UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] | Preliminary Proxy Statement |
[ ] | Confidential for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
[X] | Definitive Proxy Statement |
[ ] | Definitive Additional Materials |
[ ] | Soliciting Material Pursuant to Rule 14a-12 |
inTEST Corporation
(Name of Registrant as Specified In Its Charter)
____________________________________________________________________________________
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] | No fee required. | |
|
| |
[ ] | 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: |
| (5) | Total fee paid: |
[ ] | Fee paid previously with preliminary materials. | |
[ ] | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(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: |
| (2) | Form, Schedule or Registration Statement No.: |
| (3) | Filing Party: |
| (4) | Date Filed: |
inTEST CORPORATION
804 East Gate Drive, Suite 200
Mt. Laurel, New Jersey 08054
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held June 24, 201529, 2016
NOTICE IS HEREBY GIVEN that the 20152016 Annual Meeting of Stockholders of inTEST Corporation will be held in our offices located at 804 East Gate Drive, Suite 200, Mt. Laurel, New Jersey, on Wednesday, June 24, 2015,29, 2016, at 11:00 A.M. Eastern Daylight Time, to consider and vote on the following matters described in the accompanying Proxy Statement:
1. | The election as directors of the five nominees named in the accompanying Proxy Statement, with each director to serve until the next annual meeting of stockholders and the election and qualification of such director's successor; |
2. | Ratification of the selection of |
3. | Approve, on an advisory basis, the compensation of our named executive officers; and |
| Such other business as may properly be brought before the meeting or any adjournment thereof. |
The Board of Directors has fixed April 30, 2015,May 10, 2016, at the close of business, as the record date for the determination of stockholders entitled to notice of, and to vote at, the meeting.
By Order of the Board of Directors,
/s/ Hugh T. Regan, Jr.
Hugh T. Regan, Jr.
Secretary
April 30, 2015
29, 2016
YOUR VOTE IS IMPORTANT
Whether or not you plan to attend the meeting, please complete, date, sign and mail your proxy card promptly in order that the necessary quorum may be represented at the meeting. If your shares are held in a brokerage account or by another nominee record holder, please be sure to mark your voting choices on the voting instruction card that accompanies this proxy statement.If you fail to specify your voting instructions for the election of directors or for the advisory vote on compensation, your shares will not be voted in such election due to rules applicable to broker voting, or we may incur additional costs to solicit votes. The enclosed envelope requires no postage if mailed in the United States.
TABLE OF CONTENTS
| Page |
|
|
Questions and Answers About the |
|
|
|
Voting Securities and Principal Stockholders |
|
|
|
Proposal 1: Election of Directors |
|
Nominees for Election |
|
Biographical and Other Information regarding inTEST's Directors |
|
Director Independence |
|
Board Leadership Structure |
|
Risk Oversight |
|
Transactions with Related Persons |
|
|
|
Corporate Governance |
|
Committees of the Board of Directors |
|
Meetings |
|
Stockholder Communications with the Board of Directors |
|
Compensation Procedures |
|
Nominating Procedures |
|
Audit Committee Report |
|
|
|
Executive Officers |
|
Executive Officers |
|
Biographical and Other Information Regarding inTEST's Executive Officers |
|
|
|
Executive Compensation |
|
Overview of Executive Compensation Program |
|
Summary Compensation Table of Named Executive Officers |
|
Outstanding Equity Awards at |
|
Potential Payments Upon Termination Following a Change of Control |
|
|
|
Director Compensation |
|
|
|
Proposal 2: Ratification of Independent Registered Public Accounting Firm |
|
Proposal 3: Advisory Vote on the Compensation of our Named Executive Officers | 18 |
|
|
Section 16(a) Beneficial Ownership Reporting Compliance |
|
|
|
Information Regarding Deadlines and Procedures for Submission of Stockholder Proposals and Nominations of Directors |
|
|
|
Annual Report |
|
inTEST CORPORATION
804 East Gate Drive, Suite 200
Mt. Laurel, New Jersey 08054
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
To Be Held June 24, 201529, 2016
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE STOCKHOLDER MEETING TO BE HELD ON WEDNESDAY, JUNE 24, 2015:29, 2016: Copies of this Proxy Statement and our 20142015 Annual Report to Stockholders are available at http://investor.shareholder.com/intest/annual.cfm?AnnualPage=meeting.
This proxy statement and the enclosed proxy card are intended to be sent or given to stockholders of inTEST Corporation on or about May 22, 2015,25, 2016, in connection with the solicitation of proxies on behalf of our Board of Directors for use at our 20152016 Annual Meeting of Stockholders, to be held on Wednesday, June 24, 2015,29, 2016, at 11:00 A.M. Eastern Daylight Time, in our offices located at 804 East Gate Drive, Suite 200, Mt. Laurel, New Jersey.
The following questions and answers present important information pertaining to the meeting:
Q: | Who is entitled to vote? |
A: | Stockholders of record as of the close of business on |
|
|
Q: | How many shares can vote? |
A: | There were |
|
|
Q: | What may I vote on? |
A: | You may vote on the following matters: |
|
|
|
|
| |
|
|
|
|
Q: | Will any other business be presented for action by stockholders at the meeting? |
A: | Management knows of no business that will be presented at the meeting other than that which is set forth in this proxy statement. If any other matter properly comes before the meeting, the persons named in the accompanying proxy card intend to vote the proxies (which confer discretionary authority to vote on such matters) in accordance with their best judgment. |
|
|
Q: | How does the Board of Directors recommend that I vote on each of the proposals? |
A: | The Board recommends a vote "FOR" each of the director nominees and "FOR" |
|
|
Q: | How do I vote my shares? |
A: | The answer depends on whether you own your inTEST shares directly (that is, you hold stock certificates that show your name as the registered stockholder) or if your shares are held in a brokerage account or by another nominee holder. |
|
|
| If you own inTEST shares directly: your proxy is being solicited directly by us, and you can vote by paper, telephone or Internet, as described below, or you can vote in person if you attend the meeting. |
1
2
| If you vote by paper, please do the following: (1) sign and date the enclosed proxy card, (2) mark the boxes indicating how you wish to vote, and (3) return the proxy card in the prepaid envelope provided. If you sign your proxy card but do not indicate how you wish to vote, the proxies will vote your shares "FOR" each of the director nominees,"FOR" |
|
|
| If you vote by telephone or over the Internet, you will find instructions on the enclosed proxy card that you should follow. There may be costs associated with telephonic or electronic access, such as usage charges from Internet access providers and telephone companies that must be paid by the stockholder. |
|
|
| If you hold your inTEST shares through a broker, bank or other nominee: you will receive a voting instruction card directly from your broker, bank or other nominee describing how to vote your shares. If you receive a voting instruction card, you can vote by completing and returning the voting instruction card. If you fail to specify your voting instructions for the election of directors or for the advisory vote on compensation, your broker cannot direct the voting of your shares in those matters. Therefore,please be sure to mark your voting choices on your voting instruction card before you return it. You may also be able to vote by telephone or via the Internet. Please refer to the instructions provided with your voting instruction card for information about voting in these ways. |
|
|
| If you hold your inTEST shares through a nominee and want to vote at the meeting:you must obtain a "legal proxy" from the nominee recordholder authorizing you to vote at the meeting. |
|
|
Q: | What if I want to change my vote or revoke my proxy? |
A: |
|
|
|
Q: | What is a quorum? |
A: | The presence at the meeting (in person or by proxy) of a majority of the shares entitled to vote at the meeting constitutes a quorum. A quorum must be present in order to convene the meeting. |
|
|
Q: | How will directors be elected? |
A: | A plurality of the votes cast at the meeting is required for the election of directors. This means that the director nominee with the most votes for a particular director seat is elected to that seat. |
|
|
Q: | How will the outcome of the proposal to ratify the selection of our independent registered public accounting firm be determined? |
A: | To ratify the selection, a majority of the shares of stock that are present in person or by proxy and entitled to vote at the meeting must be voted in favor of the ratification. |
|
|
Q: | How will the advisory vote on the compensation of our named executive officers be approved? |
A: | To approve the compensation of our named executive officers, a majority of the shares of stock that are present in person or by proxy and entitled to vote at the meeting must be voted in favor of the proposal. The results of this stockholder vote are advisory in nature and non-binding on inTEST. |
Q: | What is the effect if I fail to give voting instructions to my broker or other nominee? |
A: | If your shares are held by a broker or other nominee, youmust provide your broker or nominee with instructions on how to vote your shares for the director nominees and for the advisory vote on executive compensation in order for your shares to be counted in the election of |
3
2
VOTING SECURITIES AND PRINCIPAL STOCKHOLDERS The following table sets forth certain information known to us regarding the beneficial ownership of our common stock as of April
Percentage ownership in the following table is based on
|
(11) | Includes |
(12) | According to a Schedule 13G/A filed with the SEC on |
|
|
(13) | According to a Schedule |
|
|
(14) | According to a Schedule 13G/A filed with the SEC on |
PROPOSAL 1: ELECTION OF DIRECTORS
Our bylaws provide that our Board of Directors shall consist of not less than five directors, as determined by the Board of Directors, and that each director shall hold office until the next Annual Meeting of Stockholders and until a successor shall be duly elected and qualified, or until his earlier resignation, retirement or removal. Until his death on November 9, 2014, Stuart F. Daniels, Ph.D. was a member of the Board of Directors. On November 17, 2014, the Board of Directors determined to reduce the number of directors comprising the Board to five, which is theThe number of directors that presently constitute the entire Board.Board is five.
