stock ownership and changes in ownership with the SEC. Officers, directors and beneficial owners of more than ten percent of the outstanding shares of Company common stock are required by SEC regulations to furnish the Company with copies of all such forms that they file.
Based solely on the Company’s review of the copies of Forms 3, 4 and 5 the Company believes that during the year ended December 31, 2020, all filing requirements were complied with by its executive officers, directors and beneficial owners of more than ten percent of the outstanding shares of Company common stock with the exception of (i) Dr. Laurencin’s initial report on Form 3 was filed nine days late due to delays in obtaining EDGAR filing codes; and (ii) a single report of a single transaction was filed one month late by Mr. Hawkins due to a Company administrative error.
CEO Pay Ratio
In 2020, we paid total annual compensation to our median employee of $90,978. The annual total compensation of our CEO in 2020, as reported in the Summary Compensation Table, was $4,729,863. Based on this information, for 2020,the ratio of the annual total compensation of our CEO to the median annual total compensation of all employees was 52 to 1.
We determined our median employee using all income as shown in Form W-2 box 1 for all employees other than our CEO, based on information as of December 31, 2020. As permitted by SEC rules, (i) we identified our median employee as of December 31, 2020, and will determined the median employee at least every third year unless we make changes to our employee population or employee compensation arrangements that would result in a significant changes to our pay ratio disclosure; (ii) we excluded all non-U.S. employees in determining the median employee, which consisted of a single employee in Canada. The total number of U.S. and non-U.S. employees as of December 31, 2020 was 735.
EXECUTIVE COMPENSATION
COMPENSATION DISCUSSION AND ANALYSIS
Summary Overview of 2020
In an unprecedented and challenging year, MiMedx achieved strategic objectives, improved and strengthened its position and supported our customers and employees. We comprehensively responded to the pandemic, focusing on safety, and continually improved our position during the year. We advanced our commitment to operational excellence and completed a transformative transaction, strengthening the Company and positioning it for higher growth. And, we remain committed to environment, social and governance goals.
| | | | | | | | |
| COVID-19 Response | Operational Excellence | Transformative Transaction |
| We effectively managed our business through the COVID 19 pandemic, demonstrated by an immediate focus on employee safety and engagement, disciplined cost containment actions, liquidity management, and employee retention. We also acted to maintain an adequate and expanded donor supply during the pandemic. | We completed remediation of FDA Inspection Findings, bringing our manufacturing facilities into compliance with good manufacturing processes, thereby mitigating risk and delivering shareholder value. We reestablished our donor network, even adding new hospital providers during the pandemic. | We completed a successful recapitalization totaling $150 million, with high-quality respected investors. This transformative transaction was completed during challenging times and enabled the Company to retire less attractive debt. In addition, the transaction brought in new investors with accomplished expert board members, and additional executive experience. The financial flexibility afforded by the transaction positioned the Company to continue clinical trials, positioning us for future growth. |
| Commitment to ESG | Improved Position | Developing Talent |
| We supported our employees during the pandemic, and our CEO established and conducted town halls to establish touch points and recognize diversity within our work force during challenging times. In 2020, we established a diversity and inclusion council to further our efforts prospectively. | We settled shareholder litigation and effected a transformative transaction, providing financial flexibility and positioning the Company for future growth and adding expertise to our Board. We maintained our core business during the pandemic, expanded our donor network and invested in clinical trials for Plantar Fasciitis and Knee OA. Our TSR over a one-year period ending February 15, 2021 of 40% was strong, but tempered in relation to our peer group. Since the appointment of our Chief Executive Officer, our TSR for that period (May 8, 2019 – February 15, 2021) was 249%. Our three year TSR was also strong. | We continued to recruit and develop strong leadership across the organization. We attracted two senior leaders with extensive industry experience to head key value drivers of Commercial and Research & Development, as well as a new National Sales leader, and a Chief Accounting Officer. We also elevated strong performers within the Company. |
This Compensation Discussion and Analysis (“CD&A”) pertains to 2020 compensation, explains our executive compensation philosophy, describes our compensation programs and reviews our compensation decisions for the following named executive officers (“NEOs”):
•Timothy R. Wright. Mr. Wright joined MiMedx as Chief Executive Officer on May 13, 2019.
•Peter M. Carlson. Mr. Carlson joined the Company as Executive Vice President - Finance in December 2019. He became Chief Financial Officer in March 2020.
•Rohit Kashyap, Ph.D. has served as Executive Vice President and Chief Commercial Officer since August 2020.
•William F. “Butch” Hulse IV has served as General Counsel and Secretary of Matria Healthcare, Inc., a publicly traded healthcare and medical device company. She previouslysince December 2019.
•Robert B. Stein has served as Executive Vice President — Legal, General Counsel- Research and Secretary of MatriaDevelopment, since August, 2020.
•Edward Borkowski. Mr. Borkowski served as Executive Vice President and Interim Chief Financial Officer from April 1998June 6, 2018 until his resignation on November 15, 2019. He continued to February 2006. She was Assistant General Counsel and Assistant Secretary of Matria from December 1997 to April 1998, and Assistant General Counsel of Matria from July 1996 to December 1997. Prior to joining Matria, Ms. McCaw was a partner in a Connecticut-based law firm. She is a graduate of the University of Connecticut School of Law. Prior to law school, Ms. McCaw studied accounting at Miami University and Cleveland State University, and workedserve as a Certified Public Accountant.non-employee, acting Chief Financial Officer, through March 17, 2020, pursuant to a Separation and Transition Services Agreement, as described below under “Agreements with Our Executive Officers - Agreement with Mr. Borkowski.”
We establishedThese NEOs reflect our efforts to recruit and retain strong leadership across the organization. The Compensation Committee in April 2008. Its membership currently consists of Joseph G. Bleser, Larry W. Papasan(the “Committee”) is responsible for evaluating and Neil S. Yeston. The Board of Directors has determined that each of the members and former member is “independent,” as described above. The charter for the Compensation Committee is posted on our website at http://www.mimedx.com/investors/corporate-governance/.
The following table summarizesdetermining the compensation paid by the Company for services in all capacities rendered to the Company duringNEOs. All components of compensation for the years ended December 31, 2012 and 2011, by the individual who served as our principal executive officer during the 12 months ended December 31, 2012, and by each of the two other most highly compensated executive officers serving as executive officers at the end of 2012. These individualsNEOs are referred to collectively as our Named Executive Officers.
Summary Compensation Table
Name and Principal Position | | Reporting Period | | Salary $ | | | Bonus $ | | | Stock Awards $ | | | Option Awards $ (2) | | | All Other Compensation | | | Total $ | |
| Parker H. “Pete” Petit, | | | | | | | | | | | | | | | | | | | | |
| Chairman of Board of | | YE 12/31/2012 | | | 354,327 | | | | — | | | | — | | | | 706,713 | | | | | | | 1,061,040 | |
| Directors and CEO | | YE 12/31/2011 | | | 325,000 | | | | | | | | — | | | | 696,500 | | | | | | | 1,021,500 | |
| William C. Taylor, | | | | | | | | | | | | | | | | | | | | | | | | | |
| President and Chief | | YE 12/31/2012 | | | 343,846 | | | | — | | | | — | | | | 530,035 | | | | | | | 873,881 | |
| Operating Officer | | YE 12/31/2011 | | | 300,000 | | | | | | | | — | | | | 352,850 | | | | | | | 652,850 | |
| Michael J. Senken, | | | | | | | | | | | | | | | | | | | | | | | | | |
| VP and Chief | | YE 12/31/2012 | | | 236,538 | | | | — | | | | — | | | | 160,250 | | | | — | | | | 396,788 | |
| Financial Officer | | YE 12/31/2011 | | | 198,269 | | | | — | | | | — | | | | 213,950 | | | | — | | | | 412,219 | |
(1) | The Company follows the provisions of ASC topic 718 “Compensation – Stock compensation,” which requires the use of the fair-value based method to determine compensation for all arrangements under which employees and others receive shares of stock or equity instruments. The assumptions made in the valuation of our option awards is disclosed in Note 11 to our consolidated financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2012. |
(2) | The option awards vest ratably over (3) three years from the anniversary date of the grant. |
Narrative to Summary Compensation Table
We have no employment agreements with any of our Named Executive Officers. In addition to receiving a base salary as establishedthen recommended by the Compensation Committee for approval by the Board.
Compensation Philosophy
In this section, we discuss how we view executive compensation and why we make the decisions that we do. The Committee relies on defined principles to help guide its executive compensation decisions.
MiMedx’s executive compensation philosophy is based on the belief that competitive compensation is essential to attract and retain highly-qualified executives and incentivize them to achieve the Company’s operational and financial goals. In line with this philosophy, the Company’s practice is to provide total compensation that is competitive with comparable positions at peer organizations. The compensation program is based on individual and organizational performance and includes components that reinforce the Company’s incentive and retention-related compensation objectives. The Committee believes that discretion, flexibility and judgment are critical to its ability to award incentive compensation that reflects near-term performance results and progress toward longer-term strategic priorities that allow MiMedx to create value for our shareholders.
The principal components of compensation for MiMedx’s NEOs are base salary, annual cash incentives and long-term equity incentives. Cash incentives are included to encourage and reward effective performance relative to the Company’s near-term plans and objectives. Equity incentives are included to promote longer-term focus, to help retain key contributors and to align the interests of the Company’s executives and shareholders.
Prior Say-on-Pay Proposal and Shareholder Support
The Company conducted an advisory say-on-pay advisory vote at the 2019 annual meeting of shareholders on August 31, 2020, where more than 91% of the votes cast were in favor of the proposal. The Board and the Compensation Committee has considered this advisory vote result, together with the other factors and data discussed in this Compensation Discussion and Analysis, considered whether changes to the Company’s executive compensation policies and related decisions were necessary or desirable, and has concluded that the Company will maintain its existing compensation philosophy for 2021.
The Company also conducted a say-on-frequency advisory vote at the 2019 annual meeting of shareholders on August 31, 2020, where more than 97% of the votes cast were in favor of an annual advisory vote rather than the triennial vote last recommended by shareholders. The Board has determined that the Company will hold an annual say-on-pay advisory vote beginning with this, the 2021, annual meeting of shareholders.
Pay Setting Process
Compensation Consultant
The Compensation Committee engaged an independent executive compensation consulting firm, Aon Consulting, Inc. through its Radford subdivision (“Radford”), to provide compensation consulting services relating to (1) NEO compensation, (2) peer group composition and practices, (3) incentives design, (4) compensation governance, (5) amount and form of director compensation and (6) alternatives to equity compensation. Radford’s services were provided only to the Compensation Committee, and the Compensation Committee determined that Radford’s work did not raise any conflict of interest.
Use of a Peer Group
In making compensation decisions, the Compensation Committee has considered the recommendations of the CEO and of a senior HR executive, which, in calendarturn, have been informed by a compensation analysis of the practices of peer group companies, which are publicly-traded companies in the medical device, pharmaceuticals, biotechnology and life sciences sectors of the healthcare industry. The peer group was determined primarily using organizational criteria, revenue, market capitalization, and industry sector. Organizational criteria include number of employees as well as qualitative factors such as industry, markets, and development stage. The data from the peer group companies for the NEOs provides the Compensation Committee with a benchmark that it views as a point of reference, but not as a determining factor, for the compensation of the NEOs. In 2020, the Company’s peer group consisted of the following companies:
| | | | | | | | | | | | | | |
| Akebia Therapeutics | | Luminex | | Orthofix Medical |
| AMAG Pharmaceuticals, Inc. | | Meridian Bioscience | | Precigen |
| Collegium Pharmaceutical | | Momenta Pharmaceuticals; | | Retrophin |
| CryoLife, Inc. | | NanoString Technologies | | Spectrum Pharmaceuticals, Inc. |
| Fluidigm | | Omeros | | Vanda Pharmaceuticals, Inc. |
| Halozyme Therapeutics, Inc. | | OraSure Technologies | | Vericel |
| Ironwood Pharmaceuticals, Inc. | | Organogenesis | | |
The peer group adopted in 2020 reflects (i) the addition of Akebia Therapeutics; Collegium Pharmaceutical; Fluidigml Luminex; Meridian Bioscience; NanoString Technologies; Omeros; OraSure Technologies; Organogenesis; Orthofix Medical, Precigen; Retrophin; and Vericel; and (ii) the removal of Abiomed, Inc.; Acorda Therapeutics; Array BioPharma, Inc.; DexCom, Inc.; Exelixis, Inc.; Genomic Health, Inc.; Geron Corporation; ImmunoGen, Inc.; Infinity Pharmaceuticals, Inc.; Insulet Corporation; Insys Therapeutics, Inc.; Ionis Pharmaceuticals, Inc.; LivaNova PLC; Newlink Genetics Corp.; OPKO Health, Inc.; Osiris Therapeutics, Inc.; Seattle Genetics, Inc.; and Wright Medical Group. The Committee made these changes to the peer group to better balance the group relative to market capitalization, number of employees, revenues, industry, and the availability of data. As reconstituted, MiMedx ranked the 78th, 75th, and 56th percentiles among the peer for number of employees, revenues, market capitalization (as of March 6, 2020). Our TSR over a one year 2012, eachperiod ending February 15, 2021 was 40%. Our TSR since the appointment of our Chief Executive Officer (May 8, 2019 – February 15, 2021) was 249%.
The Committee uses competitive compensation data from the annual total compensation study of peer companies to inform its decisions about overall compensation opportunities and specific compensation elements. Additionally, the Committee uses multiple reference points when establishing targeted compensation levels. The Committee does not benchmark specific compensation elements or total compensation to any specific percentile relative to the peer companies or the broader United States market. Instead, the Committee applies judgment and discretion in establishing targeted pay levels, taking into account not only competitive market data, but also factors such as Company, business and individual performance, scope of responsibility, critical needs and skill sets, leadership potential and succession planning, as well as the realities of attracting and retaining key employees.
2020 Compensation Components
Base Salaries
MiMedx employees, including its NEOs, are paid a base salary commensurate with the responsibilities of their positions, the skills and experience required for the position, their individual performance, business performance, the results of arms’-length negotiations and labor market conditions, and with reference to peer company salary levels. Base salaries may be increased depending on the compensation of comparable positions within the peer group companies and published compensation surveys, the executive’s responsibilities, skills, expertise, experience and performance, the executive’s contributions to the Company’s results, and the overall performance of the Company compared to its peer group and other participants within the industry. In determining the increases, the Compensation Committee relies on this information, but also exercises its judgment about each individual, and relies on recommendations from its compensation consultant and senior management, and takes into account special circumstances. Base salaries to the NEOs in 2020 were as follows:
| | | | | | | | |
| NEO | 2020
Base Salary | 2019
Base Salary |
| Mr. Wright | $750,000 | $750,000 |
| Mr. Carlson | $525,000 | $525,000 |
| Dr. Kashyap | $500,000 | n/a |
| Mr. Hulse | $475,000 | $475,000 |
| Dr. Stein | $500,000 | n/a |
Mr. Borkowski(1) | n/a | n/a |
(1) Mr. Borkowski served as Acting Chief Financial Officer and as a non-employee through March 17, 2020 pursuant to a Separation and Transition Services Agreement.
Annual Non-Equity Incentive Awards
Annual cash bonuses for the Named Executive Officers is entitled to participate inand other executives are determined under the Company’s Management Incentive Plan (“MIP”(the “MIP”), which is an annual cash incentive plan that is designed to incentivize and reward performance achievement for the completed fiscal year.
Each of the Named Executive Officers is eligible to participate in the MIP, with a targeted base bonus equal to a specified percentage of his or her base salary. Payment of bonusesBonuses under the MIP isare contingent on certainthe achievement of annual financial performance measures and individual performance objectives specific to each fiscal year.
MIP for 2020
On February 18, 2020, the Board, upon approval and recommendation of the Compensation Committee, approved the terms for the MIP which provided for payment of cash bonuses to management personnel who meet the eligibility criteria, including all of the Named Executive Officers. At that time, the Compensation Committee recommended and the Board approved target bonus amounts, expressed as a percentage of base salary measured at the end of the program year.
Bonuses could be earned under the MIP based on (i) the Company’s 2020 revenue performance, (ii) the Company’s Adjusted EBITDA performance and/or (iii) attainment of individual performance objectives. Bonus opportunities were allocated equally among the independent performance metrics, and the revenue and EBITDA performance metrics were limited to 150% of target amounts. The maximum potential amount to be earned by a participant under the MIP was two times the participant’s target annual incentive, and the maximum earned payout for any one individual could not exceed $1,100,000.
The threshold amount established for the revenue performance metric for 2020 was $261 million and the threshold established for the EBITDA performance metric for 2020 was $33.9 million. While the Committee did not make a formal determination of performance, for 2020 the Company reported Adjusted Net Sales of $240.5 million and Adjusted EBITDA of $30.6 million. As neither threshold was met, no bonus was paid with respect to these Company financial performance metrics.
The Committee also considered the achievement of the individual performance objectives despite the disruptions caused by the COVID-19 pandemic and the NEOs’ exemplary leadership during the pandemic, demonstrated by an immediate focus on employee safety and engagement, command center management with continual touch-points throughout the business to gauge areas for additional attention, communication and employee effectiveness. In addition, managements’ focus on liquidity and disciplined cost containment actions, including company-wide salary reductions (which included the NEOs) and employee retention by employing salary reductions rather than furloughs or a reduction in force enabled the Company to maintain its teams, including our sales force, during the pandemic. The establishment of a diversity and inclusion council was an important aspect of our team approach. Additionally, our management was customer-focused by maintaining and expanding our donor supply network, ensuring our products were delivered to patients. The Committee further recognized the achievement of additional strategic objectives, including the completion of remediation of FDA Inspection Findings, thereby bringing our manufacturing facilities into compliance with good manufacturing processes, completing a refinance of existing debt that increased balance sheet cash, and the successful recapitalization with high quality, respected investors, which brought additional expertise to our Board and positioned us to continue important clinical trials to facilitate future growth. Moreover, the Committee considered the resolution of shareholder derivative litigation, the relisting the Company’s common stock on Nasdaq, and completion of the restatement of the Company’s financial statements despite the challenges caused by the COVID-19 pandemic. None of the individual strategic and leadership objectives had any specific weighting; the objectives were considered, together with other information the Committee determined relevant, to develop a holistic evaluation of and reward for individual performance. Based upon its evaluation of the strategic and leadership objectives and accomplishments of the NEOs, the Committee determined annual bonuses as described below, in comparison to target amounts, expressed as both a percentage of base salary and as a dollar amount. The amount of the approved bonus for each NEO was below the approved target and within the limitations of the MIP.
| | | | | | | | | | | | | | | | | |
| NEO | Base Salary | Target Annual Incentive as a Percent of Base Salary | Target
Annual
Incentive | Amount
Paid
for 2020 | Percent of Target |
| Mr. Wright | $750,000 | 100% | $750,000 | $562,500 | 75% |
| Mr. Carlson | $525,000 | 55% | $288,750 | $216,562 | 75% |
Dr. Kashyap(1) | $500,000 | 52.5% | $109,375 | $87,500 | 80% |
| Mr. Hulse | $475,000 | 50% | $237,500 | $178,125 | 75% |
Dr. Stein(1) | $500,000 | 50% | $166,667 | $83,334 | 80% |
Mr. Borkowski(2) | n/a | n/a | n/a | n/a | n/a |
(1) Dr. Kashyap and Dr. Stein joined the Company in August 2020 and, therefore, were eligible for only a pro-rated portion of the annual incentive this year. Pursuant to his offer letter, Dr. Kashyap was guaranteed a minimum payout of at least 80% of his prorated, target bonus.
(2) Mr. Borkowski did not participate in the MIP. The Company compensated him pursuant to his Separation and Transition Services Agreement.
Long-Term Equity Incentives
All equity incentive awards are granted under the Company’s 2016 Equity and Cash Incentive Plan (as amended, the “2016 Plan”), which was originally approved by shareholders in 2016 and most recently approved by shareholders in 2020. The 2016 Plan is designed to align the interests of the Company’s Named Executive Officers and other MiMedx officers, members of management and key employees with the interests of the Company’s shareholders, and serve as a key retention tool. Restricted stock vests over a period of time, generally pro rata annually over three years. The Company generally makes its annual equity grant to a broad group of its management employees, including the NEOs in February or March of each year. The Company also typically grants restricted stock to certain newly-hired executive officers in connection with the commencement of their employment by the Company.
The Committee believes that equity grants are a positive motivator for the Company’s officers, management and key employees to focus their strategy and efforts on the Company’s long-term goals. Working toward the long-term growth of the price of the Company’s stock produces a financial gain for the executives’ equity awards, aligned with an increase in value for the Company’s shareholders.
In recent years, the Compensation Committee has granted only restricted stock awards, rather than a mix of stock and stock options. The Compensation Committee believes that restricted stock awards are an effective form of equity compensation because the vesting period is a strong retention tool for NEOs and other key executives. Restricted stock awards increase in value as the Company’s stock price increases and continue to have value in the event of a stock price decline, unlike stock options which may lose retention value in the event of a decline in stock price.
All awards of restricted stock granted to Named Executive Officers in 2020 were approved by the Compensation Committee on anfor recommendation to the full Board for approval. All awards of restricted stock granted to all other eligible participants in the 2016 Plan were determined and approved by the Compensation Committee.
In determining the approved level of equity grants, the Compensation Committee considers the individual’s target annual basis. Eachlong-term incentive value, the Company’s overall option “overhang,” the employee’s level of responsibility and performance, prior equity awards, comparative compensation information, and the anticipated expense to the Company. For 2020, all awards of restricted stock were dated and priced as follows:
•All awards of restricted stock to current employees were granted and priced as of the Executive Officers also is eligibleclose of the business day on which the Board approved the grant, following recommendation by the Committee.
•All awards of restricted stock granted to newly-hired employees were granted and priced as of the later of the business day on which the Board approved such grants or the date of employment.
The Committee establishes vesting schedules for awards under the 2016 Plan at the time of the grant. To optimize the retention value of the awards, which is of significant importance for our efforts to cultivate and retain talent, and to orient recipients to the achievement of longer-term goals, objectives and success, awards typically vest in three equal installments on the first, second and third anniversaries of the Grant Date. The Company generally makes an annual equity grant to a broad group of its management employees, including the Named Executive Officers, in February or March of each year. In 2020, all equity-based awards were issued under plans previously approved by the Company’s 2006 Assumedshareholders.
2020 Restricted Stock IncentiveGrants to Named Executive Officers
In general, in determining the level of equity grants, the Committee uses competitive compensation data from the annual total compensation study of peer companies to inform its decisions about long-term incentives, the Committee does not benchmark long-term incentives to any specific percentile relative to the peer companies or the broader United States market. Instead, the Committee applies judgment and discretion, taking into account not only competitive market data, but also factors such as Company, business and individual performance, scope of responsibility, critical needs and skill sets, leadership potential and succession planning. The Committee also considers the individual’s target annual long-term incentive value, the NEO’s prior equity awards, the anticipated expense to the Company, as well the amount of shares that remain available under the Plan to be granted. Consistent with the foregoing, the Committee made the
following grants to the NEOs: Mr. Wright - 572,033 shares; Mr. Carlson - 177,966 shares; and Mr. Hulse 120,762 shares. Grants vest pro rata annually over three years.
Grants to Newly-Hired Officers
In addition to the annual grants described above, the Company made certain grants of restricted stock to newly-hired employees during 2020. On August 3, 2020, the Company granted 173,310 shares to Dr. Kashyap in connection with his initial employment with the Company. On August 10, 2020, the Company granted 81,833 shares to Dr. Stein in connection with his initial employment with the Company.Grants vest pro rata annually over three years.
Agreements with our Executive Officers
Agreement with Mr. Borkowski
The Board appointed Mr. Borkowski, an Executive Vice President of the Company, as interim Chief Financial Officer effective June 6, 2018. On November 18, 2019, the Company entered into a Separation and Transition Services Agreement (the “Transition Agreement”) with Mr. Borkowski pursuant to which (i) he resigned as Executive Vice President and Interim Chief Financial Officer of the Company, as well as from any and all officer, director or other positions that he held with the Company and its affiliates, effective November 15, 2019, (ii) he agreed to perform the duties of the Acting Chief Financial Officer with respect to filing the 2018 Form 10-K and assist with the transition of his duties, and (iii) until March 31, 2020, he agreed to provide services as may be requested by the Company with respect to matters related to the Company’s Annual Report on Form 10-K (the “2018 Form 10-K”) and the Company’s Annual Report on Form 10-K for the fiscal year ending December 31, 2019. The Company filed its 2018 10-K on March 17, 2020. The Agreement provided for the Company to make special payments to Mr. Borkowski in installments as follows: (i) $1,700,000, which was paid in 2019, (ii) $1,750,000 which was paid following the filing of the 2018 Form 10-K with the SEC; and (iii) after March 31, 2020, $500,000 which was paid following the execution and delivery of a supplemental release by Mr. Borkowski. Mr. Borkowski did not receive an equity grant or annual incentive for 2019 or 2020, and he forfeited all restricted stock owned by him which had not already vested, and all other claims to stock and other benefits. The Agreement also included terms and conditions governing the Company’s and Mr. Borkowski’s general release of claims and other customary provisions.
Agreement with Mr. Carlson
The Company entered into an agreement with Mr. Carlson effective December 16, 2019 to employ him as Executive Vice President - Finance. The Company later named Mr. Carlson Chief Financial Officer effective March 18, 2020. Pursuant to the Company’s agreement with Mr. Carlson, he receives an annual base salary of $525,000 and will be eligible for a target annual incentive of fifty-five percent (55%) of his base salary and a target long-term incentive equal to two hundred percent (200%) of his base salary. In addition, he received (i) a special one-time signing bonus of $50,000 (which is subject to repayment in full in the event that he resigns or has his employment terminated by the Company for specified reasons within 12 months following the commencement of his employment with the Company), (ii) 49,295 shares of restricted stock (with an approximate value of $350,000) that vest pro rata annually over three years, and (iii) 140,845 shares of restricted stock (with an approximate value of $1,000,000) that vest upon the achievement of each of four discrete performance goals.
Additional Compensation Practices and Policies
Perquisites
The Company generally does not provide executive officers with perquisites and other personal benefits beyond the Company benefits offered to similarly situated employees, with the following exception: During the Company’s transition, when its ability to attract and retain executives was reduced, the Company agreed to reimburse certain executives (Mr. Wright) for commuting and transportation expenses between their respective homes and our corporate headquarters, temporary lodging, relocation and rental car expenses, and paid a tax-gross up on these amounts. The Company also paid temporary lodging expenses and moving expenses for Dr. Stein, home finding expenses for Mr. Carlson and Dr. Stein, and a tax gross-up on such amounts. Also, following the COVID-19 pandemic, the Company also
paid certain commuting expenses for Mr. Carlson and Dr. Stein to travel between their homes and business meetings the Company required them to attend.
Stock Ownership Guidelines
The Board has adopted stock ownership guidelines that apply to the NEOs. Under the guidelines, covered persons are required to own stock, including unvested time-based restricted stock, equal to certain multiples of their annual cash compensation. On October 2, 2020, the Board increased the ownership requirements under guidelines (i) for the CEO from 3 times to 6 times, (ii) for the CFO from 2.0 times to 2.5 times, (iii) for the General Counsel from 1.5 times to 2.5 times, and (iv) by extending the guidelines to all other named executive officers at 2.5 times:
| | | | | | | | | | | | | | | | | |
| Person Subject to Policy | | Requirement |
| CEO | | | | 6.0X | |
| Other NEOs | | | | 2.5X | |
Until such time as the executive officer reaches his or her applicable threshold and subject to certain exceptions, the executive officer is required to hold 100% of the shares of Company common stock awarded to him/her from the Company or received upon vesting of restricted stock and upon exercise of stock options (net of any shares utilized to pay for tax withholding and any exercise price).
Recoupment of Compensation
The Board adopted a recoupment (clawback) policy, effective April 1, 2016, covering executive officers of the Company. The policy provides that if the Company is required to restate its financial results due to material noncompliance with financial reporting requirements under the securities laws, the Compensation Committee may seek reimbursement of any cash or equity-based bonus or other incentive compensation paid or awarded to the officer or effect cancellation of previously granted equity awards to the extent the bonus or incentive compensation was based on erroneous financial data and was in excess of what would have been paid to the officer under the restatement.
In April 2021, the Compensation Committee amended the Recoupment Policy to:
•allow for recoupment of payouts under MiMedx’s incentive compensation programs (including, but not limited to, any of the Management Incentive Plans from 2016 to present) when an executive officer has engaged in misconduct as predefined by the Compensation Committee including but not be limited to, any material violation of a Company policy that causes significant harm to the Company.
•expand the scope of persons covered to include not only the Company’s CEO, CFO, and other executive officers, but also other senior management level and higher-ranking executive officers (“Senior Officers”) on the basis of having met or exceeded performance targets during the period covered by the restated financial statement(s), regardless of whether any executives are found personally responsible for the misstatement(s). Specifically, the Board may take the steps necessary to secure reimbursement from Senior Officer(s) of any bonus or other incentive-based or equity-based (to the extent tied to financial metrics) compensation paid to any Senior Officers during the twelve-month period following the first public issuance or filing with the SEC (whichever first occurs) of the financial document embodying such error to the extent that compensation was based on the misstated financial result.
•require the Board to take steps to recoup when any restatement was the result of violation(s) of federal securities laws in theirwhich scienter is a necessary element by the CEO, CFO, or any other senior officer. The Board must take the steps necessary to recoup from any Senior Officer whose scienter led to the restatement all incentive compensation awarded to such officer for performance during the periods affected by the restatement; provided, however, this recoupment obligation is subject to MiMedx’s consideration regarding (1) a cost/benefit analysis with respect to pursuing recovery of such incentive compensation, and (2) an analysis of the potential impact of the individual’s indemnification agreement on such pursuit.
•direct that any actions taken pursuant to the Recoupment Policy be disclosed on the next proxy statement filed with the SEC or on a Form 8-K; and
•direct that all employment agreements with Senior Officers be amended as necessary to be consistent with the Recoupment Policy, as revised.
With the completion of the restatement of Company’s previously issued consolidated financial statements and financial information, the Compensation Committee has reviewed the annual non-equity incentive awards paid to executive officers based on financial performance for the years 2015 and 2016, and the amounts that would have been paid to such officers under the restated financial statements. In addition, the Compensation Committee has reviewed the annual non-equity incentive awards paid to executive officers for 2017 and 2018 (which had never been published and therefore technically not restated), and the amounts that would have been paid to such officers under the corrected financial statements. This review determined that the Company paid annual non-equity incentive awards between 2015 and 2018 to the following persons in excess of what would have been paid to such executive officers under the restated or revised financial metrics, by the following, aggregate amounts: our former Chief Executive Officer, Mr. Petit - $468,504; our former Chief Financial Officer, Mr. Senken - $215,550; our former President, Mr. Taylor - $356,555; our former General Counsel, Ms. Haden - $183,725; our former Interim Chief Financial Officer, Mr. Borkowski - $88,000; our former Chief Strategy Officer, Mr. Landy - $31,267; and Mr. Turner - $28,933.(The Company did not grant any equity awards based on incorrect financial metrics.)
