SECURITIES AND EXCHANGE COMMISSION
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| Preliminary Proxy Statement |
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| Definitive Proxy Statement |
| Definitive Additional Materials |
| Soliciting Material |
CHEMBIO DIAGNOSTICS, INC.
(Name of Registrant as Specified in Its Charter)
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NOTICE OF 2019 ANNUAL MEETING OF STOCKHOLDERS and PROXY STATEMENT | |||
2019 Annual Meeting Tuesday, June 18, 2019 10 a.m., Eastern time 555 Wireless Boulevard | Inside CEO’s letter to stockholders Information on five voting proposals: | ||
| Hauppauge, New York |  | Election of five directors | |
 | Approval of 2019 Omnibus Incentive Plan | ||
 | Ratification of appointment of independent auditor for 2019 | ||
 | Advisory vote on 2018 executive compensation | ||
 | Advisory vote on frequency of future advisory votes on executive compensation | ||
| |
555 Wireless Boulevard | |
Hauppauge, New York 11788 |
April 30, 2019
CHEMBIO DIAGNOSTICS, INC.
3661 Horseblock Road
Medford, NY 11763
(631) 924-1135
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be held May 10, 2018
TheIt is my pleasure to invite you to attend the Annual Meeting of Stockholders of Chembio Diagnostics, Inc. willto be held on MayTuesday, June 18, 2019, at 10 2018a.m., Eastern time, at 10:00 a.m. (local time) at555 Wireless Boulevard, Hauppauge, New York. Each holder of common stock as of 5 p.m., Eastern time, on the officerecord date of Chembio, 3661 Horseblock Road, Medford, New York 11763, for the following purposes:
5. To transact any other business that properly may come before the Annual Meeting.
OnlyDuring the Annual Meeting, stockholders will be asked to elect the entire board of recorddirectors, to approve our 2019 Omnibus Incentive Plan and to ratify the appointment of BDO USA, LLP as shownour independent auditor for 2019. We also will be asking stockholders for approval, by an advisory vote, of our 2018 executive compensation as disclosed in the Proxy Statement for the Annual Meeting (a “say-on-pay” vote) as well as of the board’s recommendation to submit our executive compensation to an advisory vote every year (a “say-on-frequency” vote). All of these matters are important, and we urge you to vote in favor of the election of each of the director nominees, the approval of the 2019 Omnibus Incentive Plan, the ratification of the appointment of our independent auditor, the approval of our 2018 executive compensation and the approval of an annual advisory vote on our transfer books atexecutive compensation.
We are furnishing proxy materials to our stockholders over the closeInternet. This process expedites the delivery of business on March 14, 2018 are entitledproxy materials to noticeour stockholders, lowers our costs and reduces the environmental impact of and to vote at, the Annual Meeting. Our Annual Report on Form 10-K for the fiscal year ended December 31, 2017 is being providedToday we are sending to each of our stockholders with this Proxy Statement. The Annual Report is not part of the proxy soliciting material.
All stockholders, regardless of whether they expect to attend the meeting in person, are requested to complete, date, sign and return promptly the enclosed form of Proxy via the Internet or in the accompanying envelope (which requires no postage if mailed in the United States), as applicable. The person executing the Proxy may revoke it by filing with our Secretary an instrument of revocation or a duly executed Proxy bearing a later date, or by electing to vote in person at the Annual Meeting.
Important Notice regarding the Availability of Proxy Materials for the Stockholder Meeting to Be Held on May 10, 2018:
The Proxy Statement, form of Proxy, and Annual Report to Stockholders for the fiscal year ended December 31, 2017 are available free of charge at http://www.chembio.com/investors/proxy/. The Notice of Internet Availability of Proxy Materials containing instructions on how to access our Proxy Statement for the Annual Meeting and our 2018 Annual Report to Stockholders, as well as how to vote via proxy either by telephone or over the Internet.
It is important that you vote your shares of common stock in person or by proxy, regardless of the number of shares you own. You will find the instructions for voting on your Notice of Internet Availability of Proxy Materials. We appreciate your prompt attention.
The board invites you to participate in the Annual Meeting so that management can listen to your suggestions, answer your questions, and discuss business developments and trends with you. Thank you for your support, and we look forward to joining you at the Annual Meeting.
Sincerely,
John J. Sperzel III
Chief Executive Officer and President
 | NOTICE OF 2019 ANNUAL MEETING OF STOCKHOLDERS |
| Secretary | April 30, 2019 |
When Tuesday, June 18, 2019 10 a.m., Eastern time Where 555 Wireless Boulevard Hauppauge, New York 11788 |
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON JUNE 18, 2019: The Notice of 2019 Annual Meeting of Stockholders, the Proxy Statement, the 2018 Annual Report to Stockholders and instructions for voting via the Internet can be accessed at: www.chembio.com/investors/proxy |
How to Vote in Advance Your vote is important. Please vote as soon as possible by one of the methods shown below. Your Notice of Internet Availability, proxy card or voting instruction form should be readily available. Via Internet (Any Web-Enabled Device)  Via Internet (Smartphone or Tablet)  By Telephone (U.S. or Canada only)  By Mail (Pursuant to Printed Materials)  |
| |
| 555 Wireless Boulevard | |
| Hauppauge, New York 11788 |
April 30, 2019. All stockholders are extended a cordial invitation to attend the Annual Meeting. If you would like to obtain directions to be able to attend the Annual Meeting in person, please contact Nancy Kandell at (631) 924-1135 or nkandell@chembio.com.