Listed below are the five nominees for director. The persons designated as proxies in the accompanying proxy card intend to vote "FOR" each such nominee, unless a contrary instruction is indicated on the proxy card. If for any reason any such nominee should become unavailable for election, the persons designated as proxies in the proxy card may vote the proxy for the election of another person nominated as a substitute by the Board of Directors, if any person is so nominated. We have no reason to believe that any of the nominees will be unable or unwilling to serve if elected, and all nominees have expressed their intention to serve the entire term for which election is sought.
Recommendation of the Board
The Board of Directors recommends a vote "FOR" the election of each of the nominees to the Board of Directors named below.
Nominees for Election
The names of the persons nominated for election, each of whom presently serves as a director, are listed below, together with their ages and certain other information regarding the nominees.
Nominee | Age | Position |
Alyn R. Holt |
| Executive Chairman and Director |
Robert E. Matthiessen |
| President, Chief Executive Officer and Director |
Steven J. Abrams, Esq |
| Director |
Joseph W. Dews IV |
| Director |
William Kraut |
| Director |
56
Biographical and Other Information Regarding inTEST's Directors
Biographical information regarding the business experience of each of our directors and the primary aspects of each of our directors' experience, qualifications, attributes or skills that led to the conclusion that each of our directors should serve on our Board of Directors is set forth below.
Alyn R. Holt is a co-founder of inTEST Corporation and has served as our Chairman (renamed Executive Chairman in October 2007) since our inception in September 1981. Mr. Holt also served as our Chief Executive Officer from September 1981 to August 1998.Among other attributes, skills, experiences and qualifications, the Board believes that Mr. Holt's education as an engineer and his experience as the designer and developer of the basic products in our Mechanical Products segment, as well as his knowledge and industry experience as a founder and our former Chief Executive Officer for 17 years and an industry participant for approximately 50 years, are the attributes, skills, experiences and qualifications that allow Mr. Holt to provide visionary leadership as the Chairman of our Board of Directors.
Robert E. Matthiessenhas served as our Chief Executive Officer since August 1998 and our President since February 1997. Mr. Matthiessen also served as our Chief Operating Officer from December 1997 to August 1998. Prior to that, Mr. Matthiessen served as our Executive Vice President after joining us in October 1984. Mr. Matthiessen has served as a director since February 1997.Among other attributes, skills, experiences and qualifications, the Board believes that Mr. Matthiessen's education and experience in the fields of mechanical and electrical engineering, his experience in the ATE industry throughout his over 40 year career and his extensive network of contacts and relationships in this industry, in addition to his over 25 years of experience at our Company, are the attributes, skills, experiences and qualifications that uniquely qualify him to execute our strategies and make valuable contributions as one of our directors.
Steven J. Abrams, Esq. was elected to serve as a director on January 8, 2013. In April 2016, Mr. Abrams isjoined Hogan Lovells US LLP as a partner. Prior to this, Mr. Abrams was with Pepper Hamilton LLP for 20+ years where he was co-chair of the Corporate Securities and Life Sciences Practice at Pepper Hamilton LLP and a member of Pepper'sthe Executive Committee. Mr. Abrams concentrates his legal practice on securities and merger and acquisition transactions. Mr. Abrams also counsels clients on governance, disclosure and transactional matters. Among other attributes, skills, experiences and qualifications, the Board believes that Mr. Abrams' 20 plus years of experience as a corporate and securities attorney at an Am Law 100 law firm providing counsel to corporations and other business entities regarding governance, disclosure and transactional matters allows Mr. Abrams to make a valuable contribution as one of our directors.
Joseph W. DewsIVwas elected to serve as a director on April 10, 2014. Mr. Dews has been a Partner at AGC Partners, an advisory-only technology investment bank since July 2012, and leads AGC's Semiconductor Technology and Energy Technology practices.2012. Prior to that, Mr. Dews held various positions, including Managing Director and Partner, at ThinkEquity LLC from May 2007 to July 2012, and held various positions, including Managing Director and Principal, at Needham & Company from February 2001 to May 2007, both technology investment banks. Mr. Dews has acted as a strategic and financial advisor to numerous public and private technology companies in the U.S. and internationally, including assessing corporate strategies and evaluating options for fund raising, share repurchases and acquisitions of businesses. In addition to his experience as an investment banker, Mr. Dews has a technical background including a Bachelor of Science in Applied & Engineering Physics from Cornell University and approximately two years of experience in the semiconductor industry working as a Field Applications Engineer for Cirrus Logic KK. Among other attributes, skills, experiences and qualifications, the Board believes that Mr. Dews' over 20 years of experience as an investment banker and familiarity with the semiconductor industry uniquely positions him to contribute strategic insight, acquisition creativity, and other valuable contributions as one of our directors.
William Kraut was elected to serve as a director on January 8, 2013. Mr. Kraut was an audit partner with EisnerAmper LLP until he retired in August 2011. From December 1980 until July 2010 he was partner in charge of the audit practice, for both public and non-public companies, as well as partner in charge of quality control functions within the firm of Amper, Politziner & Mattia LLP until it combined with Eisner LLP to form EisnerAmper LLP in July 2010. Since December 2011, Mr. Kraut has been a partner of Newport Board Group LLC which provides consulting services to companies in various industries. Among other attributes, skills, experiences and qualifications, the Board believes that Mr. Kraut's accounting experience as a certified public accountant at a national accounting firm, including 30 years as an audit partner, give him insight into corporate finance trends and practices and in-depth understanding and familiarity with generally accepted accounting principles and internal control procedures. In 2014, Mr. Kraut was designated a Board Governance Fellow by the National Association of Corporate Directors. These attributes, skills, experiences and qualifications allows Mr. Kraut to make a valuable contribution as one of our directors and as the Chairman of our Audit Committee.
67
Director Independence
Our Board of Directors has determined that each of the current directors meets the independence requirements of the NYSE MKT Listing Rules (the "NYSE MKT Rules"), with the exception of Mr. Holt, who serves as our Executive Chairman, and Mr. Matthiessen, who serves as our President and Chief Executive Officer. In making the foregoing determination with respect to our non-employee directors, the Board considered the directorships Mr. Kraut holds in several privately- or mutually-owned businesses, which were not deemed relevant to the determination, and did not identify any other matters, transactions, relationships or arrangements that needed to be considered in determining the independence of the non-employeethese directors.
