Internet.If you hold shares in street name, your broker, bank or other nominee may be delivering only one copy of our Proxy Statement to multiple shareholders ofreceived the same household who share the same address,Notice by mail and may continue to do so, unless your broker, bank or other nominee has received contrary instructions from one or more of the affected shareholders in the household. If you are such a beneficial holder, contact your broker, bank or other nominee directly in orderwould prefer to receive a separate setprinted copy of ourthe Company’s proxy materials.materials, please follow the instructions for requesting printed copies included in the Notice.
RECORD DATE
Stockholders of record at the close of business on June 23, 2014, will be entitled to receive notice of, attend and vote at the meeting.
IfINFORMATION ABOUT THE ANNUAL MEETING AND VOTING
Why am I receiving these materials?
MusclePharm Corporation has made these materials available to you on the Internet or, upon your request, has delivered printed versions of these materials to you by mail, in connection with the Company’s solicitation of proxies for use at the Annual Meeting of Stockholders to be held on August 25, 2014, at 10:00 a.m. Mountain time at 4721 Ironton Street, Building A, Denver, Colorado 80239. These materials describe the proposals on which the Company would like you to vote and also give you information on these proposals so that you can make an informed decision. We are a record owner of our shares you may obtain additional copies offurnishing our proxy materials by contactingon or about July 24, 2014 to all stockholders of record entitled to vote at the Annual Meeting.
What is included in these materials?
These materials include:
| · | this Proxy Statement for the Annual Meeting; |
| · | the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2013; and |
| · | if you requested printed versions of these materials by mail, these materials also include the proxy card or vote instructions for the Annual Meeting. |
What is the proxy card?
The proxy card enables you to appoint Brad Pyatt, by phoneour Chief Executive Officer, and Don Prosser, our Chief Financial Officer, as your representatives at (303) 396-6100 or by writingthe Annual Meeting. By completing and returning a proxy card, you are authorizing these individuals to vote your shares at the Company at MusclePharm Corporation, c/o Brad Pyatt, 4721 Ironton Street, Denver, CO 80239.
What proposalsAnnual Meeting in accordance with your instructions on the proxy card. This way, your shares will be voted
on atwhether or not you attend the
SpecialAnnual Meeting.
What is the purpose of the Annual Meeting?
At our Annual Meeting, stockholders will act upon the Specialmatters outlined in the Notice of Annual Meeting there will be two specific proposals that will be voted on by the shareholders entitled to notice of and to vote.
| 1. | Proposal One – To act on a proposed amendment to the Articles of Incorporation to increase the total number of authorized shares of common stock par value $0.001 of the Company from 195,000,000 to 500,000,000.
|
| 2. | Proposal Two – To act on a proposed amendment to the Articles of Incorporation to authorize up to 10,000,000 shares, par value $0.001 per share of “blank-check” preferred stock of the Company.
|
Who is requesting my vote and proxy solicitation?
The solicitation of proxies on the
enclosed form is made on behalfcover page of
this Proxy Statement, including (i) the
Boardelection of
Directorsfive persons named herein as nominees for directors of the Company,
and will be conducted primarily through the mail. Please mail your completed proxy in the envelope included with these proxy materials. In additionto hold office subject to the
useprovisions of the
mail, members of the Board and certain officers and employeesbylaws of the Company,
until the next annual meeting of stockholders and until their successors are duly elected and qualified, (ii) ratification of the appointment of EKS&H LLP as the Company’s independent auditors for the fiscal year ending December 31, 2014, and (iii) to approve the issuance of 1,500,000 shares of Company common stock to certain employees, including executive, pursuant to restricted stock agreements. In addition, management will report on the performance of the Company during fiscal year 2013 and 2014 and respond to questions from stockholders.What constitutes a quorum?
The presence at the meeting, in person or its subsidiaries may solicit the returnby proxy, of proxies by telephone, facsimile, and other electronic media or through personal contact. The directors, officers and employees that participate in such solicitation will not receive additional compensation for such efforts, but will be reimbursed for out-of-pocket expenses. The cost of preparing, assembling and mailing this Proxy Statement, the Notice of Special Meeting of Shareholders and the enclosed proxy will be borne by the Company. The Company will also request persons, firms and companies holding shares in their names or in the name of their nominees, which are beneficially owned by others, to send proxy material to and obtain proxies from the beneficial owners and will reimburse the holders for their reasonable expenses in doing so.
How many votes are required to approve each proposal?
To approve the two proposals, the following proportion of votes is required:
Item | | Vote Required |
| | |
Amendment to the Articles of Incorporation as described in Proposals One and Two | | Approval of the majority of the outstanding shares entitled to vote at the Special Meeting |
Many of the Company’s shareholders hold their shares in “street name”—in the name of a brokerage firm. If you hold your shares in “street name,” please note that only your brokerage firm can sign a proxy on your behalf. The Board of Directors urges you to contact the person responsible for your account today and instruct them to execute a proxy on your behalf for the Special Meeting.
How are votes counted?
A shareholder may:
As to the proposed amendments to the Company’s Articles of Incorporation—Proposal One to increase the number of authorized common shares and Proposal Two to authorize a new class of preferred stock—you may, with respect to each separate proposal:
| ¨ | Vote “FOR” the proposal; |
| | |
| ¨ | Vote “AGAINST” the proposal; or |
| | |
| ¨ | Abstain from voting on the proposal |
Because both Proposal One and Proposal Two require the affirmative vote of a majority of the
number of shares of common stock issued and outstanding
on the record date will constitute a quorum permitting the meeting to conduct its business. As of the record date, there are 11,175,970 shares
to be approved, abstentionsof MusclePharm common stock.What is the difference between a stockholder of record and broker non-votesa beneficial owner of shares held in street name?
Most of our stockholders hold their shares in an account at a brokerage firm, bank or other nominee holder, rather than holding share certificates in their own name. As summarized below, there are equivalent tosome distinctions between shares held of record and those owned beneficially in street name.
Why did I receive a vote “AGAINST”one-page notice in the proposal.
How doesmail regarding the Board recommend that I vote?
The Board recommends that you vote “FOR” eachInternet availability of Proposals One and Two.
Because both Proposal One and Two require the affirmative voteproxy materials this year instead of a
majorityfull set of proxy materials?Pursuant to rules adopted by the SEC, the Company has elected to provide access to its proxy materials over the Internet. Accordingly, the Company is sending the Notice to the Company’s stockholders of record and beneficial owners. All stockholders will have the ability to access the proxy materials on the website referred to in the Notice or request to receive a printed set of the outstanding shares present for voting, whether in personproxy materials. Instructions on how to access the proxy materials over the Internet or by proxy to request a printed copy may be approved. Any shares not voted (whether by abstention, broker non-vote or otherwise) will have no impact on the proposals. Abstaining from voting on the proposals is equivalent to a vote against the proposals, but broker non-votes do not affect the outcomes of the votes on such proposals. Except for determining the presence or absence of a quorum for the transaction of business, broker non-votes are not counted for any purpose in determining whether a matter has been approved.
How do I vote my shares without attending the Special Meeting?
Voting by Proxy Card
If proxiesfound in the accompanyingNotice. In addition, stockholders may request to receive proxy materials in printed form are properly executed and returned, the shares of our common stock represented thereby will be voted in the manner specified therein. In the absence of voting instructions, a valid proxy will be voted (i) “FOR” each of the proposed amendments to the Articles of Incorporation to increase our authorized common shares and to authorize additional shares of blank-check preferred stock; and (ii) in the discretion of the persons named in the enclosed form of proxy on any other proposals which may properly come before the Special Meeting or any adjournment or adjournments thereof. Any stockholder who has submitted a proxy may revoke it at any time before it is voted, by written notice addressed to and received by the Secretary of the Company, by submitting a duly executed proxy bearing a later date or by electing to vote in person at the Special Meeting. The mere presence at the Special Meeting of the person appointing a proxy does not, however, revoke the appointment. IF YOU DECIDE TO VOTE BY PROXY, THE PROXY CARD WILL BE VALID ONLY IF YOU SIGN, DATE AND RETURN IT BEFORE THE SPECIAL MEETING TO BE HELD ON MAY 11, 2011.
How do I vote my shares in person at the Special Meeting?
Even if you plan to attend the Special Meeting, we encourage you to vote by mail or phone so your vote will be counted ifelectronically by email on an ongoing basis. The Company encourages you later decide not to attendtake advantage of the Special Meeting.
If you choose to vote at the Special Meeting:
| | If you are a shareholderavailability of record, to vote your shares at the Special Meeting you should bring the enclosed proxy card and proof of identity; or |
| | If you hold your shares in street name, you must obtain a proxy in your name from your bank, broker or other holder of record in order to vote at the Special Meeting. |
Bring the proxy (for record holders) or proof of beneficial ownership (for street name holders), such as a recent brokerage statement or a letter from your bank or broker, and proof of identity for admission tomaterials on the Special Meeting.
Internet.What does it mean if I receive more than one proxy?
It likely means you hold shares registered in more than one account. ToNotice?You may have multiple accounts at the transfer agent and/or with brokerage firms. Please follow directions on each Notice to ensure that all of your shares are voted,voted.
Stockholder of Record
If on July 23, 2014, your shares were registered directly in your name with our transfer agent, Corporate Stock Transfer, you are considered a stockholder of record with respect to those shares, and the Notice of Annual Meeting and Proxy Statement was sent directly to you by the Company. As the stockholder of record, you have the right to direct the voting of your shares by returning the proxy card to us. Whether or not you plan to attend the Annual Meeting, if you do not vote over the Internet, please complete, date, sign and return each proxy.
Dissenters’ Rights
No dissenters’ rights applya proxy card to
ensure that your vote is counted.Beneficial Owner of Shares Held in Street Name
If on July 23, 2014, your shares were held in an account at a brokerage firm, bank, broker-dealer, or other nominee holder, then you are considered the beneficial owner of shares held in “street name,” and the Notice of Annual Meeting & Proxy statement was forwarded to you by that organization. The organization holding your account is considered the stockholder of record for purposes of voting at the Annual Meeting. As the beneficial owner, you have the right to direct that organization on how to vote the shares held in your account. However, since you are not the stockholder of record, you may not vote these shares in person at the Annual Meeting unless you receive a valid proxy from the organization.
How do I vote?
Stockholders of Record. If you are a stockholder of record, you may vote by any of the proposals containedfollowing methods:
| · | By Mail. You may vote by completing, signing, dating and returning your proxy card in the pre-addressed, postage-paid envelope provided. |
| · | In Person. You may attend and vote at the Annual Meeting. The Company will give you a ballot when you arrive. |
Beneficial Owners of Shares Held in Street Name. If you are a beneficial owner of shares held in street name, you may vote by any of the following methods:
| · | By Mail. You may vote by proxy by filling out the vote instruction form and returning it in the pre-addressed, postage-paid envelope provided. |
| · | In Person. If you are a beneficial owner of shares held in street name and you wish to vote in person at the Annual Meeting, you must obtain a legal proxy from the organization that holds your shares. |
Abstentions and broker non-votes
While the inspectors of election will treat shares represented by Proxies that reflect abstentions or include "broker non-votes" as shares that are present and entitled to vote for purposes of determining the presence of a quorum, abstentions or "broker non-votes" do not constitute a vote "for" or "against" any matter and thus will be disregarded in any calculation of "votes cast." However, abstentions and "broker non-votes" will have the effect of a negative vote if an item requires the approval of a majority of a quorum or of a specified proportion of all issued and outstanding shares.
Brokers holding shares of record for customers generally are not entitled to vote on “non-routine” matters, unless they receive voting instructions from their customers. As used herein, “uninstructed shares” means shares held by a broker who has not received voting instructions from its customers on a proposal. A “broker non-vote” occurs when a nominee holding uninstructed shares for a beneficial owner does not vote on a particular proposal because the nominee does not have discretionary voting power with respect to that non-routine matter. In connection with the treatment of abstentions and broker non-votes, the proposed ratification of EKS&H LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2014 is considered a “routine” matter. Accordingly, brokers are entitled to vote uninstructed shares with respect to this proposal.
What happens if I do not give specific voting instructions?
Stockholders of Record. If you are a stockholder of record and you:
| · | sign and return a proxy card without giving specific voting instructions, |
then the proxy holders will vote your shares in the manner recommended by the Board of Directors on all matters presented in this proxy statement.
Other Matters
Itstatement and as the proxy holders may determine in their discretion with respect to any other matters properly presented for a vote at the Annual Meeting.Beneficial Owners of Shares Held in Street Name. If you are a beneficial owner of shares held in street name and do not provide the organization that holds your shares with specific voting instructions, under the rules of various national and regional securities exchanges, the organization that holds your shares may generally vote on routine matters, such as the ratification of EKS&H LLP as the Company’s independent registered public accounting firm for the year ending December 31, 2014, but cannot vote on non-routine matters, such as the election of directors.
What are the Board’s recommendations?
The Board’s recommendation is set forth together with the description of each item in this Proxy Statement. In summary, the Board recommends a vote:
| · | for election of the five (5) directors nominated by the Company to hold office subject to the provisions of the Bylaws of the Company, until the next annual meeting of stockholders and until their successors are duly elected and qualified; |
| · | for ratification of the appointment of EKS&H LLP as the Company’s independent auditors for fiscal year 2014; and |
| · | forapproval of the issuance of 1,500,000 shares of Company common stock to certain employees, including executive, pursuant to restricted stock agreements, |
With respect to any other matter that properly comes before the meeting, the proxy holders will vote as recommended by the Board of Directors or, if no recommendation is given, in their own discretion.
Dissenters’ Right of Appraisal
Holders of shares of our Common Stock do not expected that any matters other than those referredhave appraisal rights under Nevada law or under the governing documents of the Company in connection with this solicitation.
How Are Proxy materials delivered to inhouseholds?
Only one copy of the Company's 10-K for the fiscal year ending December 31, 2013 and this Proxy Statement will be brought beforedelivered to an address where two or more stockholders reside with the Special Meeting. If other matters are properly presented, however,same last name or who otherwise reasonably appear to be members of the persons named as proxy appointees will vote in accordance with their best judgment on such matters. The grant of a proxy also will confer discretionary authoritysame family based on the persons named as proxy appointees to vote in accordance with their best judgment on matters incident to the conductstockholders’ prior express or implied consent.
We will deliver promptly upon written or oral request a separate copy of the Special Meeting.