| Date | Tuesday, June 18, 2019 |
| Time | 10 a.m., Eastern time |
| Meeting Address | 555 Wireless Boulevard Hauppauge, New York |
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| Chembio Diagnostics, Inc. 2019 Omnibus Incentive Plan | Appendix A |
| Time and Date | 10 a.m., Eastern time, on June 18, 2019. |
| Meeting Address | 555 Wireless Boulevard, Hauppauge, New York. |
| Record Date | 5 p.m., Eastern time, on April 26, 2019. |
| Voting | Stockholders will be entitled to one vote for each outstanding share of common stock they hold of record as of the record date. |
| Votes Eligible to be Cast | A total of 17,166,459 votes are eligible to be cast on each proposal. |
| Proposal | Board Recommendation | |
| Election of directors | FOR each nominee | |
| Approval of 2019 Omnibus Incentive Plan | FOR | |
| Ratification of appointment of independent auditor for 2019 | FOR | |
| Advisory vote on 2018 executive compensation | FOR | |
| Advisory vote on frequency of future advisory votes on executive compensation | ANNUAL | |
| Until 11:59 p.m., Eastern time, on May 1, 2019 | At the Annual Meeting on June 18, 2019 | |||||
| • Internet: | • | Address: | 555 Wireless Boulevard | |||
| 4 | From any web-enabled device: www.aalvote.com/CEMI | Hauppauge, New York | ||||
| 4 | Scan QR code from any smartphone or tablet: | |||||
 |
| • | Telephone:+1 (866) 804-9616 |
| • | Completed, signed and returned proxy card |
 | Election of Directors |
| We are asking stockholders to elect the following five director nominees, each of whom currently serves as a member of the board of directors. |
Director Since | Experience/ | Independent | Committee | Other Public | ||||
| Name | Age | Occupation | Qualifications | Yes | No | Memberships | Company Boards | |
| Katherine L. Davis | 62 | 2007 | Owner of Davis Design Group LLC Financial Advisor to Mayor of Indianapolis | • Leadership • Governance • Policy/ Government | ✔ | • Chair of the Board • Audit • Nominating and Corporate Governance | ||
| Gail S. Page | 63 | 2017 | Venture Partner at Turret Capital Management, L.P. | • Industry • Leadership • Finance | ✔ | • Audit • Nominating and Corporate Governance • Compensation (Chair) | ||
| Mary Lake Polan | 75 | 2018 | Professor of Clinical Obstetrics, Gynecology and Reproductive Sciences at Yale University School of Medicine Chair of Scientific Advisory Board in Women’s Health for Procter and Gamble Company Managing Director of Golden Seeds angel investing group | • Industry • Leadership • Governance | ✔ | • Nominating and Corporate Governance (Chair) • Compensation | • Motif Bio plc • Quidel Corporation | |
| John G. Potthoff | 51 | 2018 | Chief Executive Officer and Co-founder of Elligo Health Research | • Finance • Industry • Leadership | ✔ | | • Audit (Chair) • Compensation | |
| John J. Sperzel III | 55 | 2014 | Chief Executive Officer and President of Chembio Diagnostics, Inc. | • Industry • Leadership • Innovation | ✔ | |||
| Additional Board Governance Practices | ||
| No | ||
| Frequency of Director Elections | Annual | |
| In-Person Shareholder Meeting | Yes | |
| Voting Standard | Plurality | |
| Mandatory Retirement Age or Tenure | No | |
| Chair: | Separate Chair of the Board and CEO | Yes |
| Independent Chair of the Board | Yes | |
| Robust Responsibilities and Duties Assigned to Independent Chair | Yes | |
| Meetings: | Number of Board Meetings Held in 2018 | 15 |
| Directors Attending Fewer than 75% of Board Meetings in 2018 | None | |
| Independent Directors Meet without Management Present | Yes | |
| Number of Standing Committee Meetings Held in 2018 | 8 | |
| Members Attending Fewer than 75% of Committee Meetings in 2018 | None | |
| Director Status: | Directors “Overboarded” per ISS or Glass Lewis Voting Guidelines | None |
| Material Related-Party Transactions with Directors | None | |
| Family Relationships with Executive Officers or Other Directors | None | |
| Shares Pledged by Directors | None | |
 | Approval of 2019 Omnibus Incentive Plan |
| We are asking stockholders to approve our 2019 Omnibus Incentive Plan to, among other things, reserve 2,400,000 shares of common stock for awards under the plan. | |
 | Ratification of Appointment of Independent Auditor for 2019 |
| We are asking stockholders to ratify the audit committee’s retention of BDO USA, LLP, an independent registered public accounting firm, as our independent auditor to examine and report on our consolidated financial statements for the fiscal year ending December 31, 2019. | |
 | Advisory Vote on 2018 Executive Compensation |
| In accordance with rules of the Securities and Exchange Commission or SEC, we are asking stockholders for an advisory vote — known as a “say-on-pay” vote — of the 2018 compensation of our “named executive officers” as set forth in the compensation tables, related narrative discussion and other disclosures under “Executive Compensation” in this Proxy Statement. The following table provides information concerning the compensation paid for 2018 and 2017 to our named executive officers during 2018: |
| Name and Principal Position | Year | Salary ($) | Bonus($)(1) | Equity Awards ($)(2) | All Other Compensation($)(3) | Total($) |
| John J. Sperzel III | 2018 | $416,847 | $89,250 | $950,000 | — | $1,456,097 |
| Chief Executive Officer and President | 2017 | 415,137 | 63,750 | 62,998 | — | 541,885 |
| Neil A. Goldman | 2018 | 294,231 | 50,400 | 300,000 | $2,769 | 647,400 |
| Executive Vice President, Chief Financial Officer | 2017 | 5,769 | — | 423,882 | — | 224,638 |
| Javan Esfandiari | 2018 | 357,807 | 72,450 | 375,000 | 7,391 | 812,648 |
Executive Vice President, Chief Science and Technology Officer | 2017 | 342,308 | 51,750 | 9,652 | 5,900 | 347,244 |
| (1) | Based on reaching revenue targets, satisfying individual objectives, and, in 2017, reaching an operating income (loss) target and discretionary grants. |
| (2) | Determined in accordance with the Financial Accounting Standards Board’s Accounting Standards Codification Topic 718, Compensation—Stock Compensation. |
| (3) | Comprised of employer matching payments to 401(k) contributions and, in 2017, a car allowance. |
 | Advisory Vote on Frequency of Future Advisory Votes on Executive Compensation |
| In accordance with rules of the SEC, we are asking stockholders for an advisory vote – known as a “say-on-frequency” vote – on how frequently they would like to cast an advisory “say-on-pay” vote on the compensation of our named executive officers. The board of directors recommends an annual advisory “say-on-pay” vote. SEC rules require that we submit a “say-on-frequency” vote to stockholders every six years |
| Q: | When and where will the Annual Meeting be held? |
| A: | This year the Annual Meeting of Stockholders of Chembio Diagnostics, Inc., |
| which we refer to as the Annual Meeting, will be held at 555 Wireless Boulevard, Hauppauge, New York beginning at 10 a.m., Eastern time, on Tuesday, June 18, 2019. |
PROXY STATEMENT
CHEMBIO DIAGNOSTICS, INC.