Board Leadership Structure
Our Bylaws and Guidelines on Significant Corporate Governance Issues state our general policy that the position of Chief Executive Officer may be held by either the Executive Chairman or the President of the Company.inTEST. We believe this gives us the greatest flexibility to maintain strong leadership and management of the Company.inTEST. Presently, the position of Chief Executive Officer is held by the President. We believe this is the most appropriate structure at this time as it allows our Executive Chairman to maintain primary focus on long range administration and development of strategic initiatives, while the President has primary focus on daily operations, product development and synergies among our product segments. Our Guidelines on Significant Corporate Governance Issues also state the Board's belief that, for the effective operation of the Board, an independent director be designated as the Lead Independent Director. Our Lead Independent Director is William Kraut. As Lead Independent Director, he is responsible for calling and chairing meetings of the independent directors, acting as a liaison between the independent directors and the Executive Committee and performing various other duties. The general responsibilities of the Lead Independent Director are set forth in a written charter adopted by the Board and posted on our website.website: www.intest.com.
Risk Oversight
Management is responsible for the day-to-day management of risks that the Company faces,we face, while the Board of Directors, as a whole and through its Committees, has responsibility for the oversight of risk management. Management attends regular Board and Committee meetings and discusses with the Board or Committees the various risks confronting the Company,inTEST, including the operational, legal, market and competitive risks facing the Company.that we face. In addition, the Audit Committee regularly considers major financial risk exposures and the steps management has taken to monitor and control such exposures.
Transactions with Related Persons
We have not entered into any transactions with a related person since January 1, 2014, the Company is not2015, nor are we otherwise a party to a current transaction, and no transaction is currently proposed, in which the amount of the transaction exceeds $120,000 and in which a related person had or will have a direct or indirect material interest. For purposes of this paragraph, a related person includes any executive officer, director or nominee for director, any greater than 5% beneficial owner of our common stock, and any immediate family or household member of any of the foregoing.
CORPORATE GOVERNANCE
Committees of the Board of Directors
Our Board of Directors currently has four standing Committees: Executive, Audit, Compensation, Nominating and Corporate Governance. Copies of the charters of each of these committees are posted on our website: www.intest.com.
The Executive Committee is appointed by the Board of Directors to exercise all powers and authority of the Board of Directors in the management of our business and affairs during intervals between meetings of the Board of Directors, and to provide oversight of, and make recommendations to, the Board of Directors regarding corporate initiatives and strategies. During 2014,2015, the members of the Committee were Alyn R. Holt, Chairman; Robert E. Matthiessen, until he stepped down from the Committee on November 17, 2014; James W. Schwartz, until his retirement on June 25, 2014; and, Stuart F. Daniels, until his death on November 9, 2014.Chairman, Steven J. Abrams, was appointed to the Committee on July 1, 2014; and Joseph W. Dews IV was appointed to the Committee on November 17, 2014.IV. The Committee held one meeting in 2014.2015.
The Audit Committee is appointed by the Board of Directors to assist the Board of Directors in fulfilling its oversight responsibilities with respect to our financial management and controls. The Committee's primary oversight responsibilities relate to the integrity of our accounting and financial reporting processes, audits of our financial statements, and systems of internal control over financial reporting and accounting matters, and the independence, qualifications, retention, and performance of our
7 independent registered
independent registered 8
public accounting firm. During 2014,2015, the members of the Committee were, William Kraut, Chairman;Chairman, Steven J. Abrams; James W. Schwartz, until his retirement on June 25, 2014;Abrams, and Stuart F. Daniels, until his death on November 9, 2014. Joseph W. Dews IV was appointed to the Committee in April 2014.IV. The Board of Directors has determined that Mr. Kraut meets the criteria of an "audit committee financial expert" as that term is defined in Item 401 of Regulation S-K. The Board of Directors has also determined that each of the members of the Committee is independent within the meaning of the NYSE MKT Rules. The Committee held nineeight meetings during 2014.2015.
The Compensation Committee is appointed by the Board of Directors to review, evaluate, and approve the compensation and benefit programs of our executive officers, to administer our equity based compensation plans, and to review and recommend to the Board of Directors changes to our director compensation. During 2014,2015, the members of the Committeewere, Steven J. Abrams; William Kraut; James W. Schwartz, until his retirement on June 25, 2014; and, Stuart F. Daniels, who served as Chairman, until his death on November 9, 2014. Joseph W. Dews IV, was appointed to the Committee in April 2014Chairman, Steven J. Abrams, and was appointed Chairman of the Committee on November 17, 2014.William Kraut. The Board of Directors has determined that each of the members of the Committee is independent within the meaning of the NYSE MKT Rules, including the stricter requirements of Section 803 of the NYSE MKT Company Guide, which are not applicable to smaller reporting companies, but which we have adopted as the standard of independence for this Committee. The Committee held twoseven meetings during 2014.2015.
The Nominating and Corporate Governance Committee is appointed by the Board of Directors to select the director nominees to be presented for election at future annual meetings of stockholders and to review and assess our corporate governance procedures. During 2014,2015, the members of the Committee were Steven J. Abrams, Chairman;Chairman, William Kraut; James W. Schwartz, until his retirement on June 25, 2014;Kraut, and Stuart F. Daniels, until his death on November 9, 2014. Joseph W. Dews IV was appointed to the Committee in April 2014.IV. The Board of Directors has determined that each of the members of the Committee is independent within the meaning of the NYSE MKT Rules. See "Nominating Procedures" for information regarding the process for identifying and evaluating nominees, procedures for stockholder nominations and director qualifications. The Committee held twothree meetings during 2014.2015.
Meetings
During the year ended December 31, 2014,2015, the Board of Directors held a total of sixten meetings. Each of our directors attended at least 75% of the aggregate number of meetings of the Board and meetings of any committee of which he was a member, which were held during the time in which he was a director or a committee member, as applicable.
All members of the Board of Directors are encouraged, but not required, to attend our annual meeting of stockholders.stockholders, and may do so in person on by phone. Three of our directors attended the 20142015 Annual Meeting held on June 25, 2014.24, 2015 by phone.
Stockholder Communications with the Board of Directors
Stockholders who wish to communicate directly with the Board of Directors, or with a particular director, may send a letter addressed to our Secretary at 804 East Gate Drive, Suite 200, Mt. Laurel, NJ 08054. The mailing envelope must contain a clear notation indicating that the enclosed letter is a "Stockholder Board Communication" or "Stockholder Director Communication." All such letters must identify the author as a stockholder and clearly state whether the intended recipients are all members of the Board or just certain specified individual directors. The Secretary will make copies of all such letters and circulate them to the directors addressed. If a stockholder wishes the communication to be confidential, such stockholder must clearly indicate on the envelope that the communication is "confidential." The Secretary will then forward such communication, unopened, to the directors, or director, specified on the envelope, or if none, to the Chairman of the Board of Directors.