The Compensation Committee notes that the Company effectively recovered $26.3 million of vested, unexercised options and unvested restricted stock as a result of the Board’s determination in September 2018 that the terminations of employment of Messrs. Petit, Senken and Taylor were “for cause,” which resulted in the forfeiture of those awards. Under the Plans, all unvested restricted stock awards and vested and unvested stock option awards were forfeited, as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Former
NEO | | Options
Forfeited | | Value on 9/20/2018
at $6.20 per share | | Unvested Restricted
Stock Forfeited | | Value on 9/20/2018
at $6.20 per share | | Total Value
of Equity
Forfeited |
| Petit | | 2,867,820 | | | $12.1 million | | 361,667 | | | $2.2 million | | $14.3 million |
| Senken | | 887,107 | | | $3.7 million | | 120,368 | | | $0.7 million | | $4.4 million |
| Taylor | | 1,558,221 | | | $6.2 million | | 229,234 | | | $1.4 million | | $7.6 million |
| TOTAL | | 5,313,148 | | | $22.0 million | | 711,269 | | | $4.3 million | | $26.3 million |
(The value of forfeited options is based on the closing price of Company common stock on the date of forfeiture, which was $6.20 per share on September 20, 2018, less the exercise price. The value of forfeited restricted stock is based on the closing price of Company common stock on the date of forfeiture.)
The Compensation Committee also notes that on November 26, 2019, the United States Attorney’s Office for the Southern District of New York (“USAO-SDNY”) filed suit against Messrs. Petit, Taylor, and Senken, the Company’s former Chief Executive Officer, President, and Chief Financial Officer, respectively, in the U.S. District Court for the Southern District of New York, including claims for relief as to Messrs. Petit and Senken for the disgorgement of all bonuses and all incentive-based and equity-based compensation pursuant to Section 304 of the Sarbanes-Oxley Act of 2002, among other claims for relief. In November 2019, Mr. Petit was convicted of securities fraud and Mr. Taylor convicted of conspiracy to commit securities fraud, which Messrs. Petit and Taylor are appealing. In view of Messrs. Petit and Taylor’s pending appeals, disputes over the proper interpretation of the Company’s indemnification agreements with them, and the SEC’s civil claims against Messrs. Petit, Taylor, and Senken, the Compensation Committee has not yet reached a final determination as to whether or how to recoup the amounts previously paid to these and other executives.
Anti-Hedging and Anti-Pledging Policies
Hedging transactions may permit the ownership of Company securities without the full risks and rewards of ownership. If a director, officer or employee engages in hedging transactions with respect to Company securities, he or she may no longer have the same objectives as the Company’s other shareholders. For this reason, the Company prohibits directors, officers and employees from engaging in hedging transactions in Company securities, subject to exceptions that may be granted in the sole discretion.discretion of the Company’s General Counsel in limited circumstances.
Securities held in a margin account as collateral for a margin loan may be sold by the broker without the customer’s consent if the customer fails to meet a margin call. Similarly, securities pledged as collateral for a loan may be sold if the borrower defaults on the loan, including at a time when the pledgor is aware of material nonpublic information or otherwise is not permitted to trade in Company securities. For additional information regardingthese reasons, the plan, see “ApprovalCompany prohibits directors, officers and other employees from holding Company securities in a margin account or otherwise pledging Company securities as collateral for a loan.
Compensation Risk Assessment
On an ongoing basis, the Compensation Committee considers the risks inherent in the Company’s compensation programs. The Compensation Committee believes that our compensation policies and practices do not encourage excessive and unnecessary risk-taking, and that the level of Amendment of Assumed 2006 Stock Incentive Plan (Proposal 2).”risk that they do encourage is not reasonably likely to have a material adverse effect on the Company. The material termsCompensation Committee believes that the design of our compensation arrangementspolicies and practices encourages our employees to remain focused on both our short- and long-term goals.
COMPENSATION COMMITTEE REPORT
The Compensation Committee has reviewed the Compensation Discussion and Analysis in this Proxy Statement and discussed it with eachmanagement. Based on its review and discussions with management, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement for the Company’s 2021 annual meeting of shareholders. This report is provided by the following independent directors, who comprise the Compensation Committee:
James L. Bierman, Chair (member of the Committee since June, 2019)
Michael Giuliani, M.D. (member of the Committee since November, 2020)
Martin P. Sutter (member of the Committee since July, 2020)
April [30], 2021
2020 SUMMARY COMPENSATION TABLE
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Name and
Principal Position | | Period | | Salary | | Bonus(7) | | Stock(8) Awards | | Non-Equity
Incentive Plan
Compensation
Awards | | All Other(9) Compensation | | Total |
Timothy R. Wright,(1) Chief Executive Officer
| | 2020 | | $735,577 | | $0 | | $3,374,995 | | $562,500 | | $56,831 | | $4,729,863 |
| 2019 | | $447,115 | | $1,220,000 | | $3,375,000 | | $0 | | $27,239 | | $5,069,354 |
Peter M. Carlson,(2) EVP - Finance and Chief Financial Officer | | 2020 | | $514,904 | | $50,000 | (7) | $1,049,999 | | $216,562 | | $8,276 | | $1,839,741 |
| 2019 | | $24,231 | | $0 | | $1,349,994 | | $0 | | $0 | | $1,374,225 |
Rohit Kashyap,(3) EVP and Chief Commercial Officer | | 2020 | | $201,923 | | $200,000 | (7) | $999,999 | | $87,500 | | $3,269 | | $1,492,691 |
|
William F. Hulse,(4) General Counsel and Secretary | | 2020 | | $465,865 | | $125,000 | (7) | $712,496 | | $178,125 | | $6,714 | | $1,488,200 |
|
Robert B. Stein,(5) EVP - Research and Development | | 2020 | | $192,308 | | $250,000 | (7) | $500,000 | | $83,334 | | $316,741 | | $1,342,383 |
|
Edward Borkowski,(6) Acting Chief Financial Officer | | 2020 | | $0 | | $0 | | $0 | | $0 | | $0 | | $0 |
| 2019 | | $597,885 | | $0 | | $610,014 | | $0 | | $4,095,931 | | $5,303,830 |
| 2018 | | $363,846 | | $150,000 | | $0 | | $330,000 | | $47,294 | | $891,140 |
(1)The Board appointed Mr. Wright as Chief Executive Officer effective May 13, 2019.
(2)The Board appointed Mr. Carlson Executive Vice President - Finance effective December 16, 2019. The Company later named Mr. Carlson Chief Financial Officer effective March 18, 2020.
(3)Rohit Kashyap, Ph.D. has served as Executive Vice President and Chief Commercial Officer since August 2020.
(4)William F. “Butch” Hulse IV has served as General Counsel and Secretary since December 2019.
(5)Robert B. Stein has served as Executive Vice President - Research and Development, since August, 2020. The "All Other Compensation” column includes $247,500 of consulting fees paid to Dr. Stein’s consulting company for services rendered before his employment commenced.
(6)Mr. Borkowski served as Interim Chief Financial Officer from June 6, 2018 until his resignation effective November 15, 2019. Subsequently, he served as Acting Chief Financial Officer until March 17, 2020. Amounts paid to Mr. Borkowski in 2020 pursuant to the Separation and Transition Services Agreement were reported in 2019; see “Compensation, Discussion & Analysis - Agreements with our Named Executive Officers is described below:- Agreement Mr. Borkowski, above.”).
(7)Reflects a one-time cash signing bonus in the following amounts: Mr. Carlson - $50,000; Dr. Kashyap - $200,000; Mr. Hulse - $125,000; and Dr. Stein - $250,000.
(8)Represents the aggregate grant date fair value of awards of restricted stock made in accordance with FASB ASC Topic 718. The restricted stock awards vest pro rata annually over a three-year period.
(9)Represents the following amounts: (a) 401(k) match Mr. Wright - $3,606; Mr. Carlson - $6,562; Dr. Kashyap - $3,269; Mr. Hulse - $6,714; and Dr. Stein - $1,442; (b) commuting expenses - Mr. Wright - $8,001; Mr. Carlson $498; Dr. Stein - $4,892; (c) temporary lodging expenses - Mr. Wright $22,774; Dr. Stein - $16,790; (d) home finding expenses - Mr. Carlson - $899; Dr. Stein - $1,250; (e) moving expenses - Dr. Stein - $29,549; (f) tax gross-up - Mr. Wright - $22,450 (on temporary lodging expenses); Mr. Carlson - $317 (on home finding expenses); Dr. Stein - $15,318 (on temporary lodging, home finding, and moving expenses); and (g) consulting fees - Dr. Stein - $247,500.
| ●
| In February 2012, the Compensation Committee approved an increase in Mr. Petit’s annual base salary from $325,000 to $425,000 to be effective on April 1, 2012. However, Mr. Petit requested that his salary be held to the same salary as the President and Chief Operating Officer, therefore Mr. Petit’s salary was increased to $360,000 effective April 1, 2012. Effective October 1, 2012, Mr. Petit’s salary was increased to $425,000 in line with the Compensation Committee’s prior approval. In March 2013, the Board approved a further increase in Mr. Petit’s salary to $480,000, effective April 1, 2013. For 2012, Mr. Petit was an eligible participant in the 2012 MiMedx MIP with a targeted base bonus equal to 50% of Mr. Petit’s 2012 annual base salary to be earned based upon a combination of the Company’s consolidated 2013 MiMedx EBITDA (85% of Mr. Petit’s targeted base bonus was based upon 2012 MiMedx EBITDA) and Mr. Petit’s individual performance (15% of Mr. Petit’s targeted base bonus was based upon individual performance, provided a threshold level of 2013 MiMedx EBITDA was achieved). The 2012 MiMedx EBITDA threshold for the payment of bonuses under the 2012 MIP was not met because of the decision to invest in a new direct sales force for governmental accounts and associated infrastructure. But for these investments, the named executive officers who met their individual performance goals would have earned not only their full base bonus, but an excess bonus as well. Accordingly, the Board determined to grant discretionary bonuses to the named executive officers in the amount of the base bonus they would have earned under the 2012 MIP had the 2012 MiMedx EBITDA target been achieved. Mr. Petit was granted a discretionary bonus in the amount of $212,500, which was paid in April 2013. For 2013, Mr. Petit is an eligible participant in the 2013 MiMedx MIP with a targeted base bonus equal to 55% of Mr. Petit’s 2013 annual based salary. Bonuses are earned under the 2013 MiMedx MIP based on the Company’s 2013 revenue performance and the Company’s 2013 EBITDA. Eighty percent of the base bonus is based on the Company’s 2013 revenue, and 20% is based on 2013 MiMedx EBITDA. |
| ● | In February 2012, the Compensation Committee approved an increase in Mr. Taylor’s salary from $300,000 to $360,000, effective April 1, 2012. For 2013, the Board approved a further increase in Mr. Taylor’s salary to $395,000, effective April 1, 2013. For 2012, Mr. Taylor was an eligible participant in the 2012 MiMedx MIP with a targeted base bonus equal to 50% of Mr. Taylor’s 2012 annual base salary to be earned based upon a combination of the Company’s consolidated 2012 MiMedx EBITDA (85% of Mr. Taylor’s targeted base bonus was based upon 2012 MiMedx EBITDA) and Mr. Taylor’s individual performance (15% of Mr. Taylor’s targeted base bonus was based upon individual performance, provided a threshold level of 2012 MiMedx EBITDA is achieved). Although the 2012 MiMedx EBIDTA threshold for payment of bonuses under the 2012 MiMedx MIP was not met, for the reasons explained in the discussion of Mr. Petit’s compensation, Mr. Taylor was granted a discretionary bonus for 2012 in the amount of $180,000, which was paid in April 2013. For 2013, Mr. Taylor is also an eligible participant in the 2013 MiMedx MIP with a targeted base bonus equal to 55% of Mr. Taylor’s 2013 annual based salary. Bonuses are earned under the 2013 MiMedx MIP based on the Company’s 2013 revenue performance and the Company’s 2013 EBITDA. Eighty percent of the base bonus is based on the Company’s 2013 revenue, and 20% is based on 2013 MiMedx EBITDA. |
GRANTS OF PLAN-BASED AWARDS FOR 2020
| ● | In February 2012, the Compensation Committee approved an increase in Mr. Senken’s base salary from $200,000 to $250,000 effective April 1, 2012. In March 2013, the Board approved a further increase in Mr. Senken’s salary to $275,000, effective April 1, 2013. For 2012, Mr. Senken was an eligible participant in the 2012 MiMedx MIP with a targeted base bonus equal to 40% of Mr. Senken’s 2012 annual base salary to be earned based upon a combination of the Company’s consolidated 2012 MiMedx EBITDA (75% of Mr. Senken’s targeted base bonus was based upon 2012 MiMedx EBITDA) and Mr. Senken’s individual performance (25% of Mr. Senken’s targeted base bonus was based upon individual performance, provided a threshold level of 2012 MiMedx EBITDA is achieved). Although the 2012 MiMedx EBIDTA threshold for payment of bonuses under the 2012 MiMedx MIP was not met, for the reasons explained in the discussion of Mr. Petit’s compensation, Mr. Senken was granted a discretionary bonus for 2012 in the amount of $100,000, which was paid in April 2013. For 2013, Mr. Senken is also an eligible participant in the 2013 MiMedx MIP with a targeted base bonus equal to 40% of Mr. Senken’s 2013 annual based salary. Bonuses are earned under the 2013 MiMedx MIP based on the Company’s 2013 revenue performance and the Company’s 2013 EBITDA. Eighty percent of the base bonus is based on the Company’s 2013 revenue, and 20% is based on 2013 MiMedx EBITDA. |
The following table provides information regarding grants of plan-based awards to the Company’s NEOs during 2020. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1) | | All Other Stock Awards: Number of Shares of Stock or Units(2) | | All Other
Option
Awards:
Number of
Securities
Underlying
Options | | Exercise
or Base
Price of
Option
Awards | | Grant Date Fair Value of Stock and Option Awards(3) |
| Name | | Grant
Date | | Threshold | | Target | | Maximum | |
| Wright | | 2/18/2020 | | $375,000 | | $750,000 | | $1,500,000 | | 572,033 | | | 0 | | n/a | | $3,374,995 |
| Carlson | | 2/18/2020 | | $144,375 | | $288,750 | | $577,500 | | 177,966 | | | 0 | | n/a | | $1,049,999 |
Kashyap(4) | | 8/3/2020 | | $87,500 | | $109,375 | | $218,750 | | 173,310 | | | 0 | | n/a | | $999,999 |
| Hulse | | 2/18/2020 | | $118,750 | | $237,500 | | $475,000 | | 120,762 | | | 0 | | n/a | | $712,496 |
Stein(5) | | 8/10/2020 | | $83,333 | | $166,667 | | $333,334 | | 81,833 | | 0 | | n/a | | $500,000 |
Borkowski(6) | | n/a | | n/a | | n/a | | n/a | | — | | | 0 | | n/a | | $0 |
(1)Represents annual incentive opportunity under the Management Incentive Plan (MIP).
(2)Represents restricted stock awards granted under the 2016 Plan. The shares of restricted stock generally vest ratably over three years from the grant date.
(3)The amounts shown reflect the grant date fair market values of the awards computed in accordance with FASB ASC Topic 718—“Compensation-Stock compensation.”
(4)Dr. Kashyap became eligible to participate in the MIP effective July 27, 2020 and his 2020 annual incentive was prorated accordingly. By agreement in connection with his recruitment, he was entitled to receive a minimum of 80% of his prorated annual target incentive amount for calendar year 2020.
(5)Dr. Stein became eligible to participate in the MIP upon joining the Company in August 2020 and his 2020 annual incentive was prorated accordingly.
(6)As discussed under “Compensation Discussion and Analysis,” Mr. Borkowski forfeited all unvested restricted stock held by him upon the termination of his employment during 2019.
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
ON DECEMBER 31, 2020
The following table shows the number of shares covered by exercisable and unexercisablenon-exercisable options and unvested restricted stock awards held by our Named Executive Officersthe Company’s NEOs on December 31, 2012. We have not made any equity awards under incentive plans and no equity incentive plan awards were outstanding2020. As discussed in the CD&A, Mr. Borkowski forfeited all unvested restricted stock held by him upon the termination of his employment during 2019.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Option Awards | | Stock Awards |
| Name | | Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable | | Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable | | | | Number of
Securities
Unvested | | | | Market Value of Unvested Securities(1) |
| Wright | | — | | | — | | | | | 1,026,578 | | | (2) | | $ | 9,321,328 | |
| Carlson | | — | | | — | | | | | 246,042 | | | (3) | | $ | 2,234,061 | |
| Kashyap | | — | | | — | | | | | 173,310 | | | (4) | | $1,573,655 |
| Hulse | | — | | | — | | | | | 120,762 | | | (5) | | $1,096,519 |
| Stein | | — | | | — | | | | | 81,833 | | | (6) | | $743,044 |
| Borkowski | | — | | | — | | | | | — | | | | | $0 |
(1)Calculated based on a closing stock price of $9.08 per share on December 31, 2012,2020.
(2)A portion vested on June 7, 2020 and February 18, 2021; 227,272 shares will vest on June 7, 2021, and 227,273 shares will vest on June 7, 2022; and 190,678 will vest on February 18, 2022 and February 18, 2023.
(3)A portion vested on December 19,2020; 16,432 shares will vest on December 19, 2021, and 16,432 shares will vest on December 19, 2022; and (b) a performance-vested restricted stock unit grant for 35,212 shares which vests upon the achievement of each of a discrete performance goal, and a time-vested restricted stock unit award for 177,966 shares that vests pro rata annually over three years on February 18, 2021, 2022, and 2023.
(4)57,770 shares will vest on August 3, 2021, August 3, 2022, and August 3, 2023.
(5)40,254 shares vested on February 18, 2021, and 40,254 shares will vest on February 18, 2022, and February 18, 2023.
(6)27,278 shares will vest on August 10, 2021 and August 10, 2022, and 27,277 shares will vest on August 10, 2023.
EQUITY COMPENSATION PLAN INFORMATION
The following table provides information about the Company’s equity compensation plans as of December 31, 2020.
| | | | | | | | | | | | | | | | | | | | |
| Plan Category | | Number of securities
to be issued upon
exercise of
outstanding options,
warrants and rights | | Weighted average
exercise price of
outstanding options,
warrants and rights | | Number of securities
remaining available
for future issuance
under equity
compensation plans |
Equity compensation plans
approved by security holders | | 2,025,683 | | | $4.62 | | 12,323,627 | |
Equity compensation plans
not approved by security holders | | — | | | — | | | — | |
| Total | | 2,025,683 | | | $4.62 | | 12,323,627 | |
2020 OPTION EXERCISES AND STOCK VESTED TABLE
The following table provides information concerning each exercise of stock options and each vesting of restricted stock during 2020, on an aggregated basis with respect to our named executive officers.
| Name | | Number of Securities Underlying Unexercised Options (#) Exercisable | | | Number of Securities Underlying Unexercised Options (#) Unexercisable | | | Option Exercise Price ($) | | Option Expiration Date |
| Parker H. Petit | | | 725,000 | | | | — | | | $ | 0.73 | | 2/24/2019 |
| | | | 62,500 | | | | — | | | | 0.50 | | 7/31/2014 |
| | | | 150,000 | | | | 75,000 | (1) | | | 1.65 | | 2/23/2020 |
| | | | 66,666 | | | | 33,334 | (2) | | | 1.20 | | 5/11/2020 |
| | | | 41,666 | | | | 83,334 | (3) | | | 1.35 | | 1/5/2021 |
| | | | 100,000 | | | | 200,000 | (4) | | | 1.23 | | 3/18/2021 |
| | | | 166,667 | | | | 333,333 | (5) | | | 1.05 | | 6/29/2021 |
| | | | 66,666 | | | | 133,334 | (6) | | | 1.10 | | 12/14/2021 |
| | | | — | | | | 800,000 | (7) | | | 1.25 | | 2/23/2022 |
| | | | — | | | | 100,000 | (8) | | | 2.94 | | 10/31/2022 |
| | | | | | | | | | | | | | |
| William C. Taylor | | | 10,000 | | | | — | | | | 0.50 | | 7/31/2019 |
| | | | 650,000 | | | | — | | | | 0.70 | | 9/22/2019 |
| | | | 233,333 | | | | 116,667 | (1) | | | 1.65 | | 2/23/2020 |
| | | | 25,000 | | | | 50,000 | (3) | | | 1.35 | | 1/5/2021 |
| | | | 75,000 | | | | 150,000 | (4) | | | 1.23 | | 3/18/2021 |
| | | | 41,666 | | | | 83,334 | (9) | | | 1.18 | | 8/3/2021 |
| | | | 38,333 | | | | 76,667 | (6) | | | 1.10 | | 12/14/2021 |
| | | | | | | | 600,000 | (7) | | | 1.25 | | 2/23/2022 |
| | | | | | | | 75,000 | (8) | | | 2.94 | | 10/31/2022 |
| | | | | | | | | | | | | | |
| Michael J. Senken | | | 100,000 | | | | 50,000 | (10) | | | 0.87 | | 1/15/2020 |
| | | | 66,666 | | | | 33,334 | (1) | | | 1.65 | | 2/23/2020 |
| | | | 16,666 | | | | 8,334 | (2) | | | 1.20 | | 5/11/2020 |
| | | | 16,666 | | | | 33,334 | (3) | | | 1.35 | | 1/5/2021 |
| | | | 36,666 | | | | 73,334 | (4) | | | 1.23 | | 3/18/2021 |
| | | | 58,333 | | | | 116,667 | (6) | | | 1.10 | | 12/14/2021 |
| | | | — | | | | 150,000 | (7) | | | 1.25 | | 2/23/2022 |
| | | | — | | | | 35,000 | (8) | | | 2.94 | | 10/31/2022 |
| (1) | The unexercisable portion of this option vests and becomes exercisable on February 23, 2013 |
| (2) | The unexercisable portion of this option vests and becomes exercisable on May 11, 2013 |
| (3) | The unexercisable portion of this option vests and becomes exercisable in equal installments on each of January 5, 2013 and 2014 |
| (4) | The unexercisable portion of this option vests and becomes exercisable in equal installments on each of March 18, 2013 and 2014 |
| (5) | The unexercisable portion of this option vests and becomes exercisable in equal installments on each of June 29, 2013 and 2014 |
| (6) | The unexercisable portion of this option vests and becomes exercisable in equal installments on each of December 14, 2013 and 2014 |
| (7) | The unexercisable portion of this option vests and becomes exercisable in equal installments on each of February 23, 2013, 2014 and 2015 |
| (8) | The unexercisable portion of this option vests and becomes exercisable in equal installments on each of October 31, 2013, 2014 and 2015 |
| (9) | The unexercisable portion of this option vests and becomes exercisable in equal installments on each of August 3, 2013 and 2014 |
| (10) | The unexercisable portion of this option vests and becomes exercisable on January 15, 2013 |
During 2012, Mr. Taylor exercised 100,000 options at an exercise price of $0.70.
Below is a description of the Company’s equity-based incentive plans:NEOs.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | Option Awards | | Stock Awards |
| Name | | | Number of
Securities
Acquired on
Exercise | | Value
Realized
on Exercise | | Number of
Securities
Acquired on
Vesting | | Value Realized on Vesting(1) |
| Wright | | | — | | | $0 | | 227,273 | | | $795,455 |
| Carlson | | | — | | | $0 | | 86,853 | | | $549,778 |
| Kashyap | | | — | | | $0 | | — | | | $0 |
| Hulse | | | — | | | $0 | | — | | | $0 |
| Stein | | | — | | | $0 | | — | | | $0 |
| Borkowski | | | — | | | $0 | | — | | | $0 |
MiMedx Group, Inc. Assumed 2006 Stock Incentive Plan
MiMedx, Inc. adopted its 2006 Stock Incentive Plan effective November 27, 2006 (the “Plan”). The Plan was assumed by Alynx, Co. in a merger transaction (the “Merger”), and thereafter by MiMedx Group, Inc. In July 2008,(1)Represents the Plan was renamed the “MiMedx Group, Inc. Assumed 2006 Stock Incentive Plan.” The Plan is administerednumber of shares acquired on vesting multiplied by the Compensation Committee. See “Approvalclosing price of Amendment of Assumed 2006 Stock Incentive Plan (Proposal 3)” below for additional information regarding the Plan.
Assumption of the SpineMedica Corp. Stock Option Plans
Each stock option to purchase shares of SpineMedica Corp.’sCompany common stock (each a “SpineMedica Stock Option”)on the vesting date.
2020 POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
This section describes additional payments that was outstanding immediately priorthe Company would make to the acquisitionNEOs assuming a hypothetical termination of SpineMedica Corp., whether oremployment occurred on December 31, 2020 under various scenarios. We did not then vested or exercisable (each, an “Assumed Option”), as adjusted, was assumed by MiMedx, Inc. when it acquired SpineMedica Corp., by Alynx, Co. upon consummationinclude Mr. Borkowski in the table below because he voluntarily resigned his employment before December 31, 2020 and his compensation in relation to his separation is separately described above. See “Compensation Discussion and Analysis - Agreements with Our Executive Officers - Agreement with Mr. Borkowski” for a discussion of certain severance payments to and arrangements made with Mr. Borkowski.
No-Cause Termination. The Company entered into Executive Retention Agreements with each NEO that provides for compensation to the Merger, and thereafter by MiMedx Group, Inc.
MiMedx, Inc. 2005 Assumed Stock Plan (formerlyexecutive in the SpineMedica Corp. 2005 Employee, Director and Consultant Stock Plan)
MiMedx, Inc. assumedevent the SpineMedica Corp. 2005 Employee, Director, and Consultant Stock Plan (the “2005 Assumed Plan”) in connectionexecutive’s employment with its acquisition of SpineMedica Corp. in July 2007. Following MiMedx, Inc.’s acquisition of SpineMedica Corp., the Board of Directors of MiMedx, Inc. declared that no awardsCompany is terminated involuntarily without “Cause” (as defined in the 2005 Assumed Plan) would be issued underagreement), or if the 2005 Assumed Plan. The 2005 Assumed Plan was assumed by Alynx, Co. in the Merger and thereafter by MiMedx Group, Inc. The 2005 Assumed Plan is administered by the Compensation Committee. All share amounts in this section represent numbers of shares of MiMedx Group, Inc. common stock. As of December 31, 2011, options to acquire 365,000 shares are outstanding under the 2005 Assumed Plan.
MiMedx, Inc. Assumed 2007 Stock Plan (formerly the SpineMedica Corp. 2007 Stock Incentive Plan)
MiMedx, Inc. assumed the SpineMedica Corp. 2007 Stock Incentive Plan (the “2007 Assumed Plan”) in connection with its acquisition of SpineMedica Corp. in July 2007. Following MiMedx, Inc.’s acquisition of SpineMedica Corp., the Board of Directors of MiMedx, Inc. declared that no awardsexecutive voluntarily terminates employment for “Good Reason” (as defined in the 2007 Assumed Plan) shall be issuedagreement) prior to a “change-in-control.” The compensation payable under the 2007 Assumed Plan. The 2007 Assumed Plan was assumed by Alynx, Co.agreements is a lump sum severance payment equal to a multiple of the executive’s annual base salary and target base bonus: Mr. Wright, 2 times; Messrs. Carlson, Hulse, Kashyap, and Stein, 1.25 times. In addition, following termination of employment under such circumstances, each NEO is entitled to receive life, health insurance coverage (subject to a COBRA election, and a periodic cash payment for 18 months), and certain other fringe benefits equivalent to those in effect at the date of termination for a period of 24 months in the Merger and thereafter by MiMedx Group, Inc. The 2007 Assumed Plan is administered bycase of Mr. Wright, or 15 months in the Compensation Committee. All share amounts in this section represent numbers of shares of MiMedx Group, Inc. common stock. As of December 31, 2011, options to acquire 10,000 shares are outstanding under the 2007 Assumed Plan.
Potential Payments upon Termination or Change in Control
The Company has entered into change-in-control severance agreements with eachcase of the Namedother NEOs.
Change-in-Control. The Executive Officers. The agreementsRetention Agreements with the NEOs also provide for compensation to the executive in the event the executive’s employment with the Company is terminated upon or within one year following the consummation of a “change-in-control” for reasons other than the executive’s death, disability or for “Cause” (as defined in the respective agreements), or if the executive voluntarily terminates employment for “Good Reason” (as defined in the respective agreements). The compensation payable under the agreements is a lump sum severance payment equal to a multiple of the executive’s annual base salary and targetedtarget base bonus as of the date of the change-in-control. The multiple applicable tochange-in-control: Mr. Petit is three. The multiple applicable to Mr. Taylor is oneWright, 2.5 times; Messrs. Carlson, Hulse, Kashyap, and a half and the multiple applicable to Mr. Senken is one.Stein, 1.5 times. In addition, following termination of employment, thethese executives are entitled to receive for a period of three years in the case of Mr. Petit, 18 months in the case of Mr. Taylor and one year in the case of Mr. Senken life, health insurance coverage (subject to a COBRA election)election and a periodic cash payment for 18 months), and certain other fringe benefits equivalent to those in effect at the date of termination for periods of 30 months for Mr. Wright and will be entitled to receive additional amounts, if any, relating to any excise taxes imposed on18 months for the executive as a result of Section 280G of the Code. other NEOs.
Restrictive Covenants. The agreementsExecutive Retention Agreements require the executive to comply with certain covenants that preclude the executive from competing with the Company or soliciting customers or employees of the Company for a period following termination of employment equal to the period for which fringe benefits are continued under the applicable agreement. The agreements expire three years after a change in control of the Company18 months.
Equity Awards. Generally, unvested equity awards vest upon an NEO’s death or any successor to the Company.
disability. Upon a “change“change in control,” as defined in the 2006 Stock Incentive2016 Plan, and subject to any requirements of Section 409A of the Internal Revenue Code of 1986, as amended, (the (“Code”), all outstandinggrants made to the NEOs prior to October 2020 vest.
For awards vest and become exercisable.
Uponmade after October 2020, the Board adopted a Corporate Transaction (asnew form of award agreement that uses a double-trigger, under which if the NEO’s employment terminates within 24 months following a change of control, as defined in the 2005 Assumed Plan) and subject to any Code Section 409A requirements, with respect to outstanding options2016 Plan, other than for cause, then the administrator (currentlyawards will vest upon such termination, provided that the awards were continued, assumed, or substituted in the transaction; if no written provision is made for continuance, assumption or substitution of the awards, then the Compensation Committee) shall (i) make appropriate provision for the continuation ofCommittee has discretion to (1) terminate such options by substituting on an equitable basis for the shares then subject toawards without payment, (2) terminate such options either the consideration payable with respect to the outstanding shares of common stock in connection with the Corporate Transaction or securities of any successor or acquiring entity, or (ii) upon written notice to the participants, provide that all options must be exercised, within a specified number of days of the date of such notice, at the end of which period the options shall terminate, or (iii) terminate all optionsawards in exchange for a cash payment equal to the excess of the fair market value of the shares subject to such options over the exercise price thereof. With respect to outstanding stock grants, the administrator shall either (i) make appropriate provisions for the continuation of such stock grants by substitutingawards on an equitable basis for the shares then subject to such stock grants either the consideration payable with respect to the outstanding shares of common stock in connection with the Corporate Transaction or securities of any successor or acquiring entity, or (ii) upon written notice to the participants, provide that all stock grants must be accepted (to the extent then subject to acceptance) within a specified number of days of the date of such notice, at the end of which periodchange in control, or (3) accelerate the offervesting of the stock grants shall terminate,awards or (iii) terminate all stock grants in exchange for a cash payment equaltake such other actions as the Committee determines to be reasonable under the excess ofcircumstances to permit the fair marketNEO to realize the value of the shares subjectawards. No awards were granted to such stock grants over the purchase price thereof, if any. In addition,NEOs in 2020 following this change. Accordingly, the amounts shown in the event of a Corporate Transaction, the administrator may waive any or all Company repurchase rights with respect to outstanding stock grants.