3661 Horseblock Road
Medford, NY 11763
(631) 924-1135
ANNUAL MEETING OF STOCKHOLDERS
To be held May 10,
| Q: | What materials have been prepared for stockholders in connection with the Annual Meeting? |
| A: | We are furnishing you and other stockholders of record with the following proxy materials: |
SOLICITATION AND REVOCATION OF PROXIES
This Proxy Statement is provided in connection with the solicitation of proxies by and on behalf of the Board of Directors of Chembio Diagnostics, Inc., a Nevada corporation (referred Annual Report to Stockholders, which we refer to as the "Company" or "Chembio" or "we" or "us"), to be voted at2018 Annual Report and which includes our Annual Report on Form 10‑K for the fiscal year ended December 31, 2018 (including our audited consolidated financial statements for 2017 and 2018);
In accordance with rules and regulations adopted by the SEC, we are furnishing proxy materials to our stockholdersa Notice of record by (i) mailing a printed copy2019 Annual Meeting of the proxy materials,Stockholders; and (ii) providing Internet access to the proxy materials at http://www.chembio.com/investors/proxy/. Stockholders of record who receive a printed copy of proxy materials as well as stockholders of record who receive
A stockholder giving a Proxy may revoke it at any time beforeStatement.
| Q: | Why was I mailed a Notice of Internet Availability rather than a printed set of proxy materials? |
| A: | In accordance with rules adopted by the SEC, we are furnishing the proxy materials to stockholders by providing access via the Internet, instead of mailing printed copies. This process expedites the delivery of proxy materials to our stockholders, lowers our costs and reduces the environmental impact of the Annual Meeting. The Notice of Internet Availability tells you how to access and review the proxy materials on the Internet and how to vote on the Internet. It also provides instructions you may follow to request paper or emailed copies of the proxy materials. |
| Q: | Are the proxy materials available via the Internet? |
| A: | You can access and review the proxy materials for the Annual Meeting at www.chembio.com/investors/proxy. In order to submit your proxies, however, you will need to refer to the Notice of Internet Availability sent to you with this Proxy Statement or a proxy card mailed to you upon your request to obtain your control number and other personal information needed to vote by proxy or in person. |
| Q: | What is a proxy? |
| A: | The term “proxy,” when used with respect to stockholder, refers to either a person or persons legally authorized to act on the stockholder’s behalf or a format that allows the stockholder to vote without being physically present at the Annual Meeting. |
The solicitation of Proxies is to be made on the Internet and through mailings. However, following the initial solicitation, further solicitations may be made by telephone or oral communication with stockholders. Our officers, directors and employees may solicit Proxies, but these persons will not receive compensation for that solicitation other than their regular compensation as employees. Arrangements also will be made with brokerage houses and other custodians, nominees and fiduciaries to provide access to the solicitation materials to beneficial owners of the shares held of record by those persons. We may reimburse those persons for reasonable out-of-pocket expenses incurred by them in so doing. We will pay all expenses involved in preparing, assembling and mailingyou review this Proxy Statement carefully and then vote by following the enclosed material.
VOTING SECURITIES
The closeinstructions set forth on the Notice of business on March 14, 2018 has been fixed asInternet Availability or the record date forproxy card. In voting prior to the determination of holders of record ofAnnual Meeting, you will deliver your proxy to the Company's common stock, $0.01 par value per share, entitled to notice of andProxy Committee, which means you will authorize the Proxy Committee to vote your shares at the Annual Meeting. Each stockholderMeeting in the way you instruct. The Proxy Committee consists of record as ofJohn J. Sperzel III and Neil A. Goldman. All shares represented by valid proxies will be voted in accordance with the close of businessstockholder’s specific instructions.