CommunicationCompany's 10-K for the fiscal year ending December 31, 2013 and this Proxy Statement upon such request. If you share an address with Boardat least one other stockholder, currently receive one copy of Directors
Security holders canour Annual Report and Proxy Statement at your residence, and would like to receive a separate copy of our Annual Report and Proxy Statement for future stockholder meetings of the Company, please specify such request in writing and send
communicationssuch written request to MusclePharm Corporation, 4721 Ironton Street, Building A, Denver Colorado 80239; Attention: Corporate Secretary.Interest of Officers and Directors in Matters to Be Acted Upon
Except for the election to our Board of Directors by either telefaxthe five nominees set forth herein, none of our officers or regular mail at our headquarters. The correspondence should be addressed to Brad Pyatt, the Chief Executive Officer.
PROPOSALS ONE AND TWO:
AMENDMENT TO THE ARTICLES OF INCORPORATION TO INCREASE THE
AUTHORIZED SHARES OF COMMON STOCK AND TO AUTHORIZE ADDITIONAL
SHARES OF BLANK-CHECK PREFERRED STOCK
The Board of Directorsdirectors has unanimously approved and recommended to the Company’s shareholders an amendment to the Company’s Articles of Incorporation to (1) increase the Company’s total number of authorized shares of common stock, par value $0.001, from 195,000,000 to 500,000,000 and (2) authorize 10,000,000 shares of blank-check preferred stock, $0.001 par value per share.
The preferred stock may be issued by the Companyany interest in the future in one or more series and with such rights (including voting, dividend and conversion), preferences and designations as the Board of Directors deems necessary or advisable without any action by our stockholders. This is commonly referred to as “blank-check” preferred stock.
Currently, the Company has authorized capital of 195,000,000 shares designated as common stock. As of the record date, there were 148,320,775 shares of common stock of the Company outstanding. The Company’s Articles of Incorporation currently authorize the issuance of up to 5,000,000 shares of Series A Preferred Stock, par value $0.001. If both Proposals One and Two are approved, the Company will have 500,000,000 shares of common stock authorized and 15,000,000 shares of preferred stock authorized, effective upon the filing of the amendment to the Articles of Incorporation.
With regard to the proposed blank-check preferred stock, the Board’s authority to determine the terms of any such shares of preferred stock would include, but not be limited to (i) the designation of each class or series and the number of shares that will constitute each such class or series; (ii) the dividend rate for each class or series; (iii) the price at which, and the terms and conditions on which, the shares of each class or series may be redeemed, if such shares are redeemable; (iv) the terms and conditions, if any, upon which shares of each class or series may be converted into shares of other classes or series of shares of the Company, or other securities; and (v) the voting rights for each class or series.
Shares of preferred stock that are issued by the Company and subsequently redeemed or converted into another security of the Company would be available to be reissued by the Company, and the Board of Directors may set the terms of the reissued shares as they deem appropriate, in the same manner, and subject to the same limitations, as the authorized preferred shares permit.
The full text of the proposed amendment to the Articles of Incorporation to increase the authorized shares of common stock and to authorize issuance of preferred stock is included herein as Appendix A.
Voting on the Proposed Amendment to the Articles of Incorporation: Proposals One and Two
The proposed amendment to the Articles of Incorporation includes two parts, and each part is voted on separately. Proposal One, the first part, is to approve the increase of shares of common stock, par value $0.001 from 195,000,000 to 500,000,000 and Proposal Two, the second part, is to authorize 10,000,000 shares of blank-check preferred stock.
Reasons, Purpose and Effect of Proposals One and Two
The primary purpose of the proposed increase in common stock and authorization of a new class of preferred stock is for general corporate purposes, including, without limitation, capital raising, merger and acquisition opportunities, the issuance of stock dividends or stock splits, and other general corporate purposes.
The effect of the adoption of Proposals One and Two would be to grant the Board of Directors the authority to issue shares of common stock, as well as shares of preferred stock in one or more series, with such rights, preferences and designations, as it deems necessary or advisable without any additional action by the Company’s shareholders, unless otherwise required by law or by the rules and policies of the OTCBB or any other exchange upon which the shares of common stock of the Company are listed and trade.
The Board of Directors has made no decisions or commitments with respect to the use of the requested shares of common and preferred stock, and it has no plans to commence an offering of any of the Company’s shares at this time. The Board believes, however, that Proposals One and Two provide the flexibility the Company needs to satisfy its obligation to raise additional capital to support the Company. Approval of Proposals One and Two will permit the Company to take advantage of opportunities as they arise.
POTENTIAL FOR DILUTION TO THE OWNERSHIP OF EXISTING SHAREHOLDERS
AND OTHER EFFECTS OF PROPOSALS ONE AND TWO
If Proposal One is approved, the additional authorized shares of common stock may be issued for such consideration, cash or otherwise, at such times and in such amounts as the Board may determine without further shareholder approval, except to the extent that shareholder approval is required by applicable laws, rules or regulations.
The additional shares of common stockmatters to be authorized by adoption of the proposed amendment to our Articles of Incorporation would have rights identical to our currently outstanding common stock. The proposed increase in the number of shares of common stock will not change the number of shares of stock outstanding, nor will it have any immediate dilutive effect or change the rights of current holders of our common stock. However, to the extent that the additional authorized shares are issued in the future, they may dilute the percentage equity ownership of existing shareholders and, depending on the price at which they are issued, may also dilute earnings and book value on a per share basis. The Company’s shareholders have no preemptive rights to subscribe for additional shares of common stock when issued, which means that current shareholders do not have a prior right to purchase any newly-issued shares in order to maintain their proportionate ownership of the Company’s common stock.
If Proposal Two is approved, the availability of undesignated blank-check preferred stock may have certain negative effects on the rights of holders of the Company’s common stock. The actual effect of the issuance of any shares of preferred stockacted upon the rights of holders of common stock cannot be stated until the Board determines the specific rights of the holders of such preferred stock. With regard to the proposed new class of preferred stock, the Board’s authority to determine the terms of any such shares of preferred stock would include, but not be limited to, (i) the designation of each class or series and the number of shares that will constitute each such class or series; (ii) the dividend rate for each class or series; (iii) the price at which, and the terms and conditions on which, the shares of each class or series may be redeemed, if such shares are redeemable; (iv) the terms and conditions, if any, upon which shares of each class or series may be converted into shares of other classes or series of shares of the Company, or other securities; and (v) the voting rights for each class or series.
Shares of preferred stock that are issued by the Company and subsequently redeemed or converted into another security of the Company would be available to be reissued by the Company and the Board of Directors may set the terms of the reissued shares as they deem appropriate, in the same manner, and subject to the same limitations, as the authorized preferred shares permit.
POSSIBLE ANTI-TAKEOVER EFFECTS OF PROPOSALS ONE AND TWO
Common Stock. The proposed increase in the authorized number of shares of common stock could, in some situations, have the effect of discouraging unsolicited takeover attempts or inhibiting the removal of incumbent management and may limit the opportunity for shareholders to dispose of their shares at the higher price generally available in takeover attempts or that may be available under a merger proposal. For example, the issuance of the newly authorized shares of commonAnnual Meeting.How much stock could be used to discourage persons from attempting to gain control of the Companyis owned by diluting the voting power of shares then outstanding or increasing the voting power of persons who would support the Board in a potential takeover situation, including by rendering a transaction proposed by such persons more costly, or by preventing or delaying a proposed business combination that is opposed by the Board although perceived to be desirable by some shareholders.
Preferred Stock. Article III of the Company’s current Certificate of Incorporation authorizes 5,000,000 shares of Series A preferred stock. The proposed amendment to Article III would permit the Board of Directors to authorize 10,000,000 shares of blank-check preferred stock in one or more series5% stockholders, directors, and with such rights (including voting, dividend and conversion), preferences and designations as the Board of Directors deems necessary or advisable without any action by our stockholders.
The availability of undesignated preferred stock may have certain negative effects on the rights of the holders of our common stock. The actual effect of the issuance of any shares of blank-check preferred stock upon the rights of holders of common stock cannot be stated until the Board of Directors determines the specific rights of the holders of such blank check preferred stock. The proposed amendment will permit the Board of Directors, without future stockholder approval, to issue preferred stock with dividend, liquidation, conversion, voting or other rights, which are superior to and could adversely affect the voting power or other rights of the holders of our common stock. Specifically, we will be in a position to issue securities which would grant to the holders thereof, preferences or priorities over the holders of common stock with respect to, among other things, liquidation, dividends and voting. This could result in holders of common stock receiving less in the event of a liquidation, dissolution or other winding up of our company, reduce the amount of funds, if any, available for dividends on common stock, and dilute the voting power of the holders of our common stock.
In addition, preferred stock could be used, under certain circumstances, as a method of discouraging, delaying or preventing a change in control of our company. For example, the Board of Directors could designate and issue a series of preferred stock in an amount that sufficiently increases the number of outstanding shares to overcome a vote by the holders of our common stock or with rights and preferences that include special voting rights to veto a change in control. The effect of such provisions could delay or frustrate a merger, tender offer or proxy contest, the removal of incumbent directors, or the assumption of control by stockholders, even if such proposed actions would be beneficial to our stockholders. This could include discouraging bids even if such bid represents a premium over our then existing trading price and thereby prevent stockholders from receiving the maximum value for their shares. Please note that the creation of the blank-check preferred stock has not been proposed by the Board of Directors for an anti-takeover related purpose and the Board of Directors has no knowledge of any current efforts to obtain control of the Company or to effect large accumulations of our voting stock.
BOARD RECOMMENDATION
The Board believes that Proposals One and Two are in both the Company and the shareholders’ best interests and will provide the flexibility needed to meet corporate objectives. If approved, the Company’s officers intend to promptly make appropriate filings and take any other action necessary to implement the amendment to the Articles of Incorporation that is approved at the Special Meeting.
MUSCLEPHARM CORPORATION’S BOARD OF DIRECTORS HAS APPROVED AND RECOMMENDS A VOTE “FOR” THE PROPOSED AMENDMENT TO THE ARTICLES OF INCORPORATION TO INCREASE AUTHORIZED SHARES OF COMMON STOCK AND TO AUTHORIZE BLANK-CHECK PREFERRED STOCK AS SET FORTH IN PROPOSALS ONE AND TWO.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
Muscle Pharm LLC Share Exchange
On February 1, 2010, the Company (formerly known and at such time known as Tone in Twenty, Inc.) executed a securities exchange Agreement with Muscle Pharm, LLC, a Colorado limited liability company (“Muscle Pharm LLC”) (the “Securities Exchange Agreement”), pursuant to which Company agreed to issue an aggregate of 26,000,000 shares of the Company’s common stock for all of the issued and outstanding equity and voting interests of Muscle Pharm LLC from the Muscle Pharm LLC members (the “Share Exchange”). Upon the closing of the Share Exchange, Muscle Pharm LLC became a wholly owned subsidiary of the Company.
As a result of the Share Exchange, on February 1, 2010, the Company had 26,070,834 shares of the Company’s common stock outstanding as of the closing.
Immediately prior to the closing of the Share Exchange, there were no material relationships between any of the officers, directors or shareholders of the Company and Muscle Pharm LLC, other than in respect of the Securities Exchange Agreement.
executive officers?The following table sets forth as of February 1, 2010, and after giving effect to the closing of Company’s reverse acquisition of Muscle Pharm LLC, the total number of shares known to be beneficially owned beneficially by eachall persons who own at least 5% of MusclePharm's outstanding common stock, the Company's directors, the executive officers, and the directors and executive officers individually and as a group.
Exceptgroup as
set forth inof July 23, 2014, unless otherwise noted. Unless otherwise indicated, the
footnotes to this table, each person namedstockholders listed in the table
hashave sole voting and investment power with respect to the shares
indicated.| | | Shares Beneficially Owned | |
| | | Common Stock (1) | |
| Name of Beneficial Owner | | Shares | | | % (2) | |
| Named Executive Officers: | | | | | | | | |
| Brad J. Pyatt | | | 254,222 | | | | 2.27 | % |
| Richard Estalella | | | 34,000 | | | | * | |
| Donald W. Prosser | | | 18,183 | | | | * | |
| James J. Greenwell | | | 26,183 | | | | * | |
| Sydney Rollock | | | 14,485 | | | | * | |
| Cory J. Gregory | | | 181,273 | | | | 1.62 | % |
| | | | | | | | | |
| Non-Employee Directors: | | | | | | | | |
| Michael J. Doron | | | 18,183 | | | | * | |
| Daniel J. McClory | | | 5,071 | | | | * | |
| Gregory Macosko(3) | | | 1,000 | | | | * | |
| | | | | | | | | |
| Officers and Directors as a Group (nine persons): | | | 552,600 | | | | 4.95 | % |
| * | Represents less than one percent. |
| (1) | This column lists beneficial ownership of voting securities as calculated under SEC rules. Otherwise, except to the extent noted below, each director, named executive officer or entity has sole voting and investment power over the shares reported. The shares are not subject to any pledge. Standard brokerage accounts may include nonnegotiable provisions regarding set-offs or similar rights. |
| (2) | Percent of total voting power represents voting power with respect to 4.95% shares of common stock outstanding as of July 23, 2014. This percentage does not include issued, non-vested shares. |
| (3) | Share held by Mr. Macosko’s spouse, Sharon Zane. |
Beneficial Owners of More than Five Percent
The following table shows the number of shares of our common stock, as of July 23, 2014, held by persons known to us to beneficially own more than five percent of our outstanding common stock.
| | | Shares Beneficially Owned | |
| | | Common Stock (1) | |
| Name of Beneficial Owner | | Shares | | | % (2) | |
| Cocrystal Pharma, Inc. (f/k/a Biozone Pharmaceuticals Inc.) (3) | | | 1,200,000 | | | | 10.74 | % |
| Wynnefield Capital (4) | | | 1,000,000 | | | | 8.95 | % |
| Marine MP (5) | | | 780,000 | | | | 6.98 | % |
| (1) | This column lists beneficial ownership of voting securities as calculated under SEC rules. Otherwise, except to the extent noted below, each director, named executive officer or entity has sole voting and investment power over the shares reported. The shares are not subject to any pledge. Standard brokerage accounts may include nonnegotiable provisions regarding set-offs or similar rights. |
| (2) | Percent of total voting power represents voting power with respect to 28.08% shares of common stock outstanding as of July 23, 2014. This percentage does not include issued, non-vested shares. |
| (3) | Dr. Gary Wilcox, as the Chief Executive Officer of Cocrystal Pharma, Inc. (f/k/a Biozone Pharmaceutical, Inc.) and as such has voting and investment power over the securities owned by the stockholder. |
| (4) | Joshua Landes may be deemed to hold an indirect beneficial interest in these shares, which are directly beneficially owned by Wynnefield Partners Small Cap Value, L.P., Wynnefield Partners Small Cap Value, L.P. I and Wynnefield Small Cap Value Offshore Fund because he is a co-managing member of Wynnefield Capital Management, LLC and a principal executive officer of Wynnefield Capital, Inc. The principal place of business for Wynnefield Capital is 450 Seventh Avenue, Suite 509, New York, New York 10123. |
| (5) | Arnold Schwarzenegger is the sole member of Marine MP, LLC, and as such has voting and investment power over the securities owned by the stockholder. |
There are no arrangements known to the Company, including any pledge by any person of securities of the Company, the operation of which may at a subsequent date result in a change in control of the Company.