Upon a “change in control,” as defined in the 2007 Assumed Plan and subject to any Code Section 409A requirements, all options and SARs outstanding as of the date of such change in control shall become fully exercisable, whether or not then otherwise exercisable. Any restrictions, performance criteria and/or vesting conditions applicable to any restricted award shall be deemed to have been met, and such awards shall become fully vested, earned and payable to the fullest extent of the original grant of the applicable award. Notwithstanding the foregoing, in the event of a merger, share exchange, reorganization, sale of all or substantially all of the assets of the Company, the administrator (currently the Compensation Committee) may, in its sole and absolute discretion, determine that any or all awards granted pursuant to the 2007 Assumed Plan shall not vest or become exercisable on an accelerated basis, if the Company or the surviving or acquiring corporation shall have taken such action, including but not limited to the assumption oftable below reflect awards granted under the 2007 Assumed Plan orprior form of agreement pursuant to which the grant of substitute awards as the administrator determines appropriate to protect the rights and interest of participants under the 2007 Assumed Plan.would vest upon a change in control.
162020 POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Executive | | Involuntary
Without
Cause or
for Good Reason | | | | Involuntary or for
Good Reason with
Change in Control | | | | Death or
Disability | | |
| Wright | | | | | | | | | | | | |
| cash severance | | $1,500,000 | | (1) | | $1,875,000 | | (1)(2) | | $0 | | |
| estimated benefits | | $21,273 | | (3) | | $21,273 | | (2)(3) | | $0 | | |
| estimated value of accelerated equity awards | | — | | | | | $9,321,328 | | (4) | | $9,321,328 | | (5) |
| Carlson | | | | | | | | | | | | |
| cash severance | | $656,250 | | (1) | | $787,500 | | (1)(2) | | $0 | | |
| estimated benefits | | $17,728 | | (3) | | $21,273 | | (2)(3) | | $0 | | |
| estimated value of accelerated equity awards | | $0 | | | | $ | 2,234,061 | | | (4) | | $ | 2,234,061 | | | (5) |
| Kashyap | | | | | | | | | | | | |
| cash severance | | $625,000 | | (1) | | $750,000 | | (1)(2) | | n/a | | |
| estimated benefits | | $23,077 | | (3) | | $27,693 | | (2)(3) | | n/a | | |
| estimated value of accelerated equity awards | | $0 | | | | $1,573,655 | | (4) | | $1,573,655 | | (5) |
| Hulse | | | | | | | | | | | | |
| cash severance | | $593,750 | | (1) | | $712,500 | | (1)(2) | | $0 | | |
| estimated benefits | | $23,077 | | (3) | | $27,693 | | (2)(3) | | $0 | | |
| estimated value of accelerated equity awards | | $0 | | | | $1,096,519 | | (4) | | $1,096,519 | | (5) |
| Stein | | | | | | | | | | | | |
| cash severance | | $625,000 | | (1) | | $750,000 | | (1)(2) | | n/a | | |
| estimated benefits | | $23,077 | | (3) | | $27,693 | | (2)(3) | | n/a | | |
| estimated value of accelerated equity awards | | $0 | | | | $743,044 | | (4) | | $743,044 | | (5) |
The following table sets forth in tabular form the potential post-employment payments due to the Named Executive Officers under the agreements discussed above; assuming the triggering event for the payments occurred on the last business day of the year ended December 31, 2012.
| Executive | | Cash Severance | | | Estimated Benefits | | | Estimated Value of Accelerated Equity Awards | | | Estimated 280G Tax Gross-Ups | | | Retirement Plans | |
| | | (1)(2) | | | (2)(3) | | | (4) | | | (2) | | | | |
| Parker H. Petit | | $ | 1,912,500 | | | $ | 59,288 | | | $ | 4,439,088 | | | $ | 2,211,752 | | | $ | — | |
| | | | | | | | | | | | | | | | | | | | | |
| William C. Taylor | | $ | 810,000 | | | $ | 27,540 | | | $ | 2,824,737 | | | $ | N/A | | | $ | — | |
| | | | | | | | | | | | | | | | | | | | | |
| Michael J. Senken | | $ | 350,000 | | | $ | 21,700 | | | $ | 1,257,574 | | | $ | N/A | | | $ | — | |
(1) | Includes a)Includes (a) annual base salary as of December 31, 2012, plus b) annual targeted bonus for the year ended December 31, 2012, times the multiple applicable to the named executive. |
(2) | Payable only in the event the executive’s employment is terminated without cause or for “good reason” within three years of following a change in control |
(3) | Includes a) the estimated value of medical, dental, vision and life insurance, plus b) the employer’s cost of FICA for the duration of the severance period. |
(4) | Includes the accelerated value of unvested stock options as of December 31, 2012, which are in-the-money based on the December 31, 2012, stock price. |
EQUITY COMPENSATION PLAN INFORMATIONThe following table provides information about our equity compensation plans of MiMedx as of December 31, 2012:
| | | A | | | B | | | C | |
| Plan Category | | Number of securities to be issued upon exercise of outstanding options, warrants and rights | | | Weighted average exercise price of outstanding options, warrants and rights reflected in column (A) | | | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (A)* | |
| Equity compensation plans approved by security holders | | | 13,614,135 | | | $ | 1.42 | | | | 2,885,865 | |
| Equity compensation plans not approved by security holders | | | — | | | | — | | | | — | |
| Total | | | 13,614,135 | | | $ | 1.42 | | | | 2,885,865 | |
The following table provides information concerning compensation of our directors2020, plus (b) annual targeted bonus for the year ended December 31, 2012. The compensation reported2020, times the multiple applicable to the NEO.
(2)Payable only in the event the executive’s employment is terminated without cause or for services as directors. Only those directors who received compensation for such services during“good reason” within one year following a change in control.
(3)Includes the year endedestimated value of medical, dental, vision and life insurance.
(4)Includes the value of unvested restricted stock based on the December 31, 2012, are listed.2020 stock price, the vesting of which is deemed accelerated to December 31, 2020. Awards made before October 2020 vest upon a change in control
without regard to the Participant’s termination of employment.
| Name | | Fees Earned or Paid in Cash (1) | | | Stock Awards $ | | | Option Awards $ | | | Non-Equity Incentive Plan Compensation | | | Change in Pension Value and Nonqualified Deferred Compensation Earnings | | | All Other Compensation | | | Total $ | |
| | | | | | | | | | | | | | | | | | | | | | |
| Joseph G. Bleser | | $ | 50,853 | | | | — | (10) | | | 25,607 | (2)(6) | | | — | | | | — | | | | — | | | | 76,460 | |
| J. Terry Dewberry | | $ | 52,000 | | | | — | (10) | | | 25,607 | (2)(6) | | | — | | | | — | | | | — | | | | 77,607 | |
| Charles R. Evans | | $ | 13,818 | | | | — | (10) | | | 72,724 | (7) | | | — | | | | — | | | | — | | | | 86,542 | |
| Bruce L. Hack | | $ | 31,802 | | | | — | (10) | | | 25,607 | (2)(6) | | | — | | | | — | | | | — | | | | 57,408 | |
| Charles E. Koob | | $ | 29,000 | | | | — | (10) | | | 25,607 | (2)(5)(9) | | | — | | | | — | | | | — | | | | 54,607 | |
| Larry W. Papasan | | $ | 54,000 | | | | — | (10) | | | 46,093 | (2)(4) | | | — | | | | — | | | | — | | | | 100,093 | |
| Neil S. Yeston | | $ | 12,818 | | | | — | (10) | | | 72,724 | (7) | | | — | | | | — | | | | — | | | | 85,542 | |
| Kurt M. Eichler | | $ | 28,777 | | | | — | (10) | | | (3 | )(8) | | | — | | | | — | | | | — | | | | 28,777 | |
| Andrew K. Rooke Jr. | | $ | 19,984 | | | | — | (10) | | | (3 | )(8)(9) | | | — | | | | — | | | | — | | | | 19,984 | |
(1) | Amount represents fees paid or earned during the year ended December 31, 2012. |
(2) | Annual stock option grant of 15,000 shares which vests in equal installments on October 31, 2013, 2014, 2015. |
(3) | Mr. Eichler and Mr. Rooke have an aggregate of 30,000 options outstanding. |
(4) | Mr. Papasan has an aggregate of 57, 000 options outstanding to include an additional stock option grant of 12,000 shares awarded October 31, 2012 which vests in equal installments on October 31, 2013, 2014, 2015. |
(5) | Mr. Koob has an aggregate of 45,000 options outstanding. |
(6) | Mr. Bleser, Mr. Dewberry and Mr. Hack have an aggregate of 80,000 options outstanding. |
(7) | Mr. Evans and Mr. Yeston were appointed to the Board of Directors, September 4, 2012 and were awarded stock options of 45,000 shares that vest in equal installments on September 4, 2013, 2014 and 2015. |
(8) | During 2012, Mr. Eichler and Mr. Rooke resigned from the Board of Directors. On September 4, 2012 MiMedx entered into consulting agreements with Mr. Eichler and Mr. Rooke through December 31, 2014. Mr. Eichler and Mr. Rooke did not receive any consulting fees in 2012. |
(9) | During 2012 Mr. Rooke exercised 50,000 shares and Mr. Koob exercised 100,000 shares. |
(10) | No outstanding stock awards as of December 31, 2012. |
Our compensation policy for our
50
2020 DIRECTOR COMPENSATION
The Company compensates non-employee directors as revised effective May 11, 2010, is as follows:
| ● | An annual cash retainer of $25,000 for service as a member of the Board; |
| ● | An annual cash retainer of $10,500 for service as a chairman of the Audit Committee; |
| ● | An annual cash retainer of $7,500 for service as a chairman of the Compensation Committee; |
| ● | An annual cash retainer of $5,000 for service as a chairman of the Nominating and Governance Committee; |
| ● | An annual cash retainer of $2,500 for service as a non-chairman member of a Board committee; and |
| ● | Meeting attendance fees of $1,000 per Board of Directors or committee meeting attended in person and $1,000 per Board of Directors or committee meeting attended telephonically. |
Each director who is not a full time employee of the Company also receives a grant of 45,000 options to purchase our common stock upon being first elected or appointed to the Board of Directors. In addition, on the date of the annual meeting of the shareholders, each director who is not a full time employee of the Company who has been a director for at least 12 months receives a grant of options to purchase 15,000 shares of our common stock. The options vest in three equal installments on each anniversary of the grant date.equity and cash. Directors who are full timefull-time Company employees of the Companydo not receive noany compensation for their service as directors or as members of boardBoard committees. The Company compensates non-employee directors at approximately the median of peer practices. The 2016 Plan imposes limits on awards to directors for their service as directors of (i) 125,000 shares granted during any calendar year and (ii) a maximum of $300,000 for any consecutive 12-month period for awards stated as a specific dollar amount.
Equity Compensation
The following table sets forth certain information regarding our capital stock, beneficially owned as
Upon initial election or appointment to the Board, each non-employee director receives a one-time grant of March 15, 2013, by each person known to us to beneficially own more than 5%a number of ourrestricted shares of Company common stock each Named Executive Officer and director, and all directors and executive officers asvalued at $175,000, plus a group. We calculated beneficial ownership according to Rule 13d-3prorated portion of the Exchange Act as of that date. Unless otherwise indicated below, the address of those identified in the table is MiMedx Group, Inc., 60 Chastain Center Blvd., Suite 60, Kennesaw, Georgia 30144.
Name and address of beneficial owner | | Number of Shares (1) | | | Percentage Ownership (1) | |
| Parker H. “Pete” Petit (2) | | | 11,505,853 | | | | 11.78 | % |
| | | | | | | | | |
| ADEC Private Equity Investments, LLC (3) | | | 5,536,832 | | | | 5.86 | % |
| | | | | | | | | |
| Charles E. Koob (5) | | | 1,469,653 | | | | 1.83 | % |
| | | | | | | | | |
| William C. Taylor (4) | | | 1,589,999 | | | | 1.66 | % |
| | | | | | | | | |
| Steve Gorlin (6) | | | 986,645 | | | | 1.04 | % |
| | | | | | | | | |
| Bruce L. Hack (7) | | | 714,268 | | | | * | |
| | | | | | | | | |
| Michael J. Senken (8) | | | 506,665 | | | | * | |
| | | | | | | | | |
| Roberta McCaw (9) | | | 493,556 | | | | * | |
| | | | | | | | | |
| Larry W. Papasan (10) | | | 143,668 | | | | * | |
| | | | | | | | | |
| Joseph G. Bleser (11) | | | 114,585 | | | | * | |
| | | | | | | | | |
| J. Terry Dewberry (12) | | | 71,666 | | | | * | |
| | | | | | | | | |
| Neil S. Yeston (13) | | | 5,000 | | | | * | |
| | | | | | | | | |
| Total Directors and Executive Officers (11 persons)(14) | | | 23,138,390 | | | | 23.01 | % |
(1) | Beneficial ownership is determined in accordance with the rules of the SEC and includes voting or investment power with respect to shares beneficially owned. Unless otherwise specified, reported ownership refers to both voting and investment power. Stock options, warrants and convertible securities which are exercisable within 60 days are deemed to be beneficially owned. On March 15, 2013, there were 94,435,438 shares of common stock issued and outstanding, net of 50,000 shares of common stock held in treasury. |
(2) | Includes (i) 5,010,020 shares held by Mr. Petit; (ii)1,895,833 shares of common stock issuable upon the exercise of vested options; (iii) 400,000 shares that are subject to currently exercisable warrants; (iv) 2,925,000 shares of common stock and currently exercisable warrants to purchase 975,000 shares of common stock held by each of Cox Road Partners, LLLP, Cox Road Partners II, LLLP, and Petit Investments II, LLLP, limited liability limited partnerships over which Mr. Petit possesses sole voting and investment control and for which Mr. Petit serves as General Partner; (v) 150,000 shares of common stock and held by the Parker H. Petit Grantor Trust over which Mr. Petit serves as the trustee; (vi) 150,000 shares of common stock held by Petit Investments, LP, a limited partnership where Mr. Petit serves as General Partner and Limited Partner and possesses shared voting and investment control. |
(3) | The number of shares owned is basedprior year’s annual grant (based on information contained in a report on Schedule 13D filed with the SEC on August 8, 2012. The address of ADEC Private Equity Investments, LLC (“ADEC”) is 172 South Ocean Blvd., Palm Beach, FL 33480. According to its Schedule 13D, ADEC, in its capacity as a private investor, may be deemed to beneficially own 5,536,832 shares of the Company’s common stock and has the sole power to vote or to direct the vote or to dispose or to direct the disposition of shares held by ADEC. |
(4) | Includes (i) 100,000 shares owned by Mr. Taylor and (ii) 1,489,999 shares that are subject to currently exercisable stock options. |
(5) | Includes (i) 615,000 shares held jointly by Mr. Koob and his wife; (ii) 789,653 shares held individually by Mr. Koob; (iii) 15,000 shares that are subject to currently exercisable stock options; and (iv) 50,000 shares that may be acquired upon the exercise of warrants held individually by Mr. Koob. |
(6) | Includes (i) 451,857 shares held in a trust for the benefit of Mr. Gorlin; (ii) 434,788 shares held by Mr. Gorlin’s wife; (iii) 100,000 shares that are subject to currently exercisable stock options; and (iv) 116,857 shares of common stock pledged as collateral for a bank loan. |
(7) | Includes (i) 450,935 shares owned by Mr. Hack; (ii) 208,333 shares that are subject to currently exercisable warrants; and (iii) 55,000 shares that are subject to currently exercisable stock options. |
(8) | Includes 506,665 shares that are subject to currently exercisable stock options. |
(9) | Includes (i) 267,724 shares owned by Ms. McCaw and (ii) 225,832 shares that are subject to currently exercisable stock options. |
(10) | Includes (i) 82,001 shares owned by Mr. Papasan; (ii) 41,667 shares held in a trust for the benefit of Mr. Papasan; (iii) 20,000 shares that are subject to currently exercisable stock options. |
(11) | Includes (i) 59,585 shares owned by Mr. Bleser; and (ii) 55,000 shares that are subject to currently exercisable stock options. |
(12) | Includes (i) 16,666 shares owned by Mr. Dewberry; and (ii) 55,000 shares that are subject to currently exercisable stock options. |
(13) | Includes (i) 5,000 shares owned by Mr. Yestin. |
(14) | Includes (i) shares controlled or held for the benefit of the executive officers and directors; (ii) 4,418,329 shares that are subject to stock options that are currently exercisable or exercisable within 60 days; (iii) 1,633,333 shares that are subject to currently exercisable warrants. |
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONSPolicies and Procedures for Approval of Related Party Transactions
Under its charter, our Audit Committee is responsible for reviewing and approving all transactions or arrangements between the Company and any of our directors, officers, principal shareholders or any of their respective affiliates, associates or related parties. In determining whether to approve or ratify a related party transaction, the Audit Committee considers all relevant facts and circumstances available to it, such as:
| ● | Whether the terms of the transaction are fair to the Company and at least as favorable to the Company as would apply if the transaction did not involve a related party; |
| ● | Whether there are demonstrable business reasons for the Company to enter into the transaction; |
| ● | Whether the transaction would impair the independence of an outside director; and |
| ● | Whether the transaction would present an improper conflict of interest for any director or executive officer, taking into account the size of the transaction, the direct or indirect nature of the related party’s interest in the transaction and the ongoing nature of any proposed relationship, and any other factors the Audit Committee deems relevant. |
Transactions
2010 Private Placement
Parker H. Petit, our Chairman and Chief Executive Officer, invested $1,006,664 in the 2010 Private Placement of our common stock and warrants (the “2020 Private Placement”) and received 1,006,664 shares of our common stock, 503,332 callable warrants, 251,666 first contingent warrants and 251,666 second contingent warrants. In March 2012, Mr. Petit exercised his first contingent warrants at an exercise price of $0.01 per share and received 251,666 shares of MiMedx common stock. As of the close of the stock market on July 3, 2012, the closing trading price of our common stock had traded at or above $1.75 per share for a total of ten consecutive trading days, which rendered null and void all second contingent warrants. In July 2012, the Company exercised our right to call the callable warrants since the closing trading price of our common stock had traded at or above $1.75 per share for a total of 15 consecutive trading days. In July 2012, Mr. Petit elected to exercise his callable warrants by paying the exercise price of $754, 998 and received 503,332 shares of our common stock.
Convertible Line of Credit with Related Party
On March 31, 2011, the Company and Mr. Petit entered into a subscription agreement for a 5% convertible senior secured promissory note (“Line of Credit Note”) in the amount borrowed by the Company, and certain contingent warrants to purchase Common Stock. The first borrowing in the amount of $800,000 occurred on March 31, 2011, resulting in the issuance of 400,000 contingent warrants at an exercise price of $0.01 per warrant. Additional borrowings in the amount of $500,000 were drawn during the three months ended June 30, 2011, resulting in the issuance of 250,000 contingent warrants at an exercise price of $0.01 per warrant. On February 28, 2012, 325,000 first contingent warrants vested to Mr. Petit with an exercise price of $0.01 per share. Mr. Petit exercised these warrants in March 2012 resulting in the issuance of 325,000 shares of MiMedx common stock. In July 2012, a total of 325,000 Second Contingent Warrants were voided. On December 7, 2012, the Chairman and CEO elected to convert his note and accrued interest resulting in the issuance of 1,403,630 shares of MiMedx common stock.
Senior Secured Promissory Notes
In December 2011, Mr. Petit participated in the Company’s private placement of 5% Convertible Senior Secured Promissory Notes (the “Notes”), Conversion Warrants, First Contingent Warrants and Second Contingent Warrants. Mr. Petit purchased Notes in an aggregate of $500,000. In addition, Mr. Petit received a first contingent warrant to purchase 125,000 shares of Common Stock at an exercise price of $0.01 per share which he exercised in March 2012. Mr. Petit further received a second contingent warrant which by the terms and conditions of such warrant was rendered null and void. In January 2013 Mr. Petit elected to convert his note resulting in the issuance of 532,260 shares of common stock which represents the face value of their respective notes plus accrued but unpaid interest.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCESection 16(a) of the Exchange Act requires the Company’s executive officers and directors, and any beneficial owner of more than ten percent of a registered class of the Company’s equity securities, to file reports (Forms 3, 4 and 5) of stock ownership and changes in ownership with the SEC. Officers, directors and beneficial owners of more than ten percent of the common stock are required by SEC regulations to furnish the Company with copies of all such forms that they file.
Based solely on the Company’s review of the copies of Forms 3, 4, and 5 the Company believes that during the year ended December 31, 2012, all filing requirements were complied with by its executive officers, directors and beneficial owners of more than ten percent of the common stock, with the exception of one late Form 4 filing by Mr. Petit, Mr. Papasan and Mr. Koob, and one late Form 3 filing by Mr. Yeston.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE
AMENDMENT OF THE COMPANY’S ARTICLES
TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK
APPROVAL OF AMENDMENT TO ASSUMED 2006 STOCK INCENTIVE PLAN(PROPOSAL 2)
The Board of Directors has approved and recommends that the shareholders of the Company ratify and approve the amendment of the Company’s Assumed 2006 Stock Incentive Plan (the “Plan”) to increase the number of authorized shares of common stock that may be issued pursuant to Awards under the Plan from 16,500,000 to 22,500,000 shares. A copy of the Plan, as amended, is attached as Appendix B. Approval of the amendment of the Plan by the shareholders is intended, among other things, to qualify options, stock grants and stock appreciation rights (“SARs”) granted under the plan as “performance-based compensation,” which is not subject to the limits on deductibility of Section 162(m) of the Code, described further below, and to enable the Company to grant incentive stock options (“ISOs”) under Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”).
The Plan was adopted by a predecessor organization effective November 27, 2006. The purpose of the Plan is to encourage and enable selected employees, directors, and independent contractors of the Company and its affiliates to acquire or increase their holdings of common stock and other equity-based interests in the Company in order to promote a closer identification of their interests with ours, thereby stimulating their efforts to enhance our efficiency, soundness, profitability, growth and shareholder value. Persons eligible to participate in the Plan are such employees, officers, directors, independent contractors and consultants of the Company or one of its subsidiaries (or future parent companies) as the administrator of the Plan in its discretion, shall designate from time to time. As of March 1, 2013, the Company employed approximately 182 full-time personnel.
Summary of the Plan
Shares Available for Issuance under the Plan
Of the 16,500,000 shares previously authorized by the shareholders to be issued under the Plan, as of December 31, 2012, 13,226,635 shares were subject to outstanding options, and 1,829,253 shares remained available for future issuance. On March 6, 2013, the Board amended the Plan to provide that an additional 6,000,000 shares of the Company’s common stock may be issued pursuant to the Plan. The aggregate 6,000,000 additional shares represent approximately 6.4 % of the Company’s common stock outstanding as of March 15, 2013. In addition, the Board approved an amendment to the Plan to provide that shareholder approval is required to approve any future increases in the number of authorized shares of common stock under the Plan. Therefore, any increase of authorized shares approved for issuance in excess of 22,500,000 shares requires the approval of our shareholders.
Of the shares available for issuance under the Plan, the maximum that we may issue pursuant to incentive stock options is 22,500,000. In addition, if and to the extent that Section 162(m) of the Code is applicable:
| ● | We may not grant to any participant options or SARs that are not related to an option for more than 1,000,000 shares of common stock in any calendar year; |
| ● | We may not grant to any participant awards for more than 1,000,000 shares of common stock in any calendar year; and |
| ● | Participants may not be paid more than $2,000,000 with respect to any cash-settled award granted in any calendar year, subject in each case to adjustments as provided in the Plan. |
The following will not be included in calculating the share limitations set forth above:
| ● | Awards which by their terms are settled in cash rather than the issuance of shares; |
| ● | Shares subject to an award that are repurchased or reacquired by us; and |
| ● | Any shares a participant surrenders or we withhold to pay the option or purchase price for an award or use to satisfy any tax withholding requirement in connection with the exercise, vesting, or earning of an award. |
We will further adjust the number of shares reserved for issuance under the Plan and the terms of awards in the event of an adjustment to the capital stock structure of the Company or one of our affiliates due to a merger, consolidation, reorganization, stock split, stock dividend or similar event.
Administration, Amendment and Termination
Currently, our Compensation Committee administers the Plan. In this discussion, we refer to our Compensation Committee as the “administrator.” Subject to certain restrictions set forth in the Plan, the administrator has full and final authority to take actions and make determinations with respect to the Plan.
Subject to certain terms and conditions, the administrator may delegate to one or more of our officers the authority to grant awards, and to make determinations otherwise reserved for the administrator with respect to such awards.
Our Board of Directors may amend, alter, or terminate the Plan at any time, subject to certain exceptions and restrictions set forth in the Plan. Previously, shareholder approval of amendments to the plan were only required where such approval was required by applicable law. As part of the amendment to increase the number of authorized shares available for issuance under the Plan, the board also amended the plan to require that any future increases in the number of authorized shares available for issuance pursuant to Awards under the plan will require shareholder approval. Our Board of Directors may also amend, alter, or terminate any award, although participant consent may be required.
In addition to the rights described in the immediately preceding paragraph, the administrator may amend the Plan and any award, without participant consent and, except where required by applicable laws, without shareholder approval, in order to comply with applicable laws. In addition, the administrator may make adjustments to awards upon the occurrence of certain unusual or nonrecurring events. The administrator may (subject to certain Plan limitations) cause any award or any portion thereof to be cancelled in consideration of an alternative award or cash payment of an equivalent cash value. The administrator also may determine that a participant’s rights, payments, and/or benefits with respect to an award will be subject to reduction, cancellation, forfeiture, or recoupment upon the occurrence of certain specified events. Except to the extent otherwise required under Code Section 409A, the administrator also may modify or extend the terms and conditions for exercise, vesting, or earning of an award and/or accelerate the date that any award may become exercisable, vested, or earned, without any obligation to accelerate any other award.
Options
The Plan authorizes the grant of both incentive stock options and nonqualified stock options. The administrator will determine the option price at which a participant may exercise an option. The option price may not be less than 100% of the fair market value onmonths between the date of grant (or 110%appointment to the Board and expected date of the fair market value with respect to incentive stock options granted tonext annual meeting of shareholders). One third of this grant vests on each anniversary of the grant date. In addition, each non-employee director receives an annual grant of a 10% or more shareholder) and also may not be less than the par value per share (subject to certain exceptions in the casenumber of substitute or assumed options).
Unless an individual award agreement provides otherwise, a participant may pay the option price in cash or, to the extent permitted by the administrator and applicable laws, by tenderingrestricted shares of Company common stock by the withholding of shares upon exercise, by such other consideration as the administrator may deem appropriate, or a combination of the foregoing.
At the time of optionvalued at $175,000. The Board usually makes this grant the administrator will determine the terms and conditions of an option, the period or periods during which an option is exercisable, and the option term (which, in the case of incentive stock options, may not exceed ten years, or five years with respect to a 10% or more shareholder). Options are also subject to certain restrictions on exercise if the participant terminates employment or service.
Stock Appreciation Rights
Subject to the limitations of the Plan, the administrator may in its sole discretion grant SARs to such eligible individuals, in such numbers, upon such terms and at such times as the administrator shall determine. SARs may be granted to the holder of an option (a “related option”) with respect to all or a portion of the shares of common stock subject to the related option (a “related SAR”) or may be granted separately to an eligible individual (a “freestanding SAR”). The consideration to be received by the holder of an SAR may be paid in cash, shares of common stock (valued at fair market value on the date of the SAR exercise),annual meeting of shareholders or a combination thereof, as determined by the administrator. Uponfirst meeting of the exerciseBoard that follows the annual meeting of an SAR,shareholders, subject to the holdershare limits in the Plan, and it vests upon the earlier of an SAR is entitledthe next annual meeting or the first anniversary of the grant date.
Director Stock Ownership Guidelines
The Nominating and Corporate Governance Committee has adopted stock ownership guidelines for the Company’s non-employee directors to receive payment frombetter align the interests of non-employee directors with shareholders. The guidelines require non-employee directors to own shares of Company in an amount determined by multiplying (i) the difference between the fair market value per share of common stock onwith a value equal to or greater than three times their annual gross cash compensation. Newly elected directors have three years from the date of exercise overelection to the base price per share of such SARBoard to comply with the ownership guidelines. Shares must be owned directly by (ii) the number of shares of common stock with respect to whichdirector or the SAR is being exercised. The base price may be no less than 100%director’s immediate family members residing in the same household, held in trust for the benefit of the fair market value per share of common stock onnon-employee director or the date the SAR is granted (except in the case of certain substituteddirector’s immediate family or assumed SARs inowned by a mergerpartnership, limited liability company or similar transaction).
SARs are exercisable according to the terms established by the administrator and stated in the applicable award agreement. Upon the exercise of a related SAR, the related option is deemed to be cancelledother entity to the extent of the number of shares of common stock for whichdirector’s interest therein (including the related SAR is exercised. No SAR may be exercised more than ten years after it was granted, or such shorter period as may apply to with respect to a particular SAR. Each award agreement will state the extent to which a holder may have the right to exercise an SAR following terminationinterests of the holder’s employmentdirector’s immediate family members residing in the same household) provided that the individual has the power to vote or service with the Company or an affiliate, as determined by the administrator.
Restricted Awards
Subject to the limitationsdispose of the Plan, the administrator may grant restricted awards to such individuals in such numbers, upon such terms, and at such times as the administrator shall determine. Restricted awards may be in the formshares. Unvested shares of restricted stock awards and/and unexercised stock options (vested or restricted stock units that are subjectunvested) do not count toward satisfaction of the guidelines.
Cash Compensation
In 2020, the Company also paid the following cash amounts to certain conditions which must be met for the restricted award to vest and be earned, in whole or in part, and be no longer subject to forfeiture. Restricted stock awards may be payable in common stock. Restricted stock units may be payable in cash or common stock, or a combination thereof.non-employee directors.
| | | | | | | | | | | | | | |
| | Chairman | | Non-Chair
Member |
| Board | | $71,000 | | $42,000 |
| Audit Committee | | $21,000 | | $11,000 |
| Compensation Committee | | $16,000 | | $8,500 |
| Nominating and Corporate Governance | | $11,000 | | $6,000 |
| Ethics and Compliance Committee | | $12,500 | | $6,500 |
Subject to certain limitations in the Plan, the administrator will determine the restriction period during which a participant may earn a restricted award and the conditions to be met in order for it to be granted or to vest or be earned. These conditions may include:
| ● | Payment of a stipulated purchase price; |
| ● | Attainment of performance objectives; |
| ● | Continued service or employment for a certain period of time; |
| ● | Any combination of these conditions. |
Subject to the terms of the Plan and Code Section 409A requirements, the administrator determines whether and to what degree restricted awards have vested and been earned and are payable. If a participant’s employment or service is terminated for any reason and all or any part of a restricted award has not vested or been earned pursuant to the terms of the Plan and the individual award, the participant will forfeit the award and related benefits unless the administrator determines otherwise.