| Q: | What matters will the stockholders vote on at the Annual Meeting? |
| A: | Proposal | | Election of the following five director nominees: | |||||
| • | Katherine L. Davis | • | Gail S. Page | • | Mary Lake Polan | |||
| • | John G. Potthoff | • | John J. Sperzel III | |||||
| Proposal |  | Approval of 2019 Omnibus Incentive Plan | |
| Proposal |  | Ratification of appointment of our independent auditor for 2019 | |
| Proposal |  | Approval, as an advisory vote, of 2018 executive compensation as disclosed in this Proxy Statement | |
| Proposal |  | Approval, as an advisory vote, of the frequency of future advisory votes on executive compensation |
| Q: | Who can vote at the Annual Meeting? |
| A: | Stockholders of record of common stock at 5 p.m., Eastern time, on April 26, 2019, the record date, will be entitled to vote at the Annual Meeting. As of the record date, there were outstanding a total of 17,166,459 shares of common stock, each of which will be entitled to one vote on each proposal. As a result, up to a total of 17,166,459 votes can be cast on each proposal. |
| Q: | What is a stockholder of record? |
| A: | A stockholder of record is a stockholder whose ownership of common stock is reflected directly on the books and records of our transfer agent, Broadridge Corporate Issuer Solutions, Inc. |
| Q: | What does it mean for a broker or other nominee to hold shares in “street name”? |
| A: | If you beneficially own shares held in an account with a broker, bank or similar organization, that organization is the stockholder of record and is considered to hold those shares in “street name.” An organization that holds your beneficially owned shares in street name will vote in accordance with the instructions you provide. If you do not provide the organization with specific voting instructions with respect to a proposal, the organization’s authority to vote your shares will, under the rules of the Nasdaq Global Market or Nasdaq, depend upon whether the proposal is considered a “routine” or a non-routine matter. |
| Q: | How do I vote my shares if I do not attend the Annual Meeting? |
| A: | If you are a stockholder of record, you may vote prior to the Annual Meeting as follows: |
| • | Via the Internet: | You may vote via the Internet by going to www.aalvote.com/CEMIor scanning the QR code on the Notice of Internet Availability, in accordance with the voting instructions on the Notice of Internet Availability and the proxy card. Internet voting is available 24 hours a day until 11:59 p.m., Eastern time, on June 17, 2019. You will be given the opportunity to confirm that your instructions have been recorded properly. |
| • | By Telephone: | You may vote by calling +1 (866) 804-9616 and following the instructions provided on the telephone line. Telephone voting is available 24 hours a day until 11:59 p.m., Eastern time, on June 17, 2019. Easy-to-follow voice prompts will allow you to vote your shares and confirm that your instructions have been recorded properly. |
| • | By Mail: | If you obtain a proxy card by mail, you may vote by returning the completed and signed proxy card in a postage-paid return envelope that will be provided with the proxy card. |
| • | Via the Internet: | You may vote via the Internet by going to www.ProxyVote.comor scanning the QR code on the Notice of Internet Availability, in accordance with the voting instructions on the Notice of Internet Availability and the proxy card. Internet voting is available 24 hours a day until 11:59 p.m., Eastern time, on June 17, 2019. You will be given the opportunity to confirm that your instructions have been recorded properly. |
| Q: | Can I vote at the Annual Meeting? |
| A: | If you are a stockholder of record, you may vote in person at the Annual Meeting, whether or not you previously voted. If your shares are held in street name, you must obtain a written proxy, executed in your favor, from the stockholder of record to be able to vote at the Annual Meeting. |
| Q: | May I change my vote or revoke my proxy? |
| A: | If you are a stockholder of record and previously delivered a proxy, you may subsequently change or revoke your proxy at any time before it is exercised by: |
| Q: | What happens if I do not give specific voting instructions? |
| A: | If you are a stockholder of record and you return a proxy card without giving specific voting instructions, the Proxy Committee will vote your shares in the manner recommended by the board on all five proposals presented in this Proxy Statement and as the Proxy Committee may determine in its discretion on any other matters properly presented for a vote at the Annual Meeting. |
| Q: | What if other matters are presented at the Annual Meeting? |
| A: | If a stockholder of record provides a proxy by voting in any manner described in this Proxy Statement, the Proxy Committee will have the discretion to vote on any matters, other than the five proposals presented in this Proxy Statement, that are properly presented for consideration at the Annual Meeting. We do not know of any other matters to be presented for consideration at the Annual Meeting. |
VOTING PROCEDURES
Votes at the Annual Meeting are counted by an inspector of election appointed by the Chair of the meeting. You can ensure that your shares are voted at the Annual Meeting by submitting your proxy card on the Internet, or by completing, signing, dating and returning the enclosed proxy form in the envelope provided, such that they are received no later than the day before the Annual Meeting. Abstentions by thosetreat as present at the Annual Meeting any proxies that are tabulated separately from affirmative and negative votesand do not constitute affirmative votes. If a stockholder submits his or her proxy card and withholds authorityvoted on any matter to vote for any or all of the items, the votes representedbe acted upon by the proxy card will be deemed to be present at the Annual Meeting for purposes of determining the presence of a quorum but will not be countedstockholders, as affirmative votes. Rule 452 of the New York Stock Exchange (NYSE), which governs all brokers, permits brokers to vote their customers' stock held in street name on routine matters when the brokers have not received voting instructions from their customers. The NYSE does not, however, allow brokers to vote their customers' stock held in street name on non-routine matters unless they have received voting instructions from their customers. In such cases, the uninstructed shares for which thewell as abstentions or any proxies containing broker is unable to vote are called broker non-votes. The ratification of the independent auditor is a routine matter on which brokers may vote in their discretion on behalf of customers who have not provided voting instructions. While the advisory vote on the compensation of our Named Executive Officers and the advisory vote on the frequency of such votes on compensation are routine matters, brokers are not allowed to vote on these matters unless they have received voting instructions from their customers. The election of directors is a non-routine matter on which brokers are not allowed to vote unless they have received voting instructions from their customers. Shares in the names of brokers that are not voted on a particular matter are treated as not present with respect to that matter.
We will announce voting results at the meeting, and we will publish the final results within four business days following the meeting on a Current Report on Form 8-K that will be filed with the SEC.
FORWARD-LOOKING STATEMENTS
This Proxy Statement includes "forward-looking" statements within the meaning of Section 21E of the Securities Exchange Act of 1934. All statements other than statements of historical facts included in this Proxy Statement regarding our financial position, business strategy and plans and objectives of management for future operations and capital expenditures are forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements and the assumptions upon which the forward-looking statements are based are reasonable, we can give no assurance that such expectations and assumptions will prove to have been correct.
BENEFICIAL OWNERSHIP OF THE COMPANY'S SECURITIES BY FIVE PERCENT BENEFICIAL OWNERS AND MANAGEMENT
On March 14, 2018 there were 14,162,702 shares of common stock issued and outstanding and eligible to be voted at the Annual Meeting. The following table sets forth certain information regarding the beneficial ownership of our common stock on March 14, 2018 by each person or entity known by us to be the beneficial owner of more than 5% of the outstanding shares of common stock, each of our directors and nominees for director, each of our "Named Executive Officers," and all our directors and executive officers as a group.