INFORMATION ABOUT THE BOARD OF DIRECTORS
The Board of Directors oversees our business and affairs and monitors the performance of management. In accordance with corporate governance principles, the Board does not involve itself in day-to-day operations. The directors keep themselves informed through discussions with the Chief Executive Officer and other key executives, visits to the Company’s facilities, by reading the reports and other materials that we send them and by participating in Board and committee meetings. Each director’s term will continue until the election and qualification of his or her successor, or his or her earlier death, resignation or removal. Biographical information about our directors is provided in “Item 1 - Proposal for the Election of Five Directors” on page 22. Except as set forth oppositein this Proxy Statement, none of our directors held directorships in other reporting companies and registered investment companies at any time during the past five years.
Our Board currently consists of five persons, all of which have been nominated by the Company to stand for election.
| Name | | Age | | Position |
| Bradley J. Pyatt | | 33 | | Chairman of the Board, Chief Executive Officer |
| Richard F. Estalella | | 52 | | Chief Operating Officer, Director |
| Michael J. Doron (1)(2)(3*) | | 52 | | Director |
| Daniel J. McClory (1)(2)(3) | | 54 | | Director |
| Gregory Macosko (1*)(2)(3) | | 67 | | Director |
| (2) | Nominating and Corporate Governance Committee |
| (3) | Compensation Committee |
* Committee Chair
Involvement in Certain Legal Proceedings
To our knowledge, during the last ten years, none of our directors or executive officers has:
| · | Had a bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time. |
| · | Been convicted in a criminal proceeding or been subject to a pending criminal proceeding, excluding traffic violations and other minor offenses. |
| · | Been subject to any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities. |
| · | Been found by a court of competent jurisdiction (in a civil action), the SEC, or the Commodities Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended or vacated. |
| · | Been the subject to, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization, any registered entity, or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member. |
Mr. Pyatt filed for protection under Chapter 7 of the federal bankruptcy laws in 2008. He received a discharge relating to the matter in 2008.
There are no material proceedings to which any director of the Company is a party adverse to the Company or has a material interest adverse to the Company.
How often did the Board meet during fiscal 2013?
During 2013, the Board of Directors held 14 meetings. Each director attended no fewer than 75% of the aggregate of the total number of meetings of the Board and the total number of meetings held by all committees on which such person’s name.
Each stockholder’s percentage ownershipdirector served. The Board also approved certain actions by unanimous written consent.What committees has the Board established?
The Board of Directors has standing Audit, Compensation, Nominating and Corporate Governance Committees. Information concerning the function of each Board committee follows.
Audit Committee
Our Audit Committee’s main function is to oversee our accounting and financial reporting processes, internal systems of control, independent auditor relationships and the audits of our financial statements. The Audit Committee’s responsibilities include:
· selecting, hiring, and compensating our independent auditors;
· evaluating the qualifications, independence and performance of our independent auditors;
· overseeing and monitoring the integrity of our financial statements and our compliance with legal and regulatory requirements as they relate to financial statements or accounting matters;
· approving the audit and non-audit services to be performed by our independent auditor;
· reviewing with the independent auditor the design, implementation, adequacy and effectiveness of our internal controls and our critical accounting policies; and
· preparing the report that the SEC requires in our annual proxy statement.
The current members of the Audit Committee are Gregory Macosko, Michael Doron and Daniel McClory. The Board has determined that Gregory Macosko is an “audit committee financial expert” as defined by the SEC. During 2013, the Audit Committee held 8 meetings in person or through conference calls.
Compensation Committee
Our Compensation Committee’s main functions are assisting our board of directors in discharging its responsibilities relating to the compensation of outside directors, the Chief Executive Officer and other executive officers, as well as administering any stock incentive plans we may adopt. The Compensation Committee’s responsibilities include the following:
· reviewing and recommending to our board of directors the compensation of our Chief Executive Officer and other executive officers, and the outside directors;
· conducting a performance review of our Chief Executive Officer;
· reviewing our compensation policies; and
· if required, preparing the report of the Compensation Committee for inclusion in our annual proxy statement.
The board of directors has adopted a Compensation Committee Charter.
The Compensation Committee’s policy is to offer our executive officers competitive compensation packages that will permit us to attract and retain highly qualified individuals and to motivate and reward these individuals in an appropriate fashion aligned with the long-term interests of our Company and our stockholders.
The current members of the Compensation Committee are Michael Doron and Daniel McClory. During 2013, the Compensation Committee held 4 meetings in person or through conference calls.
Nominating and Corporate Governance Committee
The Nominating and Corporate Governance Committee’s responsibilities include:
· identify qualified individuals to serve as members of the Company’s board of directors;
· review the qualifications and performance of incumbent directors;
· review and consider candidates who may be suggested by any director or executive officer or by any stockholder of the Company;
· review considerations relating to board composition, including size of the board, term and age limits, and the criteria for membership on the board;
· review periodically the management succession plan of;
· review and recommend corporate governance policies; and
· monitor, oversee and review compliance with the Company’s code of ethics.
The board of directors has adopted a Nominating and Corporate Governance Committee Charter.
The current members of the Governance and Nominating Committee are Michael Doron (Chairman) and Daniel McClory. During 2013, the Governance and Nominating Committee held 4 meetings in person or through conference calls.
Financial Disclosure Committee
On March 21, 2014, the Board of Directors approved the creation of a Financial Disclosure Committee, to be comprised of certain officers and directors of the Company, for the purpose of assisting the Chief Executive Officer, President, Chief Financial Officer, and Audit Committee Chairman in fulfilling their responsibility for oversight of the accuracy and timeliness of the disclosures made by the Company.
Nomination of Directors
As provided in its charter, the Nominating and Corporate Governance Committee is responsible for identifying individuals qualified to become directors. The Nominating and Corporate Governance Committee seeks to identify director candidates based on input provided by a number of sources, including (1) the 26,070,836 shares of common stock outstanding asNominating and Corporate Governance Committee members, (2) our other directors, (3) our stockholders, (4) our Chief Executive Officer or Chair of the closing dateBoard, and (5) third parties such as service providers. In evaluating potential candidates for director, the Nominating and Corporate Governance Committee considers the entirety of each candidate’s credentials.
Qualifications for consideration as a director nominee may vary according to the particular areas of expertise being sought as a complement to the existing composition of the Share Exchange.
| | | Amount and | | | | |
| | | Nature of | | | | |
| Name and Address | | Beneficial | | | Percent | |
| of Beneficial Owner | | Ownership | | | Of Class | |
| | | | | | | |
| Brad Pyatt | | | 12,331,668 | | | | 47.3 | % |
| 3390 Peoria Street, Unit 307 | | | | | | | | |
| Aurora, Colorado 80010 | | | | | | | | |
| | | | | | | | | |
| Cory Gregory | | | 7,833,014 | | | | 30.0 | % |
| 422 Middleground Road | | | | | | | | |
| Pataskala, Ohio 43062 | | | | | | | | |
| | | | | | | | | |
| Todd E. Huss | | | 0 | | | | - | |
| 13802 Boulder Lane | | | | | | | | |
| Larkspur, Colorado 80118 | | | | | | | | |
| | | | | | | | | |
| Leonard K. Armenta, Jr. | | | 0 | | | | - | |
| 3390 Peoria Street, Unit 307 | | | | | | | | |
| Aurora, Colorado 80010 | | | | | | | | |
| | | | | | | | | |
| All executive officers and directors | | | 20,164,602 | | | | 77.3 | % |
| as a group (4 persons) | | | | | | | | |
CURRENT SECURITY OWNERSHIPBoard of Directors. However, at a minimum, candidates for director must possess: | · | high personal and professional ethics and integrity; |
| · | the ability to exercise sound judgment; |
| · | the ability to make independent analytical inquiries; |
| · | a willingness and ability to devote adequate time and resources to diligently perform Board and committee duties; and |
| · | the appropriate and relevant business experience and acumen. |
The Nominating and Corporate Governance Committee will consider nominees recommended by stockholders if such recommendations are made in writing to the committee. The Nominating and Corporate Governance Committee does not plan to change the manner in which the committee evaluates nominees for election as a director based on whether the nominee has been recommended by a stockholder or otherwise.
The Nominating and Corporate Governance Committee does not have a formal policy relating to diversity among directors. In considering new nominees and whether to re-nominate existing members of the Board, the committee seeks to achieve a Board with strengths in its collective knowledge and a broad diversity of perspectives, skills and business and professional experience. Among other items, the committee looks for a range of experience in strategic planning, sales, finance, executive leadership, industry and similar attributes.
Board Leadership Structure and Role in Risk Oversight
Our Board has overall responsibility for risk oversight. The oversight is conducted primarily through committees of the Board of Directors, as disclosed in each of the descriptions of each of the committees above and in the charters of each of the committees, but the full Board of Directors has retained responsibility for general oversight of risks.
Stockholder Communications
Stockholders requesting communication with directors can do so by writing to MusclePharm Corporation, c/o Corporate Secretary, 4721 Ironton Street, Building A, Denver, Colorado 80239. At this time we do not screen communications received and would forward any requests directly to the named director. If no director was named in a general inquiry, the Secretary would contact either the Chair of the Board of Directors or the chairman of a particular committee, as appropriate. We do not provide the physical address, email address, or phone numbers of directors to outside parties without a Director’s permission.
Code of Ethics and Business Conduct
We adopted a Code of Ethics on July 24, 2012 that applies to all directors, officers and employees. Our Code of Ethics is available on our website at http://www.musclepharm.com. Our Code of Ethics provides general statements of our expectations regarding ethical standards that we expect our directors, officers and employees to adhere to while acting on our behalf. Among other things, the Code of Ethics provides that:
| · | We will comply with all laws, rules and regulations; |
| · | Our directors, officers, and employees are to avoid conflicts of interest and are prohibited from competing with the Company or personally exploiting our corporate opportunities; |
| · | Our directors, officers, and employees are to protect our assets and maintain our confidentiality; |
| · | We are committed to promoting values of integrity and fair dealing; and |
| · | We are committed to accurately maintaining our accounting records under generally accepted accounting principles and timely filing our periodic reports and tax returns. |
Our Code of Ethics also contains procedures for employees to report, anonymously or otherwise, violations of the Code of Ethics.
COMPENSATION OF PRINCIPAL STOCKHOLDERS AND MANAGEMENT
DIRECTORSIn 2013 the Compensation Committee engaged an independent third party to study and evaluate a cash and stock compensation plan for MusclePharm’s independent board of directors. The following table sets forth information knownthe aggregate compensation paid to Company with respectour independent, non-employee directors during 2013.
| Name | | Fees Earned
or Paid In Cash
($) | | | Stock Awards(1)(2)(3)(4) ($) | | | Total
($) | |
| Michael J. Doron | | | 156,000 | | | | 365,262 | | | | 521,262 | |
| James J. Greenwell(5) | | | 157,500 | | | | 365,262 | | | | 522,762 | |
| Donald W. Prosser(6) | | | 196,500 | | | | 365,262 | | | | 561,762 | |
| Daniel F. McClory | | | 71,383 | | | | 32,000 | | | | 103,383 | |
| (1) | Reflects the full grant date fair value of restricted stock awards granted in 2013 calculated in accordance with FASB ASC Topic 718 based on the closing price of the common stock of $6.00 on February 14, 2013, the date of grant. |
| (2) | Reflects the full grant date fair value of restricted stock awards granted for 2013 calculated in accordance with FASB ASC Topic 718 based on the stock price of $4.00 as stipulated in the grant agreement. |
| (3) | Reflects the full grant date fair value of restricted stock awards granted for 2013 calculated in accordance with FASB ASC Topic 718 based on the closing price of the common stock of $7.85 on December 10, 2013. |
| (4) | Reflects the full grant date fair value of restricted stock awards granted for 2013 calculated in accordance with FASB ASC Topic 718 based on the closing price of the common stock of $11.01 on July 1, 2013. |
| (5) | Resigned from serving on the Company’s Board of Directors effective May 12, 2014. |
| (6) | Resigned from serving on the Company’s Board of Directors effective April 10, 2014. |
The actual amounts paid to directors in 2013 differ from the program amounts in the table below due to special project bonuses and other cash payments and stock grants that were paid to the beneficial ownershipdirectors under the old compensation plan prior to the adoption of the plan described below.
2014 Non-Employee Director Compensation Program
In October 2013, our board of directors adopted a non-employee director compensation program based on recommendations by the Compensation Committee’s independent third party director’s pay study that was completed in 2013. Directors who are employees of the Company receive no additional compensation for their services as directors. Non-employee directors are compensated for their service on our board of directors as described below. The following table describes the components of compensation for non-employee directors in effect beginning January 2014:
| Compensation Element | | 2014 Compensation Program ($) | |
| Annual Cash Retainer | | | 35,000 | |
| Annual Equity Retainer Award | | | 80,000 | |
| Audit Committee Chair Fee | | | 15,000 | |
| Compensation Committee Chair Fee | | | 10,000 | |
| Nominating and Corporate Governance Chair Fee | | | 7,000 | |
| Audit Committee Member Fee | | | 10,000 | |
| Compensation Committee Member | | | 5,000 | |
| Nominating and Corporate Governance Member Fee | | | 5,000 | |
Annual Cash Retainer and Committee Fees. Beginning in January 2014, each non-employee director who continues to serve as a director will receive an annual cash retainer fee of $35,000 per year, pro rata for service less than one year. Non-employee directors will also receive $15,000 or $10,000 for serving as chair or member, respectively, of the audit committee, $10,000 or $5,000 for serving as chair or member, respectively, of the Compensation Committee, and $7,000 or $5,000 for serving as chair or member, respectively, of the nominating and governance committee.
Annual Equity Retainer Award. Beginning in July 2013, each non-employee director will receive $80,000 of the annual board retainer fee in the form of restricted common stock with the number of shares of restricted common stock determined by dividing that dollar amount by the closing price of our common stock on the date of grant. These shares of restricted common stock will vest in three equal annual installments. The restricted common stock awards are to be issued near the start of each calendar year without forfeiture.
REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
The Audit Committee, on behalf of our Board of Directors, serves as an independent and objective party to monitor and provide general oversight of the integrity of our financial statements, our independent registered public accounting firm’s qualifications and independence, the performance of our independent registered public accounting firm and our standards of business conduct. The Audit Committee performs these oversight responsibilities in accordance with its Audit Committee Charter.