Dividend and Dividend Equivalent
The administrator may provide that awards earn dividends or dividend equivalents, subject to restrictions set forth in the Plan. Such dividends or dividend equivalents may be paid currently or may be credited to a participant’s account, subject to such restrictions and conditions as the administrator may establish.
Change in Control
Upon a “change in control,” as defined in the Plan and subject to any Code Section 409A requirements, awards vest and become immediately exercisable in full.
Transfer and Other Restrictions
Awards generally are not transferable other than by will or the laws of intestate succession or as may otherwise be permitted by the administrator, and participants may not sell, transfer, assign, pledge or otherwise encumber shares subject to such awards until the restriction period and/or performance period has expired and until all conditions to vesting the award have been met. As a condition to the issuance or transfer of common stock or the grant of any other Plan benefit, we may require a participant or other person to become a party to an agreement imposing such conditions or restrictions as we may require.
Certain Federal Income Tax Consequences
The following generally describes the principal federal (and not state and local) income tax consequences of awards granted under the Plan as of this time. The summary is general in nature and is not intended to cover all tax consequences that may apply to a particular participant or to the Company. The provisionstable provides information concerning compensation of the Code and related regulations and other guidance are complicated and their impactCompany’s non-employee directors who served in any one case may depend upon the particular circumstances.2020.
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Name | | Fees Earned
or Paid
in Cash | | Stock Awards(1) | | Options | | Total |
Richard J. Barry(2) | | $53,167 | | $0 | | $0 | | $53,167 |
| M. Kathleen Behrens | | $121,000 | | $238,223 | | $0 | | $359,223 |
| James L. Bierman | | $63,375 | | $238,223 | | $0 | | $301,598 |
J. Terry Dewberry(3) | | $59,083 | | $0 | | $0 | | $59,083 |
Charles R. Evans(4) | | $74,666 | | $238,223 | | $0 | | $312,889 |
| Michael Giuliani | | $0 | | $304,389 | | $0 | | $304,389 |
| William A. Hawkins | | $12,125 | | $505,011 | | $0 | | $517,136 |
| Charles E. Koob | | $49,000 | | $238,223 | | $0 | | $287,223 |
| Cato Laurencin | | $0 | | $304,389 | | $0 | | $304,389 |
| K. Todd Newton | | $66,375 | | $238,223 | | $0 | | $304,598 |
Martin P. Sutter(5) | | $0 | | $0 | | $0 | | $0 |
Neil S. Yeston(4)(6) | | $94,125 | | $238,223 | | $0 | | $332,348 |
Incentive Options
The grant and exercise of an incentive stock option generally will not result in taxable income to the participant if the participant does not dispose of shares received upon exercise of such option less than one year after the date of exercise and two years after the date of grant, and if the participant has continuously been an employee of the Company from the date of grant to three months before the date of exercise (or 12 months in the event of disability). However, the excess of the fair market value of the shares received upon exercise of the option over the option price generally will constitute an item of adjustment in computing the participant’s alternative minimum taxable income for the year of exercise. Thus, certain participants may incur federal income tax liability as a result of the exercise of an incentive option under the alternative minimum tax rules of the Code.
The Company generally is not entitled to a deduction upon the exercise of an incentive option. Upon the disposition of shares acquired upon exercise of an incentive option, the participant will be taxed on the amount by which the amount realized exceeds the option price. This amount will be treated as capital gain or loss.
If the holding period requirements described above are not met, the participant will have ordinary income in the year of disposition to the extent of the lesser of: (i) the fair market value of the stock on the date of exercise minus the option price or (ii) the amount realized on disposition of the stock minus the option price. The Company generally is entitled to deduct as compensation the amount of ordinary income realized by the participant.
Pursuant to the Code and the terms of the Plan, in no event can there first become exercisable by a participant in any one calendar year incentivefollowing directors had stock options granted by the Company with respect to shares having an aggregate fair market value (determined at the time an option is granted) greater than $100,000. To the extent an incentive option granted under the Plan exceeds this limitation; it will be treated as a nonqualified option.
Nonqualified Options
If a participant receives a nonqualified option, the difference between the fair market value of the stock on the date of exercise and the option price will constitute taxable ordinary income to the participant on the date of exercise. The Company generally will be entitled to a deduction in the same year in an amount equal to the income taxable to the participant.
Stock Appreciation Rights
The grant of an SAR will not result in taxable income to a participant or a tax deduction to the Company. Upon exercise of the SAR, the amount of cash and fair market value of shares received by the participant (determined at the time of delivery to the participant), less cash or other consideration paid (if any), is taxed to the participant as ordinary income and the Company generally will be entitled to receive a corresponding tax deduction.
Restricted Stock Awards
The grant of restricted stock awards will not result in taxable income to the participant or a tax deduction to the Company, unless the restrictions on the stock do not present a substantial risk of forfeiture or the award is transferable. In the year that the restricted stock is no longer subject to a substantial risk of forfeiture or the award is transferable, the fair market value of such shares at such date and any cash amount awarded, less cash or other consideration paid (if any), will be taxed to the participant as ordinary income, except that, in the case of restricted stock issued at the beginning of the restriction period, the participant may elect to include in his ordinary income at the time the restricted stock is awarded, the fair market value of such shares at such time, less any amount paid for the shares. The Company generally will be entitled to a corresponding tax deduction.
Restricted Stock Units and Dividend Equivalents
The federal income tax consequences of the award of restricted stock units or dividend equivalents will depend on the conditions of the award. Generally, the grant of one of these awards does not result in taxable income to the participant or a tax deduction to the Company. However, the participant will recognize ordinary compensation income at settlement of the award equal to any cash and the fair market value of any common stock received (determined as of the date that the award is not subject to a substantial risk of forfeiture or transferable). The Company generally is entitled to a deduction upon the participant’s recognition of income in an amount equal to the ordinary income recognized by the participant.
Section 409A of the Code
Section 409A of the Code imposes certain requirements on deferred compensation. The Company intends for the Plan to comply in good faith with the requirements of Section 409A of the Code including related regulations and guidance, where applicable and to the extent practicable. If, however, Section 409A of the Code is deemed to apply to an award, and the Plan and award do not satisfy the requirements of Section 409A of the Code during a taxable year, the participant will have ordinary income in the year of non-compliance in the amount of all deferrals subject to Section 409A of the Code to the extent that the award is not subject to a substantial risk of forfeiture. The participant will be subject to an additional tax of 20% on all amounts includible in income and may also be subject to interest charges under Section 409A of the Code. The Company generally will be entitled to an income tax deduction with respect to the amount of compensation includible as income to the participant. The Company undertakes no responsibility to take, or to refrain from taking, any actions in order to achieve a certain tax result for any participant.
Accounting Treatment
Stock Option grants or stock issuances made to employees or directors under the Plan are accounted for under the provisions of ASC topic 718 “Compensation — Stock compensation” which requires the use of the fair-value based method to determine compensation for all arrangements under which employees and others receive shares of stock or equity instruments (options and warrants). Under the fair-value based method, total compensation expense related to such stock options or stock issuances is determined using the fair-value of the stock options or stock issuances on the date of grant. Total compensation expense is recognized on a straight-line basis over the vesting period of the applicable stock option or stock grant.
Description of the Changes to the Plan
Increase in Number of Shares. The amendment that the shareholders are being asked to approve includes an increase in the number of shares of Company common stock available for issuance under the Plan from 16,500,000 to 22,500,000. As of March 15, 2013, 15,992,369 shares of common stock have been issued under the Plan and are included in the number of shares outstanding and 5,000,086 shares remained available for future issuance.
Awards under the Plan are determined on a case-by-case basis, based upon among other things, the participant’s performance, overall compensation and the performance of the Company. Accordingly, future awards (“new plan benefits”) under the Plan are not determinable at this time. Reference is made to the sections captioned “Executive Compensation” and “Outstanding Equity Awards at Fiscal Year End” of this Proxy Statement for detailed information on stock incentive awards and exercises of such awards by certain executive officers under former and existing stock incentive plans.
Plan Benefits
During the period January 1, 2012 through December 31, 2012, the Compensation Committee granted options as follows: Messrs. Petit and Taylor and Senken were granted 900,000, 675,000 and 185,000 options, respectively; all other executives as a group were granted a total of 80,000 options; all Directors who are not executive officers were granted a total of 102,000 options; and all other employees and consultants as a group were granted a total of 3,365,500 options and 7,500 restricted shares, for a total aggregate amount of 5,307,500 stock options and 7,500 restricted shares. On each of February 23, 2010, March 18, 2011, September 21, 2011 and February 23, 2012, the Compensation Committee approved a cumulative pool of 500,000 shares to be granted to certain consultants, subject to entering into final agreements with such consultants. Of these 500,000 authorized grants , 390,000 options have been granted as of December 31, 2012, of which, 220,000 options were granted during the period January 1, 2012 through2019: Messrs. Evans and Koob, and Dr. Yeston - 60,000; Mr. Dewberry - 30,000. The following directors had unvested restricted stock or stock unit awards outstanding on December 31, 2012,2020: Drs. Behrens and are included in the total aggregate stock options granted in 2012.Yeston, and Messrs., Bierman, Evans, Koob, and Newton - 26,236; Drs. Giuliani and, Laurencin - 33,523; and Mr. Hawkins - 55,618.
2.Mr. Barry declined to stand for re-election, and his terms as a directors ended on August 31, 2020.
Other than grants of options3.Mr. Dewberry retired from the approved pool,Board effective August 31, 2020.
4.Messrs. Evans and Koob, and Dr. Yeston, retired from the selection of individuals who will receive awardsBoard effective November 20, 2020.
5.Mr. Sutter has declined all compensation as a non-employee director.
6.Dr. Yeston received a $15,000 retainer for serving as the Science and Research liaison to the Board.
PROPOSAL 3 ADVISORY APPROVAL OF EXECUTIVE COMPENSATION
In accordance with Section 14A of the newly authorized shares underExchange Act, we are providing shareholders with the Plan and the amount of any such awards are subject to Compensation Committee discretion and are not yet determinable. Therefore, it is not possible to predict the benefits or amounts that will be received by, or allocated to, particular individuals or groups of employees in fiscal 2013. The number of shares of common stock subject to awards granted in fiscal 2012 to the Company’s Named Executive Officers is set forth in this Proxy Statement in the “Summary Compensation Table” and the “Grant of Plan-Based Awards Table.”
Market Price of the Common Stock
The average high and low sales prices of the Company’s common stock as reported on the OTCBB was $4.82 on March 15, 2013. As of such date, there were 94,435,438 issued and outstanding options under the Plan with an aggregate market value of approximately $455,178,811.
The preceding summary of the Plan is qualified in its entirety by reference to the complete text of the Plan set forth in Appendix B to this proxy statement.
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THE ADOPTION OF THE
AMENDMENT TO THE ASSUMED 2006 STOCK INCENTIVE PLAN
RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM(PROPOSAL 3)
Independent Registered Public Accounting Firm For 2013
The Board of Directors, upon the recommendation of its Audit Committee, has selected Cherry, Bekaert & Holland L.L.P. to audit our accounts for the fiscal year ending December 31, 2013. Cherry, Bekaert & Holland L.L.P. has reported that none of its members has any direct financial interest or material indirect financial interest in us. Currently, our Audit Committee is composed of Mr. Dewberry, Mr. Papasan, Mr. Bleser and Mr. Evans and has responsibility for recommending the selection of our independent registered public accounting firm.
The Audit Committee’s pre-approval process for non-audit and audit-related services may be found in the charter of the Audit Committee.
Representatives of Cherry, Bekaert & Holland L.L.P. are expected to be present at the Annual Meeting of Shareholders. These representatives will have an opportunity to make a statement if they desire to do so and will be available to respond to appropriate questions.
Audit Firm Fee Summary
The following table presents fees billed for professional audit services rendered by Cherry, Bekaert & Holland, L.L.P. for the audit of our annual financial statements for the year ended December 31, 2012 and December 31, 20111 and fees billed for other services rendered by Cherry, Bekaert and Holland, L.L.P., our independent registered public accounting firm during these periods.
| | | Fiscal year end December 31, 2012 | | | Fiscal Year end December 31, 2011 | |
| Audit Fees | | $ | 210,000 | | | $ | 90,000 | |
| Tax Fees | | $ | 23,400 | | | $ | 17,250 | |
| All Other Fees | | $ | — | | | $ | — | |
Audit Fees. This category includes fees for (i) the audit of our annual financial statements and review of financial statements included in our quarterly reports on Form 10-Q; and (ii) services that are normally provided by the independent registered public accounting firm in connection with statutory and regulatory filings or engagements for the relevant periods described above. There were no separate audit-related services or fees.
Audit-related Fees. This category includes fees for assurance and related services that are reasonably related to the performance of the audit or review of Company’s financial statements and are not reported under “Audit Fees.”
Tax Fees. This category consists of professional services rendered for tax compliance, tax planning, tax return preparation, tax research and tax advice.
All Other Fees. This category includes the aggregate fees for products and services that are not reported above under “Audit Fees,” or “Tax Fees.”
Audit Committee Pre-Approval Policy
The Audit Committee has responsibility for the appointment, retention and oversight of the work of our independent auditors, to recommend their selection and engagement, to review and approve in advance all non-audit related work performed by our independent registered public accounting firm prior to the performance of each such service. The Audit Committee is also required to establish formal policies and procedures for the engagement of the independent auditors to provide permitted non-audit services. The Audit Committee gave its prior approval to all services provided by our independent auditors in fiscal 2011 and 2012. The Audit Committee has determined that the provision of services by Cherry, Bekaert & Holland, L.L.P, is compatible with maintaining the independence of the independent registered public accounting firm.
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THE APPROVAL OF THE COMPENSATION OF OUR
NAMED EXECUTIVE OFFICERS
ADVISORY VOTE ON EXECUTIVE COMPENSATION
(PROPOSAL 4)
The recently enacted Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”) added Section 14A to Securities Exchange Act of 1934, as amended (the “Exchange Act”), which enables our stockholders to vote to approve, on an advisory non-binding basis, the compensation of our named executive officers as disclosed in this proxy statement in accordance with the SEC’s rules.
Please read the “Executive Compensation” section of this proxy statement for additional details about our executive compensation program.
We are asking our shareholders to indicate their support for our named executive officer compensation as described in this proxy statement. This proposal,resolution, commonly known as a “say-on-pay” proposal, gives our shareholdersto approve the opportunity to express their views on our named executive officers’ compensation. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our named executive officersthe Company’s NEOs as disclosed in the CD&A, the compensation tables, and the philosophy, policies and practices described in this proxy statement. Accordingly, we will ask our shareholders to vote “FOR” the following resolution at the Annual Meeting:accompanying narrative disclosures, (see pages 35 through 50):
“RESOLVED, that the Company’s shareholders approve, on an advisory basis, the compensation of the Company’s named executive officers as disclosed in the Company’s proxy statement under the section captioned “Executive Compensation,” including the Compensation Discussion and Analysis, the compensation tables, and the accompanying narrative disclosures.
The Compensation Committee is responsible for evaluating and determining the compensation paid to the Company’s NEOs. All components of compensation for the 2013 Annual Meeting of Shareholders pursuant to the compensation disclosure rules of the Securities and Exchange Commission.”
The say-on-pay vote is advisory, and therefore not binding on the Company,NEOs are then recommended by the Compensation Committee or ourfor approval by the Board. Our Board and our Compensation Committee valueAs described above in detail in the opinions of our shareholders and we will consider our shareholders’ concernsCD&A, the compensation tables and the Compensation Committee will evaluate whether any actions are necessaryaccompanying narrative disclosures, the Company’s executive compensation philosophy is based on the belief that competitive compensation is essential to address those concerns.
Required Vote
attract and retain highly-qualified executives and motivate them to achieve the Company’s operational and financial goals. The Company’s compensation components seek to reward effective performance relative to the Company’s near-term plans and objectives, promote longer-term focus and help retain key contributors and align the interests of the Company’s executives and shareholders.
Approval
The Company conducted an advisory say-on-pay vote at the 2019 annual meeting of this proposal requires the affirmative vote of a majorityshareholders, where approximately 91% of the votes cast onwere in favor of the proposal.
The Board and Compensation Committee reviewed these final vote results together with the other factors and data discussed in this CD&A and determined that, given the significant level of support of the Company’s approach to compensation by its shareholders, no changes to its executive compensation policies and related decisions were necessary.
OURThe Company has previously determined that its shareholders should vote on an advisory say-on-pay proposal every year, consistent with the recommendation of the Board and the preference expressed by the Company’s shareholders in the advisory vote taken at the 2019 annual meeting of shareholders.
Effect of Vote
While this is a non-binding, advisory vote, the Compensation Committee and the Board intend to take into account the outcome of the vote when considering future executive compensation arrangements.
Vote Required
For this proposal to be approved, votes cast FOR the proposal by the holders of shares represented at the meeting and entitled to vote must exceed the votes cast AGAINST the proposal.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THE APPROVAL OF A THREE (3) YEAR
FREQUENCY FOR AN ADVISORY VOTE ON EXECUTIVE COMPENSATION
THIS PROPOSAL
ADVISORY VOTE ON THE FREQUENCY OF THE ADVISORY VOTE ON EXECUTIVE COMPENSATIONWHITE PROXY CARD.
(PROPOSAL 5)
Section 14A53
AUDIT MATTERS
Changes in Registered Public Accounting Firm
Appointment of Deloitte & Touche LLP
On March 25, 2021, the Exchange Act,Audit Committee approved the engagement of, and on March 29, 2021 executed an agreement with, Deloitte & Touche LLP (“Deloitte”) as addedthe Company’s new independent registered public accounting firm for the fiscal year ending December 31, 2021. Neither the Company, nor anyone acting on its behalf, consulted Deloitte regarding either (i) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on the Company’s consolidated financial statements, and no written report or oral advice was provided to the Company that Deloitte concluded was an important factor considered by the Dodd-Frank Act, also enables our shareholders to indicate their preferenceCompany in reaching a decision as to how frequently we should seek an advisory vote on the compensationaccounting, auditing or financial reporting issue; or (ii) any matter that was the subject of our named executive officers. By voting on this proposal, shareholders may indicate whether they would prefer an advisory vote on named executive officer compensation once every year, once every two yearsa “disagreement” or once every three years. “reportable event” (as those terms are defined in Item 304(a)(1) of Regulation S-K).
Shareholders also may abstain from voting on this proposal.
After careful considerationare being asked to ratify the Audit Committee’s appointment of this proposal,Deloitte as the Board has determined that a non-binding, advisory vote on executive compensation that occurs every three years is the most appropriate alternativeCompany’s independent registered public accounting firm for the Company,fiscal year ending December 31, 2021. A representative of Deloitte is expected to be present at the annual meeting, will have the opportunity to make a statement if he or she desires to do so, and therefore your Board recommends that you vote for a three year (3-year) frequency for the advisory vote on executive compensation.
In formulating its recommendation, our Board considered that a triennial vote will allow shareholdersis expected to better evaluate our executive compensation program in relation to our short- and long-term company performance. Additionally, a triennial vote will provide us with timebe available to respond to shareholders concernsappropriate questions.
Dismissal of BDO USA, LLP
In light of its engagement of Deloitte for the year ended December 31, 2021, the Audit Committee dismissed BDO USA, LLP (“BDO”) as the Company’s independent registered public accounting firm effective March 25, 2021.
BDO’s reports on the effectiveness of internal control over financial reporting as of December 31, 2020 and implement appropriate revisions.as of December 31, 2019 expressed an adverse opinion on the effectiveness of the Company’s internal control over financial reporting.
During the period from May 24, 2019 through March 25, 2021, there were no “disagreements” as such term is described in Item 304(a)(1)(iv) of Regulation S-K with BDO on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedures which, if not resolved to the satisfaction of BDO, would have caused BDO to make reference to the subject matter of the disagreements in connection with its audit report. Also, during this same period, there were no “reportable events,” as that term is defined in Item 304(a)(1)(v) of Regulation S-K.
The proxy card provides shareholdersCompany provided BDO with a copy of the foregoing disclosures and requested that BDO furnish the Company with a letter addressed to the Commission stating whether BDO agreed with the opportunityabove statements. A copy of BDO’s letter dated March 30, 2021 was filed as Exhibit 16.1 to choose among four options (holding the advisory vote on executive compensation every one, two or three years, or abstain from voting) and, therefore, shareholders will not be voting to approve or disapproveCompany’s Form 8-K filed March 30, 2021.
BDO provided the recommendationCompany with an unqualified opinion regarding their audit of the boardCompany’s financial statements as of directors. You may cast your voteDecember 31, 2020 and 2019 that were included in the Company’s Annual Report on your preferred voting frequency by choosing the option of once every year (“1 year”), once every two years (“2 years”), once every three years (“3 years”), or you may abstain from voting.Form 10-K.
The optionAudit Committee initially approved the engagement of, one year, two years or three years that receivesand executed an agreement with, BDO as the highest number of votes cast by shareholders will be considered the frequencyCompany’s independent registered public accounting firm for the advisory votefiscal years ending December 31, 2017, 2018 and 2019 on executive compensation that is preferred by ourMay 24, 2019 and engaged BDO as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2020 on April 28, 2020. Shareholders ratified BDO’s appointment as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2020 on August 31, 2020 at the 2019 annual meeting of shareholders. However, because this vote is advisory
Audit Firm Fees
The Audit Committee’s duties include pre-approving audit and not binding on the Board of Directors ornon-audit services provided to the Company by the Company’s independent registered public accounting firm, BDO. All of the services in any way,respect of 2020 and 2019 under the Board may decide that it isAudit Fees, Audit-Related Fees, Tax Fees and All Other Fees categories below were pre-approved by the Audit Committee.
| | | | | | | | | | | |
| Type of Fee | Year Ended December 31, 2020 | | Year Ended
December 31, 2019 |
Audit Fees(1) | $1,835,422 | | $3,875,000 |
Audit-Related Fees(2) | $21,336 | | $19,000 |
| Tax Fees | $0 | | $0 |
| All Other Fees | $0 | | $0 |
(1) This category includes fees for the audit of the Company’s annual financial statements and review of financial statements included in its quarterly reports on Form 10-Q.
(2) This relates to BDO’s audit of the best interests of our shareholders and the Company to hold an advisory vote on executive compensation more or less frequently than the option preferred by our shareholders.Company’s 401(k) plan.
REPORT OF THE AUDIT COMMITTEE
The following report of the Audit Committee shall not be deemed to be “soliciting material” or to be “filed” with the Securities and Exchange Commission, nor shall it be incorporated by reference into any previous or future filing by the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (the “Exchange Act”) except to the extent that the Company incorporates it by specific reference.
In accordance withManagement is responsible for the written charter adopted bypreparation, presentation and integrity of financial statements; establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(f)); evaluating the Boardeffectiveness of Directors,disclosure controls and procedures; and evaluating any change in internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, internal control over financial reporting. The purpose of the Audit Committee assistsis to assist the Board of Directors in fulfilling its responsibility for oversight ofduty to oversee the qualityCompany’s accounting and integrityfinancial reporting processes and the audits of the Company’s financial reporting processes.
statements and internal control over financial reporting.
Review and Discussions with Management. TheOn April 28, 2020, the Audit Committee has reviewed and discussed our audited financial statements forapproved the year ended December 31, 2012, andengagement of BDO USA, LLP (“BDO”) as the unaudited financial statements for the quarters ended March 31, June 30 and September 30, 2012 and the system of internal controls designed to provide reasonable assurance regarding compliance with accounting standards and applicable laws with our management.
Review and Discussion with Independent Registered Public Accounting Firm. The Audit Committee has reviewed and discussed with theCompany’s independent registered public accounting firm which is responsible for expressing an opinion on the conformity, in all material respects, of those audited consolidated financial statements with U.S. generally accepted accounting principles,fiscal year ended December 31, 2020.
In fulfilling its judgments as to the quality, not just the acceptability, of the Company’s accounting principles and such other matters as are required to be discussed withoversight responsibilities, the Audit Committee by standards of the Public Company Accounting Oversight Board (PCAOB). In addition, the Audit Committee has received the written disclosuresreviewed and the letter from the independent registered public accounting firm required by the PCAOB.
Conclusion. In reliance on the reviews and discussions referred to above, the Audit Committee recommended to the Board of Directors, and the Board of Directors has approved, thatdiscussed the audited consolidated financial statements be included in the Company’s Annual Report on Form 10-K for the year ended December 11, 2020 with management and BDO. It has also reviewed and discussed with BDO: (1) the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board (“PCAOB”) and the SEC; (2) BDO’s judgments as to the quality of the accounting principles applied in the Company’s financial reporting; (3) written disclosures and the letter from BDO required by applicable requirements of the PCAOB regarding BDO’s communications with the Audit Committee concerning independence; and (4) BDO’s independence. The Audit Committee also met with management periodically during the year to consider the adequacy of the Company’s internal control over financial reporting and the quality of its financial reporting and discussed these matters with BDO and with appropriate Company financial personnel and internal auditors.
Based on the Audit Committee’s review and discussions noted above, the Audit Committee recommended to the Board, and the Board approved, that the audited financial statements be included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2012,2020 for filing with the Securities and Exchange Commission.
Submitted by the Audit Committee of the Board of Directors:
| Audit Committee of the Board of Directors |
| J. Terry Dewberry, Chairman |
| Joseph G. Bleser |
| Larry W. Papasan |
| Charles Evans |
K. Todd Newton, Chairman
M. Kathleen Behrens
James L. Bierman
April [30], 2021
PROPOSAL 4—RATIFICATION OF DELOITTE & TOUCHE LLP AS INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR SHAREHOLDER PROPOSALSTHE FISCAL YEAR ENDING DECEMBER 31, 2021
This proposal would ratify the Audit Committee’s appointment of Deloitte & Touche LLP (“Deloitte”) to serve as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2021.
Proposals
A representative of Deloitte is expected to be present at the virtual Annual Meeting, will have the opportunity to make a statement if he or she desires to do so, and is expected to be available to respond to appropriate questions.
Effect of Vote
In the event our shareholders intendedfail to ratify the selection, the Audit Committee will reconsider whether or not to continue to retain Deloitte for inclusionthe fiscal year ending December 31, 2021. In view of the process and expense involved in our proxy statement relatingchanging the independent registered public accounting firm on short notice, if the shareholders do not ratify the selection of Deloitte, it is contemplated that the appointment of Deloitte will be permitted to stand unless the 2013Board finds other compelling reasons for making a change. Disapproval by the shareholders will be considered a recommendation that the Audit Committee select another independent registered public accounting firm for the following year.
Vote Required
For this proposal to be approved, votes cast FOR the proposal by the holders of shares present and entitled to vote must exceed the votes cast against the proposal.
THE BOARD AND AUDIT COMMITTEE UNANIMOUSLY RECOMMEND
THAT YOU VOTE FOR THIS PROPOSAL ON THE WHITE PROXY CARD.
PROPOSAL 5—AMENDMENT TO ARTICLES TO DECLASSIFY THE COMPANY’S BOARD OF DIRECTORS
At the 2010 annual meeting of shareholders, must be receivedthe Company’s shareholders overwhelmingly approved an amendment to our Articles classifying the Board into three classes of directors such that only one-third of the Board is up for election at each annual meeting of shareholders. Currently, the Company’s Articles and Bylaws provide for a classified board of directors divided into three classes of directors, with each class elected for three-year terms.
After carefully weighing the advantages and disadvantages of a classified board, including through dialogue with our offices (addressedshareholders, the Board has determined that this is an appropriate time and that it is now in the best interests of the Company and its shareholders to amend the Articles to eliminate the classified board structure to provide for the annual election of directors. This will result in a fully declassified Board by the 2024 annual meeting of shareholders.
In deciding to approve the proposed amendment to the attentionArticles and to recommend that the shareholders vote to adopt the proposed amendment, the Board considered the benefits of retaining a classified board structure, which has a long history in corporate law, such as providing continuity and stability of the Board, encouraging directors to take a long-term perspective in the management of the business and affairs of the Company, reducing the Company’s vulnerability to coercive takeover tactics and enhancing the independence of non-management directors by providing them with a longer term of office and insulating them against pressure from management or special interest groups. However, the Board also considered the feedback it has received from shareholders, and reviewed the perspectives and voting guidelines of its large shareholders and independent proxy advisory firms. The prevailing viewpoint expressed by shareholders in our outreach was that they believed that the declassification of the Board, while not essential in the shorter term, was a better long-term practice. Ultimately, the Board is committed to strong corporate governance and to listening and responding to shareholders sentiment; therefore, the Board is proposing to eliminate the classified board structure.
Effect of the Amendment
The proposed amendment to the Articles would eliminate the classification of the Board over a three-year period beginning at the 2022 annual meeting of shareholders, with directors elected to a one-year term following the expiration of the directors’ existing terms and provide for the annual election of all directors beginning at the 2024 annual meeting of shareholders. We believe that a gradual declassification of the Board is in the best interests of our shareholders because it honors our shareholders’ prior decisions in electing incumbent directors for three-year terms. Further, a gradual declassification assures a smooth transition to the new board structure.
The proposed amendment of the Articles would become effective upon the filing of the Articles of Amendment to the Restated Articles of Incorporation with the Secretary of State of the State of Florida, which the Company would file promptly following the Annual Meeting if our shareholders approve the proposed amendment. In the case of any vacancy on the Board created by an increase in the number of directors, the vacancy would be filled through an interim appointment by the Board with the new director to serve a term ending at the next Annual Meeting. Vacancies created by resignation, removal or death would be filled by the Board by appointment of a new director to serve until the end of the term of the director being replaced. The proposed amendment would not change the present number of directors or the Board’s authority to change that number and to fill any vacancies or newly created directorships. If our shareholders approve the proposed amendment, the Board will also make certain conforming changes to the Bylaws and the Company’s Corporate Secretary) not later than January 9, 2014. Any suchGovernance Guidelines. The proposed amendment to the Articles is attached to this Proxy Statement as Annex B.
Vote Required
For this proposal mustto be approved, the affirmative vote of a majority of shares entitled to vote on the matter (i.e., shares outstanding) is required.
THE BOARD UNANIMOUSLY RECOMMENDS
THAT YOU VOTE FOR THIS PROPOSAL ON THE WHITE PROXY CARD.
PROPOSAL 6— AMENDMENT TO ARTICLES TO REDUCE OWNERSHIP THRESHOLD TO CALL A SPECIAL SHAREHOLDERS’ MEETING
After careful consideration, the Board has determined that it is in the best interests of the Company and its shareholders to seek shareholder approval of an amendment to the Articles to reduce the ownership threshold to call a special shareholders’ meeting. The Company’s Articles and Bylaws currently permit shareholders holding 50% of all shares outstanding to call special meetings of shareholders for any purpose. The Board is committed to strong corporate governance principles that promote shareholder rights and the Board’s accountability. Based on the feedback we have received from shareholders and our commitment to align with best practices, the Board approved an amendment to the Articles to reduce the minimum ownership threshold to call a special shareholders’ meeting from 50% to 25%.