Compensation Procedures
During 2014,2015, the Compensation Committee was comprised, and presently is comprised, solely of independent directors. Under Delaware state law, the Committee has the authority to delegate any or all of its powers and authority to one or more subcommittees, each subcommittee to consist of one or more members of the Committee. No such delegation of authority to a subcommittee has occurred. All decisions regarding the compensation of our Executive Officers are approved by the Compensation Committee.Generally, the processFor purposes of considering and determining compensation for executive officers isin years prior to and including 2015, our process had generally been initiated by a review of the individual contributions and performance of each executive officer, as described in this paragraph. Our Executive Chairman iswas responsible for evaluating the performance of the President and Chief Executive Officer and for presenting that evaluation to the Committee with his recommendation for the compensation of the President and Chief Executive Officer. The President and Chief Executive Officer
8
is was responsible for evaluating the Chief Financial Officer and each of the General Managers of our Product Segments and for presenting his evaluations of these officers to the Compensation Committee with his recommendations for compensation. The Executive Chairman's compensation iswas determined by the Committee based upon its assessment of the performance of the Executive Chairman in light of the Chief Executive Officer's overall recommendations regarding executive compensation. In each case, the members of the Committee have had significant contact with each of our executive officers during the course of the year, such that the compensation decisions will also reflectreflected the Committee members' assessments of individual contribution and performance, as well as Companyoverall company and Product Segment performance.Management
9
For years prior to 2016, management would periodically obtainsobtain survey data of comparably situated companies from Economic Research Institute ("ERI") to guide it in its recommendations of compensation decisions. The specific parameters defined for ERI typically are job titles, company revenue size, company SIC code and geographic location. Based upon these inputs, ERI supplies base salaries, incentive and total compensation information for comparable positions. Where comparable positions dodid not exist, further analysis is necessarywould be done to determine appropriate comparable compensation parameters. Thus, because it ishas been our current practice to have both an Executive Chairman and a President and Chief Executive Officer, the starting point for our consideration of the compensation for these two positions iswas determined by combining the ERI data for the position of "Outside Chairman" and the position of "Inside Chairman and Chief Executive Officer" and adjusting for the additional activities and responsibilities of our Executive Chairman. The key data obtained from ERI that the Committee uses areused were the ranges of fixed compensation (base salaries), variable compensation, and total compensation, as well as the mean of each range. This data iswas then compared to the actual compensation of each executive officer for the prior year and the average actual compensation for the past five years.
Changes to director compensation are periodically considered by the Committee and recommended to the Board of Directors for approval. Such changes may be proposed by any director. Any change in the compensation of any director or any group of directors is approved by a majority of non-interested directors, and, if such recommendation applies to the compensation of all directors, by a majority of the independent directors in addition to a majority of the directors then in office. InformationFor periods prior to 2016, information regarding director compensation at comparable companies iswas also obtained periodically from ERI.
Procedures Applicable to 2016 Executive Compensation.In the fall of 2015, the Compensation Committee determined to retain a compensation consultant to advise it regarding current best practices for executive and director compensation arrangements. Radford, the compensation consultant independently retained by the Compensation Committee, provided the Committee with peer group data regarding compensation arrangements, plans, and amounts. As a result of the Committee's analysis of the information provided, and with the recommendations of the compensation consultant, the Compensation Committee adopted a new management compensation plan with regard to both cash and equity compensation to more closely align executive compensation with specific objectives of the company and more closely align the executive officers' long-term interests to those of stockholders. In addition, based upon the consultant's recommendations, the Board approved increases in equity compensation for the independent directors to more closely align the independent directors' long-term interests to those of stockholders.
Nominating Procedures
Generally, in order to identify and evaluate director nominees, our Nominating and Corporate Governance Committee (which is comprised solely of independent directors) assesses the qualifications, expertise, performance and willingness to serve of each current director. If as a result of such assessment, or at any other time during the year, the Board of Directors determines a need to add a new director with specific qualifications or to fill a vacancy on the Board, a search will be initiated utilizing appropriate staff support, input from other directors, senior management, and outside contacts, consideration of nominees previously submitted by stockholders, and, if deemed necessary or appropriate, retention of a search firm. An initial slate of candidates satisfying the specific qualifications, if any, and otherwise qualifying for membership on the Board, will be identified and reviewed by the Committee and the Board. The candidates will be prioritized and a determination made as to whether a member of the Committee, another director or member of senior management has a relationship with the preferred candidate and can initiate contacts. If not, contact may be initiated by a search firm. The Chairman and one or more members of the Committee or the Board will interview the prospective candidate. Evaluations and recommendations of the interviewers will be shared with the Committee for final evaluation. The Committee will then meet to consider such recommendations and to determine which candidate (or candidates) to select. The Committee will evaluate all nominees for director, including nominees recommended by a stockholder, on the same basis.
Each of the nominees for director included in this proxy statement were selected for re-election by the Committee (which is comprised solely of independent directors).Committee. The full Board of Directors, including the Executive Chairman and the President and Chief Executive Officer, unanimously recommend the nominees for election by the stockholders of the Company.We consider director candidates recommended to us by our stockholders. Pursuant to policies adoptedthe Charter of the Committee, the Committee considers all candidates, including candidates submitted by stockholders on the Board of Directors,same basis. Stockholder recommendations with regard to nominees for election to the Board of Directors at future annual meetings of stockholdersdirector candidates may be submitted in writing received byto the Secretary of inTEST at least 60 days prior to the date on which inTEST first mailed its proxy materials for the prior year's annual meeting of stockholders, or, if the date for the annual meeting has changed more than 30 days from the prior year or if inTEST did not have an annual meeting of stockholders in the prior year, then such recommendations must be receivedconsideration by the Secretary of inTEST a reasonable time beforeCommittee. Each such recommendation should include the distribution of the proxy materials for the annual meeting. Each notice of nomination must set forthfollowing information: (i) the name, age, business address and, if known, residence address of each nominee, (ii) the principal occupation or employment of each such nominee, (iii) the number of shares of common stock of inTEST which are beneficially owned by each such nominee, (iv) the qualifications of such nominee for service on the Board of Directors, (v) the name and residence address of the proposing stockholder(s), and (vi) the number of shares of common stock owned by the proposing stockholder(s)., and (vii) such other information as the stockholder making such recommendation believes would be relevant to the consideration of such candidate.
9
10
Stockholders who wish to make nominations to be considered at the 2016 Annual Meeting of Stockholders may do so by following the procedures set forth in our Bylaws. See "Information Regarding Deadlines and Procedures for Submission of Stockholder Proposals and Nominations of Directors" for additional information regarding the deadlines and notice procedures.
Director candidates must meet certain minimum qualifications, including being at least 21 years old and possessing (1) the ability to read and understand corporate financial statements, (2) relevant business experience and professional skills, (3) high moral character and personal and professional integrity, and (4) the willingness to commit sufficient time to attend to his or her duties and responsibilities as a director of a public corporation. In addition, the Nominating and Corporate Governance Committee may consider a variety of other qualities and skills, including (i) expertise in finance, economics, technology or markets related to the business in which inTEST and its subsidiaries may engage, (ii) the ability to exercise independent decision-making, (iii) the absence of conflicts of interest, (iv) diversity of experience, and (v) the ability to work effectively with other directors in collectively serving the long-term interests of all stockholders. Nominees must also meet any applicable requirements of SEC regulations, state law, and inTEST's charter and bylaws. While we do not have a policy related to Board diversity, the BoardCommittee seeks nominees whose qualifications provide a diversity of relevant experience and skill sets that synergistically combine to provide a strong management advisory and oversight capability.
Stockholders who wish to make nominations to be considered at the 2017 Annual Meeting of Stockholders may do so by following the procedures set forth in our Bylaws. See "Information Regarding Deadlines and Procedures for Submission of Stockholder Proposals and Nominations of Directors" for additional information regarding the deadlines and notice procedures.
AUDIT COMMITTEE REPORT
The Committee operates pursuant to a written charter adopted by our Board of Directors, which is available on our website: www.intest.com.
The Committee has reviewed and discussed our audited consolidated financial statements for the year ended December 31, 20142015 with management. The Committee has discussed the matters required to be discussed by Statement on Auditing Standards No. 61, as amended, "Communication With Audit Committees" with McGladreyRSM US LLP, our independent registered public accounting firm ("IRPA Firm") for the year ended December 31, 2014.2015. The Committee has received the written disclosures and the letter from McGladreyRSM US LLP required by Public Company Accounting Oversight Board Ethics and Independence Rule 3526,Communication with Audit Committees Concerning Independence (which relates to the IRPA Firm's independence from us and our subsidiaries) and has discussed with McGladreyRSM US LLP their independence from us and our related entities.