In this Proxy Statement, the term "Named Executive Officers" refers to our principal executive officer, principal financial officer and our three most highly compensated executive officers, other than the principal executive and financial officers, who were serving as executive officers at the end of 2017. The term "Named Executive Officers" also refers to up to two additional individuals for whom disclosure would have been provided but for the fact that the individuals were not serving as executive officers of the Company at the end of 2017. There is one such additional individual for the Company, the Company’s former principal financial officer, Richard J. Larkin.
The following table sets forth certain information, as of March 14, 2018, regarding the beneficial ownership of our common stock by each person or entity known by us to be the beneficial owner of more than 5% of the outstanding shares of common stock, each of our directors, nominees for director, "NEOs" individually, and also for all our directors and executive officers as a group.
| Election of Directors |
| The affirmative vote of a plurality of votes cast by shares entitled to vote and present in person or represented by proxy at the Annual Meeting at which a quorum is present is required to elect each director. Votes to “abstain” will not be counted for the purpose of determining whether a director is elected. Similarly, broker non‑votes will not have any effect on the outcome of the election of directors, since broker non-votes are not counted as “votes cast.” | |
| Approval of 2019 Omnibus Incentive Plan |
| Our 2019 Omnibus Incentive Plan must be affirmatively approved by a majority of the votes entitled to be cast and present in person or represented by proxy at the Annual Meeting. Abstentions will count as votes against this proposal because shares with respect to which a stockholder abstains will be deemed present and entitled to vote. Broker non-votes will have no effect on the outcome of this proposal because broker non-votes are not counted as “votes cast.” | |
| Ratification of Appointment of Independent Auditor for 2019 |
| The ratification of BDO USA, LLP as our independent auditor for the year ending December 31, 2019 must be approved by affirmative votes constituting a majority of the votes entitled to be voted and present in person or represented by proxy at the Annual Meeting. Abstentions will count as votes against this proposal, because shares with respect to which the stockholder abstains will be deemed present and entitled to vote. Because this proposal is considered a routine matter, discretionary votes by brokers will be counted. | |
| Approval of 2018 Executive Compensation on an Advisory Basis |
| The advisory “say-on-pay” vote to approve our 2018 executive compensation must be approved by affirmative votes constituting a majority of the votes entitled to be cast and present in person or represented by proxy at the Annual Meeting. Abstentions will count as votes against this proposal, because shares with respect to which the stockholder abstains will be deemed present and entitled to vote. Broker non-votes will have no effect on the outcome of this proposal, because broker non-votes are not counted as “votes cast.” | |
| Approval of Frequency of Future Advisory “Say-on-Pay” Votes on an Advisory Basis |
| The advisory “say-on-frequency” vote on the frequency of future advisory “say-in-pay” votes on executive compensation must be approved by affirmative votes constituting a majority of the votes entitled to be voted and present in person or represented by proxy at the Annual Meeting. As a result, any votes not cast, whether by abstention, broker non-votes or otherwise, will not affect the outcome of this proposal, except to the extent that the failure to vote for a particular frequency period may result in another frequency period receiving a larger proportion of the votes cast. |
Name and Address of Beneficial Owner | Amount and Nature of Beneficial Ownership | Percent of Class | |
Sperzel, John J.(1) 3661 Horseblock Road Medford, NY 11763 | 205,000 | 1.45% | |
Esfandiari, Javan(2) 3661 Horseblock Road Medford, NY 11763 | 108,493 | 0.77% | |
Goldman, Neil A.(3) 3661 Horseblock Road Medford, NY 11763 | 14,815 | 0.10% | |
Klugewicz, Sharon(4) 3661 Horseblock Road Medford, NY 11763 | 27,078 | 0.19% | |
Passas, Robert(5) 3661 Horseblock Road Medford, NY 11763 | 12,000 | 0.08% | |
Larkin, Richard J. 3661 Horseblock Road Medford, NY 11763 | 51,731 | 0.37% | |
Davis, Katherine L.(6) 3661 Horseblock Road Medford, NY 11763 | 95,796 | 0.68% | |
Kissinger, Peter(7) 3661 Horseblock Road Medford, NY 11763 | 50,281 | 0.36% | |
Page, Gail S.(8) 3661 Horseblock Road Medford, NY 11763 | 9,375 | 0.07% | |
Potthoff, John 3661 Horseblock Road Medford, NY 11763 | 0 | 0.0% | |
GROUP (all executive officers and directors, 13 persons )(9) | 658,066 | 4.65% | |
Wellington Management Group LLP(10) 280 Congress Street Boston, MA 02210 | 1,729,790 | 12.21% | |
Norman H. Pessin(11) 366 Madison Ave, 14th Floor New York, NY 10017 | 1,274,139 | 9.00% | |
Acuta Capital Partners LLC(12) 1301 Shoreway Rd Belmont, CA 94002 | 1,721,299 | 12.15% |
Beneficial ownership is determined in accordance with the Rule 13d-3(a) of the Securities Exchange Act of 1934, as amended, and generally includes voting or investment power with respect to securities. Except as subject to community property laws, where applicable, the person named above has sole voting and investment power with respect to all shares of our common stock shown as beneficially owned by that person.
Each stockholder's beneficial ownership is calculated as the number of shares of common stock owned by that stockholder plus the number of shares of common stock into which any preferred stock, warrants, options or other convertible securities owned by that stockholder can be converted within 60 days. The beneficial ownership percent in the table is calculated with respect to the number of shares (14,162,702) of the Company's common stock outstanding as of March 14, 2018. With respect to each stockholder’s beneficial ownership, the denominator is the sum of the number of common shares outstanding and the number, if any, of outstanding options included in that stockholder's beneficial ownership; and the numerator is the same as the stockholder’s beneficial ownership of shares as determined according to the preceding sentence.