Our management is responsible for preparing our financial statements and managing our financial reporting process. Our independent registered public accounting firm is responsible for expressing an opinion on the conformity of our audited financial statements to generally accepted accounting principles in the United States of America. The Audit Committee met with our independent registered public accounting firm, with and without management present, to discuss the results of their examinations and the overall quality of our financial reporting.
In this context, the Audit Committee reviewed and discussed our audited financial statements for the year ended December 31, 2013 with management and with our independent registered public accounting firm. The Audit Committee has discussed with our independent registered public accounting firm the matters required to be discussed by the statement on Auditing Standards No. 61, as amended (Communications with Audit Committees), as adopted by the Public Company Accounting Oversight Board in Rule 3200T, which includes, among other items, matters related to the conduct of the audit of our annual financial statements.
The Audit Committee has received the written disclosures and the letter from the independent registered public accounting firm required by applicable requirements of the Public Company Accounting Oversight Board regarding such independent registered public accounting firm's communications with the Audit Committee concerning independence, and has discussed with the independent registered public accounting firm its independence from us and our management.
Based on its review of the audited financial statements and the various discussions noted above, the Audit Committee recommended to our Board of Directors that our audited financial statements be included in our Annual Report on Form 10-K for the year ended December 31, 2013.
Respectfully submitted by the Audit Committee,
Michael Doron
Daniel McClory
Gregory Macosko
The foregoing Audit Committee Report does not constitute soliciting material and shall not be deemed filed or incorporated by reference into any other filing of our company under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, except to the extent we specifically incorporate this Audit Committee Report by reference therein.
INFORMATION ABOUT THE EXECUTIVE OFFICERS
The following table sets forth certain information as of March 31, 2014, regarding our directors and named executive officers:
| Name | | Age | | Position |
| | | | |
| Bradley J. Pyatt | | 33 | | Chairman of the Board, Chief Executive Officer |
| Richard F. Estalella | | 52 | | President, Director |
| Donald W. Prosser | | 63 | | Chief Financial Officer & Treasurer |
| James J. Greenwell | | 54 | | Chief Operating Officer |
| Sydney R. Rollock | | 50 | | Chief Marketing & Sales Officer |
| Cory J. Gregory | | 35 | | Executive Vice President |
| Michael J. Doron | | 52 | | Director |
| Daniel J. McClory | | 54 | | Director |
| Gregory Macosko | | 67 | | Director |
Bradley J. Pyatt is our Chairman of the Board, Chief Executive Officer and Director and founded the company in April 2008. His background includes seven years of experience as a professional athlete, and more than five years of experience in the sports nutrition arena. Mr. Pyatt played in National Football League for the Indianapolis Colts during the 2003, 2004, and 2005 NFL seasons as well for the Miami Dolphins during the 2006 NFL season. Mr. Pyatt played in the Arena Football League for the Colorado Crush during the 2007 and 2008 AFL seasons. Mr. Pyatt attended the University of Kentucky from 1999 to 2002, where he studied kinesiology exercise science, as well the University of Northern Colorado, from 2002 to 2003.
Richard F. Estalella has served as our Chief Operating Officer since April 2013, and as a member of the Board of Directors since August 2013. Prior to joining MusclePharm, Mr. Estalella served as Senior Vice President of Operations at Arbonne International, LLC since 2005. Mr. Estalella was instrumental in Arbonne’s expansion operations and distribution upgrades and was responsible for all warehouse and distribution facilities, facilities maintenance departments and Customer Service. Previously, between 1998 and 2005, he owned a consulting business specializing in retail, operations, warehousing and distribution. Prior to that, Mr. Estalella served as Senior Vice President of Warehouse Operations for Office Depot between 1987 and 1998 and established many of its retail markets, along with its nationwide distribution center network which helped grow it into a $9 billion company.
Donald W. Prosser served as a director on our Board of Directors from July 2012 until April 2014, and since April 2014 has served as the Company’s Chief Financial Officer. Mr. Prosser has been the principal executive officer and principal financial officer of Arête Industries, Inc. since January 2011 and a director of Arête since September, 2003. Arête is a voluntary filer with the SEC under the Securities Exchange Act of 1934. Mr. Prosser owns a certified public accounting firm, Donald W. Prosser, P.C., specializing in tax services and accounting and has represented a number of private and public companies serving in the capacity of accountant, member of boards of directors, and as chief financial officer. From 1997 to 1999, Mr. Prosser served as Chief Financial Officer and Director for Chartwell International, Inc., a public company publishing high school athletic information and providing athletic recruiting services. From 1999 to 2000, he served as Chief Financial Officer and Director for Anything Internet, Inc. and from 2000 to 2001, served as Chief Financial Officer and Director for its successor, Inform Worldwide Holdings, Inc., a publicly traded company. From November 2002 through June 2008, Mr. Prosser served as CFO of VCG Holding Corp., a public company. From July 2008 through August 2009 Mr. Prosser was Chief Financial Officer of Iptimize, Inc., a provider of broadband and data services that filed a petition under federal bankruptcy laws in October 2009. He also has served on the Board of Directors of Veracity Management Global, Inc., a publicly traded company, since January, 2008. Mr. Prosser has been a certified public accountant since 1975. Mr. Prosser attended the University of Colorado from 1970 to 1971 and Western State College of Colorado from 1972 to 1975, where he earned a Bachelor’s Degree in Accounting and History (1973) and a Master’s Degree in Accounting – Income Taxation (1975).
James J. Greenwell served as a director from October 15, 2012 until May 2014 and became the Company’s Chief Operating Officer in May of 2014. Since March 20, 2013 he has been Vice-President of Voice Technology for Intelligrated. (Intelligrated is one of the top material handling automation companies in the U.S.) Intelligrated acquired Datria Systems in March 2013. Since 2000, he has been the Chief Executive Officer of Datria Systems Inc., a speech recognition application software company. He has also served as the Datria Systems’ Chairman since 2002. In prior employment, he served as a technology executive in a number of private and public companies .He has served on the Board of the Cherry Creek School Foundation since September 2010. He was a founding member of Friends of Denver Fire and served on its Board from 2007 through 2010. Mr. Greenwell served on the Board of the Denver Chapter of the American Heart Association from 2002 through 2008 and was Chairman of the Board in 2007. He also served on the Board of Trustees of the Bonfils Blood Center Foundation from 1999 through 2003. Mr. Greenwell earned a BS from the College of Business at Michigan State University and an MBA degree from Saint Mary’s College.
Sydney R. Rollock has served as our Chief Marketing & Sales Officer since October 2013. Prior to joining MusclePharm, Mr. Rollock served as President of XXIC Growth Ventures LLC, a company he founded to partner with investors to identify and evaluate Non-Core Consumer Fortune 500 brand businesses in the Over the Counter (“OTC”) Health & Wellness sector to bring buyers and sellers together to form a stand-alone consumer OTC company. Prior to that, Mr. Rollock served as Chief Marketing and Business Development Officer for Brightside Academy in Pittsburgh, Pennsylvania as well as Vice President and General Manager of Health & Wellness OTC Business Unit for GlaxoSmithKline. Mr. Rollock has expertise in general management, global marketing, and corporate strategy as well as wide-ranging experience in leadership roles for Fortune 500 companies including GlaxoSmithKline, Coca-Cola, Campbell’s, and General Mills.
Cory J. Gregory has served as an executive officer of Muscle Pharm, LLC, since its inception in 2008 and our Senior Vice President (formerly Senior President) since May 2010. Prior to joining us, Mr. Gregory served as President, managing member, and owner of T3 Personal Training LLC, or T3, from April 2009 until November 2011. T3 was a personal training service that managed and oversaw over 40 clients using seven trainers over a ten-year period. During the same period, Mr. Gregory served as President of the Ohio Natural Bodybuilding Federation, a federation founded by Mr. Gregory in 2004 which hosted 14 bodybuilding competitions over a six-year period. He consulted for Agile Enterprises, a nutritional supplement company from January 2006 through January 2008. In 2004, Mr. Gregory purchased the Old School Gym, located in Pataskala, Ohio, which he continues to own at present day.
Michael J. Doron has served as a director since November 5, 2012. He has been the Managing Director of DDR & Associates, LLC since January 2009, and Evolution Capital Partners, LLC since October 2009. From January 2007 to December 2008, he served as Chief Operating Officer and director of Toyshare, Inc. From February 2006 to January 2007, Mr. Doron served as Chief Operating Officer and Chief Financial Officer of Frontgate Sundance Alliance. From September 2005 to January 2007, he served as Vice President – Private Banking of the Bank of the West. Mr. Doron earned a BA from the University of Maryland and a Master’s of Science from American University.
Daniel J. McClory was appointed as an independent director of the Company’s common stockBoard of Directors in August 2013. Mr. McClory has been a member of Burnham Securities Inc. since February 2014, currently serving as its Managing Director. His investment banking career includes an affiliation with Hunter Wise Financial Group, LLC from 2003 to 2014. At Burnham Securities and Hunter Wise Financial Group, Mr. McClory has completed public offerings, financings and M&A deals for clients listed on the London Stock Exchange, NASDAQ, NYSE Amex, the Toronto Stock Exchange, the Stock Exchange of April 8, 2011, unless otherwise noted, by:
Hong Kong, and the Over-the-Counter Markets. He opened Hunter Wise Financial Group offices in London and Beijing in support of the firm’s investment banking clients in both locations. Mr. McClory earned his BS in English and an MA in Language and International Trade from Eastern Michigan University.Gregory Macosko was appointed as an independent director of the Company’s Board of Directors in June 2014. Mr. Macosko is currently a member of the Board of Directors of Montrose Advisors, and an SEC-registered investment advisor. He also serves as a business advisor to the Board of Directors of Bioxiness Pharmaceuticals, a California-based pre-clinical stage company. In September of 2013, Mr. Macosko retired as a Partner from Lord Abbett & Co., a privately held investment management firm. He was a Portfolio Manager of Lord Abbet's Small Cap Value Fund and a founding member of the company’s Proxy Committee. Mr. Macosko is a Phi Beta Kappa graduate of Albion College, a Fulbright Scholar in Germany, and holds an MBA from Columbia University. His twenty-four years of experience on Wall Street bring to MusclePharm broad knowledge of public company management, and investment community relationships among institutional investors, analysts and investment bankers.
Family Relationships
There are no family relationships between any of our directors and our executive officers.
Involvement in Certain Legal Proceedings
Except as outlined below, to our knowledge, during the past ten (10) years, none of our directors, executive officers, promoters, control persons, or nominees has been:
| | each stockholder known to MusclePharm to own beneficially more than 5%the subject of MusclePharm’s common stock; |
| | eachany bankruptcy petition filed by or against any business of MusclePharm’s directors; |
| | each of MusclePharm’swhich such person was a general partner or executive officers, including eachofficer either at the time of the named executive officers listedbankruptcy or within two years prior to that time; |
| · | convicted in the “2010 Summary Compensation Table” included in this report;a criminal proceeding or is subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); |
| | allsubject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of MusclePharm’s current directors and executive officers as a group.any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; or |
Beneficial ownership is determined in accordance with the rules | · | found by a court of competent jurisdiction (in a civil action), the Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law |
Mr. Pyatt filed for protection under Chapter 7 of the SEC and generally includes voting or dispositive power with respect to securities. Common sharesfederal bankruptcy laws in 2008. He received a discharge relating to options or warrants currently exercisable, or exercisable within 60 daysthe matter in 2008.
EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
Executive Compensation Objectives
The objectives of April 8, 2011,our compensation program are deemed outstanding for computing the percentage of the person holding such securities but are not deemed outstanding for computing the percentage of any other person. Except as indicated by footnote, and subject to the community property laws where applicable, the persons or entities named in the tables have sole voting and dispositive power with respect to all shares shown as beneficially owned by them.
| | | Amount and | | | Percentage | |
| | | Nature of | | | of | |
| Name and Address | | Beneficial | | | Beneficial | |
| of Beneficial Owner | | Ownership | | | Ownership(1) | |
| | | | | | | |
| Brad J. Pyatt | | | 17,331,668 | | | | 11.69 | % |
| 4721 Ironton St | | | | | | | | |
| Denver, CO 80239 | | | | | | | | |
| | | | | | | | | |
| Cory Gregory | | | 12,833,014 | | | | 8.65 | % |
| 4721 Ironton St | | | | | | | | |
| Denver, CO 80239 | | | | | | | | |
| | | | | | | | | |
| Lawrence S. Meer | | | 0 | | | | 0 | % |
| 4721 Ironton St | | | | | | | | |
| Denver, CO 80239 | | | | | | | | |
| | | | | | | | | |
| Leonard K. Armenta, Jr. | | | 0 | | | | 0 | % |
| 4721 Ironton St | | | | | | | | |
| Denver, CO 80239 | | | | | | | | |
| | | | | | | | | |
| All executive officers and directors | | | 30,164,682 | | | | 20.34 | % |
| as a group (4 persons) | | | | | | | | |
follows: | (1)· | PercentAttract, hire and retain well-qualified executives. |
| · | Reward performance that drives substantial increases in shareholder value, as evidenced through both future operating profits and increased market price of Class based on 148,320,775our common shares. |
EXECUTIVE COMPENSATION
Compensation Setting Process
Role of Compensation Committee. The role of the Compensation Committee is to oversee the Company’s executive compensation strategy, oversee the administration of its executive compensation and its equity based compensation plans, review and approve the compensation of the Company’s CEO, and oversee the Company’s compensation plan for the Board of Directors. The Compensation Committee is comprised exclusively of independent outside directors and includes members with executive level experience in other companies who bring a perspective of reasonableness to compensation matters with our Company. In addition, the Compensation Committee compares executive compensation practices of similar companies at similar stages of development.
Role of Management. In setting compensation for 2013, our CEO worked closely with the Compensation Committee and attended its meetings of the Compensation Committee. Our CEO made recommendations to the Compensation Committee regarding compensation of our executive officers other than him. No executive officer participated directly in the final deliberations regarding his or her own compensation package.
Elements of Executive Compensation
The compensation level of our executives generally reflects their level of experience and is designed to provide an incentive to positively affect our future operating performance and shareholder value.
Salary. Base salary is the primary fixed element in the Company’s compensation program and is intended to provide an element of certainty and security to the Company’s executive officers on an ongoing basis. Most of the executive officers have employment agreements with the Company and their initial salaries are set by contract.
Equity. Part of the compensation paid to our executives is in the form of equity, which to date has been exclusively through stock option grants. The stock option exercise price is generally the fair market value of the stock on the date of grant. Therefore, a gain is only recognized if the value of the stock increases, which promotes a long term alignment between the interests of the Company’s executives and its stockholders.