Based on the review and discussions referenced above, the Committee (comprised of the individuals listed below on March 26, 2015) recommended to our Board of Directors that our audited consolidated financial statements be included in our Annual Report on Form 10-K for the year ended December 31, 2014.2015.
Audit Committee:
William Kraut, Chairman
Steven J. Abrams, Esq.
Joseph W. Dews IV
EXECUTIVE OFFICERS OF inTEST
Our executive officers and their ages are as follows:
Name | Age | Position |
Alyn R. Holt |
| Executive Chairman and Director |
Robert E. Matthiessen |
| President, Chief Executive Officer and Director |
Hugh T. Regan, Jr. |
| Secretary, Treasurer and Chief Financial Officer |
|
|
|
James Pelrin |
| Executive Vice President |
Biographical and Other Information Regarding inTEST's Executive Officers
Executive officers are appointed by the Board of Directors. Each executive officer is appointed to serve at the will of the Board of Directors.
Alyn R. Holt.See "Biographical and Other Information Regarding inTEST's Directors" above.
Robert E. Matthiessen. See "Biographical and Other Information Regarding inTEST's Directors" above.
10
11
Hugh T. Regan, Jr. has served as our Treasurer and Chief Financial Officer since joining us in April 1996 and has served as Secretary since December 1999. From 1985 to April 1996, Mr. Regan served in various financial capacities for Value Property Trust, a publicly traded real estate investment trust, including Vice President of Finance from 1989 to September 1995 and Chief Financial Officer from September 1995 until April 1996.Daniel J. Grahamhas served as our Senior Vice President since August 2006 and as General Manager - Mechanical Products Segment since November 2004. In addition, he was made General Manager - Electrical Products Segment effective December 2009, after serving as Acting General Manager of that segment since May 2009. Prior to that, Mr. Graham served as our Chief Technology Officer from April 2004 to November 2004, our Executive Vice President from October 2001 to November 2004 and as our Senior Vice President from June 1998 until October 2001. Mr. Graham served as our Vice Chairman from October 1998 to July 2005. Mr. Graham is a co-founder of inTEST Corporation and served as a director from June 1988 through July 2005.
James Pelrin has served as our Executive Vice President since November 2015. Prior to that, Mr. Pelrin served as Vice President since August 2006 and as General Manager - Thermal Products Segment since November 2004. In addition, Mr. Pelrin has served as President of our subsidiary, Temptronic Corporation, since December 2008. Prior to that, Mr. Pelrin served as the General Manager of Temptronic Corporation since joining us in October 2001. From July 1999 to June 2001, Mr. Pelrin served as Vice President and General Manager of Accusonic Technologies, Inc., a privately held company that designs and manufactures hydro-acoustic measurement systems.
EXECUTIVE COMPENSATION
Overview of Executive Compensation Program
The Compensation Committee is committed to the general principle that executive compensation should be commensurate with our performance and the performance of the individual executive officer. The primary objectives of our executive compensation program are to:
Generally, decisions regarding our executive compensation program reflect the individual contributions and performance of each executive officer as well as our overall business goals and strategies, the business cycle of our industry and, if applicable, prior cost-containment initiatives and adjustments. In addition, our executive compensation program has been developed with reference to the executive compensation practices of comparable companies in our industry to ensure that the total compensation opportunity provided to our executive officers is competitive with the market in which we compete for executive talent.
Underlying our executive compensation program particularly, in the case of executive officers who have price-setting authority (who are the Chief Executive Officer and the General Managers of our Product Segments), is the philosophy that the interests of our stockholders are best served by a program that includes a significant variable component based on our performance. We tieFor years prior to and including 2015, for executive officers who had price-setting authority (i.e., the Chief Executive Officer and the General Managers of our Product Segments), we tied the variable component of our executive officer'stheir compensation directly to the profitability of the relevant Product Segment or Segments for which they havehad responsibility. In this manner, we also effectively make ourmade the compensation of these executive officer's compensationofficers follow the cyclicality of our business allowing our executive officers to share in our profitability during our "up" cycles and tighten their belts with reduced compensation when we havehad "down" cycles.
In allocating compensation for our executive officers,years prior to and including 2015, our general philosophy iswas to structure itexecutive compensation so that over a number of years cumulative variable compensation based upon profitability approximatesapproximated one-third of cumulative fixed compensation, i.e., base salary, for each executive officer, respectively. This compensation allocation philosophy doesdid not apply to our executive officers who dodid not have responsibility for price setting (who are(that is, our Executive Chairman and Chief Financial Officer). In the case of our Chief Financial Officer, it has beenwas our practice to provide a discretionary bonus when deemed appropriate to do so. It iswas also our philosophy to make restricted stock awards and/or stock option awards periodically from time-to-time in order to align the executive officers' long-term interests to those of stockholders' long-term interests.stockholders. Restricted stock awards may also behave been made during down cycles in order to provide the executives with long-term opportunities to recover from associated compensation reductions.
Due to the cyclicality of our business, we also periodically reducetemporarily reduced fixed compensation, such as when our business segments incurred losses or minimal earnings as in 2009. During such periods, little or no variable compensation will bewas earned. When the economy and our business sectors regainregained strength, our compensation decisions focusfocused first upon restoring fixed compensation, while recognizing the loss of variable compensation opportunities during the prior down years and seeking to restore such lost opportunities, so that our compensation structure reflectsreflected the ongoing contributions of our executive officers to our long-term success throughout the cycles.
1112
Accordingly, in 2010, the base salaries of our executive officers were reinstated to the levels paid prior to our 2008 cost containment actions, with the exception that our Executive Chairman voluntarily retained his 2008 reduced salary. Since then,From 2010 through 2015, the base salaries of our executive officers have remained fixed, except for our two General Managers, whose base salaries were adjusted in 2012 to be more in line with survey data obtained from ERI.ERI, and in November 2015, we increased the base salary of James Pelrin in connection with his promotion to Executive Vice President.
The following table compares the aggregate compensation for our five executive officers consisting of fixed compensation (base salary) and variable compensation (non-equity incentive plan compensation or bonus) to our pre-tax profits for the five year period ended December 31, 2014.2015.
| 2014 | 2013 | 2012 | 2011 | 2010 | 2015 | 2014 | 2013 | 2012 | 2011 |
| - - - - - - - - - - - - (In Millions) - - - - - - - - - - - - | - - - - - - - - - - -(In Millions) - - - - - - - - - - - | ||||||||
Net revenue | $41.8 | $39.4 | $43.4 | $47.3 | $46.2 | $38.9 | $41.8 | $39.4 | $43.4 | $47.3 |
Pre-tax profits | $ 4.9 | $ 4.0 | $ 3.1 | $ 7.7 | $ 7.4 | $ 2.6 | $ 4.9 | $ 4.0 | $ 3.1 | $ 7.7 |
Fixed compensation | $ 1.2 | $ 1.1 | $ 1.2 | |||||||
Variable compensation or bonus | .4 | .3 | .6 | .3 | .4 | .3 | .6 | |||
Total compensation | $ 1.6 | $ 1.5 | $ 1.8 | $ 1.7 | $ 1.5 | $ 1.6 | $ 1.5 | $ 1.8 |
The fixed compensation (base salary) and variable compensation arrangements of our named executive officers (as defined below) for 2014, which are also effective for 2015 are reflected in the table below:
|
|
|
| |
|
|
|
| |
|
|
|
| |
|
|
|
| |
|
|
Named Executive Officer | Title | Salary |
| Variable Component | |
Robert E. Matthiessen | President, CEO and Director | $317,242 |
| 1.5% of consolidated pre-tax profits plus 1.5% of each product segment's pre-tax profits. | |
|
|
|
|
| |
Hugh T. Regan, Jr. | Secretary, Treasurer and CFO | $224,422 |
| Discretionary (1) | |
|
|
|
|
| |
James Pelrin | Executive Vice President | $220,000 | (2) | 2.5% of pre-tax profits of the Thermal Products segment. | |
|
| ||||
(2) | Effective November 16, 2015, Mr. Pelrin's annual fixed compensation (base salary) was increased to $275,000 in connection with his promotion to Executive Vice President. |
The primary elements of our executive compensation include fixed compensation (base salary), benefits, variable compensation, stock-awards and change-in-control payments. The following sections set forth certain information with respect to the compensation we paid, or recognized as an expense in accordance with Accounting Standards Codification ("ASC") Topic 718 (Compensation - Stock Compensation) to our Chief Executive Officer and our two other most highly compensated executive officers who were serving as such at December 31, 2014.2015. These officers are referred to as our "Named Executive Officers."named executive officers."