The Board continues to believe that the special meeting processes along with the Company’s shareholder engagement practices, provide shareholders with meaningful opportunities to raise important matters and, if necessary, pursue actions for shareholder consideration outside the annual meeting process. The Board also believes that establishing a 25% ownership threshold to call a special meeting strikes a reasonable balance between enhancing shareholder rights and protecting against the risk that a small minority of shareholders, including shareholders with special interests or transitory interests in the Company, could call one or more special meetings that could result in unnecessary financial expense and disruption to our business.
Effect of the Amendment
The proposed amendment to the Articles would reduce the minimum ownership threshold to call a special shareholders’ meeting from 50% to 25%.
If approved by our shareholders at the Annual Meeting, the proposed amendment of the Articles would become effective upon the filing of the Articles of Amendment to the Restated Articles of Incorporation with the Secretary of State of the State of Florida, which the Company would file promptly following the Annual Meeting if our shareholders approve the proposed amendment. If our shareholders approve the proposed amendment, the Board will also make certain conforming changes to the Bylaws.
The proposed amendment to the Articles is attached to this Proxy Statement as Annex C.
Vote Required
For this proposal to be approved, the affirmative vote of a majority of shares entitled to vote on the matter (i.e., shares outstanding) is required. The failure to vote as well as abstentions and broker non-votes will be counted as votes “AGAINST” this proposal.
THE BOARD UNANIMOUSLY RECOMMENDS
THAT YOU VOTE FOR THIS PROPOSAL ON THE WHITE PROXY CARD.
PROPOSAL 7 - AMENDMENT TO THE AMENDED AND RESTATED
BYLAWS TO ADOPT PROXY ACCESS
The Board has unanimously approved and recommends that our shareholders approve amendments (“Proxy Access Amendments”) to the Bylaws to provide for proxy access. Proxy access will allow Eligible Shareholders (as defined below) who comply with Rule 14a-8the requirements set forth in the Bylaws to include their own nominees for director in the Company’s proxy materials along with the candidates nominated by the Board. After considering various factors with respect to the implementation of Regulation 14Aproxy access, the Board approved the Proxy Access Amendments, subject to approval by shareholders at the Annual Meeting.
Rationale for the Proposal and Recommended Thresholds
The Board is committed to acting in the best interests of our shareholders and to sound corporate governance guidelines and practices. The proposed adoption of the proxy rulesProxy Access Amendments is the result of the SecuritiesBoard’s ongoing review of the Company’s corporate governance policies and Exchange Commission. recent corporate governance best-practice.
The submissionBoard believes that proxy access should be structured in a way that:
•provides minority shareholders who hold a significant and continuing ownership interest in the Company with the opportunity to include Board candidates in our proxy statement;
•aligns with similar proxy access bylaws adopted by other public companies;
•requires a sustained commitment to the Company in terms of the shareholder’s ownership holding period, which is consistent with our focus on managing our business for the long term;
•avoids significant director turn-over with candidates not nominated by the Board, which may adversely impact the effectiveness of the Board; and
•provides sufficient substantive and procedural rules to permit the timely and cost-effective evaluation and implementation of shareholder nominations.
The Board believes that permissive proxy access, unless accompanied by meaningful requirements and thresholds, risks damaging the effectiveness of the Board, and by extension, the Company’s operational performance and long-term growth.
The Board determined that proxy access should require a proposalnominating shareholder to own a minimum of 3% of the issued and outstanding shares of Company common stock. The majority of public companies that have adopted proxy access have applied this limitation. In adopting 3% as the applicable threshold, the Board considered, among other things, the number of outstanding shares of Company common stock, the number of shareholders with disclosed ownership positions of at least 1%, the ownership thresholds used by other public companies that have adopted proxy access, the ownership standards recommended by shareholder advisory groups, and the Board’s desire to avoid nominees who could be backed by shareholders with specific interests that may not represent the interests of shareholders generally.
The Board believes that allowing aggregation of up to 20 shareholders to meet the ownership requirement preserves the possibility of proxy access for relatively small shareholders and also alleviates unjustified demands on management’s time and resources.
The Board also determined that proxy access should require a nominating shareholder to have held the qualifying shares for at least three years. The Board believes that the interests and goals of shareholders who have demonstrated a long-term financial commitment to the Company are more likely to be aligned with the Company’s longer-term strategies, which the Board believes are essential to the Company’s success and beneficial to all shareholders. Granting
proxy access to shareholders with holding periods of less than three years could result in a shorter-term focus at the Board level that may not promote the best interest of all shareholders.
If this Proposal 7 is approved and proxy access is adopted by the Company, the Proxy Access Amendments will go into effect and provide shareholders proxy access for next year’s annual meeting.
The following description of the proposed Proxy Access Amendments is only a summary and is qualified in its entirety by reference to the complete text of Article II, Section 10(d) of the amendment to the Bylaws attached hereto as Annex D.
Eligibility of Shareholders to Nominate Directors Pursuant to the Proxy Access Provisions
A shareholder or group of up to 20 shareholders (such shareholder or shareholder group, an “Eligible Shareholder”) that has maintained continuous qualifying ownership of at least 3% of the issued and outstanding Company common stock for at least the previous three years would be permitted to nominate and include up to a specified number of proxy access nominees in the Company’s proxy materials for its annual meeting of shareholders provided that the Eligible Shareholder and proxy access nominee(s) satisfy the requirements of the Proxy Access Amendments.
Calculation of Qualifying Ownership
To ensure that the interests of shareholders seeking to include proxy access nominees in the Company’s proxy materials are aligned with those of other shareholders, an Eligible Shareholder would be deemed to own only those outstanding shares of Company common stock as to which the Eligible Shareholder possesses both (1) the full voting and investment rights pertaining to the shares and (2) the full economic interest in (including the opportunity for profit from and risk of loss on) such shares. The following shares would not count as “owned” shares for purposes of the Proxy Access Amendment:
•shares purchased or sold by the Eligible Shareholder or any of its affiliates in any transaction that has not been settled or closed, including any short sale;
•shares borrowed by the Eligible Shareholder or any of its affiliates for any purposes or purchased by the Eligible Shareholder or any of its affiliates pursuant to an agreement to resell such shares; and
•shares subject to any option, warrant, forward contract, swap, contract of sale, other derivative or similar agreement entered into by the Eligible Shareholder or any of its affiliates which has, or is intended to have, the purpose or effect of (1) reducing in any manner, to any extent or at any time in the future, the Eligible Shareholder’s or its affiliates’ full right to vote or direct the voting of any such shares, and/or (2) hedging, offsetting or altering to any degree any gain or loss arising from the full economic ownership of such shares by the Eligible Shareholder or its affiliate.
Number of Proxy Access Nominees
The maximum number of proxy access nominees that the Company would be required to include in its proxy materials would not exceed the greater of (i) two (2) or (ii) 20% of the directors in office on the last day on which a nomination could be submitted (rounded down to the nearest whole number). If, after the nomination deadline, one or more vacancies occur on the Board and the Board decides to reduce the size of the Board in connection therewith, the proxy access nominee limit would be calculated based on the reduced number of directors. Any proxy access nominee who is either subsequently withdrawn or included in the Company’s proxy materials as a nominee of the Board, would be counted against the proxy access nominee limit. Nominees who cease to satisfy, or nominees of nominating shareholders who cease to satisfy, the eligibility requirements of the Proxy Access Amendments would also be counted against the proxy access nominee limit. Any director currently serving on the Board who was a proxy access nominee at any of the two preceding annual meetings and whose reelection at the upcoming annual meeting of the shareholders is being recommended by the Board at the upcoming annual meeting would also be counted against the proxy access nominee limit.
Procedure for Selecting Proxy Access Nominees if Proxy Access Nominee Limit Exceeded
If the number of proxy access nominees exceeds the proxy access nominee limit, then each nominating shareholder will select one nominee for inclusion in the proxy statement does not guarantee that it will be included. Any shareholder proposal not includeduntil the maximum number of director nominees is reached, beginning with the Eligible Shareholder with the largest qualifying ownership and proceeding through the list of Eligible Shareholder in descending order of qualifying ownership.
Nominating Procedure
In order to provide adequate time to assess proxy access nominees, requests to include proxy access nominees in the Company’s proxy materials we disseminatemust be received no earlier than 150 days and no later than 120 days before the anniversary of the date that the Company issued its proxy statement for our 2013the previous year’s annual meeting of shareholders, subject to adjustment in the event the annual meeting is held more than 30 days before or after the anniversary of the date of the prior year’s annual meeting.
Information Required of All Eligible Shareholders
Each Eligible Shareholder seeking to include a proxy access nominee in the Company’s proxy materials would be required to provide certain information to the Company, including, but not limited to:
•a copy of the Schedule 14N filed by the Eligible Shareholders with the SEC;
•information (including representations and warranties) regarding (i) a lack of intent to effect a change in control; (ii) the nominee’s candidacy compliance with applicable law or exchange rules; (iii) certain relationships with the Company and other attributes and biographical information of the nominee; (iv) continued compliance with shareholder eligibility requirements; (v) limitations on nominating shareholder solicitations, other than with respect to the nominee; and (vi) use of proxy cards;
•an agreement to comply with all applicable laws in connection with the nomination, solicitation and election and to file any and all written solicitations relating to director nominees; and
•an agreement to assume certain liabilities and indemnify the Company and its directors, officers, and employees against certain losses, including liabilities and losses relating to the shareholder’s nomination.
Information Required of All Proxy Access Nominees
Each proxy access nominee would be required to make certain written representations to and agreements with the Company, including, but not limited to:
•providing to the Company reasonably requested information;
•agreeing to adhere to the Company’s corporate governance guidelines and Code of Business Conduct and Ethics and any other Company policies and guidelines applicable to directors as adopted from time to time; and
•agreeing that such nominee is not and will not become party to any compensatory arrangements or voting commitments with a person or entity in connection with such proxy access nominee’s service or action as a nominee or director that have not been disclosed to the Company.
Exclusion of Proxy Access Nominees
The Company would not be required to include a proxy access nominee in the Company’s proxy materials if:
•the nominating shareholder or the designated representative thereof does not appear at the meeting of shareholders to present the nomination or the nominating shareholder withdraws its nomination, or the presiding officer of the annual meeting declares that such nomination was not made in accordance with the Proxy Access Amendments;
•the Board determines that such nominee’s nomination or election to the Board would result in the Company’s violating or failing to be in compliance with the Bylaws or the Articles or any applicable law, rule or regulation to which the Company is subject, including any rules or regulations of any stock exchange on which the Company’s securities are traded;
•the nominee was nominated for election to the Board pursuant to the Proxy Access Amendments at one of the Company’s two (2) preceding annual meetings of shareholders of the Company and either withdrew or became ineligible or received less than 25% of the votes that all shareholders are entitled to cast for such nominee;
•the nominee has been, within the past three years, an officer or director of a competitor, as defined for purposes of Section 8 of the Clayton Antitrust Act of 1914, as amended; or
•the Company is notified, or the Board determines, that a nominating shareholder has failed to continue to satisfy the eligibility requirements included in the Proxy Access Amendments, any of the representations and warranties made in the applicable notice ceases to be true and accurate in all material respects (or omits a material fact necessary to make the statement not misleading), the nominee becomes unwilling or unable to serve on the Board or any material violation or breach occurs of the obligations, agreements, representations or warranties of the Proxy Access Amendments.
Supporting Statement
Eligible Shareholders would be permitted to include in the proxy statement a statement of up to 500 words in support of each proxy access nominee. The Company may omit any information or statement that the Board determines is untrue in any material respect, directly or indirectly impugns the character, integrity or personal reputation of, or directly or indirectly makes charges concerning improper, illegal or immoral conduct or associations, without factual foundation, with respect to any person or would violate any applicable law or regulation and may solicit against and include in the proxy statement its own statement relating to any proxy access nominee.
Vote Required
For this proposal to be approved, the affirmative vote of a majority of shares entitled to vote on the matter (i.e., shares outstanding) is required. The failure to vote as well as abstentions and broker non-votes will be counted as votes “AGAINST” this proposal.
THE BOARD UNANIMOUSLY RECOMMENDS
THAT YOU VOTE FOR THIS PROPOSAL ON THE WHITE PROXY CARD.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following tables sets forth certain information as of April 16, 2021 regarding the Company’s capital stock, beneficially owned by each person known to the Company to beneficially own more than 5% of the outstanding shares of Company common stock and Series B Preferred Stock, each NEO, each director, and all directors and executive officers as a group. Unless otherwise indicated below, the address of those identified in the table is c/o MiMedx Group, Inc., 1775 West Oak Commons Court, NE, Marietta, Georgia 30062.
| | | | | | | | | | | | | | | | | | | | |
| Name of Beneficial Owner | | Number of
Shares | | | | Percentage Ownership(1) |
Affiliates of Prescience Point Capital Management, LLC(2) | | 9,058,250 | | | | | 8.0% |
| | | | | | |
| NEOs, Executive Officers, and Directors | | Number of
Shares | | | | Percentage Ownership(1) |
| M. Kathleen Behrens, Ph.D. | | 64,371 | | | | | * |
| James L. Bierman | | 64,371 | | | | | * |
Edward J. Borkowski(3) | | 21,194 | | | | | * |
Peter M. Carlson(4) | | 125,812 | | | | | * |
| Phyllis Gardner | | — | | | | | * |
| Michael J. Giuliani | | 33,523 | | | | | * |
William A. Hawkins(5) | | 13,418 | | | | | * |
William F. Hulse IV(6) | | 30,023 | | | | | * |
Rohit Kashyap(7) | | 173,310 | | | | | * |
| Cato T. Laurencin | | 33,523 | | | | | * |
| K. Todd Newton | | 64,371 | | | | | * |
Robert B. Stein(8) | | 81,833 | | | | | * |
Martin P. Sutter(9) | | 24,125,747 | | | | 17.6% |
Timothy R. Wright(10) | | 730,705 | | | | | * |
Total Directors and Executive Officers(11) (15 persons) | | 25,778,981 | | | | 18.8% |
(1) The beneficial ownership set forth in the table is determined in accordance with SEC rules and includes voting or investment power with respect to the securities. The percentage of beneficial ownership is based on 111,718,544 shares of Company common stock outstanding on April 16, 2021, plus 1,584,059 shares deemed outstanding pursuant to Rule 13d-3 under the Exchange Act. Also, shares of common stock that may be acquired by an individual or group within 60 days of April 16, 2021, pursuant to the exercise of options or warrants, are deemed to be outstanding for the purpose of computing the percentage ownership of such individual or group, but are not deemed to be outstanding for the purpose of computing the percentage ownership of any other person shown in the table. Except as indicated in the footnotes to this table, we believe that the stockholders named in the tables that follow have sole voting and investment power with respect to all shares of Company common stock and/or Company Preferred Stock shown to be beneficially owned by them, based on information provided to us by them.
(2) On April 16, 2021, Eiad Asbahi, Alfred G. Merriweather, Charlotte E. Sibley, William F. Spengler, Prescience Point Capital Management, LLC, and certain affiliated entities filed an amendment to their Schedule 13D that indicated, among other things, that (i) Prescience Partners, LP had shared voting power over, and total beneficial ownership regarding, 6,058,430 shares of Company common stock; (ii) Prescience Point Special Opportunity L.P. had shared voting and dispositive power over, and total beneficial ownership regarding, 2,098,644 shares of Company common stock; (iii) Prescience Capital, LLC had shared voting and dispositive power over, and total beneficial ownership regarding, 8,157,074 shares of Company common stock; (iv) Prescience Investment Group, LLC d/b/a Prescience Point Capital Management LLC, had shared voting and dispositive power over, and total beneficial ownership regarding, 8,735,918 shares of Company common stock; (v) Mr. Asbahi had shared voting and dispositive power over, and total beneficial ownership regarding, 9,058,250 shares of Company common stock; (vi) Alfred G. Merriweather had shared voting and dispositive power over, and total beneficial ownership regarding, 1,270 shares of Company common stock; (vii) Charlotte E. Sibley had shared voting and dispositive power over, and total beneficial ownership regarding, 1,241 shares of Company common stock; and (viii) William F. Spengler had shared voting and dispositive power over, and total beneficial ownership regarding, 1,260 shares of Company common stock. The address of the principal office of Prescience Partners, LP, Prescience Point Special Opportunity L.P., Prescience Capital, LLC, Prescience Investment Group, LLC d/b/a Prescience Point Capital Management LLC, and Mr. Asbahi is 1670 Lobdell Avenue, Suite 200, Baton Rouge, Louisiana 70806. The address of the principal office of Mr. Merriweather is PO Box 668, Los Altos, California 94023. The address of the principal office of Ms. Sibley is 115 Hunt Valley Circle, Berwyn, Pennsylvania 19312. The address of the principal office of Mr. Spengler is 1003 NE 9th Avenue, Delray Beach, Florida 33483.
(3) Mr. Borkowski resigned as Executive Vice President and Interim Chief Financial Officer effective November 15, 2019. Share ownership information is limited to record ownership.
(4) Does not include 35,212 restricted stock units granted on December 16, 2019 that will vest based upon the achievement of certain performance criteria. Does not include 263,091 time vested restricted stock units.
(5) Does not include 42,200 time vested restricted stock units.
(6) Does not include 179,812 time vested restricted stock units.
(7) Does not include 99,304 time vested restricted stock units.
(8) Does not include 109,235 time vested restricted stock units.
(9) Mr. Sutter is deemed to own 24,125,247 shares of Company common stock issuable upon conversion of 90,000 shares of Series B Preferred Stock and unpaid dividends held of record by an affiliate of EW Healthcare Partners, (converted using a ratio of $1,000 divided by $3.85, or approximately 259 common shares per share of Series B Preferred Stock), and 500 shares of common stock owned by his spouse.
(10) Does not include 716,508 time vested restricted stock units.
(11) Represents the ownership of only those persons currently serving as a director or executive officer of the Company. Includes 24,125,247 shares of Company common stock that may be acquired within 60 days.
| | | | | | | | | | | | | | | | | | | | |
| SERIES B CONVERTIBLE PREFERRED STOCK |
| Name of Beneficial Owner | | Number of
Shares of Series B Convertible Preferred Stock | | Number of
Shares of Company Common Stock Into Which They May Convert(b) | | Percentage Ownership(b)(c) |
EW Healthcare Partners(a) | | 90,000 | | | 24,125,247 | | 17.6% |
(a) The Series B Preferred Stock held of record by Falcon Fund 2 Holding Company, L.P., a partnership controlled by EW Healthcare Partners. EW Healthcare Partners Fund 2-UGP, LLC, the general partner of Falcon Fund 2 Holding Company, L.P., may also be deemed to have sole voting and investment power with respect to such shares of Company common stock. EW Healthcare Partners Fund 2-UGP, LLC, in a Schedule 13D filed on July 13, 2020 by it, Falcon Fund 2 Holding Company, L.P., Martin P. Sutter, Scott Barry, Ronald W. Eastman, Petri Vainio and Steve Wiggins, each a manager and collectively the managers of EW Healthcare Partners Fund 2-UGP, LLC (the “EW Schedule 13D”), disclaimed beneficial ownership of such shares of Company common stock except to the extent of its or his pecuniary interest therein. Similarly, each of the managers may be deemed to exercise shared voting and investment power with respect to such shares, and in the EW Schedule 13D each manager disclaimed beneficial ownership of such shares of Company common stock except to the extent of his pecuniary interest therein. Martin P. Sutter is a member of the Company’s Board of Directors. The principal address of the EW Healthcare Partners entities and each of the managers is 21 Waterway Avenue, Suite 225, The Woodlands, Texas 77380.
(b) Conversion to Common Stock. Each holder of Series B Preferred Stock (each a “Holder” and collectively, the “Holders”) will have the right, at its option, to convert its Series B Preferred Stock (plus any accrued and unpaid dividends), in whole or in part, into a number of fully paid and non-assessable shares of Company common stock (converted using a ratio of $1,000 divided by $3.85, or approximately 259 common shares per share of Series B Preferred Stock). For purposes of this table the conversion price is presumed to be $3.85. No Holder may convert its shares of Series B Preferred Stock into shares of Company common stock if such conversion would result in the Holder, together with its affiliates, holding more than 19.9% of the votes entitled to be cast at any shareholders meeting or beneficially owning in excess of 19.9% of then-outstanding shares of Company common stock.
(c) Voting Rights. Each share of Series B Preferred Stock is entitled to be voted by the Holders and will vote on an as-converted basis (converted using a ratio of $1,000 divided by $5.25 per share, or approximately 190 votes per share of Series B Preferred Stock) as a single class with the Company common stock, subject to certain limitations on voting set forth in the Articles of Amendment to the Company’s Articles of Incorporation, including a limit on the maximum number of votes to which Holders are entitled. As a result, EW Healthcare Partners would have 17,691,848 votes, or 13.5%, as of April 16, 2021. Percentage of total voting power is based on 111,718,544 shares of Company common stock outstanding on April 16, 2021, plus 1,584,059 shares deemed outstanding pursuant to Rule 13d-3 under the Exchange Act, plus the 17,691,848 votes to which EW Healthcare Partners are entitled.
OTHER MATTERS
Participants in the Solicitation
Under applicable SEC regulations, each of the Company’s directors and certain executive officers and other employees of the Company are deemed to be “participants” in this proxy solicitation by virtue of their position as directors and director nominees of the Company or because they may be soliciting proxies on our behalf. For information about our directors and certain of our executive officers and other employees who may be deemed to be “participants” in the solicitation, please see “Proposal 1—Election of Three Class II Directors” under the heading “Class II Director Nominees—Term Expiring at the 2024 Annual Meeting of Shareholders” beginning on page 16, “Proposal 2—Election of One Class III Director” under the heading “Class III Director Nominee—Term Expiring at the 2022 Annual Meeting of Shareholders” beginning on page 18, “Board of Directors—Biographies of Other Continuing Directors” beginning on page 21, “Corporate Governance—Executive Officers” beginning on page 32, “Security Ownership of Certain Beneficial Owners and Management” beginning on page 64 of this Proxy Statement and Annex A to this Proxy Statement. Other than the persons described in this Proxy Statement, no general class of employee of the Company will be employed to solicit shareholders in connection with this proxy solicitation. However, in the course of their regular duties, employees may be asked to perform clerical or ministerial tasks in furtherance of this solicitation.
Proxy Solicitation Costs
The Company will bear the expenses of calling and holding the Annual Meeting and the solicitation of proxies on behalf of the Board. These expenses will include, among others, the costs of preparing, assembling, printing and mailing the proxy materials to shareholders of record and reimbursement paid to brokerage firms, banks and other fiduciaries for their reasonable out-of-pocket expenses for forwarding proxy materials to beneficial owners and obtaining beneficial owners’ voting instructions. Proxies may be solicited through the mail, in person, by telephone or via email.
We have retained Morrow Sodali LLC to solicit proxies in connection with the Annual Meeting. Under our agreement with them, Morrow Sodali will receive a fee of up to $[ ]. Morrow Sodali, and potentially employees and directors of MiMedx, will solicit proxies in person, by mail, telephone, facsimile, or email. The Company’s aggregate expenses, including those of Morrow Sodali, related to this solicitation and in excess of expenses normally spent for an annual meeting in which there is not a proxy contest and salaries and wages of regular employees and officers, are currently estimated to be approximately $[ ], of which approximately $[ ] has been incurred as of the date of this Proxy Statement. The Company also agreed to indemnify Morrow Sodali against certain liabilities relating to, or arising out of, its retention.
Shareholder Proposals and Director Nominations for the 2022 Annual Meeting of Shareholders
The Company does not know at this time when it will hold the 2022 annual meeting. In the event that an annual meeting is held more than 30 days earlier than the anniversary of the date of the immediately preceding annual meeting, notice of a shareholder nomination or proposal must be delivered to the Company no more than 190 days prior to such annual meeting nor less than the later of (i) 90 days prior to the date of such annual meeting and (ii) the tenth day following the day on which public announcement of the date of such meeting is first made.
Because the 2022 Annual Meeting has not yet been scheduled, the Company is not providing a deadline for submitting shareholder proposals for the 2022 Annual Meeting at this time. Instead, in accordance with Rule 14a-814a-8(e)(2) under the Exchange Act, the Company will be considered untimelyprovide shareholders with a deadline set at a reasonable time before the Company begins to print and send its proxy materials for the purposes2022 Annual Meeting.
Householding of Rules 14a-4 and 14a-5 underProxy Materials
We may deliver only one copy of this Proxy Statement to shareholders residing at the Exchange Act if noticesame address unless contrary instructions have been received from one or more of the proposalaffected shareholders. This is received after January 15, 2014. Management proxiesknown as “householding.” We do this to reduce costs and preserve resources. Upon oral or written request, we will be authorized to exercise discretionary authority with respectpromptly deliver a separate copy to any shareholder proposal not included inresiding at an address to which only one copy was mailed. Shareholders of record residing at the same address that have received multiple copies of this Proxy Statement may contact our mailing agent, Broadridge, to request that only a single copy of our proxy materials unless (a) we receive notice of such proposalstatement be mailed in the future. Contact Broadridge by January 9, 2014, and (b) the conditions set forth in Rule 14a-4(c)(2)(i)-(iii) under the Exchange Act are met.phone at 1-800-690-6903 or by mail at 51 Mercedes Way, Edgewood, NY 11717.
Additional Information
Management knows of no matters that are to be presented for action at the Annual Meeting of Shareholders other than those set forth above.in this Proxy Statement. If any other matters properly come before the Annual Meeting, of Shareholders, the persons named in the enclosed form of proxy will vote the shares represented by proxies in accordance with their best judgment on such matters.
ANNEX A
ADDITIONAL INFORMATION REGARDING
PARTICIPANTS IN THE SOLICITATION
Under applicable SEC rules and regulations, members of the expensesBoard, the Board Nominees and certain executive officers of the Company are “participants” with respect to the Company’s solicitation of proxies in connection with the solicitationAnnual Meeting. The following sets forth certain information about such persons (the “Participants”).
Directors and Board Nominees
The names, ages and principal occupations of proxies. Solicitation will be madethe Company directors and the Board nominees who are Participants are set forth in the sections entitled “Proposal 1—Election of Three Class II Directors” under the heading “Class II Director Nominees—Terms Expiring in 2024 Annual Meeting of Shareholders ” beginning on page 16, “Proposal 2—Election of One Class III Director” under the heading “Class III Director Nominee—Term Expiring in 2022” beginning on page 18 and “Board of Directors—Biographies of Other Continuing Directors” beginning on page 21. Other than as set forth in this Proxy Statement, no such principal occupation has been at any corporation or organization that is a parent, subsidiary or other affiliate of the Company. The business address for each of the Company directors and the Board nominees is c/o MiMedx Group, Inc., 1775 West Oak Commons Court, NE, Marietta, Georgia 30062.
Officers
The executive officers of the Company who are Participants are Timothy R. Wright, Peter M. Carlson, Mark P. Graves, William F. “Butch” Hulse IV, Rohit Kashyap, Robert B. Stein, and Scott M. Turner. The business address for each of the executive officers is c/o MiMedx Group, Inc., 1775 West Oak Commons Court, NE, Marietta, Georgia 30062. The principal occupations of the Company’s executive officers are stated under the section entitled “Corporate Governance—Executive Officers” beginning on page 32. Other than as set forth in this Proxy Statement, no such principal occupation has been at any corporation or organization that is a parent, subsidiary or other affiliate of the Company.
Information Regarding Ownership of the Company’s Securities by mail, but may also be madeParticipants
The number of the Company’s securities beneficially owned by telephone, personal interview, facsimile or personal calls by our officers, directors or employees who will not be specially compensated for such solicitation. We may request brokerage houses and other nominees or fiduciaries to forward copiesNEOs as of our proxy statement to beneficial ownersApril 16, 2021 is set forth in the section entitled “Security Ownership of common stock held in their namesCertain Beneficial Owners and we may reimburse them for reasonable out-of-pocket expenses incurred in doing so.Management” beginning on page 64.
A copy of our Annual Report on Form 10-K for the year ended December 31, 2012, , and our Quarterly Reports on Form 10-Q for the periods ended March 31, June 30 and September 30, 2012 as filed with the Securities and Exchange Commission, will be sent to any shareholder without charge upon written request addressed to:
| Michael J. Senken |
| MiMedx Group, Inc. |
| 60 Chastain Center Blvd., Suite 60 |
| Kennesaw, Georgia 30144 |
| | |
| | By order of the Board of Directors, |
| | |
| | /s/ Parker H. Petit |
| | Parker H. Petit |
| | Chairman and Chief Executive Officer |
| | |
| | April 3, 2013 |
32Information Regarding Transactions in the Company’s Securities by Participants
The following table sets forth information regarding purchases and sales of the Company’s securities by each Participant within the past two years.
Transaction Descriptions Key
ItemDescription
1 Grant of restricted shares for director grant (including unvested restricted stock units)
2 Grant of annual restricted shares for first year director grant (including unvested restricted stock units)
3 Regular scheduled purchase
4 Transfer to direct
5 Dividend reinvestment
6 Gift
7 Shares withheld for tax
8 Officer grant (including unvested restricted stock units)
9 Transfer to indirect by gift
10 Purchase
11 Transfer to indirect
12 Sale
| | | | | | | | | | | | | | | | | |
| Name | | Transaction Date | Number of Shares of Company Common Stock | Acquisition (A)
or Disposition (D) | Transaction
Description
Code |
| M. Kathleen Behrens | | 8/05/2020 | 38,135 | | A | 8 |
| | 10/02/2020 | 26,236 | | A | 1 |
| James L. Bierman | | 8/05/2020 | 38,135 | | A | 8 |
| | 10/02/2020 | 26,236 | | A | 1 |
| Phyllis Gardner | | None | N/A | N/A | N/A |
| Michael J. Giuliani | | 12/16/2020 | 22,349 | | A | 1 |
| | 12/16/2020 | 11,174 | | A | 1 |
| William A Hawkins | | 7/21/2020 | 13,418 | | A | 1 |
| | 10/02/2020 | 26,236 | | A | 1 |
| | 12/16/2020 | 15,964 | | A | 1 |
| Cato T. Laurencin | | 12/16/2021 | 22,349 | | A | 1 |
| | 12/16/2021 | 11,174 | | A | 1 |
| K. Todd Newton | | 8/05/2020 | 38,135 | | A | 1 |
| | 10/02/2020 | 26,236 | | A | 1 |
| Martin P. Sutter | | 7/2/2020 | 23,377,123 | A | 1 |
| | | | | | | | | | | | | | | | | |
| Name | | Transaction Date | Number of Shares of Company Common Stock | Acquisition (A)
or
Disposition (D) | Transaction
Code |
| Timothy R. Wright | | 6/07/2019 | 681,818 | | A | 8 |
| | 6/07/2020 | 89,591 | | D | 7 |
| | 8/05/2020 | 572,033 | | A | 8 |
| | 2/18/2021 | 70,200 | | D | 7 |
| | 3/04/2021 | 335,153 | | A | 8 |
| Peter M. Carlson | | 12/18/2019 | 49,295 | | A | 8 |
| | 7/06/2020 | 35,211 | | A | 8 |
| | 8/05/2020 | 177,966 | | A | 8 |
| | 11/04/2020 | 35,211 | | A | 8 |
| | 2/18/2021 | 18,015 | | D | 7 |
| | 3/04/2021 | 109,235 | | A | 8 |
| Mark P. Graves | | 4/26/2020 | 3,363 | | D | 7 |
| | 8/05/2020 | 35,254 | | A | 8 |
| | 2/18/2021 | 4,060 | | D | 7 |
| | 3/4/2021 | 27,308 | A | 8 |
| William F. Hulse IV | | 8/5/2020 | 120,762 | A | 8 |
| | 2/18/2021 | 10,231 | D | 7 |
| | 3/4/2021 | 99,304 | A | 8 |
| Rohit Kashyap | | 8/3/2020 | 173,310 | A | 8 |
| | 3/4/2021 | 99,304 | A | 8 |
| Robert B. Stein | | 8/10/2020 | 81,833 | A | 8 |
| | 3/4/2021 | 191,068 | A | 8 |
| Scott M. Turner | | 2/22/2019 | 3,540 | D | 7 |
| | 2/22/2019 | 1,876 | D | 7 |
| | 4/25/2019 | 1,460 | D | 7 |
| | 4/26/2019 | 52,067 | A | 8 |
| | 10/26/2019 | 292 | D | 7 |
| | 2/22/2020 | 3,540 | D | 7 |
| | 2/22/2020 | 1,629 | D | 7 |
| | 4/26/2020 | 5,067 | D | 7 |
| | 8/5/2020 | 48,135 | A | 8 |
| | 10/26/2020 | 301 | D | 7 |
| | 2/18/2021 | 5,278 | D | 7 |
| | 2/22/2021 | 1,572 | D | 7 |
| | 3/4/2021 | 39,721 | A | 8 |
Miscellaneous Information Concerning Participants
Each of the Company’s directors and officers is entitled to indemnification under the Articles and the Bylaws. In addition, each of the Company’s directors is a party to an indemnification agreement with the Company.