The term "Named Executive Officer" refers to our principal executive officer, our principal financial officer, our three most highly compensated executive officers other than the principal executive officer and principal financial officer who were serving as executive officers at the end of 2017, and one additional individual for whom disclosure would have been provided but for the fact that the individual was not serving as an executive officer of the Company at the end of 2017.
Equity Compensation Plan Information
| Combined Equity Compensation Plans - Information as of December 31, 2017 | ||||||||||||
| Plan Category | Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights | Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights | Number of Securities Remaining Available for Future Issuance under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) | |||||||||
| (a) | (b) | (c) | ||||||||||
| Equity compensation plans approved by security holders1 | 810,670 | $ | 5.18 | 444,026 | ||||||||
| Equity compensation plans not approved by security holders | - | - | - | |||||||||
| Total | 810,670 | $ | 5.18 | 444,026 | ||||||||
1The "Number of Securities to be Issued Upon Exercise of Outstanding Warrants and Rights" represents 228,177 under the 2008 Stock Incentive Plan, 375,625 under the 2014 Stock Incentive Plan, and 206,868 issued outside of the Plans. The 2008 Stock Incentive Plan was increased by 125,000 units at the Annual Stockholder meeting held September 23, 2011. The "Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans" represents 41,651 under the 2008 Stock Incentive Plan and 402,375 under the 2014 Stock Incentive Plan.
AVAILABLE INFORMATION
Copies of our Annual Report on Form 10-K are being furnished to each stockholder with this Proxy Statement, and are available on the internet at http://www.chembio.com/investors/proxy/ pursuant to the instructions set forth in the attached "Notice Regarding the Availability of Proxy Materials." Upon written request, we will provide, without charge, a copy of our Annual Report on Form 10-K for the year ended December 31, 2017, to any stockholder of record, or to any stockholder who owns, as of March 14, 2018, common stock listed in the name of a bank or broker as nominee. Any request for a copy of these reports should be mailed to the Secretary, Chembio Diagnostics, Inc., 3661 Horseblock Road, Medford, NY 11763. Stockholders also may receive copies of these reports by accessing the Company's website at www.chembio.com. We file annual, quarterly and current reports, Proxy Statements and other information with the SEC in accordance with the Securities Exchange Act of 1934, as amended. You may read and copy any reports, Proxy Statements or other information filed by us at the public reference facilities maintained by the SEC at 100 F Street, N.E., Washington, D.C. 20549. In addition, the materials we file electronically with the SEC are available at the SEC's website at www.sec.gov. The SEC's website contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. Information about the operation of the SEC's public reference facilities may be obtained by calling the SEC at 1-800-SEC-0330.
ITEM 1. ELECTION OF DIRECTORS
At the Annual Meeting, the stockholders will elect fourthe entire board of directors to serve as our Board of Directors. Each director will be elected to hold officefor the ensuing year and until the next annual meeting of stockholders or until his/her successor istheir successors are elected and qualified. The affirmative voteboard has designated as nominees for election the five persons named below, each of whom currently serves as a pluralitydirector.
It is not anticipated that any of the nominees will become unable or unwilling to accept nomination or election, but, if that should occur, the persons nameda duly completed proxy may be voted in the proxy intend to vote for the electionfavor of such other person as may be determined by the BoardProxy Committee.
create a conflict of interest with a director’s responsibilities and duties to us and our constituents; and
"Beneficial Ownershipnominee’s age as of the Company's Securities By Five Percent Beneficial Ownersrecord date for the Annual Meeting;
| ||||||||
| Katherine L. Davis | ||||||||
 | Chembio Board Service: • Tenure: 12 years • Chair of the Board | • Committees: ○ Audit ○ Nominating and Corporate Governance Age: 62 | ||||||
_____________
* Dr. Potthoff is not currently a director of the Company.
Katherine L. Davis (61), Director and
Gail S. Page (62), Director. Ms. Page was elected
| Gail S. Page | ||
 | Chembio Board Service • Tenure: 2 years • Committees: ○ Audit ○ Compensation (Chair) ○ Nominating and Corporate Governance Age: 63 | |
| INDEPENDENT | ||
| Mary Lake Polan | ||
 | Chembio Board Service: • Tenure: 7 months • Committees: ○ Compensation ○ Nominating and Corporate Governance (Chair) Age: 75 | |
| INDEPENDENT | ||
| John G. Potthoff | ||
 | Chembio Board Service • Tenure: 10 months • Committees: ○ Audit (Chair) ○ Compensation Age: 51 | |
| INDEPENDENT | ||
John Potthoff Ph.D. (50), Nominee for Director. Dr. Potthoff, a nominee for director2014
experience as
John J. Sperzel (54),point-of-care diagnostic solutions, since 1993
| John J. Sperzel III | ||
 | Chembio Board Service: • Tenure: 5 years Age: 55 | |
| Resolved: | That the stockholders approve the compensation paid to the “named executive officers” of Chembio Diagnostics, Inc. with respect to the fiscal year ended December 31, 2018, as disclosed, pursuant to Item 402 of Regulation S-K promulgated by the Securities and Exchange Commission, in the Proxy Statement for the 2019 Annual Meeting of Stockholders, including the compensation tables and narrative discussion set forth under “Executive Compensation” therein. |
| Resolved: | That the stockholders wish Chembio Diagnostics, Inc. to present an advisory vote on the compensation of named executive officers pursuant to Section 14A of the Securities Exchange Act on an annual basis. |
Required Vote; Board Recommendation
The affirmative vote of a pluralityapplicable committee chair criteria and method for evaluating the effectiveness of the shares votedcommittees;
INFORMATION REGARDING THE BOARD OF DIRECTORS
AND EXECUTIVE OFFICERS
Boardnotice, the number of Directors
Information regardingshares of common stock beneficially owned by each nominee, and any arrangement, affiliation, association, agreement or other relationship of the Boardnominee with any Chembio stockholder.