Summary Compensation Table | ||||||||||||
|
|
|
|
|
|
| Non-Equity |
|
| |||
Robert E. Matthiessen | 2015 | $317,242 |
| $ 500 | (1) | -- | $123,666 | (2) | $4,750 | (3) | $446,158 | |
|
|
|
|
|
|
|
|
|
|
|
| |
Hugh T. Regan, Jr. | 2015 | $224,422 |
| $ 87,983 | (4) | -- | -- | $4,750 | (3) | $317,155 | ||
|
|
|
|
|
|
|
|
|
|
|
| |
James Pelrin | 2015 | $ |
| -- | -- | $ | (5) | $7,288 | (6) | $350,180 |
12
13
(A) |
|
|
|
(1) | Represents an annual holiday bonus. |
|
|
(2) | Consists of 1.5% of the consolidated pre-tax profits plus 1.5% of each product segment's pre-tax profits paid in March of |
|
|
(3) | Consists of matching contributions to 401(k) Plan Account. |
|
|
(4) | Consists of $500 of annual holiday bonus paid in both |
|
|
(5) | Consists of 2.5% of the pre-tax profits of the Thermal Products segment paid in March |
|
|
(6) | Consists of $4,750 for matching contributions to Mr. Pelrin's 401(k) plan account in both |
Employment Agreements. We have not entered into any employment agreements with our named executive officers. However, as discussed in the "Potential Payments Upon Termination Following a Change of Control" section below, we have entered into agreements with Messrs. Matthiessen, Regan and Pelrin, which provide for the payment of certain benefits in the event of termination of employment following a change in control.
Variable Compensation. Variable compensation for 20142015 was determined for each of our named executive officers, other than our Chief Financial Officer, under a pre-established formula tied to our pre-tax profitability as follows:
The amounts of annual variable compensation earned by our named executive officers, other than our Chief Financial Officer, for 20142015 is set forth in the Summary Compensation Table under the column "Non-Equity Incentive Plan Compensation" in accordance with SEC rules.
In lieu of formula-based variable compensation, our Chief Financial Officer iswas eligible for a discretionary bonus, subject to theupon recommendation of the Chief Executive Officer and approval of the Compensation Committee. The amount of discretionary bonus awarded to our Chief Financial Officer for 20142015 is included in the Summary Compensation Table under the "Bonus" column in accordance with SEC rules.
Grants of Stock-Based Awards. We did not grant any stock-based awards to our named executive officers in 2014.2015.
Retirement Benefits.Our executive officers are provided retirement benefits under the tax-qualified 401(k) plan provided to our other domestic employees. Messrs. Matthiessen, Regan and Pelrin have beenare subject to provisions that allow participants to make contributions from their own salary on a pre-tax basis and provide a discretionary employer matching contribution not to exceed $4,750 a year. The amount of employer contributions made to our 401(k) plans for our named executive officers for 20142015 and 20132014 are included in the column entitled "All Other Compensation" in the Summary Compensation Table. We do not provide any other retirement benefits to our named executive officers.
1314
Outstanding Equity Awards at Fiscal Year-End | ||||
| Stock Awards | |||
| Number of | Market Value | ||
Robert E. Matthiessen |
| $ | ||
31,724 | ||||
Hugh T. Regan, Jr. |
| $ | ||
James Pelrin | 5,000(1) | $21,150 | ||
|
| |||
|
|
|
(1) | Represents the unvested portion of restricted stock that was granted on October 29, 2013 under the 2007 Stock Plan. These shares will vest in equal portions on October 29, | ||
(2) | Based on the closing share price on December 31, |
Structure of 2016 Executive Compensation.On January 22, 2016, as a result of the Committee's analysis of the information provided by and the recommendations of the compensation consultant, the Compensation Committee adopted a new management compensation program for the named executive officers to more closely align executive compensation with specific objectives of inTEST and more closely align the executive officers' long-term interests to those of stockholders. As part of the new plan:
1. | Base salaries were increased to the amounts shown in the table below; |
2. | Incentive percentages and company (and business unit) performance targets were established for short term incentive compensation, specifically internal financial goals, the profitability of the Manipulator/Docking Hardware Product Group and executing on inTEST's acquisition strategy; and |
3. | The named executive officers received awards of restricted stock and stock options in the amounts shown below. |
| ||||
Name | Annual | Restricted | Options | |
Robert E. Matthiessen | $348,966 | 9,600(1) | 7,200(1)(2) | |
Hugh T. Regan, Jr. | $246,864 | 7,200(1) | 5,400(1)(2) | |
James Pelrin | $286,000 | 9,600(1) | 7,200(1)(2) | |
(1) | The restricted shares and options will vest in equal increments over four years beginning on the first anniversary of the awards on January 22, 2017. | |||
(2) | The exercise price is $4.37, the closing price of inTEST's stock on the date of grant, January 22, 2016. |
Potential Payments Upon Termination Following a Change of Control.We have Change-of-Control Agreements in place with Messrs. Matthiessen, Regan and Pelrin. These Change-of-Control Agreements provide for the payment of certain benefits upon the executive officer's termination of employment by us without Cause or by the executive officer for Good Reason within two years following a Change of Control. These benefits consist of the continuation of the executive officer's base salary and fringe benefits for the one year period following the termination of his employment and payment of the variable performance based compensation that he would have earned for such one year period.
Under the Change-of-Control Agreements, a Change of Control occurs in the event of:
15
Under the Change-of-Control Agreements, a termination for "Cause" means the executive's termination by us because of an act of fraud upon the Company,inTEST, his willful refusal to perform the duties assigned to him by the Board or his conviction for any crime involving dishonesty or breach of trust or for any crime that is a felony or of moral turpitude.
The term "Good Reason" under the Change-of-Control Agreements means a material adverse change in an executive's status, responsibilities or benefits; a failure to be nominated or elected to his current officer position; a requirement to report to anyone other than his direct report; an assignment of duties inconsistent with his current officer position; any reduction in base salary, variable component or formula for determining the variable component which would have the effect of reducing his variable component, or other reduction in compensation or benefits; or a requirement to relocate more than thirty miles from his current office.
The benefits payable under the Change-of-Control Agreements are subject to the release of any claims that Messrs. Matthiessen, Regan and Pelrin may have against us pursuant to the agreements as we may request. Fringe benefits will be reduced or eliminated to the extent that comparable benefits are received from another source. Furthermore, the benefits will be reduced to the extent that the payments would not be deductible by us (in whole or in part) under Section 280G of the Internal Revenue Code.
Also, in the event of a Change of Control, all equity awards issued to our named executive officers become 100% vested. For purposes of equity awards under the inTEST Corporation 2007 and 2014 Stock Plans, the definition of Change of Control is the same as defined above.