Other than as set forth in this Annex A or elsewhere in this Proxy Statement and based on the information provided by each Participant, no Participant or associate of March 6, 2013any Participant:
MIMEDX GROUP, INC.• beneficially owns, directly or indirectly, or owns of record but not beneficially, any shares of Company common stock or other securities of the Company or any of the Company’s subsidiaries or
ASSUMED 2006 STOCK INCENTIVE PLAN
•has any substantial interest, direct or indirect, by security holdings or otherwise, in any matter to be acted upon at the Annual Meeting other than an interest, if any, as a shareholder of the Company or, with respect to a Board nominee, as a nominee for director.
1. Definitions
In addition, to other terms defined herein,than as described elsewhere in this Proxy Statement, neither the following terms shall have the meanings given below:
(a) Administrator means the Board, and, upon its delegation of all or part of its authority to administer the Plan to the Committee, the Committee.
(b) Affiliate meansCompany nor any Parent or Subsidiary of the Corporation, and also includesParticipants listed above is now or has been within the past year a party to any other business entity which is controlled by, under common controlcontract, arrangement or understanding with or controlsany person with respect to any of the Corporation; provided, however, that the term “Affiliate” shall be construed in a manner in accordance with the registration provisions of applicable federalCompany’s securities, laws and any requirements imposed under Code Section 409A, related regulations or other guidance.
(c) Applicable Laws means any applicable laws, rules or regulations (or similar guidance), including, but not limited to, joint ventures, loan or option arrangements, puts or calls, guarantees against loss or guarantees of profit, division of losses or profits or the Securities Act, the Exchange Act and the Code.giving or withholding of proxies.
(d) Award means, individuallyOther than as set forth in this Annex A or collectively, a grant under the Plan of an Option (including an Incentive Option or Nonqualified Option); a Stock Appreciation Right (including a Related SAR or a Freestanding SAR); a Restricted Award (including a Restricted Stock Award or a Restricted Unit Award); a Dividend Equivalent Award; or any other award granted under the Plan.
(e) Award Agreement means an agreement (which may beelsewhere in written or electronic form, in the Administrator’s discretion,this Proxy Statement and which includes any amendment or supplement thereto) between the Corporation and a Participant specifying the terms, conditions and restrictions of an Award granted to the Participant. An Award Agreement may also state such other terms, conditions and restrictions, including but not limited to terms, conditions and restrictions applicable to shares or any other benefit underlying an Award, as may be established by the Administrator.
(f) Board or Board of Directors means the Board of Directors of the Corporation.
(g) Cause means, unless the Administrator determines otherwise, a Participant’s termination of employment or service resulting from the Participant’s (i) termination for “cause” as defined under the Participant’s employment, consulting or other agreement with the Corporation or an Affiliate, if any, or (ii) if the Participant has not entered into any such employment, consulting or other agreement (or if any such agreement does not address the effect of a “cause” termination), then the Participant’s termination shall be for “Cause” if termination results due to the Participant’s (A) dishonesty; (B) refusal or continued failure to perform his duties for the Corporation, as determined by the Administrator or its designee; (C) engaging in fraudulent conduct; or (D) engaging in any conduct that could be materially damaging to the Corporation without a reasonable good faith belief that such conduct was in the best interest of the Corporation. The determination of “Cause” shall be made by the Administrator and its determination shall be final and conclusive. Without in any way limiting the effect of the foregoing, for the purposes of the Plan and any Award, a Participant’s employment or service shall be deemed to have terminated for Cause if, after the Participant’s employment or service has terminated, facts and circumstances are discovered that would have justified, in the opinion of the Administrator, a termination for Cause.
(h) Change in Control:
(i) General: Except as may be otherwise provided in an individual Award Agreement or as may be otherwise required in order to comply with Code Section 409A, a Change in Control shall be deemed to have occurredbased on the earliest to occur of a change ininformation provided by each Participant, neither the ownership of the Corporation, a change in the effective control of the Corporation, a change in ownership of a substantial portion of the Corporation’s assets and a disposition of a substantial portion of the Corporation’s assets, all as defined below:
(a) A change in the ownership of the Corporation occurs on the date that any one person, or more than one person acting as a group, acquires ownership of stock of the Corporation which, together with stock held by such person or group, represents more than fifty percent (50%) of the total fair market value or total voting power of the stock of the Corporation. An increase in the percentage of stock owned by any one person, or persons acting as a group, as a result of a transaction in which the Corporation acquires its stock in exchange for property will be treated as an acquisition of stock.
(b) A change in the effective control of the Corporation occurs on the date that either: any one person, or more than one person acting as a group becomes the beneficial owner of stock of the Corporation possessing more than fifty percent (50%) of the total voting power of the stock of the Corporation; or a majority of members of the Corporation’s board of directors is replaced during any 24-month period by directors whose appointment or election is not endorsed by at least two-thirds (2/3) of the members of the Corporation’s board of directors who were directors prior to the date of the appointment or election of the first of such new directors.
(c) A change in the ownership of a substantial portion of the Corporation’s assets occurs on the date that any one person, or more than one person acting as a group, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) assets from the Corporation that have a total fair market value equal to seventy-five percent (75%) or more of the total fair market value of all of the assets of the Corporation immediately prior to such acquisition or acquisitions. The transfer of assets by the Corporation is not treated as a change in the ownership of such assets if the assets are transferred to an entity more than fifty percent (50%) of the total value or voting power of which is owned, directly or indirectly, by the Corporation.
(d) A disposition of a substantial portion of the Corporation’s assets occurs on the date that the Corporation transfers assets by sale, lease, exchange, distribution to shareholders, assignment to creditors, foreclosure or otherwise, in a transaction or transactions not in the ordinary course of the Corporation’s business (or has made such transfers during the 12-month period ending on the date of the most recent transfer of assets) that have a total fair market value equal to seventy-five percent (75%) or more of the total fair market value of all of the assets of the Corporation as of the date immediately prior to the first such transfer or transfers. The transfer of assets by the Corporation is not treated as a disposition of a substantial portion of the Corporation’s assets if the assets are transferred to an entity, more than fifty percent (50%) of the total value or voting power of which is owned, directly or indirectly, by the Corporation.
(e) The Administrator shall have full and final authority, in its discretion, to determine whether a Change in Control of the Corporation has occurred pursuant to the above definition, the date of the occurrence of such Change in Control and any incidental matters relating thereto.
For purposes of the above-definition of a “Change in Control,” the terms “person,” “acting as a group” and “ownership” shall have the meanings prescribed in Sections 3(a)(9) and 13(d)(3) of the Securities Exchange Act of 1934, as amended, and Rule 13d-3 promulgated thereunder; provided, however, that in any merger, consolidation or share exchange in which less than fifty percent (50%) of the outstanding voting securities of the Corporation or its successor corporation are held by the former shareholders of the Corporation, the shareholders of the other parties to the transaction shall be deemed to have acted as a group that acquired ownership of more than fifty percent (50%) of the outstanding voting securities of the Corporation, resulting in a change in ownership under (a) above.
(ii) Definition Applicable to Awards subject to Code Section 409A: Notwithstanding the preceding provisions of Section 1(h)(i), in the event that any Awards granted under the Plan are deemed to be deferred compensation subject to the provisions of Code Section 409A, then distributions related to such Awards may be permitted, in the Administrator’s discretion, upon the occurrence of one or more of the following events (as they are defined and interpreted under Code Section 409A, related regulations or other guidance): (A) a change in the ownership of the Corporation, (B) a change in effective control of the Corporation, or (C) a change in the ownership of a substantial portion of the assets of the Corporation.
(i) Code means the Internal Revenue Code of 1986, as amended.
(j) Committee means the Compensation Committee of the Board, which may be appointed to administer the Plan.
(k) Common Stock means the common stock of MiMedx Group, Inc., $0.001 par value per share.
(l) Corporation means MiMedx Group, Inc., a Florida corporation, together with any successor thereto.
(m) Covered Employee shall have the meaning given the term in Section 162(m) of the Code and related regulations.
(n) Director means a member of the Board or of the board of directors of an Affiliate.
(o) Disability shall, except as may be otherwise determined by the Administrator or required under Code Section 409A or related regulations or other guidance, have the meaning given in any employment agreement, consulting agreement or other similar agreement, if any, to which a Participant is a party, or, if there is no such agreement (or if any such agreement does not address the effect of termination due to disability), “Disability” shall mean the inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death, or which has lasted or can be expected to last for a continuous period of not less than 12 months. The Administrator shall have discretion to determine if a termination due to Disability has occurred.
(p) Displacement shall, as applied to any Participant, be as defined in any employment agreement, consulting agreement or other similar agreement, if any, to which the Participant is a party, or, if there is no such agreement (or if any such agreement does not address the effect of a termination due to displacement), “Displacement” shall mean the termination of the Participant’s employment or service due to the elimination of the Participant’s job or position without fault on the part of the Participant (as determined by the Administrator).
(q) Dividend Equivalent Award means a right granted to a Participant pursuant to Section 10 to receive the equivalent value (in cash or shares of Common Stock) of dividends paid on Common Stock.
(r) Effective Date means the effective date of the Plan, as provided in Section 4.
(s) Employee means any person who is an employee of the Corporation or any Affiliate (including entities which become Affiliates after the Effective Date of the Plan). For this purpose, an individual shall be considered to be an Employee only if there exists between the individual and the Corporation or an Affiliate the legal and bona fide relationship of employer and Employee; provided, however, that, with respect to Incentive Options, “Employee” means any person who is considered an employee of the Corporation or any Parent or Subsidiary for purposes of Treas. Reg. Section 1.421-1(h) (or any successor provision related thereto).
(t) Exchange Act means the Securities Exchange Act of 1934, as amended.
(u) Fair Market Value per share of the Common Stock shall be established in good faith by the Administrator and, unless otherwise determined by the Administrator, the Fair Market Value shall be determined in accordance with the following provisions: (A) if the shares of Common Stock are listed for trading on the New York Stock Exchange or the American Stock Exchange, the Fair Market Value shall be the closing sales price per share of the shares on the New York Stock Exchange or the American Stock Exchange (as applicable) on the date immediately preceding the date an Option is granted or other determination is made (such date of determination being referred to herein as a “valuation date”), or, if there is no transaction on such date, then on the trading date nearest preceding the valuation date for which closing price information is available, and, provided further, if the shares are quoted on the Nasdaq National Market or the Nasdaq SmallCap Market of the Nasdaq Stock Market but are not listed for trading on the New York Stock Exchange or the American Stock Exchange, the Fair Market Value shall be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on such system on the date immediately or nearest preceding the valuation date for which such information is available, and, provided further, if the shares are not listed for trading on the New York Stock Exchange or the American Stock Exchange or quoted on the Nasdaq National Market or the Nasdaq SmallCap Market, the Fair Market Value shall be the average between the highest bid and lowest asked prices for such stock on the date immediately or nearest preceding the valuation date as reported on the Nasdaq OTC Bulletin Board Service or by the National Quotation Bureau, Incorporated or a comparable service; or (B) if the shares of Common Stock are not listed or reported inCompany nor any of the foregoing, then the Fair Market Value shall be determined by the Administrator based on such valuation measuresParticipants listed above or other factors as it deems appropriate. Notwithstanding the foregoing, (i) with respect to the grant of Incentive Options, the Fair Market Value shall be determined by the Administrator in accordance with the applicable provisions of Section 20.2031-2 of the Federal Estate Tax Regulations, or in any other manner consistent with the Code Section 422 and accompanying regulations; and (ii) Fair Market Value shall be determined in accordance with Section 409A, related regulations or other guidance to the extent required by such provisions.
(v) Freestanding SAR means an SAR that is granted without relation to an Option, as provided in Section 8.
(w) Incentive Option means an Option that is designated by the Administrator as an Incentive Option pursuant to Section 7 and intended to meet the requirements of incentive stock options under Code Section 422 and related regulations.
(x) Independent Contractor means an independent contractor, consultant or advisor providing services to the Corporation or an Affiliate.
(y) Nonqualified Option means an Option granted under Section 7 that is not intended to qualify as an incentive stock option under Code Section 422 and related regulations.
(z) Option means a stock option granted under Section 7 that entitles the holder to purchase from the Corporation a stated number of shares of Common Stock at the price set forth in an Award Agreement.
(aa) Option Period means the term of an Option, as provided in Section 7(d)(i).
(bb) Option Price means the price at which an Option may be exercised, as provided in Section 7(b).
(cc) Parent means a “parent corporation,” whether now or hereafter existing, as defined in Section 424(e) of the Code.
(dd) Participant means an individual employed by, or providing services to, the Corporation or an Affiliate who satisfies the requirements of Section 6 and is selected by the Administrator to receive an Award under the Plan.
(ee) Performance Measures mean one or more performance factors which may be established by the Administrator with respect to an Award. Performance factors may be based on such corporate, business unit or division and/or individual performance factors and criteria as the Administrator in its discretion may deem appropriate; provided, however, that, if and to the extent that Section 162(m) of the Code is applicable, then such performance factors shall be limited to one or more of the following (as determined by the Administrator in its discretion): (i) cash flow; (ii) return on equity; (iii) return on assets; (iv) earnings per share; (v) operations expense efficiency milestones; (vi) consolidated earnings before or after taxes (including earnings before interest, taxes, depreciation and amortization); (vii) net income; (viii) operating income; (ix) book value per share; (x) return on investment; (xi) return on capital; (xii) improvements in capital structure; (xiii) expense management; (xiv) profitability of an identifiable business unit or product; (xv) maintenance or improvement of profit margins; (xvi) stock price or total shareholder return; (xvii) market share; (xviii) revenues or sales; (xix) costs; (xx) working capital; (xxi) economic wealth created; (xxii) strategic business criteria; (xxiii) efficiency ratio(s); (xxiv) achievement of division, group, function or corporate financial, strategic or operational goals; and (xxv) comparisons with stock market indices or performances of metrics of peer companies. If and to the extent that Section 162(m) of the Code is applicable, the Administrator shall, within the time and in the manner prescribed by Section 162(m) of the Code and related regulations, define in an objective fashion the manner of calculating the Performance Measures it selects to use for Participants during any specific performance period and determine whether such Performance Measures have been met. Such performance factors may be adjusted or modified due to extraordinary items, transactions, events or developments, or in recognition of, or in anticipation of, any other unusual or nonrecurring events affecting the Corporation or the financial statements of the Corporation, or in response to, or in anticipation of, changes in Applicable Laws, accounting principles or business conditions, in each case as determined by the Administrator.
(ff) Plan means the MiMedx Group, Inc. Assumed 2006 Stock Incentive Plan, as it may be hereafter amended and/or restated.
(gg) Related SAR means an SAR granted under Section 8 that is granted in relation to a particular Option and that can be exercised only upon the surrender to the Corporation, unexercised, of that portion of the Option to which the SAR relates.
(hh) Restricted Award means a Restricted Stock Award and/or a Restricted Stock Unit Award, as provided in Section 9.
(ii) Restricted Stock Award means shares of Common Stock awarded to a Participant under Section 9. Shares of Common Stock subject to a Restricted Stock Award shall cease to be restricted when, in accordance with the terms of the Plan and the terms and conditions established by the Administrator, the shares vest and become transferable and free of substantial risks of forfeiture.
(jj) Restricted Stock Unit means a Restricted Award granted to a Participant pursuant to Section 9 which is settled (i) by the delivery of one share of Common Stock for each Restricted Stock Unit, (ii) in cash in an amount equal to the Fair Market Value of one share of Common Stock for each Restricted Stock Unit, or (iii) in a combination of cash and Shares equal to the Fair Market Value of one share of Common Stock for each Restricted Stock Unit, as determined by the Administrator. A Restricted Stock Unit Award represents the promise of the Corporation to deliver shares, cash or a combination thereof, as applicable, upon vesting of the Award and compliance with such other terms and conditions as may be determined by the Administrator.
(kk) Retirement shall, as applied to any Participant, be as defined in any employment agreement, consulting agreement or other similar agreement, if any, to which the Participant is a party, or, if there is no such agreement (or if any such agreement does address the effect of termination due to retirement), “Retirement” shall mean retirement in accordance with the retirement policies and procedures established by the Corporation, as determined by the Administrator.
(ll) SAR means a stock appreciation right granted under Section 8 entitling the Participant to receive, with respect to each share of Common Stock encompassed by the exercise of such SAR, the excess of the Fair Market Value on the date of exercise over the SAR base price, subject to the terms of the Plan and any other terms and conditions established by the Administrator. References to “SARs” include both Related SARs and Freestanding SARs, unless the context requires otherwise.
(mm) Securities Act means the Securities Act of 1933, as amended.
(nn) Shareholders’ Agreement means that certain Shareholders’ Agreement which may be entered into between the Corporation and certain or all shareholders of the Corporation, as it may be amended.
(oo) Subsidiary means a “subsidiary corporation,” whether now or hereafter existing, as defined in Section 424(f) of the Code.
(pp) Termination Date means the date of termination of a Participant’s employment or service with the Company as a non-employee Director or Independent Contractor, for any reason, as determined by the Administrator in its discretion.
2. Purpose
The purpose of the Plan is to encourage and enable selected Employees, Directors and Independent Contractors of the Corporation and its Affiliates to acquire or to increase their holdings of Common Stock of the Corporation and other proprietary interests in the Corporation in order to promote a closer identification of their interestsrespective associates have or will have:
• any arrangements or understandings with those of the Corporation and its shareholders, thereby further stimulating their efforts to enhance the efficiency, soundness, profitability, growth and shareholder value of the Corporation. This purpose may be carried out through the grant of Awards to selected Employees, Directors and Independent Contractors, which may include the grant to selected Participants of Options in the form of Incentive Stock Options and Nonqualified Options; SARs in the form of Related SARs and Freestanding SARs; Restricted Awards in the form of Restricted Stock Awards and Restricted Stock Units; and/or Dividend Equivalent Awards.
3. Administration of the Plan
(a) The Plan shall be administered by the Board of Directors of the Corporation, or, upon its delegation, by the Committee. In the event that the Corporation shall become subject to the reporting requirements of the Exchange Act, the Committee shall be comprised solely of two or more “non-employee directors,” as such term is defined in Rule 16b-3 under the Exchange Act, or as may otherwise be permitted under Rule 16b-3, unless the Board determines otherwise. Further, in the event that the provisions of Section 162(m) of the Code or related regulations become applicable to the Corporation, the Plan shall be administered by a committee comprised of two or more “outside directors” (as such term is defined in Section 162(m) or related regulations) or as may otherwise be permitted under Section 162(m) and related regulations. For the purposes of the Plan, the term “Administrator” shall refer to the Board and, upon its delegation to the Committee of all or part of its authority to administer the Plan, to the Committee. Notwithstanding the foregoing, the Board shall have sole authority to grant Awards to Directors who are not Employees of the Corporation or its Affiliates.
(b) Subject to the provisions of the Plan, the Administrator shall have full and final authority in its discretion to take any action with respect to the Plan including, without limitation, the authority (i) to determine all matters relating to Awards, including selection of individuals to be granted Awards, the types of Awards, the number of shares of the Common Stock, if any, subject to an Award, and all terms, conditions, restrictions and limitations of an Award; (ii) to prescribe the form or forms of Award Agreements evidencing any Awards granted under the Plan; (iii) to establish, amend and rescind rules and regulations for the administration of the Plan; and (iv) to construe and interpret the Plan, Awards and Award Agreements made under the Plan, to interpret rules and regulations for administering the Plan and to make all other determinations deemed necessary or advisable for administering the Plan. Except to the extent otherwise required or restricted under Code Section 409A or related regulations or other guidance, (i) the Administrator shall have the authority, in its sole discretion, to accelerate the date that any Award which was not otherwise exercisable, vested or earned shall become exercisable, vested or earned in whole or in part without any obligation to accelerate such dateperson with respect to any other Award granted to any recipient; and (ii) the Administrator also may in its sole discretion modify or extend the terms and conditions for exercise, vesting or earning of an Award. The Administrator may determine that a Participant’s rights, payments and/or benefits with respect to an Award (including but not limited to any shares issued or issuable and/or cash paid or payable with respect to an Award) shall be subject to reduction, cancellation, forfeiture or recoupment upon the occurrence of certain specified events, in addition to any otherwise applicable vesting or performance conditions of an Award. Such events may include, but shall not be limited to, termination offuture employment for cause, violation of policies of the Corporation or an Affiliate, breach of non-solicitation, noncompetition, confidentiality, proprietary rights and invention assignment agreements or other restrictive covenants that may apply to the Participant, or other conduct by the Participant that is determined by the Administrator to be detrimental to the business or reputation of the CorporationCompany or any Affiliate.
In addition, the Administrator shall have the authority and discretion to establish terms and conditions of Awards (including but not limited to the establishment of subplans) as the Administrator determines to be necessaryits affiliates or appropriate to conform to the applicable requirements or practices of jurisdictions outside of the United States. In addition to action by meeting in accordance with Applicable Laws, any action of the Administrator with respect to the Plan may be taken by a written instrument signed by all of the members of the Board or Committee, as appropriate, and any such action so taken by written consent shall be as fully effective as if it had been taken by a majority of the members at a meeting duly held and called. No member of the Board or Committee, as applicable, shall be liable while acting as Administrator for any action or determination made in good faith with respect to the Plan, an Award or an Award Agreement. The members of the Board or Committee, as applicable, shall be entitled to indemnification and reimbursement in the manner provided in the Corporation’s articles of incorporation and bylaws and/or under Applicable Laws.
(c) Notwithstanding the other provisions of Section 3, the Administrator may delegate to one or more officers of the Corporation the authority to grant Awards, and to make any or all of the determinations reserved for the Administrator in the Plan and summarized in Section 3(b) with respect to such Awards (subject to any restrictions imposed by Applicable Laws, and such terms and conditions as may be established by the Administrator); provided, however, that, if and to the extent required by Section 16 of the Exchange Act or Section 162(m) of the Code, the Participant, at the time of said grant or other determination, (i) is not deemed to be an officer or director of the Corporation within the meaning of Section 16 of the Exchange Act; and (ii) is not deemed to be a Covered Employee as defined under Section 162(m) of the Code and related regulations. To the extent that the Administrator has delegated authority to grant Awards pursuant to this Section 3(c) to one or more officers of the Corporation, references to the Administrator shall include references to such officer or officers, subject, however, to the requirements of the Plan, Rule 16b-3, Section 162(m) of the Code and other Applicable Laws.
4. Effective Date; Term
The Effective Date of the Plan shall be November 27, 2006. Awards may be granted under the Plan on and after the Effective Date, but not after November 26, 2016. Awards that are outstanding at the end of the Plan term (or such earlier termination date as may be established by the Board pursuant to Section 12(a)) shall continue in accordance with their terms, unless otherwise provided in the Plan or an Award Agreement.
5. Shares of Stock Subject to the Plan; Award Limitations
(a) Shares of Stock Subject to the Plan: Subject to adjustments as provided in Section 5(d), the aggregate number of shares of Common Stock that may be issued pursuant to Awards granted under the Plan shall not exceed 22,5000,000 shares. Shares delivered under the Plan shall be authorized but unissued shares, treasury shares or shares purchased on the open market or by private purchase. The Corporation hereby reserves sufficient authorized shares of Common Stock to meet the grant of Awards hereunder.
(b) Award Limitations: Notwithstanding any provision in the Plan to the contrary, the following limitations shall apply to Awards granted under the Plan, in each case subject to adjustments pursuant to Section 5(d):
(i) The maximum number of shares of Common Stock that may be issued to any one Participant under the Plan pursuant to the grant of Incentive Options shall not exceed 22,500,000 shares;
(ii) If and to the extent Section 162(m) of the Code is applicable:
(A) In any calendar year, no Participant may be granted Options and SARs that are not related to an Option for more than 1,000,000 shares of Common Stock;
(B) No Participant may be granted Awards in any calendar year for more than 1,000,000 shares of Common Stock; and
(C) No Participant may be paid more than $2,000,000 with respect to any cash-settled award or awardsfuture transactions to which were granted during any single calendar year.
(For purposes of Section 5(b)(iii)(A) and (B), an Option and Related SAR shall be treated as a single Award.)
(c) Shares Not Subject to Limitations: The following will not be applied to the share limitations of Section 5(a) above: (i) dividends, including dividends paid in shares, or dividend equivalents paid in cash in connection with outstanding Awards; (ii) Awards which by their terms are settled in cash rather than the issuance of shares; (iii) any shares subject to an Award under the Plan which Award is forfeited, cancelled, terminated, expires or lapses for any reasonCompany or any shares subject to an Award which shares are repurchased or reacquired by the Corporation; and (iv) any shares surrendered by a Participant or withheld by the Corporation to pay the Option Price or purchase price for an Award or shares used to satisfy any tax withholding requirement in connection with the exercise, vesting or earning of an Award if, in accordance with the terms of the Plan, a Participant pays such Option Price or purchase price or satisfies such tax withholding by either tendering previously owned shares or having the Corporation withhold shares.
(d) Adjustments: If there is any change in the outstanding shares of Common Stock because of a merger, consolidation or reorganization involving the Corporation or an Affiliate, or if the Board of Directors of the Corporation declares a stock dividend, stock split distributable in shares of Common Stock, reverse stock split, combination or reclassification of the Common Stock, or if there is a similar change in the capital stock structure of the Corporation or an Affiliate affecting the Common Stock, the number of shares of Common Stock reserved for issuance under the Plan shall be correspondingly adjusted, and the Administrator shall make such adjustments to Awards and to any provisions of this Plan as the Administrator deems equitable to prevent dilution or enlargement of Awards or as may be otherwise advisable.
6. Eligibility
An Award may be granted only to an individual who satisfies all of the following eligibility requirements on the date the Award is granted:
(a) The individual is either (i) an Employee, (ii) a Director, or (iii) an Independent Contractor.
(b) With respect to the grant of Incentive Options, the individual is otherwise eligible to participate under Section 6, is an Employee of the Corporation or a Parent or Subsidiary and does not own, immediately before the time that the Incentive Option is granted, stock possessing more than 10% of the total combined voting power of all classes of stock of the Corporation or a Parent or Subsidiary. Notwithstanding the foregoing, an Employee who owns more than 10% of the total combined voting power of the Corporation or a Parent or Subsidiary may be granted an Incentive Option if the Option Price is at least 110% of the Fair Market Value of the Common Stock, and the Option Period does not exceed five years. For this purpose, an individualits affiliates will be deemed to own stock which is attributable to him under Section 424(d) of the Code.
(c) With respect to the grant of substitute awards or assumption of awards in connection with a merger, consolidation, acquisition, reorganization or similar business combination involving the Corporation or an Affiliate, the recipient is otherwise eligible to receive the Award and the terms of the award are consistent with the Plan and Applicable Laws (including, to the extent necessary, the federal securities laws registration provisions and Section 409A and Section 424(a) of the Code and related regulations or other guidance).
(d) The individual, being otherwise eligible under this Section 6, is selected by the Administrator as an individual to whom an Award shall be granted (as defined above, a “Participant”).
7. Options
(a) Grant of Options: Subject to the limitations of the Plan, the Administrator may in its sole and absolute discretion grant Options to such eligible individuals in such numbers, subject to such terms and conditions, and at such times as the Administrator shall determine. Both Incentive Options and Nonqualified Options may be granted under the Plan, as determined by the Administrator; provided, however, that Incentive Options may only be granted to Employees of the Corporation or a Parent or Subsidiary. To the extent that an Option is designated as an Incentive Option but does not qualify as such under Section 422 of the Code, the Option (or portion thereof) shall be treated as a Nonqualified Option. An Option may be granted with or without a Related SAR.
(b) Option Price: The Option Price shall be established by the Administrator and stated in the Award Agreement evidencing the grant of the Option; provided, that (i) the Option Price of an Option shall be no less than 100% of the Fair Market Value per share of the Common Stock as determined on the date the Option is granted (or 110% of the Fair Market Value with respect to Incentive Options granted to an Employee who owns stock possessing more than 10% of the total voting power of all classes of stock of the Corporation or a Parent or Subsidiary, as provided in Section 6(b)); and (ii) in no event shall the Option Price per share of any Option be less than the par value per share (if any) of the Common Stock. Notwithstanding the foregoing, the Administrator may in its discretion authorize the grant of substitute or assumed options of an acquired entity with an Option Price not equal to at least 100% of the Fair Market Value on the date of grant, if such options are assumed or substituted in accordance with Reg. Section 1.424-1 (or any successor provision thereto) and if the option price of any such assumed or substituted option was at least equal to 100% of the fair market value of the underlying stock on the original date of grant, or if the terms of such assumed or substituted option otherwise comply with Code Section 409A, related regulations and other guidance. The preceding sentence shall also apply to SARs that are assumed or substituted in a corporate transaction, to the extent required under Code Section 409A, related regulations or other guidance.
(c) Date of Grant: An Incentive Option shall be considered to be granted on the date that the Administrator acts to grant the Option, or on any later date specified by the Administrator as the effective date of the Option. A Nonqualified Option shall be considered to be granted on the date the Administrator acts to grant the Option or any other date specified by the Administrator as the date of grant of the Option.