Bonus. The executive officers’ cash incentive awards are tied to achieving performance metrics established by the Compensation Committee at the beginning of each year, with input from the Chief Executive Officer, which are not re-set during the year, regardless of Company performance or economic conditions. The program creates incentive for the executive officers to direct their efforts toward achieving specified company goals and individual goals.
Summary Compensation Table
for 2013The following summary compensation tabletables sets forth all compensation awarded to, earned by, or paid to each person serving as a named executive officer of the Company during the year ended December 31, 2013.
| Name and Principal Position | | Year | | Salary ($) | | | Bonus ($) | | | Stock Awards (1) ($) | | | Option Awards (1) ($) | | | All Other Compensation ($)** | | | Total ($) | |
| | | | | | | | | | | | | | | | | | | | | |
| Bradley J. Pyatt | | 2013 | | | 250,000 | | | | 260,000 | | | | 3,853,500 | (4) | | | - | | | | 44,356 | (6) | | | 4,407,856 | |
| Chief Executive Officer and President | | 2012 | | | 322,022 | | | | 160,000 | | | | | | | | - | | | | 59,951 | (7) | | | 541,973 | |
| | | 2011 | | | 250,000 | | | | 140,099 | (2) | | | 1,555,921 | (2)(3) | | | - | | | | 47,713 | (8) | | | 1,993,733 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| L. Gary Davis | | 2013 | | | 175,000 | | | | 235,000 | | | | 2,202,000 | (4) | | | - | | | | 9,310 | (9) | | | 2,621,310 | |
| Chief Financial Officer (former)(30) | | 2012 | | | 65,000 | | | | 75,000 | | | | 204,500 | (5) | | | - | | | | - | | | | 344,500 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Richard F. Estalella(24) | | 2013 | | | 163,000 | | | | 250,000 | | | | 1,101,000 | (4) | | | | | | | 31,388 | (10) | | | 1,545,388 | |
| Chief Operating Officer | | | | | | | | | | | | | - | | | | - | | | | - | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Sydney R. Rollock(25) | | 2013 | | | 41,667 | | | | 35,160 | | | | - | | | | - | | | | 11,107 | (11) | | | 87,934 | |
| Chief Marketing and Sales Officer | | | | | | | | | | | | | | | | | - | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Cory J. Gregory | | 2013 | | | 150,000 | | | | 160,000 | | | | 1,651,500 | (4) | | | - | | | | 13,765 | (12) | | | 1,975,265 | |
| Executive Vice President of Brand | | 2012 | | | 201,796 | | | | 130,000 | | | | - | | | | - | | | | 22,901 | (13) | | | 354,697 | |
| Awareness and Social Media | | 2011 | | | 150,000 | | | | 140,099 | (2) | | | 1,555,921 | (2)(3) | | | - | | | | 19,966 | (14) | | | 1,865,986 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Jeremy R. DeLuca | | 2013 | | | 225,000 | | | | 225,000 | | | | 2,477,250 | (4) | | | - | | | | 20,092 | (15) | | | 2,947,342 | |
| Executive Vice President and Chief | | 2012 | | | 187,500 | | | | 130,000 | | | | - | | | | - | | | | 34,899 | (16) | | | 352,399 | |
| Marketing Officer (former)(26) | | 2011 | | | 65,833 | | | | 140,099 | (2) | | | 1,555,921 | (2)(3) | | | - | | | | 5,717 | (17) | | | 1,767,570 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| John H. Bluher | | 2013 | | | 366,379 | (27) | | | 158,750 | | | | 1,651,500 | (4) | | | - | | | | 3,961 | (18) | | | 2,180,590 | |
| Executive Vice President (former)(27) | | 2012 | | | 182,292 | | | | 130,000 | | | | 245,400 | (5) | | | - | | | | 8,311 | (19) | | | 566,003 | |
| | | 2011 | | | 36,458 | | | | 50,000 | | | | - | | | | - | | | | 485 | (20) | | | 86,943 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Larry S. Meer(28) | | 2012 | | | 120,000 | | | | 31,797 | | | | - | | | | - | | | | 4,366 | (21) | | | 156,163 | |
| Chief Financial Officer and Treasurer (former) | | 2011 | | | 74,400 | | | | | | | | - | | | | - | | | | 3,000 | (22) | | | 77,400 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Leonard Armenta(29) | | 2011 | | | 86,400 | | | | - | | | | - | | | | - | | | | 1,217 | (23) | | | 87,617 | |
| Chief Operating Officer (former) | | | | | | | | | | | | | | | | | | | | | | | | | | |
** The Company’s executive compensation table and, specifically, perquisites as disclosed in the “Other Compensation” column of the executive compensation table is currently under review with the SEC as part of the SEC Investigation as discussed in Note 13(F) of the Notes to Consolidated Financial Statements. The audit committee has conducted a detailed and thorough analysis of the perquisites for the periods of 2010, 2011, 2012 and 2013 as part of the preparation of these tables and the SEC Investigation.
| (1) | Amounts reflect the aggregate grant date fair value of stock awards computed in accordance with FASB ASC Topic 718. The grant date fair value of each stock award is measured based on the closing price of our common stock on the date of grant. A portion of such stock is subject to forfeiture. |
| (2) | Reflects the amount returned to the Company in July 2012 as a result of restated revenues for the years ended December 31, 2011 and 2010. Mr. Pyatt, Mr. Gregory, and Mr. DeLuca each received cash bonuses and stock compensation in 2011 based on the attainment of certain revenue thresholds, and the restatement resulted in the reduction of 2011 net revenue by approximately $3,626,000. As a result of the restatement each executive voluntarily returned (i) $30,311 each of their cash bonus and (ii) their stock grant was reduced by 31,008 shares (equal to a value as of the grant date of $276,746). |
| (3) | Mr. Pyatt, Mr. Gregory, and Mr. DeLuca each received a stock award of $1,555,921, equal to 148,182,972 of shares as of 12/31/11. After giving effect to the 850 for 1 reverse stock split in November 2012, the grant was equivalent to 174,333 shares of common stock at a price per share of $8.92, which was the closing price of our common stock on December 31, 2011, the effective date of the grant. After the return of the 31,008 shares described in note 2 above, each of Mr. Pyatt, Mr. Gregory, and Mr. Deluca received 143,325 shares. |
| (4) | Reflects the full grant date fair value of restricted stock unit award granted in 2013 calculated in accordance with FASB ASC topic 718 based on the closing price of the common stock of $11.01 on the date of the grant. |
| (5) | Reflects the full grant date fair value of restricted stock unit award granted in 2012 calculated in accordance with FASB ASC Topic 718 based on the closing price of the common stock of $3.48 (after adjustment for the reverse split of 1-for-850) on the date of grant. |
| (6) | Amount reflects 401k matching contributions of $14,566 and club membership of $8,119. The remaining balance consists of miscellaneous executive perquisites including cell phone charges, auto allowance, apparel, travel and promotional expenses. |
| (7) | Amount reflects 401k matching contributions of $10,667 and club memberships of $12,987. The remaining balance consists of miscellaneous executive perquisites including auto allowance, apparel, travel and other promotional expenses. |
| (8) | Amount reflects automobile allowances of $16,761 and club memberships of $3,519. The remaining balance includes miscellaneous executive perquisites including medical expenses, apparel, travel and other promotional expenses. |
| (9) | Amount reflects 401k matching contributions of $2,250 and other allowances for apparel, automobile, phone and travel expenses. |
| (10) | Amount reflects relocation expenses of $25,600 and the remaining balance includes allowances for apparel, auto, phone and travel expenses. |
| (11) | Amount reflects relocation expenses of $8,940 and the remaining balance includes allowances for apparel, auto and phone expenses. |
| (12) | Amount reflects auto expenses and auto allowance of $6,715, apparel and product allowance of $5,000, and other minor miscellaneous expenses. |
| (13) | Amount reflects auto expenses of $4,982 and 401k matching contributions of $1,333. The remaining balance consists of miscellaneous executive perquisites including allowances for apparel, travel, furniture, equipment and other promotional expenses. |
| (14) | Amount reflects $11,890 for medical expense reimbursements. The remaining balance consists of miscellaneous executive perquisites allowances for automobile, equipment, phone and other promotional expenses. |
| (15) | Amount reflects $7,361 in club memberships and $5,079 in 401k matching contributions. The remaining balance consists of miscellaneous executive perquisites including allowances for apparel, automobile travel and promotional expenses. |
| (16) | Amount reflects $6,141 in club memberships and 401k matching contributions of $5,750. The remaining balance consists of miscellaneous executive perquisites including allowances for automobile, entertainment, phone, travel and other promotional expenses. |
| (17) | Amount reflects miscellaneous executive perquisites including travel and other promotional expenses. |
| (18) | Amount reflects $2,500 in 401k matching contributions and other miscellaneous executive perquisites for phone, travel and other promotional expenses. |
| (19) | Amount reflects $6,683 in 401k matching contributions and other miscellaneous executive perquisites for phone, travel and other promotional expenses. |
| (20) | Amount reflects miscellaneous executive perquisites including travel and other promotional expenses. |
| (21) | Amount reflects $2,700 in 401k matching contributions and other miscellaneous executive perquisites for automobile, travel and other promotional expenses. |
| (22) | Amount reflects miscellaneous executive perquisites for apparel, phone and other promotional expenses. |
| (23) | Amount reflects miscellaneous executive perquisites. |
| (24) | Mr. Estalella was initially appointed to his position as the Company’s Chief Operating Officer on April 29, 2013. |
| (25) | Mr. Rollock was initially appointed to his position as the Company’s Chief Marketing and Sales Officer on October 16, 2013. |
| (26) | Effective 8/6/2013 Mr. DeLuca was no longer a named executive officer of the Company and his title was changed from Executive Vice President and Chief Marketing Officer to President of Sales and Marketing. Mr. DeLuca reports to Sydney Rollock, Chief Marketing Officer and Sales Officer. Amounts in the above table represent full year amount for salary, bonus, and stock awards. The amounts in Other Compensation in 2013 were prorated for the period of time that he was a named executive officer. |
| (27) | Effective October 15, 2013, Mr. Bluher resigned his position with the Company, but continued to serve on the Company’s Board of Directors through December 31, 2013. The amounts in the above table represent full year amounts paid to him including any severance compensation. |
| (28) | Effective July 3, 2012, Mr. Meer resigned his position as Chief Financial Officer with the Company. |
| (29) | Effective September 16, 2011, Mr. Armenta resigned his position with the Company. |
| (30) | Effective April 15, 2014, Mr. Davis resigned his position as Chief Financial Officer with the Company and is no longer a named executive officer. |
Outstanding Equity Awards at Year End
The following table provides information concerning the holdings of restricted stock unit awards by our named executive officers as of December 31, 2013. This table includes unexercised (both vested and unvested) stock option awards and unvested restricted stock unit awards with vesting conditions that were not satisfied as of December 31, 2013. Each equity grant is shown separately for each named executive officer. The vesting schedule for each outstanding equity award is shown in the footnotes following this table.
| Outstanding Equity Awards at Year End |
| | | | | Option Awards | | | Stock Awards | |
| Name | | Grant Date | | Number of Securities Underlying Unexercised Options (#) Exercisable | | | Number of Securities Underlying Unexercised Options (#) Unexercisable | | | Option Exercise Price ($) | | | Option Expiration Date | | | Number of Shares or Units of Stock that Have Not Vested (1) (#) | | | Market Value of Shares or Units of Stock that Have Not Vested (2) ($) | |
| | | | | | | | | | | | | | | | | | | | | |
| Bradley J. Pyatt | | 7/1/2013 | | | - | | | | - | | | | - | | | | - | | | | 290,500 | | | | 2,408,245 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| L. Gary Davis | | 11/16/2012 | | | - | | | | - | | | | - | | | | - | | | | 39,216 | | | | 325,101 | |
| | | 7/1/2013 | | | | | | | | | | | | | | | | | | | 166,000 | | | | 1,376,140 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Richard F. Estalella | | 7/1/2013 | | | - | | | | - | | | | - | | | | - | | | | 83,000 | | | | 688,070 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Sydney R. Rollock | | - | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Cory J. Gregory | | 7/1/2013 | | | - | | | | - | | | | - | | | | - | | | | 124,500 | | | | 1,032,105 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Jeremy R. DeLuca | | 7/1/2013 | | | - | | | | - | | | | - | | | | - | | | | 186,750 | | | | 1,548,158 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| John H. Bluher | | 11/16/2012 | | | - | | | | - | | | | - | | | | - | | | | 47,059 | | | | 390,119 | |
| | | 7/1/2013 | | | - | | | | - | | | | - | | | | - | | | | 124,500 | | | | 1,032,105 | |
| (1) | The table below shows the vesting dates for the respective unvested restricted stock units listed in the above Outstanding Equity Awards at Year-End for 2013 Table: |
| Vesting Date | | Pyatt | | | Davis | | | Estalella | | | Gregory | | | Deluca | | | Bluher | |
| 01/01/2014 | | | - | | | | 19,608 | | | | - | | | | - | | | | - | | | | 23,530 | |
| 12/01/2014 | | | - | | | | 19,608 | | | | - | | | | - | | | | - | | | | 23,529 | |
| 12/31/2014 | | | - | | | | 166,000 | | | | - | | | | 124,500 | | | | - | | | | 124,500 | |
| 12/31/2015 | | | 290,500 | | | | - | | | | 83,000 | | | | - | | | | 186,750 | | | | - | |
| (2) | Market value of the restricted stock units represents the product of the closing price of our common stock as of December 31, 2013 (the last trading day of the year), which was $8.29, and the number of shares underlying each such award. |
Employment Arrangements
The following table reflects the current executive team and their employment agreement termination dates as amended on December 31, 2013 and approved by the Board of Directors.
| Name | | Position | | Term |
| | | | |
| Bradley J. Pyatt | | Chief Executive Officer | | December 31, 2018 |
| Richard F. Estalella | | President | | December 31, 2018 |
| Donald Prosser | | Chief Financial Officer | | April 15, 2015 |
| James Greenwell | | Chief Operating Officer | | December 31, 2016 |
| Sydney R. Rollock | | Chief Marketing and Sales Officer | | December 31, 2016 |
| Cory J. Gregory | | Executive Vice President | | December 31, 2016 |
The employment agreements were executed and approved by the Compensation Committee and the Board of Directors. During 2013, the Compensation Committee engaged an independent third party to determine a competitive wage and bonus structure and the table below reflects the executive base salaries for 2014 based on the recommendations of the third party and approved by the Compensation Committee.
| Name | | Annual Base Salary | |
| Bradley J. Pyatt | | $ | 325,000 | |
| Richard F. Estalella | | $ | 300,000 | |
| Donald Prosser | | $ | 275,000 | |
| James Greenwell | | $ | 275,000 | |
| Sydney R. Rollock | | $ | 225,000 | |
| Cory J. Gregory | | $ | 200,000 | |
If the employment of an officer is terminated due to the officer’s death or inability to perform, the employment agreements provide for payment to the officer of any unpaid portion of the Officer’s base salary and benefits accrued through the date of death or inability to perform and, at the discretion of the Compensation Committee, a bonus. The officer or his representatives will also be entitled to receive a reimbursement of up to 12 months of Consolidated Omnibus Reconciliation Act, or COBRA, premiums, if the officer or his representatives timely elect and remain eligible for COBRA. If the officer’s employment is terminated due to inability to perform, the officer will also be entitled to (i) a lump sum payment equal to the greater of (A) the target bonus payable to the Officer for the year in which the date of termination occurs or if no target bonus has been set, the officer’s most recent annual bonus, and (B) a bonus for such year as may be determined by the Compensation Committee in its sole discretion; and (ii) a severance payment (payable over six months) equal to six months of the officer’s base salary in effect as of the date of termination.