14
DIRECTOR COMPENSATION
Non-employee directors received in 2015 and currently receive an annual retainer of $25,000, non-employee members of the Executive Committee receive an additional annual fee of $15,000, the lead independent director receives an additional annual fee of $10,000, and the chairmen of the committees of the Board receive an additional annual fee as follows: the Chairman of the Audit Committee receives an additional annual fee of $20,000; the Chairman of the Compensation Committee receives an additional annual fee of $10,000; and the Chairman of the Nominating and Corporate Governance Committee receives an additional annual fee of $10,000. In addition, we reimburse non-employee directors' travel expenses and other costs associated with attending Board or committee meetings. We do not pay additional cash compensation to our executive officers for their service as directors.
The following table sets forth the compensation earned by, or paid in cash to, the members of our Board of Directors, who are not named executive officers, for the year ended December 31, 2014:2015:
| Fees |
|
| All |
| |
Alyn R. Holt | --(1) | -- |
| $185,430(1) | $185,430 | |
Steven J. Abrams, Esq. | $ 42,500(2) | -- | (3) | -- | $ 42,500 | |
Stuart F. Daniels, Ph.D. | $125,000(4) | -- |
| -- | $125,000 | |
Joseph W. Dews IV | $ 21,181(5) | $41,400 | (6) | -- | $ 62,581 | |
William Kraut | $ 40,000 (7) | -- | (8) | -- | $ 40,000 | |
James W. Schwartz, Esq. | $ 20,000 (9) | -- |
| -- | $ 20,000 |
| Fees |
| All |
| ||
Alyn R. Holt | --(1) | -- | $185,430(1) | $185,430 | ||
Steven J. Abrams, Esq. | $ 50,000(2) | -- | (3) | -- | $ 50,000 | |
Joseph W. Dews IV | $ 50,000(4) | -- | (5) | -- | $ 50,000 | |
William Kraut | $ 55,000 (6) | -- | (7) | -- | $ 55,000 | |
(A) |
| |||||
|
| |||||
(1) | Mr. Holt, Executive Chairman, is an executive officer of | |||||
|
| |||||
(2) | Consists of $25,000 annual retainer, $10,000 for service as | |||||
|
| |||||
(3) | As of December 31, | |||||
|
| |||||
(4) | Consists of $25,000 annual retainer, | |||||
|
| |||||
|
|
16
| As of December 31, | |||||
|
| |||||
| Consists of $25,000 annual retainer, | |||||
|
| |||||
| As of December 31, | |||||
|
|
15
Structure of 2016 Director Compensation.During the fall of 2015, our Compensation Committee determined to retain a compensation consultant to advise it regarding current best practices in director compensation including the alignment of the independent directors' long-term interests to those of stockholders. As a result, in addition to the annual retainer described above, it was recommended and the Board approved the award of an additional 7,500 shares of restricted stock to each of the non-employee directors on January 22, 2016. Such shares will vest for a particular director upon such director's re-election at the 2016 Annual Meeting.
PROPOSAL 2: RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
McGladreyRSM US LLP was appointed as our independent registered public accounting firm ("IRPA Firm") on June 16, 2008. McGladreyRSM US LLP audited our consolidated financial statements for the years ended December 31, 20142015 and 2013.2014. The Audit Committee of our Board of Directors has selected McGladreyRSM US LLP as our IRPA Firm for the year ending December 31, 2015,2016, subject to the determination of the 20152016 audit fees. The Audit Committee has the sole authority and responsibility to select, appoint, evaluate and, where appropriate, discharge and replace McGladreyRSM US LLP as our IRPA Firm, and the selection of the Company'sour IRPA Firm is not required to be submitted to a vote of the stockholders for ratification. Notwithstanding the outcome of the vote by the stockholders, of the Company, the Audit Committee is not bound to retain the IRPA Firm or to replace the IRPA Firm, where, in either case, after considering the outcome of the vote, the Audit Committee determines its decision regarding the IRPA Firm to be in the best interests of the Company.inTEST.
The following table sets forth the fees billed by McGladreyRSM US LLP as described below:
| 2014 | 2013 | 2015 | 2014 |
Fee Category: |
|
| ||
Audit Fees | $314,615 | $323,634 | $281,486 | $314,615 |
Audit-Related Fees | - | - | ||
Tax Fees | 51,168 | 48,000 | 56,809 | 51,168 |
All Other Fees | 25,698 | - | 12,955 | 25,698 |
Total Fees | $391,481 | $371,634 | $351,250 | $391,481 |
Audit Fees: Consists of fees billed for professional services rendered in connection with the audit of our consolidated financial statements and review of the interim condensed consolidated financial statements for 20142015 and 2013,2014, respectively, that are included in quarterly reports during those years and services that are normally provided by our IRPA Firm in connection with statutory and regulatory filings or engagements, and attest services, except those not required by statute or regulation.
Audit-Related Fees: Consists of fees billed in each of 20142015 and 20132014 for assurance and related services that are reasonably related to the performance of the audit or review of our consolidated financial statements and are not reported under "Audit Fees." These services would include accounting consultations in connection with acquisitions and divestitures, attest services that are not required by statute or regulation, and consultations concerning financial accounting and reporting standards.
Tax Fees: Consists of fees billed in each of 20142015 and 20132014 for tax related services including advice, preparation of returns and other tax services related to federal, state and international taxes.
All Other Fees: Consists of fees billed in each of 20142015 and 20132014 for all services other than those reported above.
17
In accordance with the Sarbanes-Oxley Act of 2002, the Audit Committee's policy is to pre-approve all audit and non-audit services provided by our IRPA Firm. On an ongoing basis, management defines and communicates specific projects and categories of service for which the advance approval of the Audit Committee is requested. The Audit Committee reviews these requests and advises management if the Audit Committee approves the engagement of our IRPA Firm for such services. The Audit Committee has also delegated authority to the Chairman of the Audit Committee, and if the Chairman of the Committee is unavailable, to any other Audit Committee member, to pre-approve permitted services. Any such pre-approval must be reported to the Audit Committee at its next meeting. The Audit Committee did not approve any services pursuant to the de minimis exception of Rule 2-01(c)(7)(i)(C) of Regulation S-X during 2014.2015.
Recommendation of the Board of Directors
The Board of Directors recommends a vote "FOR" the ratification of the selection of McGladreyRSM US LLP as our independent registered public accounting firm for the year ending December 31, 2015.2016.
PROPOSAL 3: ADVISORY VOTE ON THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS
16
In accordance with Section 14A of the Securities Exchange Act of 1934, as amended, we are again providing our stockholders with the opportunity at the annual meeting to approve, on a non-binding advisory basis, the 2015 compensation of our named executive officers as disclosed in the Executive Compensation section of this proxy statement, including the Overview of Executive Compensation Program, the Summary Compensation Table and the related tables, notes, and narrative. As approved by our stockholders in 2013, and as recommended by the Board of Directors, this "say-on-pay" vote will be taken once every three years.
As described in the Overview of Executive Compensation Program, our 2015 executive compensation program was designed to provide our executive officers with compensation that is commensurate with our performance and the performance of the individual officer, reflecting the cyclicality of our business and allocating compensation between fixed pay and variable performance-based pay, and aligning the long-term interests of our executive officers with the long-term interests of our stockholders. We urge stockholders to read the discussion in this proxy statement of Executive Compensation which describes our principles and practices in more detail, including the Summary Compensation table and other related tables and narratives, which provide detailed information on the compensation of our named executive officers.
While this proposal is an advisory vote that will be non-binding on inTEST, the Board of Directors and the Compensation Committee will review and consider the voting results when making future decisions regarding the compensation of our named executive officers. The results of this advisory vote will be reported in a Form 8-K following the annual meeting.
Recommendation of the Board
The Board of Directors recommends that you vote"FOR" the approval, on an advisory basis, of the compensation of our named executive officers.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires our directors, certain officers and persons who own more than ten percent of a registered class of our equity securities to file reports of ownership and changes in ownership with the SEC. These officers, directors and greater than ten-percent stockholders are required by SEC regulation to furnish us with copies of all Section 16(a) forms they file.