(d) Option Period and Limitations on the Right to Exercise Options:
(i) The Option Period shall be determined by the Administrator at the time the Option is granted and shall be stated in the Award Agreement. With respect to Incentive Options, the Option Period shall not extend more than 10 years from the date on which the Option is granted (or five years with respect to Incentive Options granted to an Employee who owns stock possessing more than 10% of the total combined voting power of all classes of stock of the Corporation or a Parent or Subsidiary, as provided in Section 6(b)). Any Option or portion thereof not exercised before expiration of the Option Period shall terminate. The period or periods during which, and conditions pursuant to which, an Option may become exercisable shall be determined by the Administrator in its discretion, subject to the terms of the Plan.
(ii) An Option may be exercised by giving written notice to the Corporation in form acceptable to the Administrator at such place and subject to such conditions as may be established by the Administrator or its designee. Such notice shall specify the number of shares to be purchased pursuant to an Option and the aggregate purchase price to be paid therefore and shall be accompanied by payment of such purchase price. Unless an Award Agreement provides otherwise, such payment shall be in the form of cash or cash equivalent; provided that, where permitted by the Administrator and Applicable Laws (and subject to such terms and conditions as may be established by the Administrator), payment may also be made:
(A) By delivery (by either actual delivery or attestation) of shares of Common Stock owned by the Participant for a time period, if any, determined by the Administrator and otherwise acceptable to the Administrator;
(B) With respect only to purchases upon exercise of an Option after a public market for the Common Stock exists, by delivery of written notice of exercise to the Corporation and delivery to a broker of written notice of exercise and irrevocable instructions to promptly deliver to the Corporation the amount of sale or loan proceeds to pay the Option Price;
(C) By cash bonuses, loans or such other payment methods as may be approved by the Administrator (and subject to such terms as may be established by the Administrator), and which methods are acceptable under Applicable Laws; or
(D) By any combination of the foregoing methods.
Shares tendered or withheld in payment on the exercise of an Option shall be valued at their Fair Market Value on the date of exercise, as determined by the Administrator. For the purposes of the Plan, a “public market” for the Common Stock shall be deemed to exist (i) upon consummation of a firm commitment underwritten public offering of the Common Stock pursuant to an effective registration statement under the Securities Act, or (ii) if the Administrator otherwise determines that there is an established public market for the Common Stock.
(iii) Unless the Administrator determines otherwise, no Option granted to a Participant who was an Employee at the time of grant shall be exercised unless the Participant is, at the time of exercise, an Employee, and has been an Employee continuously since the date the Option was granted, subject to the following:
(A) The employment relationship of a Participant shall be treated as continuing intact for any period that the Participant is on military or sick leave or other bona fide leave of absence, provided that the period of such leave does not exceed three months, or, if longer, as long as the Participant’s right to reemployment is guaranteed either by statute or by contract. The employment relationship of a Participant shall also be treated as continuing intact while the Participant is not in active service because of Disability. The Administrator shall have sole authority to determine whether a Participant is disabled and, if applicable, the Participant’s Termination Date.
(B) Unless the Administrator determines otherwise, if the employment of a Participant is terminated because of Disability or death, the Option may be exercised only to the extent exercisable on the Participant’s Termination Date, except that the Administrator may in its sole discretion accelerate the date for exercising all or any part of the Option which was not otherwise exercisable on the Termination Date. The Option must be exercised, if at all, prior to the first to occur of the following, whichever shall be applicable: (X) the close of the one-year period following the Termination Date (or such other period stated in the Award Agreement); or (Y) the close of the Option Period. In the event of the Participant’s death, such Option shall be exercisable by such person or persons as shall have acquired the right to exercise the Option by will or by the laws of intestate succession.
(C) Unless the Administrator determines otherwise, if the employment of the Participant is terminated for any reason other than Disability, death or for “Cause,” his Option may be exercised to the extent exercisable on his Termination Date, except that the Administrator may in its sole discretion accelerate the date for exercising all or any part of the Option which was not otherwise exercisable on the Termination Date. The Option must be exercised, if at all, prior to the first to occur of the following, whichever shall be applicable: (X) the close of the period of three months next succeeding the Termination Date (or such other period stated in the Award Agreement); or (Y) the close of the Option Period. If the Participant dies following such termination of employment and prior to the earlier of the dates specified in (X) or (Y) of this subparagraph (C), the Participant shall be treated as having died while employed under subparagraph (B) (treating for this purpose the Participant’s date of termination of employment as the Termination Date). In the event of the Participant’s death, such Option shall be exercisable by such person or persons as shall have acquired the right to exercise the Option by will or by the laws of intestate succession.
(D) Unless the Administrator determines otherwise, if the employment of the Participant is terminated for “Cause,” his Option shall lapse and no longer be exercisable as of his Termination Date, as determined by the Administrator.
(E) Notwithstanding the foregoing, the Administrator may, in its sole discretion (subject to any requirements imposed under Code Section 409A, related regulations or other guidance), accelerate the date for exercising all or any part of an Option which was not otherwise exercisable on the Termination Date, extend the period during which an Option may be exercised, modify the terms and conditions to exercise, or any combination of the foregoing.
(iv) Unless the Administrator determines otherwise, an Option granted to a Participant who was a Director but who was not an Employee at the time of grant may be exercised only to the extent exercisable on the Participant’s Termination Date (unless the termination was for Cause), and must be exercised, if at all, prior to the first to occur of the following, as applicable: (X) the close of the period of three months next succeeding the Termination Date (or such other period stated in the Award Agreement); or (Y) the close of the Option Period. If the services of a Participant are terminated for Cause, his Option shall lapse and no longer be exercisable as of his Termination Date, as determined by the Administrator. Notwithstanding the foregoing, the Administrator may in its sole discretion (subject to any requirements imposed under Code Section 409A, related regulations or other guidance) accelerate the date for exercising all or any part of an Option which was not otherwise exercisable on the Termination Date, extend the period during which an Option may be exercised, modify the other terms and conditions to exercise, or any combination of the foregoing.
(v) Unless the Administrator determines otherwise, an Option granted to a Participant who was an Independent Contractor at the time of grant (and who does not thereafter become an Employee, in which case he shall be subject to the provisions of Section 7(d)(iii)) may be exercised only to the extent exercisable on the Participant’s Termination Date (unless the termination was for Cause), and must be exercised, if at all, prior to the first to occur of the following, as applicable: (X) the close of the period of three months next succeeding the Termination Date (or such other period stated in the Award Agreement); or (Y) the close of the Option Period. If the services of a Participant are terminated for Cause, his Option shall lapse and no longer be exercisable as of his Termination Date, as determined by the Administrator. Notwithstanding the foregoing, the Administrator may in its sole discretion (subject to any requirements imposed under Code Section 409A, related regulations or other guidance) accelerate the date for exercising all or any part of an Option which was not otherwise exercisable on the Termination Date, extend the period during which an Option may be exercised, modify the other terms and conditions to exercise, or any combination of the foregoing.
(e) Notice of Disposition: If shares of Common Stock acquired upon exercise of an Incentive Option are disposed of within two years following the date of grant or one year following the transfer of such shares to a Participant upon exercise, the Participant shall, promptly following such disposition, notify the Corporation in writing of the date and terms of such disposition and provide such other information regarding the disposition as the Administrator may reasonably require.
(f) Limitation on Incentive Options: In no event shall there first become exercisable by an Employee in any one calendar year Incentive Options granted by the Corporation or any Parent or Subsidiary with respect to shares having an aggregate Fair Market Value (determined at the time an Incentive Option is granted) greater than $100,000. To the extent that any Incentive Options are first exercisable by a Participant in excess of such limitation, the excess shall be considered a Nonqualified Option.
(g) Nontransferability: Incentive Options shall not be transferable (including by sale, assignment, pledge or hypothecation) other than by will or the laws of intestate succession or, in the Administrator’s discretion, as may otherwise be permitted in accordance with Treas. Reg. Section 1.421-1(b)(2) or any successor provision thereto. Nonqualified Options shall not be transferable (including by sale, assignment, pledge or hypothecation) other than by will or the laws of intestate succession, except for such transfers to immediate family members or related entities as may be permitted by the Administrator in a manner consistent with the registration provisions of the Securities Act. Except as may be permitted by the preceding sentence, an Option shall be exercisable during the Participant’s lifetime only by him or by his guardian or legal representative. The designation of a beneficiary in accordance with the Plan does not constitute a transfer.
8. Stock Appreciation Rights
(a) Grant of SARs: Subject to the limitations of the Plan, the Administrator may in its sole and absolute discretion grant SARs to such eligible individuals, in such numbers, upon such terms and at such times as the Administrator shall determine. SARs may be granted to the holder of an Option (a “Related Option”) with respect to all or a portion of the shares of Common Stock subject to the Related Option (a “Related SAR”) or may be granted separately to an eligible individual (a “Freestanding SAR”). The base price per sharea party; or
•a direct or indirect material interest in any transaction or series of an SAR shall be no less than 100% the Fair Market Value per sharesimilar transactions since January 1, 2018 or any currently proposed transactions, or series of the Common Stock on the date the SAR is granted (except as may be otherwise permitted in the case of substituted or assumed SARs in accordance with Section 7(b)).
(b) Related SARs: A Related SAR may be granted either concurrently with the grant of the Related Option or (if the Related Option is a Nonqualified Option) at any time thereafter prior to the complete exercise, termination, expiration or cancellation of such Related Option; provided, however, that Related SARs must be granted in accordance with Code Section 409A, related regulations and other guidance. The base price of a Related SAR shall be equal to the Option Price of the Related Option. Related SARs shall be exercisable only at the time and to the extent that the Related Option is exercisable (and may be subject to such additional limitations on exercisability as the Administrator may provide in the Award Agreement), and in no event after the complete termination or full exercise of the Related Option. Notwithstanding the foregoing, a Related SAR that is related to an Incentive Option may be exercised only to the extent that the Related Option is exercisable and only when the Fair Market Value exceeds the Option Price of the Related Option. Upon the exercise of a Related SAR granted in connection with a Related Option, the Option shall be canceled to the extent of the number of shares assimilar transactions, to which the Related SARCompany or any of its subsidiaries was or is exercised, and upon the exercise of a Related Option, the Related SAR shall be canceled to the extent of the number of shares as to which the Related Option is exercised or surrendered.
(c) Freestanding SARs: An SAR may be granted without relationship to an Option (as defined above, a “Freestanding SAR”) and, in such case, will be exercisable upon such terms and subject to such conditions as may be determined by the Administrator, subject to the terms of the Plan.
(d) Exercise of SARs:
(i) Subject to the terms of the Plan, SARs shall be exercisable in whole or in part upon such terms and conditions as may be established by the Administrator and stated in the applicable Award Agreement. The period during which an SAR may be exercisable shall not exceed 10 years from the date of grant or, in the case of Related SARs, such shorter Option Period as may apply to the Related Option. Any SAR or portion thereof not exercised before expiration of the period established by the Administrator shall terminate.
(ii) SARs may be exercised by giving written notice to the Corporation in form acceptable to the Administrator at such place and subject to such terms and conditions as may be established by the Administrator or its designee. Unless the Administrator determines otherwise, the date of exercise of an SAR shall mean the date on which the Corporation shall have received proper notice from the Participant of the exercise of such SAR.
(iii) Each Participant’s Award Agreement shall set forth the extent to which the Participant shall have the right to exercise an SAR following termination of the Participant’s employment or service with the Corporation. Such provisions shall be determined in the sole discretion of the Administrator, need not be uniform among all SARs issued pursuant to this Section 8, and may reflect distinctions based on the reasons for termination of employment or service. Notwithstanding the foregoing, unless the Administrator determines otherwise, no SAR may be exercised unless the Participant is, at the time of exercise, an eligible Participant, as described in Section 6, and has been a Participant continuously since the date the SAR was granted, subject to the provisions of Sections 7(d)(iii), (iv) and (v).
(e) Payment Upon Exercise: Subject to the limitations of the Plan, upon the exercise of an SAR, a Participant shall be entitled to receive payment from the Corporation in an amount determined by multiplying (i) the difference between the Fair Market Value of a share of Common Stock on the date of exercise of the SAR over the base price of the SAR by (ii) the number of shares of Common Stock with respect to which the SAR is being exercised. Notwithstanding the foregoing, the Administrator in its discretion may limit in any manner the amount payable with respect to an SAR. The consideration payable upon exercise of an SAR shall be paid in cash, shares of Common Stock (valued at Fair Market Value on the date of exercise of the SAR) or a combination of cash and shares of Common Stock, as determined by the Administrator.
(f) Nontransferability: Unless the Administrator determines otherwise, (i) SARs shall not be transferable (including by sale, assignment, pledge or hypothecation) other than by will or the laws of intestate succession, and (ii) SARs may be exercised during the Participant’s lifetime only by him or by his guardian or legal representative. The designation of a beneficiary in accordance with the Plan does not constitute a transfer.
9. Restricted Awards
(a) Grant of Restricted Awards: Subject to the limitations of the Plan, the Administrator may in its sole and absolute discretion grant Restricted Awards to such individuals in such numbers, upon such terms and at such times as the Administrator shall determine. Such Restricted Awards may be in the form of Restricted Stock Awards and/or Restricted Stock Units that are subject to certain conditions, which conditions must be met in order for the Restricted Award to vest and be earned (in whole or in part) and no longer subject to forfeiture. Restricted Stock Awards shall be payable in shares of Common Stock. Restricted Stock Units shall be payable in cash or shares of Common Stock, or partly in cash and partly in shares of Common Stock, in accordance with the terms of the Plan and the discretion of the Administrator. The Administrator shall determine the nature, length and starting date of the period, if any, during which a Restricted Award may be earned (the “Restriction Period”), and shall determine the conditions which must be met in order for a Restricted Award to be granted or to vest or be earned (in whole or in part), which conditions may include, but are not limited to, payment of a stipulated purchase price, attainment of performance objectives, continued service or employment for a certain period of time (or a combination of attainment of performance objectives and continued service), Retirement, Displacement, Disability, death or any combination of such conditions. In the case of Restricted Awards based upon performance criteria, or a combination of performance criteria and continued service, the Administrator shall determine the Performance Measures applicable to such Restricted Awards (subject to Section 1(ee)).
(b) Vesting of Restricted Awards: Subject to the terms of the Plan and Code Section 409A, related regulations or other guidance, the Administrator shall have sole authority to determine whether and to what degree Restricted Awards have vested and been earned and are payable and to establish and interpret the terms and conditions of Restricted Awards. The Administrator may (subject to any restrictions imposed under Code Section 409A, related regulations or other guidance) accelerate the date that any Restricted Award granted to a Participant shall be deemed to be vested or earned in whole or in part, without any obligation to accelerate such date with respect to other Restricted Awards granted to any Participant.
(c) Forfeiture of Restricted Awards: Unless the Administrator determines otherwise, if the employment or service of a Participant shall be terminated for any reason and all or any part of a Restricted Award has not vested or been earned pursuant to the terms of the Plan and the individual Award, such Award, to the extent not then vested or earned, shall be forfeited immediately upon such termination and the Participant shall have no further rights with respect to the Award or any shares of Common Stock, cash or other benefits related to the Award.
(d) Shareholder Rights; Share Certificates: The Administrator shall have sole discretion to determine whether a Participant shall have dividend rights, voting rights or other rights as a shareholder with respect to shares subject to a Restricted Stock Award which has not yet vested or been earned. If the Administrator so determines, a certificate or certificates for whole shares of Common Stock subject to a Restricted Stock Award may be issued in the name of the Participant as soon as practicable after the Award has been granted; provided, however, that, notwithstanding the foregoing, the Administrator or its designee shall have the right to retain custody of certificates evidencing the shares subject to a Restricted Stock Award and to require the Participant to deliver to the Corporation a stock power, endorsed in blank, with respect to such Award, until such time as the Restricted Stock Award vests (or is forfeited) and is no longer subject to a substantial risk of forfeiture.
(e) Nontransferability: Unless the Administrator determines otherwise, Restricted Awards that have not vested shall not be transferable (including by sale, assignment, pledge or hypothecation) other than by will or the laws of intestate succession, and the recipient of a Restricted Award shall not sell, transfer, assign, pledge or otherwise encumber shares subject to the Award until the Restriction Period has expired and until all conditions to vesting have been met. The designation of a beneficiary in accordance with the Plan does not constitute a transfer.
10. Dividends and Dividend Equivalents
Awards granted under the Plan shall, to the extent vested, earn dividends or dividend equivalents. Such dividends or dividend equivalents may be paid currently or may be credited to a Participant’s account. Any crediting of dividends or dividend equivalents may be subject to such restrictions and conditions as the Administrator may establish, including reinvestment in additional shares of Common Stock or share equivalents. Notwithstanding the other provisions herein, any dividends or dividend equivalent rights related to an Award shall be structured in a manner so as to avoid causing the Award to be subject to Code Section 409A or shall otherwise be structured so that the Award and dividends or dividend equivalents are in compliance with Code Section 409A, related regulations or other guidance.
11. No Right or Obligation of Continued Employment or Service
Neither the Plan, the grant of an Award nor any other action related to the Plan shall confer upon the Participant any right to continue in the service of the Corporation or an Affiliate as an Employee, Director or Independent Contractor or to interfere in any way with the right of the Corporation or an Affiliate to terminate the Participant’s employment or service at any time. Except as otherwise provided in the Plan, an Award Agreement or as may be determined by the Administrator, all rights of a Participant with respect to an Award shall terminate upon the termination of the Participant’s employment or service.
12. Amendment and Termination of the Plan
(a) Amendment and Termination: The Plan may be amended, altered and/or terminated at any time by the Administrator; provided, however, that approval of an amendment to the Plan by the shareholders of the Corporation shall be required to the extent, if any, that shareholder approval of such amendment is required by Applicable Laws or to increase the shares available that may be issued pursuant to Awards granted under the Plan as set forth in Section 5(a) of the Plan as hereby amended. Any Award may be amended, altered and/or terminated at any time by the Administrator; provided, however, that any such amendment, alteration or termination of an Award shall not, without the consent of the recipient of an outstanding Award, materially adversely affect the rights of the recipient with respect to the Award.
(b) Unilateral Authority of Administrator to Modify Plan and Awards: Notwithstanding Section 12(a) herein, the following provisions shall apply:
(i) The Administrator shall have unilateral authority to amend the Plan and any Award (without Participant consent and without shareholder approval, unless such shareholder approval is required by Applicable Laws) to the extent necessary to comply with Applicable Laws or changes to Applicable Laws (including but not limited to Code Section 409A and Code Section 422, related regulations or other guidance and federal securities laws).
(ii) The Administrator shall have unilateral authority to make adjustments to the terms and conditions of Awards in recognition of unusual or nonrecurring events affecting the Corporation or any Affiliate, or the financial statements of the Corporation or any Affiliate, or of changes in accounting principles, if the Administrator determines that such adjustments are appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan or necessary or appropriate to comply with applicable accounting principles.
(c) Cash Settlement: Notwithstanding any provision of the Plan, an Award or an Award Agreement to the contrary, the Administrator shall have discretion (subject to (i) any requirements imposed under Code Section 409A, related regulations or other guidance and (ii) consideration of such accounting principles as the Administrator deems relevant) to cause any Award (or portion thereof) granted under the Plan to be canceled in consideration of an alternative award or cash payment of an equivalent cash value, as determined by the Administrator in its sole discretion, made to the holder of such canceled Award.
13. Restrictions on Awards and Shares
(a) General: As a condition to the issuance and delivery of Common Stock hereunder, or the grant of any benefit pursuant to the Plan, the Corporation shall require a Participant or other person to become a party to an Award Agreement, the Shareholders Agreement, other agreement(s) restricting the transfer, purchase or repurchase of shares of Common Stock of the Corporation, voting agreement or such other agreements and any other employment agreements, consulting agreements, non-competition agreements, confidentiality agreements, non-solicitation agreements or other similar agreements imposing such restrictions as may be required by the Corporation. In addition, without in any way limiting the effect of the foregoing, each Participant or other holder of shares issued under the Plan shall be permitted to transfer such shares only if such transfer is in accordance with the terms of Section 13 herein, the Award Agreement, the Shareholders Agreement and any other applicable agreements. The acquisition of shares of Common Stock under the Plan by a Participant or any other holder of shares shall be subject to, and conditioned upon, the agreement of the Participant or other holder of such shares to the restrictions described in this Section 13, the Award Agreement, the Shareholders Agreement and any other applicable agreements.
(b) Compliance with Applicable Laws: The Corporation may impose such restrictions on Awards, shares and any other benefits underlying Awards hereunder as it may deem advisable, including without limitation restrictions under the federal securities laws, the requirements of any stock exchange or similar organization and any blue sky, state or foreign securities laws applicable to such securities. Notwithstanding any other Plan provision to the contrary, the Corporation shall not be obligated to issue, deliver or transfer shares of Common Stock under the Plan, make any other distribution of benefits under the Plan, or take any other action, unless such delivery, distribution or action is in compliance with Applicable Laws (including but not limited to the requirements of the Securities Act). The Corporation may cause a restrictive legend to be placed on any certificate issued pursuant to an Award hereunder in such form as may be prescribed from time to time by Applicable Laws or as may be advised by legal counsel.
14. Change in Control
In the event of a Change in Control, all Awards shall vest and become immediately exercisable in full.
15. Compliance with Code Section 409A
(a) General: Notwithstanding any other provision in the Plan or an Award to the contrary, if and to the extent that Section 409A of the Code is deemed to apply to the Plan or any Award granted under the Plan, it is the general intention of the Corporation that the Plan and all such Awards shall comply with Code Section 409A, related regulations or other guidance, and the Plan and any such Award shall, to the extent practicable, be construed in accordance therewith. Deferrals of shares or any other benefit issuable pursuant to an Award otherwise exempt from Code Section 409A in a manner that would cause Code Section 409A to apply shall not be permitted unless such deferrals are in compliance with Code Section 409A, related regulations or other guidance. Without in any way limiting the effect of the foregoing, in the event that Code Section 409A, related regulations or other guidance require that any special terms, provisions or conditions be included in the Plan or any Award, then such terms, provisions and conditions shall, to the extent practicable, be deemed to be made a part of the Plan or Award, as applicable. Further, in the event that the Plan or any Award shall be deemed not to comply with Code Section 409A or any related regulations or other guidance, then neither the Corporation, the Administrator nor its or their designees or agents shall be liable to any Participant or other person for actions, decisions or determinations made in good faith.
(b) Special Code Section 409A Provisions for Nonqualified Options: Notwithstanding the other provisions of the Plan, unless otherwise permitted under Code Section 409A, related regulations or other guidance, (i) the Option Price for a Nonqualified Option may never be less than the Fair Market Value of the Common Stock on the date of grant of the Option and the number of shares subject to the Option shall be fixed on the original grant date; (ii) the transfer or exercise of the Option shall be subject to taxation under Code Section 83 and related regulations; and (iii) the Nonqualified Option may not include any feature for the deferral of compensation other than the deferral of recognition of income until the later of exercise or disposition of the Option or the time the shares acquired pursuant to the exercise of the Option first became substantially vested.
(c) Special Code Section 409A Provisions for SARs: Notwithstanding the other provisions the Plan, unless otherwise permitted under Code Section 409A, related regulations or other guidance, (i) compensation payable under an SAR cannot be greater than the difference between the Fair Market Value of the Common Stock on the SAR grant date and the Fair Market Value of the Common Stock on the SAR exercise date; (ii) the SAR base price may never be less than the Fair Market Value of the Common Stock on the date the SAR is granted; and (iii) the SAR may not include any feature for the deferral of compensation other than the deferral of recognition of income until the exercise of the SAR.
(d) Short-Term Deferrals: Except to the extent otherwise required or permitted under Code Section 409A, related regulations or other guidance, distributions pursuant to Restricted Stock Units or any Awards granted under the Plan that are subject to Code Section 409A must be made no later than the later of (A) the 15th day of the third month following the Participant’s first taxable year in which the amount is no longer subject to a substantial risk of forfeiture; or (B) the 15thinvolved exceeds $120,000. day of the third month following the end of the Corporation’s first taxable year in which the amount is no longer subject to a substantial risk of forfeiture. Notwithstanding the foregoing, if and to the extent that the distribution of shares of Common Stock or any other benefit payable pursuant to an Award is deemed to involve the deferral of compensation that is not otherwise exempt from Code Section 409A, then (i) the distribution of such shares or benefit shall occur no later than the end of the calendar year in which the Award vests; and (ii) if the Participant is or may be a “specified employee” (as defined in Code Section 409A, related regulations or other guidance), a distribution due to separation from service may not be made before the date that is six months after the date of separation from service (or, if earlier, the date of death of the Participant), except as may be otherwise permitted pursuant to Code Section 409A, related regulations or other guidance.
16. General Provisions
(a) Shareholder Rights: Except as otherwise determined by the Administrator (and subject to the provisions of Section 9(d) regarding Restricted Stock Awards), a Participant and his legal representative, legatees or distributes shall not be deemed to be the holder of any shares subject to an Award and shall not have any rights of a shareholder unless and until certificates for such shares have been issued and delivered to him or them under the Plan. A certificate or certificates for shares of Common Stock acquired upon exercise of an Option or SAR shall be promptly issued in the name of the Participant (or his beneficiary) and distributed to the Participant (or his beneficiary) as soon as practicable following receipt of notice of exercise and, with respect to Options, payment of the Option Price (except as may otherwise be determined by the Corporation in the event of payment of the Option Price pursuant to Section 7(d)(ii)(C)). Except as otherwise provided in Section 9(d) regarding Restricted Stock Awards, a certificate for any shares of Common Stock issuable pursuant to a Restricted Award shall be promptly issued in the name of the Participant (or his beneficiary) and distributed to the Participant (or his beneficiary) after the Award (or portion thereof) has vested or been earned and any other conditions to distribution have been met.
(b) Withholding: The Corporation shall withhold all required local, state, federal, foreign and other taxes and any other amount required to be withheld by any governmental authority or law from any amount payable in cash with respect to an Award. Prior to the delivery or transfer of any certificate for shares or any other benefit conferred under the Plan, the Corporation shall require any recipient of an Award to pay to the Corporation in cash the amount of any tax or other amount required by any governmental authority to be withheld and paid over by the Corporation to such authority for the account of such recipient. Notwithstanding the foregoing, the Administrator may establish procedures to permit a recipient to satisfy such obligation in whole or in part, and any local, state, federal, foreign or other income tax obligations relating to such an Award, by electing (the “election”) to have the Corporation withhold shares of Common Stock from the shares to which the recipient is entitled. The number of shares to be withheld shall have a Fair Market Value as of the date that the amount of tax to be withheld is determined as nearly equal as possible to (but not exceeding) the amount of such obligations being satisfied. Each election must be made in writing to the Administrator in accordance with election procedures established by the Administrator.
(c)
ANNEX B
Section 16(b) Compliance
: If and to the extent that any Participants in the Plan are subject to Section 16(b)
PROPOSED ARTICLES OF AMENDMENT
TO RESTATED ARTICLES OF INCORPORATION
OF
MIMEDX GROUP, INC.
TO DECLASSIFY THE BOARD OF DIRECTORS
FIRST: This Corporation is named MiMedx Group, Inc. (the “Corporation”). The Articles of the Exchange Act, it is the general intentionIncorporation of the Corporation that transactions underwere originally filed with the Plan by such persons shall comply with Rule 16b-3 under the Exchange Act and that the Plan shall be construed in favor of such Plan transactions meeting the requirements of Rule 16b-3 or any successor rules thereto. Notwithstanding anything in the Plan to the contrary, the Administrator, in its sole and absolute discretion, may bifurcate the Plan so as to restrict, limit or condition the use of any provisionOffice of the Plan to Participants who are officers or directors subject to Section 16Department of the Exchange Act without so restricting, limiting or conditioning the Plan with respect to other Participants.
(d) Code Section 162(m) Performance-Based Compensation. If and to the extent to which Section 162(m) of the Code is applicable, the Corporation intends that compensation paid under the Plan to Covered Employees will, to the extent practicable, constitute “qualified performance-based compensation” within the meaning of Section 162(m) and related regulations, unless otherwise determined by the Administrator. Accordingly, Awards granted to Covered Employees which are intended to qualify for the performance-based exception under Code Section 162(m) and related regulations shall be deemed to include any such additional terms, conditions, limitations and provisions as are necessary to comply with the performance-based compensation exemption of Section 162(m), unless the Administrator, in its discretion, determines otherwise.
(e) Unfunded Plan; No Effect on Other Plans:
(i) The Plan shall be unfunded, and the Corporation shall not be required to create a trust or segregate any assets that may at any time be represented by Awards under the Plan. The Plan shall not establish any fiduciary relationship between the Corporation and any Participant or other person. Neither a Participant nor any other person shall, by reason of the Plan, acquire any right in or title to any assets, funds or property of the Corporation or any Affiliate, including, without limitation, any specific funds, assets or other property which the Corporation or any Affiliate, in their discretion, may set aside in anticipation of a liability under the Plan. A Participant shall have only a contractual right to the Common Stock or other amounts, if any, payable under the Plan, unsecured by any assets of the Corporation or any Affiliate. Nothing contained in the Plan shall constitute a guarantee that the assets of such entities shall be sufficient to pay any benefits to any person.
(ii) The amount of any compensation deemed to be received by a Participant pursuant to an Award shall not constitute compensation with respect to which any other employee benefits of such Participant are determined, including, without limitation, benefits under any bonus, pension, profit sharing, life insurance or salary continuation plan, except as otherwise specifically provided by the terms of such plan or as may be determined by the Administrator.
(iii) The adoption of the Plan shall not affect any other stock incentive or other compensation plans in effect for the Corporation or any Affiliate, nor shall the Plan preclude the Corporation from establishing any other forms of stock incentive or other compensation for employees or service providers of the Corporation or any Affiliate.
(f) Applicable Laws: The Plan shall be governed by and construed in accordance with the lawsState of the State of Florida without regard to the conflicton February 8, 2008. The Restated Articles of laws provisions of any state, and in accordance with applicable federal laws of the United States.
(g) Beneficiary Designation: The Administrator may in its discretion permit a Participant to designate in writing a person or persons as beneficiary, which beneficiary shall be entitled to receive settlement of Awards (if any) to which the Participant is otherwise entitled in the event of death. In the absence of such designation by a Participant, and in the event of the Participant’s death, the estate of the Participant shall be treated as beneficiary for purposes of the Plan, unless the Administrator determines otherwise. The Administrator shall have sole discretion to approve and interpret the form or forms of such beneficiary designation. A beneficiary, legal guardian, legal representative or other person claiming any rights pursuant to the Plan is subject to all terms and conditions of the Plan and any Award Agreement applicable to the Participant, except to the extent that the Plan and/or Award Agreement provide otherwise, and to any additional restrictions deemed necessary or appropriate by the Administrator.
(h) Gender and Number: Except where otherwise indicated by the context, words in any gender shall include any other gender, words in the singular shall include the plural and words in the plural shall include the singular.
(i) Severability: If any provision of the Plan shall be held illegal or invalid for any reason, such illegality or invalidity shall not affect the remaining parts of the Plan, and the Plan shall be construed and enforced as if the illegal or invalid provision had not been included.
(j) Rules of Construction: Headings are given to the sections of this Plan solely as a convenience to facilitate reference. The reference to any statute, regulation or other provision of law shall be construed to refer to any amendment to or successor of such provision of law.