Executive Officers
The following table sets forth,directors in fulfilling its responsibilities relating to:
| Name | Age | Position With Company | Initial Date as Officer |
| John J. Sperzel III* | 54 | Chief Executive Officer | 2014 |
| Neil A. Goldman | 50 | Chief Financial Officer; Executive Vice President | 2017 |
| Javan Esfandiari | 51 | Chief Scientific & Technology Officer; Executive Vice President | 2004 |
| Sharon Klugewicz | 50 | President Americas Region | 2012 |
| Robert Passas | 64 | President EMEA and APAC | 2016 |
| Tom Ippolito | 55 | Vice President of Regulatory Affairs, Quality Assurance and Quality Control | 2005 |
| Paul Lambotte | 65 | Vice President of Research & Development | 2014 |
| David Gyorke | 58 | Vice President of Operations | 2017 |
__________________________
* Information concerning Mr. Sperzel's background is included under "Item 1. Election of Directors".
Neil A. Goldman (50), Chief Financial Officer; Executive Vice President. Mr. Goldman joined Chembio Diagnostic Systems, Inc. in December 2017 as Chief Financial Officer and Executive Vice President. Mr. Goldman previously worked at J.S. Held LLC, a private equity-sponsored national consulting firm to insurance carriers and law firms. At J.S. Held, Mr. Goldman served as Executive Vice President - Corporate Development and CFO from 2015 to 2017, during which time he successfully completed six acquisitions and drove significant sales and EBITDA growth. From 2005 to 2015, Mr. Goldman held senior level positions at Unwired Technology LLC and then Delphi Corp., now Aptiv plc
(NYSE: APTV), following Delphi's acquisition of Unwired in 2014. Mr. Goldman's positions at Unwired included Executive Vice President-Corporate Development and CFO, and Senior Vice President-Chief Operating & Financial Officer. At Delphi, Mr. Goldman served as Global Finance Director for the Delphi Data Connectivity division. Prior to Unwired, Mr. Goldman served as CFO of EPPCO Enterprises from 2003 to 2005 and worked from 1989 to 2002 at Ernst & Young and Cap Gemini Ernst & Young following the latter's acquisition of Ernst & Young's consulting business. At Ernst & Young, Mr. Goldman was an auditor, primarily of Fortune 500 companies, and advanced into regional and national management consulting provisions. Mr. Goldman received a B.S. in Business-Accountancy from Miami University, Oxford, OH. Mr. Goldman is a Certified Public Accountant, licensed in the State of Ohio.
Javan Esfandiari (51), Chief Science And Technology Officer; Executive Vice President. Mr. Esfandiari joined Chembio Diagnostic Systems, Inc, in 2000. Mr. Esfandiari co-founded, and became a co-owner of Sinovus Biotech AB where he served as Director of Research and Development concerning lateral flow technology until Chembio Diagnostic Systems Inc. acquired Sinovus Biotech AB in 2000. From 1993 to 1997, Mr. Esfandiari was Director of Research and Development with On-Site Biotech/National Veterinary Institute, Uppsala, Sweden, which was working in collaboration with Sinovus Biotech AB on development of veterinary lateral flow technology. Mr. Esfandiari received his B.Sc. in Clinical Chemistry and his M. Sc. in Molecular Biology from Lund University, Sweden. He has published articles in various veterinary journals and has co-authored articles on tuberculosis serology with Dr. Lyashchenko.
Sharon Klugewicz (50), President Americas Region. Prior to joining the Company in September 2012, Ms. Klugewicz, served as Senior Vice President, Scientific & Laboratory Services at Pall Corporation (NYSE:PLL), a world leader in filtration, separation and purification technologies. Prior to that, Ms. Klugewicz held a number of positions at Pall Corporation over her 20-year tenure there, including in the Pall Life Sciences Division, in Marketing Product Management, and Field Technical Services, which included a position as Senior Vice President, Global Quality Operations. Ms. Klugewicz holds an M.S. in Biochemistry from Adelphi University and a B.S. in Neurobiology from Stony Brook University.
Robert Passas Ph.D. (64), President EMEA and APAC Regions. Dr. Passas joined the Company in October 2016 and serves as President EMEA and APAC Regions. Prior to joining the Company, from 2011 to 2016, Dr. Passas was a memberChair of the Board and the Group Commercial Director, responsiblechief executive officer, a short-term succession plan for worldwide marketing, international sales,unexpected situations affecting the senior management; and technical
Tom Ippolito (55), VPexecutive compensation and to approve the consultant’s fees and retention terms. The compensation committee held two meetings in 2018. During 2018 the compensation committee held two executive sessions with only non-employee directors in attendance. Each of Regulatory Affairs, QAthe then-serving members participated in both of the meetings of the nominating and QC. Mr. Ippolito joined Chembio Diagnostic Systems, Inc. in June 2005,corporate governance committee during 2018.
Paul Lambotte Ph.D. (65), VP Research & Development. Mr. Lambotte joined Chembio Diagnostic Systems, Inc. in December 2014, and serves as Vice President of Product Development. Prior to joining the Company, from 2012 to 2014, Mr. Lambotte was President of PLC Inc., a point-of-care product development consulting company. He previously served as Chief Science Officer at Axxin Pty Ltd from 2009 to 2012, held positions of VP of R&D and Business Development at Quidel Corporation from 2000 to 2009, and before that held a number of positions at Beckman Coulter and Hybritech Inc. Mr. Lambotte is the inventor of several patents in the field of rapid, point-of-care diagnostic products. He received a Master in Biochemistry and a PhD in Protein Biochemistry from the University of Mons, Belgium, and did post-doctoral work at the Ludwig Institute for Cancer research in Brussels, Belgium.