If the officer’s employment is terminated for “cause” or if an Officer terminates his employment without “good reason” (as such terms are defined in the employment agreement), the officer will not be entitled to a severance payment or any other termination benefits. However, the Company will pay the officer any unpaid portion of the officer’s base salary and benefits accrued through the date of such termination.
Upon a termination of an officer’s employment (except for Mr. Pyatt) by the Company without cause and without a change in control or by the officer for good reason without a change in control, the employment agreements provide that such officer will be entitled to (i) any unpaid portion of the officer’s base salary and benefits accrued through the date of termination; (ii) an amount payable over three months and equal to the lesser of (A) nine months of the officer’s base salary in effect as of the date of termination, or (B) the officer’s base salary remaining under the term of his employment agreement; (iii) a lump sum payment equal to 25% of the officer’s target bonus (or if no target bonus has been set, the Officer’s most recent annual bonus) if the termination is between January 1 and June 30 or 50% of the Officer’s target bonus (or if no target bonus has been set, the Officer’s most recent annual bonus) if the termination is between July 1 and December 31; (iv) acceleration of the officer’s outstanding equity awards, unless otherwise provided in the equity award agreement for a particular equity award; and (v) the officer will also be entitled to receive a reimbursement of up to 12 months of COBRA premiums, if the officer timely elects and remains eligible for COBRA.
Upon a termination of Mr. Pyatt’s employment by the Company without cause and without a change in control or by Mr. Pyatt for good reason without a change in control, Mr. Pyatt’s employment agreement provides that he will be entitled to (i) any unpaid portion of his base salary and benefits accrued through the date of termination; (ii) an amount payable over three months and equal to two times his base salary on the date of termination; (iii) a lump sum payment equal to the greater of (A) two times his target bonus for the for the year in which the date of termination occurs or if no target bonus has been set, then two times Mr. Pyatt’s most recent annual bonus, and (B) a bonus for such year as may be determined by the Compensation Committee in its sole discretion; (iv) acceleration of his outstanding equity awards, unless otherwise provided in the equity award agreement for a particular equity award; and (v) he will also be entitled to receive a reimbursement of up to 12 months of COBRA premiums, if he timely elects and remains eligible for COBRA.
Upon a termination of an officer’s employment (except for Mr. Pyatt) by the Company without cause and with a change in control or by the officer for good reason after a change in control, the employment agreement provides that such officer will be entitled to (i) any unpaid portion of the officer’s base salary and benefits accrued through the date of termination; (ii) a severance payment (payable over 12 months) equal to 12 months of the officer’s base salary in effect as of the date of termination; (iii) a lump sum payment equal to the greater of (A) 100% of the officer’s target bonus in the year of termination or if no target bonus has been set, then 100% of the officer’s most recent annual bonus, and (B) a bonus for such year as may be determined by the Committee in its sole discretion; (iv) a severance payment of $500,000 (payable within 30 days of the date of termination); (v) acceleration of the officer’s outstanding equity awards; and (vi) the officer will also be entitled to receive a reimbursement of up to 12 months of COBRA premiums, if the officer timely elects and remains eligible for COBRA.
Upon a termination of Mr. Pyatt’s employment by the Company without cause and with a change in control or by Mr. Pyatt for good reason after a change in control, Mr. Pyatt’s employment agreement provides that he will be entitled to (i) any unpaid portion of his base salary and benefits accrued through the date of termination; (ii) a severance payment (payable over 12 months) equal to three times his base salary in effect as of the date of termination; (iii) a severance payment of $2 million (payable within 30 days of the date of termination); (v) acceleration of Mr. Pyatt’s outstanding equity awards; and (vi) he will also be entitled to receive a reimbursement of up to 12 months of COBRA premiums, if he timely elects and remains eligible for COBRA.
The employment agreements also contain customary confidentiality, non-competition and non-solicitation provisions. Under the non-compete provisions, during the term of his employment agreement and for a period of six months after termination of employment, the officer is prohibited from, directly or indirectly, engaging in or becoming interested financially in, as a principal, employee, partner, contractor, shareholder, agent, manager, owner, advisor, lender, guarantor, officer or director, any business that is engaged in the nutritional supplement industry and/or related products, subject to certain exceptions for passive investments.
Additionally, the non-solicitation provisions of the employment agreements prohibit the officer from soliciting for employment any employee of the Company or any person who was an employee of the Company in the 90-day period before such solicitation. This prohibition applies during the officer’s employment with the Company and for 12 months following the termination of the officer’s employment.
Change in Control Payments
Our employment agreements with our executive officers provide for certain provisions for payments to the executive upon termination as a result of a change in control. Under the employment agreements upon termination as a result of a change in control, executives will receive the following:
| · | Severance package equal to one year of the executive’s base salary immediately prior to the change in control payable in 12 equal monthly installments pursuant to the Company’s normal payroll procedures. For Mr. Pyatt, the severance package will be equal to three years of the executive’s base salary. |
| · | A lump sum payment of an amount equal to the greater of (1) one hundred percent of the Executive’s target bonus for the year in which the date of the termination occurs, or (2) a bonus for such year as may be determined by the Compensation Committee. Mr. Pyatt’s agreement does not provide for a lump sum bonus payment. |
| · | A one-time cash payment of $500,000 to be paid within 30 days of the date of termination. Mr. Pyatt’s agreement provides for a one-time cash payment of $2,000,000. |
| · | Reimbursement of COBRA premiums on a monthly basis for up to 12 months after the date of termination. |
| · | All stock awards will become fully and immediately vested and any restrictions on restricted stock held by the Executive will be removed subject to trading black-out periods for the next financial quarter following the date of termination. |
Transactions with Related Persons
In addition to the named executive officer and director compensation arrangements discussed in “Executive Compensation”, below we describe transactions since January 1, 2012, to which we have been a participant, in which the amount involved in the transaction exceeds or will exceed $120,000 and in which any of our directors, executive officers or holders of more than 5% of our capital stock, or any immediate family member of, or person sharing the household with, any of these individuals, had or will have a direct or indirect material interest.
Consulting Agreements
On July 12, 2012, we entered into a consulting agreement with Melechdavid, Inc. (“Melechdavid”), an affiliate of Mark E. Groussman, a former director, prior to Mr. Groussman becoming a director of the Company. The consulting agreement provides that Melechdavid will provide consulting services to us related to strategic acquisitions, capital restructuring and Mr. Groussman will serve as a member of the board of directors. Mr. Groussman was appointed to our board of directors on July 19, 2012, and resigned from our board effective October 18, 2012. The consulting agreement provides that we will issue to Melechdavid shares of common stock in an amount equal to 4.2% of our outstanding common stock on a fully diluted (as-converted) basis. Further, until July 12, 2014, we are required to ensure that Melechdavid shall maintain its 4.2% fully diluted equity position. The term of the consulting agreement was 12 months.
On April 2, 2013, the Company entered into a first amendment to the Original Melechdavid Consulting Agreement with Melechdavid, effective as of March 28, 2013 (the “Melechdavid Amended Agreement”). Pursuant to the Melechdavid Amended Agreement, Melechdavid agreed to cap the shares of the Company’s common stock, $0.001 par value per share (the “Common Stock”) that it is entitled to receive under the Original Melechdavid Consulting Agreement to no more than 570,000 shares of Common Stock of the Company, after giving effect to the 1-for-850 reverse stock split of the Common Stock effected by the Company on November 26, 2012. In connection with the execution and delivery of the Melechdavid Amended Agreement, the Company issued Melechdavid an aggregate of 341,247 shares of Common Stock on March 29, 2013 and 228,753 shares of Common Stock on April 5, 2013 as full satisfaction of the Company’s obligations under the Original Melechdavid Consulting Agreement. The Company’s obligations under the Melechdavid agreement was completely satisfied as of July 12, 2013 and the agreements have not been renewed or extended.
On July 12, 2012, we entered into a consulting agreement with GRQ Consultants, Inc. (“GRQ”), an affiliate of Barry C. Honig. The consulting agreement provides that GRQ will provide consulting services to us related to banking relationships, strategic acquisitions and capital restructuring. The consulting agreement provides that we will issue to GRQ shares of common stock in an amount equal to 4.2% of our outstanding common stock on a fully diluted (as-converted) basis. Further, until July 12, 2014, we are required to ensure that GRQ shall maintain its 4.2% fully diluted equity position. The term of the consulting agreement was 12 months.
On April 2, 2013, the Company entered into a first amendment to the Original GRQ Consulting Agreement with GRQ, effective as of March 28, 2013 (the “GRQ Amended Agreement”). Pursuant to the GRQ Amended Agreement, GRQ agreed to cap the shares of the Company’s Common Stock that it is entitled to receive under the Original GRQ Consulting Agreement to no more than 420,000 shares of Common Stock of the Company, after giving effect to the 1-for-850 reverse stock split of the Common Stock effected by the Company on November 26, 2012. In connection with the execution and delivery of the GRQ Amended Agreement, the Company issued GRQ an aggregate of 305,889 shares of Common Stock on March 29, 2013 and 78,753 shares of Common Stock on April 5, 2013 as full satisfaction of the Company’s obligations under the Original GRQ Consulting Agreement. The Company had previously issued GRQ 35,359 shares of Common Stock pursuant to the Original GRQ Consulting Agreement. The Company’s obligations under the GRQ agreement was completely satisfied as of July 12, 2013 and the agreements have not been renewed or extended.
Other Agreements
On February 15, 2012, Mr. Drew Ciccarelli filed a Schedule 13G with the Securities and Exchange Commission which indicated Mr. Ciccarelli owned approximately 9.94% of the Company’s common stock at that time. Prior to such date, the Company entered into a Sportswear License Agreement with MusclePharm Sportswear LLC (“MPS”), of which Mr. Ciccarelli was the principle owner, pursuant to which the Company received $250,000 in fees. In November 2013, that agreement was terminated.
Subsequent to February 15, 2012, the Company entered in a Mutual Rescission and Release Agreement with Mr. Ciccarelli pursuant to which certain purchases of the Company’s common stock previously made by Mr. Ciccarelli were rescinded. Also subsequent to February 15, 2012, the Company entered into a Warrant Conversion Agreement with Mr. Ciccarelli pursuant to which certain outstanding warrants to purchase shares of the Company’s common stock then owned by Mr. Ciccarelli were converted into shares of the Company’s common stock.
Ryan DeLuca, the Chief Executive Officer of one of our major customers, Bodybuilding.com, is the brother of Jeremy DeLuca, MusclePharm’s President of Sales and Marketing. Additionally, Gary Davis, MusclePharm’s former Chief Financial Officer also indirectly owns 1.75% of Ryan DeLuca’s equity interest in Bodybuilding.com. We do not offer preferential pricing of our products to Bodybuilding.com based on these relationships. Sales of products to Bodybuilding.com were $33,977,368 and $25,060,518 for the years ended December 31, 2013 and 2012, respectively. Bodybuilding.com owed the Company approximately $2 million and $827,000 in trade receivables as of December 31, 2013 and 2012, respectively.
We lease our office and warehouse facility in Hamilton, Ontario, Canada from 2017275 Ontario Inc., which is a company owned by Renzo Passaretti, VP and General Manager of MusclePharm Canada Enterprises Inc., our wholly owned Canadian subsidiary. In 2013 and 2012, we paid rent of $75,035 and $59,303, respectively. The lease expires March 31, 2014.
On August 26, 2013, we entered into a Securities Purchase Agreement with BioZone Pharmaceuticals, Inc. (“Biozone”) pursuant to which we bought (i) $2,000,000 of a 10% secured convertible promissory notes and (ii) a warrant to purchase 10,000,000 shares of the Seller’s common stock, at an exercise price of $0.40 per share, for an aggregate purchase price of $2,000,000. Dr. Philip Frost, a significant investor in the Company and a member of its scientific advisory board, is the Chairman and CEO of OPKO Health, Inc. (“OPKO”), and is the trustee of Frost Gamma Investments Trust (“Frost Gamma”). Each of Dr. Frost, OPKO, and Frost Gamma were significant shareholders in Biozone.
On October 16, 2013, the Company entered into an Office Lease Agreement with Frost Real Estate Holdings, LLC, a Florida limited liability company owned by Dr. Phillip Frost. Pursuant to the Lease, the Company rents 1,437 square feet of office space for an initial term of three years, with an option to renew the lease for an additional three year term. Total lease commitments under the initial term of the lease are $142,923. As of December 31, 2013, we owed Frost Real Estate Holding, LLC, $13,289 under the terms of the lease.
Subsequent to year end, the Company purchased split dollar life insurance policies on certain key executives. These policies provide a split of 50% of the death benefit proceeds to the Company and 50% to the officer’s designated beneficiaries.
Indemnification Agreements
We have entered into indemnification agreements with each of our directors and named executive officers. The indemnification agreements and our bylaws will require us to indemnify our directors to the fullest extent permitted by Nevada law.
Review, Approval or Ratification of Transactions with Related Parties
We intend to adopt a written related person transactions policy that our executive officers, directors, nominees for election as a director, beneficial owners of more than 5% of our common stock, and any members of the immediate family of and any entity affiliated with any of the foregoing persons, are not permitted to enter into a material related person transaction with us without the review and approval of our audit committee, or a committee composed solely of independent directors in the event it is inappropriate for our audit committee to review such transaction due to a conflict of interest. We expect the policy to provide that any request for us to enter into a transaction with an executive officer, director, nominee for election as a director, beneficial owner of more than 5% of our common stock or with any of their immediate family members or affiliates, in which the amount involved exceeds $120,000 will be presented to our audit committee for review, consideration and approval. In approving or rejecting any such proposal, we expect that our audit committee will consider the relevant facts and circumstances available and deemed relevant to the audit committee, including, but not limited to, whether the transaction is on terms no less favorable than terms generally available to an unaffiliated third party under the same or similar circumstances and the extent of the related person’s interest in the transaction.