(k) Successors and Assigns: The Plan shall be binding upon the Corporation, its successors and assigns, and Participants, their executors, administrators and permitted transferees and beneficiaries.
(l) Right of Offset: Notwithstanding any other provision of the Plan or an Award Agreement, the Corporation may reduce the amount of any payment or benefit otherwise payable to or on behalf of a Participant by the amount of any obligation of the Participant to or on behalfIncorporation of the Corporation that is or becomes due and payable.
(m) Effect of Changes in Status: An Award shall not be affected by any change inwere filed with the terms, conditions or statusOffice of the Participant’s employment or service, provided that the Participant continues to be an employeeDepartment of or in service to, the Corporation or an Affiliate.
(n) Shareholder Approval: The Plan is subject to approval by the shareholdersState of the Corporation, which approval must occur, if at all, within 12 monthsState of the Effective Date of the Plan. Awards granted prior to such shareholder approval shall be conditioned upon and shall be effective only upon approval of the Plan by such shareholdersFlorida on or before such date.March 4, 2021.
(o) Fractional Shares: Except as otherwise provided by an Award Agreement or the Administrator, (i) the total number of shares issuable pursuantSECOND: Pursuant to the exercise, vesting or earning of an Award shall be rounded down to the nearest whole share, and (ii) no fractional shares shall be issued. The Administrator may, in its discretion, determine that a fractional share shall be settled in cash.
IN WITNESS WHEREOF, this MiMedx Group, Inc. Assumed 2006 Stock Incentive Plan, is, by the authority of the Board of Directors of the Corporation executedset forth in behalfthe Corporation’s Restated Articles of Incorporation and Section 607.0602 of the Florida Business Corporation Act (the “Act”), these Articles of Amendment were duly adopted by the Board of Directors of the Corporation effectiveon [______________], 2021 in accordance with the provisions of Section 607.1003 of the Act.
THIRD: These Articles of Amendment were duly approved by holders of a majority of the outstanding shares of the Common Stock and of the Preferred Stock of the Corporation, voting together as a single class, in accordance with the provisions of Section 607.1003 of the Act and the Corporation’s Restated Articles of Incorporation on [____________], 2021.
FOURTH: The Corporation’s Restated Articles of Incorporation are hereby amended by deleting Article 10(b) and inserting the following text in lieu thereof:
Article 10. Board of Directors. The business and the affairs of the Corporation shall be managed by, or under the direction of, a Board of Directors comprised as follows:
[…]
(b) The members of the Board of Directors elected at the 2010 annual meeting of Shareholders shall be divided into three classes, designated as Class I, Class II, and Class III as specified in the resolution adopted by Shareholders at such meeting. Each Class shall consist, as nearly as may be possible, of one-third of the total number of directors constituting the entire Board of Directors. The Class I directors elected at the 2010 annual meeting of Shareholders shall be deemed elected for a three-year term, Class II directors for a two-year term, and Class III directors for a one-year term. Each director shall hold office until the next annual meeting of Shareholders upon which his/her term expires and until his/her successor is elected and qualified, or until his/her earlier death, resignation or removal. At each succeeding annual meeting of Shareholders prior to the 2022 annual meeting, successor directors to the Class of directors whose term expires at that annual meeting of Shareholders shall be elected for a three-year term. If the number of directors has changed, any increase or decrease shall be apportioned among the Classes so as to maintain the number of directors in each Class as nearly equal as possible. Notwithstanding the foregoing, commencing with the 2022 annual meeting of Shareholders, each person nominated as a director to serve in the class of directors whose term shall expire at such annual meeting of Shareholders shall be elected to hold office for a term expiring at the next annual meeting of Shareholders and until his/her successor is elected and qualified or until his/her earlier death, resignation or removal. As a result, commencing with the 2024 annual meeting of Shareholders, the Board of Directors shall consist of one class of directors (with the Class I, Class II and Class III designations being eliminated), with all director nominees at such annual meeting of Shareholders and thereafter being elected to hold office for a term expiring at the next annual meeting of Shareholders and until his/her successor is elected and qualified or until his/her earlier death, resignation or removal.
IN WITNESS WHEREOF, the undersigned has executed these Articles of Amendment on [_________________], 2021.
MiMedx Group, Inc.
By:__________________________
Name: William F. Hulse IV
Its: General Counsel and Secretary
ANNEX C
PROPOSED ARTICLES OF AMENDMENT
TO RESTATED ARTICLES OF INCORPORATION
OF
MIMEDX GROUP, INC.
TO REDUCE OWNERSHIP THRESHOLD
TO CALL A SPECIAL SHAREHOLDERS’ MEETING
FIRST: This Corporation is named MiMedx Group, Inc. (the “Corporation”). The Articles of Incorporation of the Corporation were originally filed with the Office of the Department of State of the State of Florida on February 8, 2008. The Restated Articles of Incorporation of the Corporation were filed with the Office of the Department of State of the State of Florida on March 4, 2021.
SECOND: Pursuant to the authority of the Board of Directors of the Corporation set forth in the Corporation’s Restated Articles of Incorporation and Section 607.0602 of the Florida Business Corporation Act (the “Act”), these Articles of Amendment were duly adopted by the Board of Directors of the Corporation on [______________], 2021 in accordance with the provisions of Section 607.1003 of the Act.
THIRD: These Articles of Amendment were duly approved by holders of a majority of the outstanding shares of the Common Stock and of the Preferred Stock of the Corporation, voting together as a single class, in accordance with the provisions of Section 607.1003 of the Act and the Corporation’s Restated Articles of Incorporation on [____________], 2021.
FOURTH: The Corporation’s Restated Articles of Incorporation are hereby amended by deleting Article 9 and inserting the following text in lieu thereof:
Article 9. Special Meeting of Shareholders. Special meetings of the shareholders for any purpose may be called by the Secretary of the Corporation at the request in writing of shareholders owning not less than 25% of all votes entitled to be cast on any issue proposed to be considered at the proposed meeting by delivering one or more written demands for the meeting which are signed, dated and delivered to the Secretary of the Corporation, describe the purpose(s) for which the meeting is to be held, and comply with the procedures set forth in Article II, Section 3 of the Amended and Restated Bylaws of the Corporation (as further amended and/or amended and restated from time to time, the “Bylaws”), or any successor or replacement provision of the Bylaws. The foregoing shall be in addition to, and not limit in any manner, the right of the any other person or group, including, to the extent applicable, the Board, the Chairman of the Board and the Chief Executive Officer of the Corporation, to call a special meeting of the shareholders as may be expressly provided in Article II, Section 3 (or any successor or replacement provision) of the Bylaws.
IN WITNESS WHEREOF, the undersigned has executed these Articles of Amendment on [_________________], 2021.
MiMedx Group, Inc.
By:__________________________
Name: William F. Hulse IV
Its: General Counsel and Secretary
ANNEX D
AMENDMENT NO. 1
TO
THE AMENDED AND RESTATED BYLAWS
OF
MIMEDX GROUP, INC.
Pursuant to the resolutions duly adopted by the Board of Directors of MiMedx Group, Inc., a Florida corporation (the “Corporation”), and in accordance with Section 10, Article VIII of the Amended and Restated Bylaws of the Corporation (the “Bylaws”), the Bylaws are amended as set forth below. Except as specifically set forth below, the Bylaws remain unchanged and in full force and effect.
1. A new Section 10(d) is added to Article II of the Bylaws, the text of which is set forth below:
“(d). Shareholder Nominations Included in the Corporation’s Proxy Materials.
(i) Definitions. For purposes of this Section 10(d), the following terms shall have the meanings set forth below, except as otherwise provided herein.
“Eligible Holder” means a person who has either (i) been a record holder of the shares of common stock of the Corporation used to satisfy the eligibility requirements of Section 10(d)(iv) continuously for the three (3)-year period as described in Section 10(d)(iv), or (ii) provides to the Secretary of the Corporation, within the time period specified in Section 10(d)(v), evidence of continuous ownership of such shares for such three (3)-year period from one or more securities intermediaries in a form that the Board of Directors, or its designee, determines would be acceptable for purposes of a shareholder proposal under Rule 14a-8(b)(2) under the Exchange Act (or any successor rule).
“Maximum Number” with respect to any annual meeting of the shareholders, means that number of nominees for election to the Board of Directors that constitutes no more than the greater of (i) two (2) or (ii) 20% of the total number of directors of the Corporation as of the 10thlast day of May, 2012.on which a Qualified Nomination Notice may be submitted pursuant to Section 10(d)(v) (rounded down to the nearest whole number). The Maximum Number shall be subject to the adjustments described in Section 10(d)(iii).
| MIMEDX GROUP, INC. |
| | |
| By: | /s/ Parker H. Petit |
| | Name: Parker H. “Pete” Petit |
| | Title: Chairman |
ATTEST:
/s/ Roberta L. McCaw
Secretary
[Corporate Seal]
MIMEDX GROUP, INC
60 Chastain Center Blvd.
Suite 60
Kennesaw, GA 30144
Investor Address Line 1
Investor Address Line 2
Investor Address Line 3
Investor Address Line 4
Investor Address Line 5
John Sample
1234 ANYWHERE STREET
ANY CITY, ON A1A 1A1
| 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 Daylight Time on May 8, 2013. 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.
ELECTRONIC DELIVERY OF FUTURE 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 Daylight Time on May 8, 2013. Have your proxy card in hand when you call and then follow the instructions.
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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| CONTROL #  | 000000000000 | |
NAME
THE COMPANY NAME INC. – COMMON
THE COMPANY NAME INC. - CLASS A
THE COMPANY NAME INC. - CLASS B
THE COMPANY NAME INC. - CLASS C
THE COMPANY NAME INC. - CLASS D
THE COMPANY NAME INC. - CLASS E
THE COMPANY NAME INC. - CLASS F
THE COMPANY NAME INC. - 401 K
| SHARES
123,456,789,012.12345
123,456,789,012.12345
123,456,789,012.12345
123,456,789,012.12345
123,456,789,012.12345
123,456,789,012.12345
123,456,789,012.12345
123,456,789,012.12345
Page 1 of 2
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TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: x
“Qualified Nomination Notice” means a notice given by a Nominating Shareholder that complies with the requirements of Section 10(d)(v) and names a Nominee.
| KEEP THIS PORTION FOR YOUR RECORDS |
| DETACH AND RETURN THIS PORTION ONLY |
“Nominating Shareholder” means an Eligible Holder or group of up to 20 Eligible Holders who nominate a nominee for election to the Board of Directors.
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
“Nominee” means any person nominated for election to the Board of Directors by a Nominating Shareholder that, individually and collectively, in the case of a group, satisfy all applicable procedures set forth in Section 10(d)(iv) and 10(d)(v).
| For | Withhold | For All | | 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.
| |
| The Board of Directors recommends you vote FOR the following: | All | All | Except | | |
| 1. | Election of directors
| o | o | o | | |
| | | | | | | | |
| 01 Parker H. Petit 02 Larry Papasan 03 J. Terry Dewberry | | | |
| | | | | | | | |
(ii) Inclusion of Nominee in Proxy Statement. Subject to the provisions of this Section 10(d) of this Article II, if expressly requested in a Qualified Nomination Notice delivered by a Nominating Shareholder, the Corporation shall include in its proxy statement for any annual meeting of the shareholders: | The Board of Directors recommends you vote FOR proposals 2, 3 and 4. | For | Against | Abstain |
| | | | | |
| 2. | Proposal to approve an amendment to the Company's Assumed 2006 Stock Incentive Plan.
| o | o | o |
| | | | | |
| 3. | Proposal to ratify the appointment of Cherry, Bekaert & Holland L.L.P. as our independent registered public accounting firm for the current fiscal year. | o | o | o |
| | | | | |
| The Board of Directors recommends that you vote on an advisory basis "FOR" to approve executive compensation | | | |
| | | | |
| 4. | Advisory vote to approve executive compensation of named executive officers. | o | o | o |
| | | | | |
(A) the name of the Nominee, which shall also be included on the Corporation’s form of proxy and ballot; | The Board of Directors recommends that you vote on an advisory basis to approve a vote every "THREE (3) YEARS".
| 1 years | | 3 years | Abstain |
| 5. | Advisory vote for the frequency of shareholder votes on executive compensation.
| o | o | o | o |
| | | | | | |
| NOTE: And such other business as may properly come before the meeting or any adjournment thereof. | | | | |
| | | | | | |
| For address change/comments, mark here.(see reverse for instructions)
| o | Investor Address Line 1
Investor Address Line 2
Investor Address Line 3
Investor Address Line 4
Investor Address Line 5
John Sample
1234 ANYWHERE STREET
ANY CITY, ON A1A 1A1
|
| | |
| 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. | |
| | | | JOB # | | | | SHARES
CUSIP #
SEQUENCE #
|
| Signature [PLEASE SIGN WITHIN BOX] | | Date | | Signature (Joint Owners) | | Date | |
| | | | | | | | |
the SEC or other applicable law to be included in the proxy statement;
(C) any statement included by the Nominating Shareholder in the Qualified Nomination Notice Regardingfor inclusion in the Availabilityproxy statement in support of Proxy Materialsthe Nominee’s election to the Board of Directors (subject, without limitation, to Section 10(d)(v)(B) of this Article II), if such statement does not exceed 500 words and fully complies with Section 14 of the Exchange Act, and the rules and regulations thereunder, including Rule 14a-9; and
(D) any other information that the Corporation or the Board of Directors determines, in its discretion, to include in the proxy statement relating to the nomination of the Nominee, including, without limitation, any statement in opposition to the nomination and any of the information provided pursuant to this Section 10(d) of this Article II.
(iii) Maximum Number of Nominees.
(A) The Corporation shall not be required to include in the proxy statement for an annual meeting of the shareholder more Nominees than the Maximum Number for such annual meeting. The Maximum Number for a particular annual meeting of the shareholders shall be reduced by: (1) Nominees who are subsequently withdrawn or that the Board of Directors itself decides to nominate for election at such annual meeting, (2) Nominees who cease to satisfy, or Nominees of Nominating Shareholders that cease to satisfy, the eligibility requirements in this Article II, Section 10(d) and (3) the number of incumbent directors who were Nominees with respect to any of the preceding two annual meetings of the shareholders and whose reelection at the upcoming annual meeting of the shareholders is being recommended by the Board of Directors. If one or more vacancies for any reason occurs on the Board of Directors after the deadline set forth in Section 10(d)(v) of this Article II, but before the date of the annual meeting of the shareholders, and the Board of Directors resolves to reduce the size of the Board in connection therewith, the Maximum Number shall be calculated based on the number of directors in office as so reduced.
(B) If the number of Nominees pursuant to this Section 10(d) of this Article II for any annual meeting of the shareholders exceeds the Maximum Number then, promptly upon notice from the Corporation, each Nominating Shareholder will select one Nominee for inclusion in the proxy statement until the Maximum Number is reached, going in order of the amount (largest to smallest) of the ownership position as disclosed in each Nominating Shareholder’s Qualified Nomination Notice, with the process repeated if the Maximum Number is not reached after each Nominating Shareholder has selected one Nominee. If, after the deadline for submitting a Qualified Nomination Notice as set forth in Section 10(d)(v) of this Article II, a Nominating Shareholder becomes ineligible or withdraws its nomination, or a Nominee becomes unwilling to serve on the Board of Directors, whether before or after the delivery of the definitive proxy statement, then the nomination shall be disregarded, and the Corporation (1) shall not be required to include in its proxy statement or on any ballot or form of proxy the disregarded Nominee or any successor or replacement Nominee proposed by the Nominating Shareholder or by any other Nominating Shareholder, and (2) may otherwise communicate to its shareholders, including, without limitation, by amending or supplementing its proxy statement or ballot or form of proxy, that the Nominee will not be included as a Nominee in the proxy statement or on any ballot or form of proxy and will not be voted on at the annual meeting of the shareholders.
(iv) Eligibility of Nominating Shareholder.
(A) An Eligible Holder or group of up to twenty (20) Eligible Holders may submit a nomination in accordance with this Section 10(d) of this Article II only if the person or group (in the aggregate) has continuously owned at least the Minimum Number of shares of the common stock of the Corporation (as adjusted for any stock splits, stock dividends, or similar events) throughout the three (3)-year period preceding, including the date of submission of, the Qualified Nomination Notice, and continues to own at least the Minimum Number through the date of the annual meeting of the shareholders. A group of funds under common management and investment control shall be treated as one Eligible Holder if such Eligible Holder shall provide, together with the Qualified Nomination Notice, documentation reasonably satisfactory to the Corporation that demonstrates that the funds are under common management and investment control. For the avoidance of doubt, in the event of a nomination by a group of Eligible Holders, any and all requirements and obligations for an individual Eligible Holder that are set forth in this Section 10(d) of this Article II, including the minimum holding period, shall apply to each member of such group; provided, however, that the Minimum Number shall apply to the ownership of the group in the aggregate. If any shareholder withdraws from a group of Eligible Holders
acting together as a Nominating Shareholder at any time prior to the annual meeting of the shareholders, the group of Eligible Holders shall only be treated as owning the shares held by the remaining members of the group.
(B) For purposes of this Section 10(d) of this Article II, an Eligible Holder “owns” only those outstanding shares of common stock of the Corporation as to which the Eligible Holder possesses both: (1) the full voting and investment rights pertaining to the shares; and (2) the full economic interest in (including the opportunity for profit and risk of loss on) such shares. The number of shares calculated in accordance with clauses (1) and (2) shall not include any shares: (a) purchased or sold by such Eligible Holder or any of its affiliates in any transaction that has not been settled or closed, (b) sold short by such Eligible Holder, (c) borrowed by such Eligible Holder or any of its affiliates for any purpose or purchased by such Eligible Holder or any of its affiliates pursuant to an agreement to resell or subject to any other obligation to resell to another person, or (d) subject to any option, warrant, forward contract, swap, contract of sale, other derivative or similar agreement entered into by such Eligible Holder or any of its affiliates, whether any such instrument or agreement is to be settled with shares or with cash based on the notional amount or value of outstanding shares of common stock of the Corporation, in any such case which instrument or agreement has, or is intended to have, the purpose or effect of: (x) reducing in any manner, to any extent or at any time in the future, such Eligible Holder’s or any of its affiliates’ full right to vote or direct the voting of any such shares, and/or (y) hedging, offsetting, or altering to any degree, gain or loss arising from the full economic ownership of such shares by such Eligible Holder or any of its affiliates. An Eligible Holder “owns” shares held in the name of a Nominee or other intermediary, so long as the Eligible Holder retains the right to instruct how the shares are voted with respect to the election of directors and possesses the full economic interest (including the opportunity for profit and risk of loss on) in the shares. An Eligible Holder’s ownership of shares shall be deemed to continue during any period in which the Eligible Holder has delegated any voting power by means of a proxy, power of attorney, or other similar instrument or arrangement that is revocable at any time by the Eligible Holder. The terms “owned,” “owning” and other variations of the word “own” shall have correlative meanings. Whether outstanding shares of common stock of the Corporation are “owned” for these purposes shall be determined by the Board of Directors.
(C) No person shall be permitted to be in more than one group constituting a Nominating Shareholder, and if any person appears as a member of more than one group, it shall be deemed to be a member of the group that has the largest ownership position as reflected in the Qualified Nomination Notice.
(v) Qualified Nomination Notice. To nominate a Nominee, the Nominating Shareholder must, no earlier than 150 days and no later than 120 days before the anniversary of the date that the Corporation delivered its proxy statement for the Annual Meeting: Theprior year’s annual meeting of the shareholders, submit to the Secretary of the Corporation at the principal executive office of the Corporation all of the following information and documents (collectively, the “Qualified Nomination Notice”), and in no event will the public announcement of an adjournment of the annual meeting of shareholders commence a new time period for the giving of the Qualified Nomination Notice & Proxy Statement, Form 10-K is/are available at as provided above; provided, however, that if (and only if) the annual meeting of the shareholders is not scheduled to be held within a period that commences 30 days before the anniversary date of the prior year’s annual meeting of shareholders and ends 30 days after such anniversary date (an annual meeting of the shareholders date outside such period being referred to herein as an “Other Meeting Date”), the Qualified Nomination Notice shall be given in the manner provided herein by the later of the close of business on the date that is 180 days prior to such Other Meeting Date or the tenth day following the date such Other Meeting Date is first publicly announced or disclosed:
(A) A Schedule 14N (or any successor form) relating to the Nominee, completed and filed with the SEC by the Nominating Shareholder as applicable, in accordance with SEC rules.
www.proxyvote.com
(B) A written notice of the nomination of such Nominee, in a form deemed satisfactory by the Board of Directors, that includes the following additional information, agreements, representations and warranties by the Nominating Shareholder (including each group member): (1) the information required with respect to the nomination of directors pursuant to Article II, Section 10(a) of these Bylaws, (2) the details of any relationship that existed within the past three years and that would have been described pursuant to Item 6(e) of Schedule 14N (or any successor item) if it existed on the date of submission of the Schedule 14N; (3) a representation and warranty that the Nominating Shareholder acquired the securities of the Corporation in the ordinary course of business and did not acquire, and is not holding, securities of the Corporation for the purpose or with the effect of influencing or changing control of the Corporation; (4) a
representation and warranty that the Nominee’s candidacy or, if elected, Board of Directors membership would not violate applicable state or federal law or the rules of any stock exchange on which the Corporation’s securities are traded; (5) a representation and warranty that the Nominee: (a) does not have any direct or indirect relationship with the Corporation that would cause the Nominee to be considered not independent pursuant to the Corporation’s corporate governance guidelines as most recently published on its website and otherwise qualifies as independent under the rules of the primary stock exchange on which the Corporation’s securities are traded; (b) meets the Audit Committee independence requirements under the rules of any stock exchange on which the Corporation’s securities are traded; (c) is a “non-employee director” for the purposes of Rule 16b-3 under the Exchange Act (or any successor rule); and (d) is not and has not been subject to any event specified in Rule 506(d)(1) of Regulation D (or any successor rule) under the Securities Act of 1933, as amended (the “Securities Act”) or Item 401(f) of Regulation S-K (or any successor rule) under the Exchange Act, without reference to whether the event is material to an evaluation of the ability or integrity of the Nominee; and (e) has not been named subject of a pending criminal proceeding (excluding traffic violations and other minor offenses) and has not been convicted in such a criminal proceeding in the last ten years; (E) a representation and warranty that the Nominating Shareholder satisfies the eligibility requirements set forth in Section 10(d)(iv) of this Article II and has provided evidence of ownership to the extent required by Section 10(d)(iv) of this Article II; (6) a representation and warranty that the Nominating Shareholder intends to continue to satisfy the share ownership eligibility requirements described in Section 10(d)(iv) of this Article II through the date of the annual meeting of the shareholders; (7) details of any position of the Nominee as an officer or director of any competitor (that is, any entity that produces products or provides services that compete with or are alternatives to the principal products produced or services provided by the Corporation or its affiliates) of the Corporation, within the five years preceding the submission of the Qualified Nomination Notice; (8) a representation and warranty that the Nominating Shareholder will not engage in a “solicitation” within the meaning of Rule 14a-1(l) of the Exchange Act (without reference to the exception in Rule 14a-1(l)(2)(iv) of the Exchange Act) (or any successor rules) with respect to the annual meeting of the shareholders, other than with respect to the Nominee or any nominee of the Board; (9) a representation and warranty that the Nominating Shareholder will not use any proxy card other than the Corporation’s proxy card in soliciting shareholders in connection with the election of a Nominee at the annual meeting of the shareholders; (10) if desired, a statement for inclusion in the proxy statement in support of the Nominee’s election to the Board of Directors, provided that such statement shall not exceed 500 words and shall fully comply with Section 14 of the Exchange Act and the rules and regulations thereunder, including Rule 14a-9; and (11) in the case of a nomination by a group, the designation by all group members of one group member who is authorized to act on behalf of all group members with respect to all matters relating to the nomination, including withdrawal of the nomination.
(C) An executed agreement, in a form deemed satisfactory by the Board of Directors, which must be submitted within seven days of the Nominating Shareholder’s first submission of any information required by this Section 10(d) of this Article II, in a form deemed satisfactory by the Board of Directors or its designee, pursuant to which the Nominating Shareholder (including each group member) agrees: (1) to comply with all applicable laws, rules and regulations in connection with the nomination, solicitation and election; (2) to file any written solicitation or other communication with the Corporation’s shareholders relating to one or more of the Corporation’s directors or director nominees or any Nominee with the SEC, regardless of whether any such filing is required under rule or regulation or whether any exemption from filing is available for such materials under any rule or regulation; (3) to assume all liability stemming from an action, suit or proceeding concerning any actual or alleged legal or regulatory violation arising out of any communication or action by the Nominating Shareholder or any of its Nominees with the Corporation, its shareholders or any other person in connection with the nomination or election of directors, including, without limitation, the Qualified Nomination Notice; and (4) to indemnify and hold harmless (jointly with all other group members, in the case of a group member) the Corporation and each of its directors, officers and employees individually against any liability, loss, damages, expenses or other costs (including attorneys’ fees) incurred in connection with any threatened or pending action, suit or proceeding, whether legal, administrative, or investigative, against the Corporation or any of its directors, officers or employees arising out of or relating to a failure or alleged failure of the Nominating Shareholder to comply with, or any breach or alleged breach of, its obligations, agreements or representations under this Section 10(d) of this Article II, or otherwise arising out of any nomination, solicitation or other activity by any Nominating Shareholder in connection with its efforts under this Section 10(d) of this Article II.
(D) An executed agreement, in a form deemed satisfactory to the Board of Directors, which must be submitted within seven days of the Nominating Shareholder’s first submission of any information required by this Section 10(d) of this
Article II, in a form determined to be satisfactory by the Board of Directors, or its designee, by the Nominee: (1) to provide to the Corporation such other information, including completion of the Corporation’s director questionnaire, as it may reasonably request; and (2) that includes the representation and agreement set forth in Section 10(a)(iii)(B)(5) of these Bylaws.
(E) In the event that any information or communications provided by a Nominating Shareholder or Nominee to the Corporation or its shareholders is not, when provided, or thereafter ceases to be, true, correct and complete in all material respects (including omitting a material fact necessary to make the statements made, in light of the circumstances under which they were made, not misleading), each Nominating Shareholder or Nominee, as the case may be, shall promptly notify the Secretary of the Corporation and provide the information that is required to make such information or communication true, correct, complete and not misleading; it being understood that providing any such notification shall not be deemed to cure any such defect or limit the Board of Directors’ right to omit a Nominee from its proxy materials.
MIMEDX GROUP, INC
This proxy is solicited on behalf of the Board of Directors
Annual Meeting of Shareholders
May 9, 2013, 2:00 PM EDT
The shares represented by this proxy will be voted as specified herein by the shareholder when instructions are given in accordance with the procedures described herein and in the accompanying proxy statement. If no specification is made, all shares will be voted "FOR" election of directors and the approval of the proposals set forth in the proxy statement.
The shareholder represented herein appoints Parker H. Petit and Roberta L. McCaw, and each of them, with full power to act alone, the true and lawful attorneys in fact and proxies, with the full power of substitution and revocation, to vote all shares of common stock entitled to be voted by said shareholder at the Annual Meeting of Shareholders of MiMedx Group, Inc. to be held at 1775 Parkway Place SE, Marietta, GA 30067 on May 9, 2013, at 2:00 PM (Eastern Daylight Time), and in any adjournment or postponement thereof as specified in this proxy. This proxy revokes any proxy previously given.
Shareholders may revoke this proxy at any time prior to the vote at the Annual Meeting. If any other business is properly brought before the Annual Meeting, the shares represented by this proxy will be voted at the discretion of the proxies identified above.
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The information and documents required by this Section 10(d)(v) of this Article II shall be: (A) provided with respect to and executed by each group member, in the case of information applicable to group members; and (B) provided with respect to the persons specified in Instruction 1 to Items 6(c) and (d) of Schedule 14N (or any successor items) in the case of a Nominating Shareholder or group member that is an entity. The Qualified Nomination Notice shall be deemed submitted on the date on which all the information and documents referred to in this Section 10(d)(v) of this Article II (other than such information and documents contemplated to be provided after the date the Qualified Nomination Notice is provided) have been delivered to or, if sent by mail, received by the Secretary of the Corporation.
(vi) Authority of the Board of Directors. The Board of Directors shall have the exclusive power and authority to interpret the provisions of this Article II, Section 10(d) and make, in good faith, all determinations deemed necessary or advisable in connection with this Article II, Section 10(d).
(vii) Exceptions.
(A) Notwithstanding anything to the contrary contained in Section 10(d) of this Article II, the Corporation may omit from its proxy statement any Nominee and any information concerning such Nominee (including a Nominating Shareholder’s statement in support) and no vote on such Nominee will occur (notwithstanding that proxies in respect of such vote may have been received by the Corporation), and the Nominating Shareholder may not, after the last day on which a Qualified Nomination Notice would be timely, cure in any way any defect preventing the nomination of the Nominee, if: (1) the Nominating Shareholder or the designated lead group member, as applicable, or any qualified representative thereof, does not appear at the meeting of shareholders to present the nomination submitted pursuant to this Section 10(d) of this Article II, the Nominating Shareholder withdraws its nomination or the presiding officer of the annual meeting declares that such nomination was not made in accordance with this Article II, Section 10(d) and shall therefore be disregarded; (2) the Board of Directors, determines that such Nominee’s nomination or election to the Board of Directors would result in the Corporation violating or failing to be in compliance with these Bylaws or the Articles of Incorporation or any applicable law, rule or regulation to which the Corporation is subject, including any rules or regulations of any stock exchange on which the Corporation’s securities are traded; (3) the Nominee was nominated for election to the Board of Directors pursuant to this Section 10(d) of this Article II at one of the Corporation’s two (2) preceding Annual Meetings of shareholders and either withdrew or became ineligible or received less than 25% of the votes that all shareholders are entitled to cast for such Nominee; (4) the Nominee has been, within the past three years, an officer or director of a competitor, as defined for purposes of Section 8 of the Clayton Antitrust Act of 1914, as amended, or (5) the Corporation is notified, or the Board of Directors determines, that a Nominating Shareholder has failed to continue to satisfy the eligibility requirements described in Section 10(d)(iv) of this Article II, any of the representations and warranties made in the Qualified Nomination Notice ceases to be true and accurate in all material respects (or omits a material fact necessary to make the statement not misleading), the Nominee becomes unwilling or unable to serve on the Board of Directors or any material violation or breach occurs of the obligations, agreements, representations or warranties of the Nominating Shareholder or the Nominee under this Section 10(d) of this Article II.
(B) Notwithstanding anything to the contrary contained in this Section 10(d) of this Article II, the Corporation may omit from its proxy statement, or may supplement or correct, any information, including all or any portion of the statement in support of the Nominee included in the Nomination Notice, if the Board of Directors determines that: (1) such information is not true in all material respects or omits a material statement necessary to make the statements made not
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misleading; (2) such information directly or indirectly impugns character, integrity or personal reputation of, or directly or indirectly makes charges concerning improper, illegal or immoral conduct or associations, without factual foundation, with respect to, any person; or (3) the inclusion of such information in the proxy statement would otherwise violate the SEC proxy rules or any other applicable law, rule or regulation.
(C) The Corporation may solicit against, and include in the proxy statement its own statement relating to, any Nominee.”