Based solely on review of the copies of such forms furnished to us, or written representations that no Forms 5 were required, we believe that, during 2014,2015, all Section 16(a) filing requirements applicable to these officers, directors and greater than ten-percent beneficial owners were timely met.
18
INFORMATION REGARDING DEADLINES AND PROCEDURES FOR SUBMISSION OF STOCKHOLDER PROPOSALS AND NOMINATIONS OF DIRECTORS
Under the Proxy Rules of the SEC, Stockholdersstockholders intending to submit proposals to be included in our proxy statement for our Annual Meeting of Stockholders to be held in 20162017 must send their proposals to Hugh T. Regan, Jr., Secretary at 804 East Gate Drive, Suite 200, Mt. Laurel, New Jersey 08054, not later than January 22, 2016.25, 2017. These proposals must relate to matters appropriate for stockholder action and be consistent with regulations of the SEC relating to stockholder proposals (Proxy Rule 14a-8) in order to be considered for inclusion in our proxy statement relating to that meeting.
Under our Bylaws, certain procedures are provided that a stockholder must follow to nominate persons for election as Directors or to introduce an item of business at an annual meeting of stockholders. These procedures provide that nominations for Director nominees and/or an item of business to be introduced at an annual meeting of Stockholdersstockholders must be submitted in writing to the Secretary of the CompanyinTEST at the address set forth above, not later than 90 days and not earlier than 120 days prior to the first anniversary of the preceding year's annual meeting of stockholders, subject to certain exceptions. Accordingly, a notice of a stockholder proposal, submitted outside of Rule 14a-8 under the Securities and Exchange Act, or a stockholder nomination for the 20162017 Annual Meeting of Stockholders will be untimely if received by the Company'sinTEST's Secretary before February 24, 2016March 1, 2017 or after March 26, 2016,31, 2017, unless the date of the 20162017 Annual Meeting is advanced by more than 30 days or delayed (other than as a result of adjournment) by more than 30 days from
the anniversary of the 20152016 Annual Meeting. If the date of the 20162017 Annual Meeting is changed by more than 30 days from the anniversary of the 20152016 Annual Meeting, then notice by the stockholder to be timely must be delivered not earlier than the 120th day prior to the date of the 20162017 Annual Meeting and not later than the close of business on the later of the 90th day prior to such annual meeting or the 10th day following the day on which public announcement of the date of such meeting is first made.
The Bylaws set forth various qualifications and disclosure requirements for such advance written notice of a nomination or proposal to be in proper form. A stockholder wishing to submit such a notice should review the provisions of our Bylaws (which were filed with the SEC on June 25, 2014 as Exhibit 3.2 to our Current Report on Form 8-K). In general, the disclosure requirements include information about the stockholder making the nomination or proposal, information regarding the nominee or proposal, and in the case of a nomination, a certification and consent from the nominee. If a stockholder fails to comply with the time of notice procedures set forth in our Bylaws, that stockholder will not be entitled to present the proposal or nomination at the meeting. If, however, notwithstanding the requirements of the Bylaws, a proposal is brought before the meeting, then under the SEC's proxy rules, the proxies inTEST solicits with respect to the 20162017 Annual Meeting of Stockholders will confer discretionary voting authority on the persons so named as proxies with respect to such proposal.
ANNUAL REPORT
Our Annual Report to Stockholders (which includes our consolidated financial statements for the year ended December 31, 2014)2015), accompanies this proxy statement. The Annual Report to Stockholders does not constitute a part of the proxy solicitation materials.
By Order of the Board of Directors,
/s/ Hugh T. Regan, Jr.
Hugh T. Regan, Jr.
Secretary
1719
* * * * * * * * * * * * * * * * *
APPENDIX A
PROXY CARD
Proxy - inTEST Corporation
ANNUAL MEETING OF STOCKHOLDERS
JUNE 24, 201529, 2016
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF inTEST CORPORATION.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE STOCKHOLDER MEETING TO BE HELD ON WEDNESDAY, JUNE 24, 2015:29, 2016: Copies of the Proxy Statement and our 20142015 Annual Report to Stockholders are available at http://investor.shareholder.com/intest/annual.cfm?AnnualPage=meeting.
The undersigned, revoking any contrary proxy previously given, hereby appoints Robert E. Matthiessen and Hugh T. Regan, Jr. (the "Proxies"), and each of them, jointly and severally, as attorneys and proxies of the undersigned, with full power of substitution, for and in the name, place and stead of the undersigned, to appear at the Annual Meeting of Stockholders of inTEST Corporation to be held June 24, 2015,29, 2016, and at any postponement or adjournment of the Annual Meeting of Stockholders, and to vote, as designated on the reverse side of this proxy card, all shares of Common Stock of inTEST Corporation held of record by the undersigned on April 30, 2015May 10, 2016 with all the powers and authority the undersigned would possess if personally present. The undersigned confers discretionary authority by this proxy as to matters which may properly come before the Annual Meeting, or any postponement or adjournment thereof, including matters which are not timely made known to inTEST Corporation.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE DIRECTOR NOMINEES AND "FOR" PROPOSAL 2.PROPOSALS 2 AND 3.
THIS PROXY, WHEN PROPERLY EXECUTED AND RETURNED IN A TIMELY MANNER, WILL BE VOTED AS SPECIFIED ON THE REVERSE SIDE OF THIS PROXY CARD. IF NO DIRECTION IS SPECIFIED, THIS PROXY WILL BE VOTED "FOR" EACH OF THE DIRECTOR NOMINEES AND "FOR" PROPOSALPROPOSALS 2 AND 3.
The undersigned hereby acknowledges receipt of the proxy statement relating to the foregoing matters.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING
THE ENCLOSED ENVELOPE, UNLESS VOTING BY TELEPHONE OR INTERNET.
Electronic Voting Instructions
Available 24 hours a day 7 days a week!
Instead of mailing your proxy card, you may choose one of the
voting methods outlined below to vote your proxy.
VALIDATION DETAILS ARE LOCATED BELOW IN THE TITLE BAR.
Proxies submitted by the Internet or telephone must be received by
1:00 a.m., Eastern Time, on June 24, 2015.29, 2016.
| Vote by Internet |
[graphic |
|
| |
Vote by telephone | |
|
Using ablack ink pen, mark your votes with an X as shown in
this example. Please do not write outside the designated areas. [X]
Annual Meeting Proxy Card
IF YOU HAVE NOT VOTED VIA THE INTERNETOR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.
A. Proposals
The Board of Directors recommends a voteFOR each of the nominees andFOR Proposal 2:Proposals 2 and 3:
1. Election of the Directors.
| Nominees: | For | Withhold |
|
| For | Withhold |
|
| For | Withhold |
01 | Alyn R. Holt | [ ] | [ ] | 02 | Robert E. Matthiessen | [ ] | [ ] | 03 | Steven J. Abrams, Esq. | [ ] | [ ] |
04 | Joseph W. Dews IV | [ ] | [ ] | 05 | William Kraut | [ ] | [ ] |
|
|
|
|
|
|
| ||
|
|
|
|
|
|
| For | Against | Abstain |
|
|
| For | Against | Abstain |
2. | Ratification of the selection of RSM US LLP as our independent registered public accounting firm for the year ending December 31, 2016. | [ ] | [ ] | [ ] |
| 3. | Approval of the compensation of our named executive officers. | [ ] | [ ] | [ ] |
B. Non-Voting Items
Change of Address -Please print new address below. |
| Comments -Please print your comments below. |
|
C. Authorized Signatures - This section must be completed for your vote to be counted. - Date and Sign Below
Please sign exactly as the name(s) appear hereon. Joint owners should each sign. When signing as attorney, executor, administrator, corporate officer, trustee, guardian or custodian, please give full title.
Date (mm/dd/yyyy)-Please print date below. |
| Signature 1-Please keep signature within the box. |
| Signature 2-Please keep signature within the box. |
/ / |
|
|