Although we have not had a written policy for the review and approval of transactions with related persons, our board of directors has historically reviewed and approved any transaction where a director or officer had a financial interest, including all of the transactions described above. Prior to approving such a transaction, the material facts as to a director’s or officer’s relationship or interest as to the agreement or transaction were disclosed to our board of directors. Our board of directors would take this information into account when evaluating the transaction and in determining whether such transaction was fair to us and in the best interest of all of our stockholders.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act, requires the Company’s directors and named executive officers, and persons who beneficially own more than ten percent of our common stock, to file initial reports of ownership and reports of changes in ownership of our common stock and our other equity securities with the SEC. As a practical matter, the Company assists its directors and officers by monitoring transactions and completing and filing Section 16 reports on their behalf. Based solely on a review of the copies of such forms in our possession and on written representations from reporting persons, we believe that during 2013 all of our named executive officers and directors filed the required reports on a timely basis under Section 16(a) of the Exchange Act, except for (i) the Amendment No. 1 to Schedule 13D filed with the SEC on October 21, 2013 for Brad Pyatt, and (ii) the Amendment No. 1 to Schedule 13D filed with the SEC on October 21, 2013 for Cory Gregory.
ACTIONS TO BE TAKEN AT THE MEETING
PROPOSAL NO. 1
PROPOSAL FOR ELECTION OF FIVE DIRECTORS
At this year’s Annual Meeting, the Board of Directors proposes that the nominees listed below be elected to hold office until the next annual meeting of stockholders and until their successors are duly elected and qualified. All of the nominees are currently serving as directors. All nominees have consented to being named in this Proxy Statement and to serve if elected.
Assuming a quorum is present, the five nominees receiving the highest number of affirmative votes of shares entitled to be voted for such persons will be elected as directors of the Company to hold office until the next annual meeting of stockholders and until their successors are duly elected and qualified. Unless marked otherwise, proxies received will be voted "FOR" the election of the nominees named below. In the event that additional persons are nominated for election as directors, the proxy holders intend to vote all proxies received by them in such a manner as will ensure the election of the nominees listed below, and, in such event, the specific nominees to be voted for will be determined by the proxy holders.
Information With Respect to Director Nominees
Listed below are the nominees for election to our Board with information showing the principal occupation or employment of the nominees for director, the principal business of the corporation or other organization in which such occupation or employment is carried on, and such nominees’ business experience during the past five years. Such information has been furnished to the Company by the director nominees.
| Name | | Age | | Position |
| Bradley J. Pyatt | | 33 | | Chairman of the Board, Chief Executive Officer |
| Richard F. Estalella | | 52 | | President, Director |
| Michael J. Doron | | 52 | | Director |
| Daniel J. McClory | | 54 | | Director |
| Gregory Macosko | | 67 | | Director |
Bradley J. Pyatt is our Chairman of the Board, Chief Executive Officer and Director and founded the company in April 2008. His background includes seven years of experience as a professional athlete, and more than five years of experience in the sports nutrition arena. Mr. Pyatt played in National Football League for the Indianapolis Colts during the 2003, 2004, and 2005 NFL seasons as well for the Miami Dolphins during the 2006 NFL season. Mr. Pyatt played in the Arena Football League for the Colorado Crush during the 2007 and 2008 AFL seasons. Mr. Pyatt attended the University of Kentucky from 1999 to 2002, where he studied kinesiology exercise science, as well the University of Northern Colorado, from 2002 to 2003.
Richard F. Estalella is our President and previously has served as our Chief Operating Officer since April 2013, and as a member of the Board of Directors since August 2013. Prior to joining MusclePharm, Mr. Estalella served as Senior Vice President of Operations at Arbonne International, LLC since 2005. Mr. Estalella was instrumental in Arbonne’s expansion operations and distribution upgrades and was responsible for all warehouse and distribution facilities, facilities maintenance departments and Customer Service. Previously, between 1998 and 2005, he owned a consulting business specializing in retail, operations, warehousing and distribution. Prior to that, Mr. Estalella served as Senior Vice President of Warehouse Operations for Office Depot between 1987 and 1998 and established many of its retail markets, along with its nationwide distribution center network which helped grow it into a $9 billion company.
Michael J. Doron has served as a director since November 5, 2012. He has been the Managing Director of DDR & Associates, LLC since January 2009, and Evolution Capital Partners, LLC since October 2009. From January 2007 to December 2008, he served as Chief Operating Officer and director of Toyshare, Inc. From February 2006 to January 2007, Mr. Doron served as Chief Operating Officer and Chief Financial Officer of Frontgate Sundance Alliance. From September 2005 to January 2007, he served as Vice President – Private Banking of the Bank of the West. Mr. Doron earned a BA from the University of Maryland and a Master’s of Science from American University.
Daniel J. McClory was appointed as an independent director of the Company’s Board of Directors in August 2013. Mr. McClory has been a member of Burnham Securities, Inc. since February 2014, currently serving as its Managing Director. His investment banking career includes an affiliation with Hunter Wise Financial Group, LLC from 2003 to 2014. At Burnham Securities and Hunter Wise Financial Group, Mr. McClory has completed public offerings, financings and M&A deals for clients listed on the London Stock Exchange, NASDAQ, NYSE Amex, the Toronto Stock Exchange, the Stock Exchange of Hong Kong, and the Over-the-Counter Markets. He opened Hunter Wise Financial Group offices in London and Beijing in support of the firm’s investment banking clients in both locations. Mr. McClory earned his BS in English and an MA in Language and International Trade from Eastern Michigan University.
Gregory Macosko was appointed as an independent director of the Company’s Board of Directors in June 2014. Mr. Macosko is currently a member of the Board of Directors of Montrose Advisors, and an SEC-registered investment advisor. He also serves as a business advisor to the Board of Directors of Bioxiness Pharmaceuticals, a California-based pre-clinical stage company. In September of 2013, Mr. Macosko retired as a Partner from Lord Abbett & Co., a privately held investment management firm. He was a Portfolio Manager of Lord Abbet's Small Cap Value Fund and a founding member of the company’s Proxy Committee. Mr. Macosko is a Phi Beta Kappa graduate of Albion College, a Fulbright Scholar in Germany, and holds an MBA from Columbia University. His twenty-four years of experience on Wall Street bring to MusclePharm broad knowledge of public company management, and investment community relationships among institutional investors, analysts and investment bankers.
Required Vote
The election of the directors of the Company requires the affirmative vote of a plurality of the votes cast by stockholders, who are entitled to vote, present in person or represented by Proxy at the Annual Meeting, which will be the nominees receiving the largest number of votes, which may or may not constitute less than a majority.
RECOMMENDATION OF THE BOARD FOR PROPOSAL NO. 1:
THE BOARD RECOMMENDS A VOTE FOR THE ELECTION OF ALL THE NOMINEES DESCRIBED ABOVE.
PROPOSAL NO. 2
RATIFICATION OF THE APPOINTMENT OF INDEPENDENT AUDITORS
EKS&H LLP (“EKS&H”), our independent auditors, audited our financial statements for the 2013 fiscal year. The Audit Committee selected EKS&H as the independent auditors of the Company for the fiscal year ending December 31, 2014. Representatives of EKS&H are not expected to attend the 2014 Annual Meeting of Stockholders. EKS&H was first engaged by us duringon August 2012.
During the periodyears ended December 31, 20102013 and 2009.
| | | | | | | | | | | | | | | | Non-Equity | | | | | | | |
| | | | | | | | | | | | | | | | | Incentive | | | | | | | |
| | | | | | | | Bonus | | | Stock | | | Option | | | Plan | | | All Other | | | | |
| Name and Principal Position | | Year | | Salary ($) | | | ($)(1) | | | Awards ($) | | | Awards ($) | | | Compensation ($) | | | Compensation ($) | | | Total($) | |
| (a) | | (b) | | (c) | | | (d) | | | (e) | | | (f) | | | (g) | | | (h) | | | (i) | |
| Brad J. Pyatt | | 2010 | | $ | 194,821 | | | $ | 0 | | | $ | 2,650,000 | ] | | $ | 0 | | | $ | 0 | | | $ | 0 | | | $ | 2,844,821 | |
| Chief Executive Officer | | 2009 | | $ | 133,992 | | | $ | 0 | | | $ | 0 | | | $ | 0 | | | $ | 0 | | | $ | 0 | | | $ | 133,992 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Cory Gregory | | 2010 | | $ | 78,892 | | | $ | 0 | | | $ | 2,650,000 | | | $ | 0 | | | $ | 0 | | | $ | 0 | | | $ | 2,728,892 | |
| President | | 2009 | | $ | 17,846 | | | $ | 0 | | | $ | 0 | | | $ | 0 | | | $ | 0 | | | $ | 0 | | | $ | 17,846 | |
| Lawrence S. Meer | | 2010 | | $ | 75,493 | | | $ | 0 | | | $ | 0 | | | $ | 228,000 | | | $ | 0 | | | $ | 0 | | | $ | 303,493 | |
| Chief Financial Officer | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Leonard K. Armenta | | 2010 | | $ | 83,215 | | | $ | 0 | | | $ | 0 | | | $ | 228,000 | | | $ | 0 | | | $ | 0 | | | $ | 311,215 | |
| Chief Operating Officer | | 2009 | | $ | 54,799 | | | $ | 0 | | | $ | 0 | | | $ | 0 | | | $ | 0 | | | $ | 0 | | | $ | 54,799 | |
Explanatory Information Relating2012, neither the Company nor anyone acting on its behalf consulted with EKS&H regarding any of the matters or events set forth in Item 304(a)(2) of Regulation S-K, nor did EKS&H receive any fees for any services during that time period.Audit Fees
The following is a summary and description of fees for services for the fiscal years ended December 31, 2013 and 2012.
| Services | | 2013 | | | 2012 | |
| Audit Fees | | $ | 189,188 | | | $ | 189,520 | (1) |
| Audit-Related Fees | | | 63,852 | | | | 182,236 | (2) |
| Tax Fees | | | - | | | | - | |
| All Other Fees | | | 3,400 | | | | 10,984 | |
| Total | | $ | 256,440 | | | $ | 382,740 | |
| (1) | Includes EKS&H fees of $101,000 and Berman & Company fees of $88,520. |
| (2) | Includes EKS&H fees of $55,309 and Berman & Company fees of $126,927. |
Audit Fees.Audit fees relate to 2010 Summary Compensation Table
Please note the following pointsprofessional services rendered in connection with the
informationaudit of our annual financial statements and quarterly reviews of financial statements included in our quarterly reports on Form 10-Q.Audit-Related Fees. This category includes the aggregate fees billed in each of the last two fiscal years for assurance and related services by the independent auditors that are reasonably related to the performance of the audits or reviews of the financial statements and are not reported above under “Audit Fees,” and generally consist of fees for accounting consultation on mergers and acquisitions, S-1 review and S-1 audit opinion consents, and compliance fees for regulatory inquiries and subpoenas.
All Other Fees. All other fees relate to professional services for tax related consultations.
Required Vote
The ratification of the appointment of the Company's independent auditors requires the receipt of the affirmative vote of a majority of the shares of the Company's common stock and Series D Preferred Stock (on an as converted basis with the Common stock) present in person or by proxy and voting at the Annual Meeting.
RECOMMENDATION OF THE BOARD FOR PROPOSAL NO. 2:
THE BOARD RECOMMENDS A VOTE FOR RATIFICATION OF APPOINTMENT OF EKS&H LLP AS OUR INDEPENDENT AUDITORS FOR THE YEAR ENDED DECEMBER 31, 2014.
PROPOSAL NO. 3
To approve the issuance of 1,500,000 shares of Company common stock to certain employees, including executive, pursuant to restricted stock agreements
The Company’s Board of Directors has approved, subject to the approval of the Company’s shareholder permitted to vote on such proposal, issuing and/or allocating 1,500,000 shares of the Company’s common stock (“Shares”) to be issued to certain of the Company’s executive officers and other employees pursuant to restricted stock agreements to be entered into by and between the Company and each employee. Such issuances and/or allocation are as follows:
| Name | | Restricted Shares to
Receive | |
| Brad Pyatt | | | 500,000 | |
| Richard Estalella | | | 250,000 | |
| Cory Gregory | | | 100,000 | |
| Don Prosser | | | 100,000 | |
| Jim Greenwell | | | 100,000 | |
| Non-Executive Employees (7 persons) | | | 165,000 | |
| Future Employee Grants | | | 285,000 | |
| | | | |
| TOTAL | | | 1,500,000 | |
These shares of restricted common stock would vest in five equal annual installments.
Required Vote
The ratification of the appointment of the Company's independent auditors requires the receipt of the affirmative vote of a majority of the shares of the Company's common stock and Series D Preferred Stock (on an as converted basis with the Common stock) present in person or by proxy and voting at the Annual Meeting.
RECOMMENDATION OF THE BOARD FOR PROPOSAL NO. 3:
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE TO APPROVEthe issuance of 1,500,000 shares of Company common stock to certain employees, including executive, pursuant to restricted stock agreements.
OTHER MATTERS
The Board of Directors knows of no other business which will be presented at the Annual Meeting. If any other matters properly come before the meeting, the persons named in the 2010 Summary Compensation Table:
The compensationenclosed Proxy, or their substitutes, will vote the shares represented thereby in accordance with their judgment on such matters.ADDITIONAL INFORMATION
Annual Reports on Form 10-K
Additional copies of the executive officers of the Company is reviewedMusclePharm's Annual Report on an annual basis by the board of directors. Each year, the Company considers whether to adjust the base salaries of senior management, including the executive officers, in order to reward individual performance, keep pace with cost of living increases and respond to competitive considerations.
Employment Agreements
We do not have any employment agreements in place and do not anticipate entering into any employment agreements in the foreseeable future.
Equity Compensation Plan Information
As of December 31, 2010, we had an employee stock option plan under which 5,000,000 shares had been reservedForm 10-K for issuance. The following table shows information with respect to this plan as of the fiscal year ended December 31, 2010.
| Equity Compensation Plan Information | |
| Plan category | | Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) | | | Weighted-average exercise price of outstanding options, warrants and rights(b) | | | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c) | |
| Equity compensation plans approved by security holders | | | 2,767,500 | | | $ | 0.50 | | | | 2,232,500 | |
| Equity compensation plans not approved by security holders | | | - | | | | - | | | | - | |
| Total | | | 2,767,500 | | | $ | 0.50 | | | | 2,232,500 | |
DIRECTOR COMPENSATION
2010 SUMMARY COMPENSATION TABLE
The following summary compensation table sets forth all compensation awarded to, earned2013 may be obtained without charge by
or paidwriting to the
named directorsCorporate Secretary, MusclePharm Corporation, 4721 Ironton Street, Building A, Denver, Colorado 80239. MusclePharm's Annual Report on Form 10-K can also be found on MusclePharm's website: www.MusclePharm.com.Stockholders Proposals for the 2015 Annual Meeting.
Proposals by us duringany stockholder intended to be presented at the period ended December 31, 2010 and 2009.
| | | | | | | | | | | | | | | | | Non-Equity | | | | | | | |
| | | | | | | | | | | | | | | | | Incentive | | | | | | | |
| | | | | | | | | | | Stock | | | Option | | | Plan | | | All Other | | | | |
| Name and Principal Position | | Year | | Salary ($) | | | Bonus ($) | | | Awards ($) | | | Awards ($) | | | Compensation ($) | | | Compensation ($) | | | Total ($) | |
| (a) | | (b) | | (c) | | | (d) | | | (e) | | | (f) | | | (g) | | | (h) | | | (i) | |
| Brad J. Pyatt | | 2010 | | $ | 0 | | | $ | 0 | | | $ | 0 | | | $ | 0 | | | $ | 0 | | | $ | 0 | | | $ | 0 | |
| Director | | 2009 | | $ | 0 | | | $ | 0 | | | $ | 0 | | | $ | 0 | | | $ | 0 | | | $ | 0 | | | $ | 0 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Cory Gregory | | 2010 | | $ | 0 | | | $ | 0 | | | $ | 0 | | | $ | 0 | | | $ | 0 | | | $ | 0 | | | $ | 0 | |
| Director | | 2009 | | $ | 0 | | | $ | 0 | | | $ | 0 | | | $ | 0 | | | $ | 0 | | | $ | 0 | | | $ | 0 | |
Indebtednessnext Annual Meeting of Directors, Officers and Others
Our directors, senior officers, and their associates were not indebted to us or to any of our subsidiaries at any time since the beginning of our last completed fiscal year.
Certain Relationships and Related Transactions
Any future transactions or loans between us and our officers, directors, principal stockholders or affiliates willStockholders must be on terms no less favorable to us than could be obtained from an unaffiliated third party, and will be approvedreceived by a majority of disinterested directors.
On February 18, 2010, the Company
issued a total of 26,000,000 shares of its common stockfor inclusion in material relating to
such meeting not later than March 1, 2015.Any stockholder who wishes to present proposals for inclusion in the 12 former owners of Muscle Pharm, LLC in reliance on the exemption from registration provided by Section 4(2) of the Securities Act of 1933, as amended.
There have been no other issuances of common stock or preferred stock.
As of April 8, 2011, the Company had 148,320,775 shares of common stock issued and outstanding.
There are no outstanding or issued options or warrants.
Muscle Pharm, LLC was formed as a Colorado limited liability company on April 22, 2008. The initial owners of Muscle Pharm LLC were Brad J. Pyatt and Cory Gregory. Mr. Pyatt received a 60% membership interest in exchange for his contribution of formulations for potential products, contacts with GNC Canada and other potential customers, and contacts with professional athletes. Mr. Gregory received a 40% membership interest in exchange for his contacts with Dr. Serrano, Louie Simmons, potential distributors, professional athletes and potential investors. Neither Mr. Pyatt nor Mr. Gregory contributed any cash and no value was placed on their respective contributions.
Other than as set forth above, there are no transactions since our inception, or proposed transactions, to which we were or are to be a party, in which any of the following persons had or is to have a direct or indirect material interest:
| (a) | Any director or executive officer of the Company; |
| (b) | Any majority security holder; and |
| (c) | Any member of the immediate family (including spouse, parents, children, siblings, and in-laws) of any of the persons in the above. |
CORPORATE GOVERNANCE
Board Independence
On an annual basis, each director and executive officer will be obligated to disclose any transactions with our Company and any of its subsidiaries in which a director or executive officer, or any member of his or her immediate family, have a direct or indirect material interest. Following completion of these disclosures, our board of directors will make an annual determination as to the independence of each director using the current standards for “independence” that satisfy both the criteriaCompany’s proxy materials for the Nasdaq and2015 Annual Meeting of Stockholders may do so by following the NYSE Amex Equities.
As of December 31, 2010, the board of directors determined that none of the Company’s current directors are independentprocedures prescribed in Rule 14a-8 under these standards.
Board Committees
Concurrent with having sufficient members and resources, the board of directors intends to establish an audit committee and a compensation committee. The audit committee will review the results and scope of the audit and other services provided by the independent auditors and review and evaluate the system of internal controls. The compensation committee will review and recommend compensation arrangements for the officers and employees. No final determination has yet been made as to the memberships of these committees or when we will have sufficient members to establish committees. We believe that we will need a minimum of three (3) independent directors to have effective committee systems.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16 of the Securities Exchange Act of 1934,
requiresas amended. To be eligible, the
Company’sstockholder proposals must be received by our Corporate Secretary at our principal executive
officers, directorsoffice on or before March 1, 2015. Such proposal must also meet the other requirements of the rules of the SEC relating to stockholders’ proposals.Proxy Solicitation Costs
The proxies being solicited hereby are being solicited by the Company. The Company will bear the entire cost of solicitation of proxies, including preparation, assembly, printing and more than 10% shareholders (“Insiders”)mailing of the Notice, the Proxy Statement, the Proxy card and establishment of the Internet site hosting the proxy material. Copies of solicitation materials will be furnished to file with the Securitiesbanks, brokerage houses, fiduciaries and Exchange Commissioncustodians holding in their names shares of common stock beneficially owned by others to forward to such beneficial owners. Officers and regular employees of the Company reports ofmay, but without compensation other than their ownership of the Company’s securities. Basedregular compensation, solicit proxies by further mailing or personal conversations, or by telephone, telex, facsimile or electronic means. We will, upon written representationsrequest, reimburse brokerage firms and copies of reports furnishedothers for their reasonable expenses in forwarding solicitation material to the Company by Insiders, all Section 16 reporting requirements applicable to Insiders during 2010 were satisfiedbeneficial owners of stock.
| By Order of the Board of Directors, | |
| | |
| /s/ Bradley J. Pyatt | |
| Bradley J. Pyatt | |
| Chair of the Board of Directors | |
PROXY
ANNUAL MEETING OF SHAREHOLDERS
OF
Musclepharm, corporation
August 25, 2014
This Proxy is Solicited on a timely basis.
Other Business
Management is not awareBehalf of any other matter which may be presented for action at the Special Meeting other than the matters set forth herein. Should any matter other than those set forth herein be presented for a vote of the shareholders, the proxy in the enclosed form directs the persons voting such proxy to vote in accordance with their judgment.
Delivery of Documents to Shareholders Sharing an Address
If you share an address with another shareholder Company, you may request us to deliver one set of voting materials to your address. You will then receive only one set of voting materials at that address, unless otherwise requested by one or more of the shareholders at that address. A separate proxy card is included in the voting materials for each of these shareholders. If you have only received one set, you may request separate copies of the voting materials at no additional cost to you by calling the Company at (303) 396-6100 or by writing to the Company at MusclePharm Corporation, c/o Brad Pyatt, 4721 Ironton Street, Denver, CO 80239.
We urge you to submit your proxy as promptly as possible whether or not you plan to attend the Special Meeting in person. You may do so mail, phone, or internet by following the instructions provided under the section of this Proxy Statement captioned “General Information about the Special Meeting and Voting Securities and Procedures – How do I vote my shares without attending the Special Meeting?”
APPENDIX A
ARTICLE III: Authorized Shares
The total authorized capital stock of the corporation shall be as follows:
Five Hundred Million (500,000,000) authorized shares of Common Stock with a par value of $0.001, all of which shall be entitled to voting power of one vote per share.
Five Million (5,000,000) authorized non-voting Series A Preferred Shares with a par value of $0.001 per share. These Series A Preferred shares shall be designated as "Callable and Convertible Preferred Stock."
(See continuation on attachment)
10,000,000 authorized “blank-check” preferred shares with a par value of $0.001. The preferred stock may be issued by the Company in the future in one or more series and with such rights (including voting, dividend and conversion), preferences and designations as the Board of
Directors deems necessarydirectorsThe undersigned hereby appoints Bradley J. Pyatt and Donald W. Prosser and each or advisable without any action by our stockholders.
PROXY FOR
MUSCLEPHARM CORPORATION
SHAREHOLDERS’ SPECIAL MEETING
KNOW ALL MEN BY THESE PRESENTS, that I, the undersigned holder of
common shares of MusclePharm Corporation do hereby constitute and appointthem proxies, with
the full power of substitution,
Brad Pyatt, my true and lawful attorney and proxy, and him being my true and lawful attorney and proxy, to
attendvote all shares of the
Special Meetingundersigned at the annual meeting of
Shareholders of MusclePharmshareholders ofMusclePharm Corporation to be held
on August 25, 2014 at
the Company’s corporate headquarters located10:00 a.m. local time at 4721 Ironton Street
, Denver, CO 80239,
on Wednesday, May 11, 2011 at 8:30AM Mountain Daylight Time, or at any adjournment thereof,
and atupon the matters set forth in the proxy statement for such meeting,
or any adjournment thereof, to voteand in their discretion, on such other business as may properly come before the
meeting. | 1. | TO ELECT DIRECTORS, EACH TO SERVE SUCH TERM AS SET FORTH IN THE PROXY STATEMENT OR UNTIL HIS SUCCESSOR HAS BEEN DULY ELECTED AND QUALIFIED. |
| ¨ | FOR THE NOMINEES LISTED BELOW |
| ¨ | WITHHOLD AUTHORITY to vote for the nominee listed below |
| ¨ | FOR ALL EXCEPT (See instructions below) |
| (INSTRUCTION: | To withhold authority to vote for any individual nominee(s) mark "FOR ALL EXCEPT" and Fill in the circle next to each nominee you wish to withhold as shown here: |
| ¡ Bradley J. Pyatt | ¡Richard F. Estalella |
| | |
| ¡Michael J. Doron | ¡Daniel J. McClory |
| | |
| ¡Gregory Macosko | |
| 2. | TO RATIFY THE APPOINTMENT OF EKS&H LLP AS THE INDEPENDENT AUDITORS. |
| 3. | TO APPROVE THE ISSUANCE OF 1,500,000 SHARES OF COMPANY COMMON STOCK TO CERTAIN EMPLOYEES, INCLUDING EXECUTIVE, PURSUANT TO RESTRICTED STOCK AGREEMENTS. |
| 4. | TO TRANSACT ANY OTHER BUSINESS THAT MAY PROPERLY BE PRESENTED AT THE ANNUAL MEETING OR ANY ADJOURNMENT THEREOF. |
| Dated: ____________________________ | | |
| Signature | |
| | |
| Dated: ____________________________ | | |
| Signature if held jointly | |
NOTE: When shares of stock of MusclePharm Corporation standing in myare held by joint tenants, both should sign. Persons signing as executor, administrator, trustee, etc., should so indicate. Please sign exactly as the name with respect to the following matters.
(Continued and to be signedappears on the reverse side)
SPECIAL MEETING OF SHAREHOLDERS OF
MUSCLEPHARM CORPORATION
MAY 11, 2011
Please date, sign and mail your proxy card in the envelope provided as soon as possible.
↓ Please detach along perforated line and mail in the envelope provided. ↓
MUSCLEPHARM CORPORATION
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Brad Pyatt with the power to appoint his substitute, and hereby authorizes him to represent and to vote as designated below, all the shares of common stock of MusclePharm Corporation held of record by the undersigned on April 8, 2011, at the Special Meeting of Shareholders to be held at the Company’s offices located at 4721 Ironton Street, Denver, CO 80239, on Wednesday, May 11, 2011 at 8:30AM Mountain Standard Time, or any adjournment thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER. proxy.IF NO DIRECTIONCONTRARY SPECIFICATION IS MADE, THIS PROXY WILL BE VOTED AGAINST FOR PROPOSALS 1, & 2.
THIS PROXY IS SOLICITED ON BEHALF OF2, 3, and 5. IN THEIR DISCRETION, THE BOARD OF DIRECTORS OF MUSCLEPHARM CORPORATIONPROXIES ARE AUTHORIZED TO TRANSACT ANY OTHER BUSINESS THAT MAY PROPERLY COME BEFORE THE MEETING. PLEASE MARK, SIGN AND RETURN THIS PROXY INCARD PROMPTLY USING THE ENCLOSED PRE-ADDRESSED ENVELOPE. THE GIVING OF A PROXY WILL NOT AFFECT YOUR RIGHT TO VOTE IN PERSON IF YOU ATTEND THE MEETING.
SHARES OF COMPANY STOCK REPRESENTED BY THIS PROXY WILL BE VOTED AT THE MEETING IN ACCORDANCE WITH THE SHAREHOLDER’S SPECIFICATIONS ON THE REVERSE SIDE. THIS PROXY CONFERS DISCRETIONARY AUTHORITY IN RESPECT TO MATTERS NOT KNOWN OR DETERMINED AT THE TIME OF THE MAILING OF THE NOTICE OF THE SPECIAL MEETING OF SHAREHOLDERS TO THE UNDERSIGNED.
The undersigned hereby acknowledges receipt of the Notice of Special Meeting of Shareholders and Proxy Statement.
(To be signed on the other side)
MUSCLEPHARM CORPORATION
4721IRONTON STREET
DENVER, CO 80239
ATTN: BRAD PYATT
VOTE BY MAIL
Mark, sign, and date the enclosed proxy card and return it in the postage-paid envelope we have provided or return it to MusclePharm Corporation, c/o Brad Pyatt.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK:
| | | | KEEP THIS PORTION FOR YOUR RECORDS
| |
| 27 |
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
MUSCLEPHARM CORPORATION
Vote On Proposals
1. To approve an amendment of our Amended Articles of Incorporation to increase the number of authorized shares of common stock par value $0.001 from 195,000,000 to 500,000,000:
2. To approve an amendment of our Articles of Incorporation to authorize up to 10,000,000 shares, par value $0.001 per share, of “blank-check” preferred stock of the Company.
Signature(s) should agree with the name(s) stenciled hereon. Executors, administrators, trustees, guardians and attorneys should indicate when signing. Attorneys should submit powers of attorney. |
| | | |
Signature [Please Sign Within Box] | Date | | Signature (Joint Owners) |