David Gyorke (58), VP Operations. Mr. Gyorke joined Chembio Diagnostic Systems, Inc. in January 2017. Mr. Gyorke has responsibility for Manufacturing and Operations for the Company's Medord, NY and Kuala Lumpur, Malaysia manufacturing facilities. Prior to joining the Company, Mr. Gyorke held VP of Operations positions at the following start-up companies: Nanomix from 2011 to 2016, an electro-chemistry-based IVD POC system; NeoVista from 2008 to 2011, an ophthalmic brachytherapy surgical device; and Farallon Medical from 2004 to 2008, a PT-time POC system (acquired by Coagusense). Prior to that he served as VP of Operations for Cholestech from 1999 to 2003, an IVD POC
system, and held Technical Management positions at Boston Scientific-Target from 1993 to 1999. He received his Bachelors of Engineering (Industrial) at California Polytechnic State University.
Each of our officers serves at the pleasure of the Board of Directors, with Mr. Sperzel, Ms. Klugewicz, Mr. Goldman, and Mr. Esfandiari each having an employment agreement with the Company. There are no family relationships among our directors and executive officers.
Certain Transactions with Management and Principal Stockholders
The executive officers of the Company are as follows: John J. Sperzel, Chief Executive Officer and member of the board of directors or compensation committee of any entity that has one or more executive officers serving on the Company, Neil A. Goldman, Chief Financial Officerboard or compensation committee.
Effective as of March 13, 2017, the Company entered into an employment agreement with John J. Sperzel III to continue to serve as its Chief Executive Officer for a term of three years. Effective as of December 18, 2017, the Company entered into an Employment Agreement with Neil Goldman to serve as its Chief Financial Officer and Executive Vice President for a term of one year. The Company entered into an employment agreement, effective as of March 5, 2016, with Mr. Esfandiari to continue as the Company's Chief Scientific & Technology Officer and Executive Vice President for an additional term of three years. The Company also entered into an employment agreement, effective as of May 22, 2017, with Ms. Klugewicz to continue as President of America Region for a term of one year. See Item 11 for additional information.
Approval ofRelated-Person Transactions with Related Persons
Director Independence
Our
Chembio Diagnostics, Inc., 555 Wireless Boulevard, Hauppauge, New York 11788.
Common Stock Beneficially Owned | ||
| Beneficial Owner | Shares | % |
Named Executive Officers, Directors and Director Nominees | ||
| John J. Sperzel III(1) | 353,446 | 2.0% |
| Javan Esfandiari(2) | 147,353 | * |
| Neil A. Goldman(3) | 87,569 | * |
| Katherine L. Davis(4) | 112,943 | * |
| John G. Potthoff(5) | 37,147 | * |
| Gail S. Page(6) | 26,522 | * |
| Mary Lake Polan(7) | 17,147 | * |
| All executive officers and directors as a group (9 persons)(8) | 886,577 | 4.9% |
5% Stockholders | ||
Wellington Management Group LLP(9) 280 Congress Street Boston, MA 02210 | 1,506,290 | 8.8% |
Norman H. Pessin(10) c/o Levy, Harkins & Co., Inc. 366 Madison Avenue, 14th Floor New York, NY 10017 | 1,498,659 | 8.7% |
| * | Less than 1%. |
| (1) | Consist of (a) 98,446 restricted shares, one-third of which will vest on October 8 of 2019, 2020 and 2021, and (b) options to acquire 255,000 shares that are exercisable by June 25, 2019. |
| (2) | Include (a) 38,860 restricted shares, one-third of which will vest on October 8 of 2019, 2020 and 2021, and (b) options to acquire 20,000 shares that are exercisable by June 25, 2019. |
| (3) | Include (a) 31,088 restricted shares, one-third of which will vest on October 8 of 2019, 2020 and 2021, and (b) options to acquire 41,666 shares that are exercisable by June 25, 2019. |
| (4) | Include (a) 7,772 restricted shares, one-third of which will vest on October 8 of 2019, 2020 and 2021, and (b) options to acquire 46,875 shares that are exercisable by June 25, 2019. |
| (5) | Include (a) 7,772 restricted shares that will vest on October 8, 2019, and (b) options to acquire 9,375 shares that are exercisable by June 25, 2019. |
| (6) | Consist of (a) 7,772 restricted shares that will vest on October 8, 2019, and (b) options to acquire 18,750 shares that are exercisable by June 25, 2019. |
| (7) | Consist of (a) 7,772 restricted shares that will vest on October 8, 2019, and (b) options to acquire 9,375 shares that are exercisable by June 25, 2019. |
| (8) | Include, in addition to the restricted shares and options in Notes 1 through 7, (a) 20,725 restricted shares, one-third of which will vest on October 8, 2019, 2020, and 2021 and (b) options to acquire 48,000 shares that are exercisable by June 25, 2019. |
| (9) | The information is based on amended Schedule 13Gs filed on February 12, 2019. |
| (a) | An amended Schedule 13G filed jointly by Wellington Management Group LLP, Wellington Group Holdings LLP and Wellington Investment Advisors Holdings LLP, and a Schedule 13G filed by Wellington Trust Company NA, as investment adviser, reported holdings of 801,835 shares. These shares are owned of record by clients of the Wellington Investment Advisers. Wellington Investment Advisors Holdings LLP controls directly, or indirectly through Wellington Management Global Holdings, Ltd., the Wellington Investment Advisers. Wellington Investment Advisors Holdings LLP is owned by Wellington Group Holdings LLP. Wellington Group Holdings LLP is owned by Wellington Management Group LLP. The shares are owned of record by clients of Wellington Trust Company NA. |
| (b) | An amended Schedule 13G filed by Wellington Trust Company, National Association Multiple Common Trust Funds Trust, Micro Cap Equity Portfolio reported holdings of 704,455 shares. |
| (10) | This information is based on information provided on behalf of Norman Pessin by Brian Pessin, the son of Norman Pessin. The shares include 131,072 shares held by Brian Pessin. |
Codereports furnished to us, along with written representations from our executive officers and directors, we believe that all required reports were timely filed during 2018.
The Company has adopted a codeexceptional ability and to promote the common interest of ethics that applies to its principal executive officer, principal financial officer, controller,directors and persons performing similar functions. A copystockholders in enhancing the value of the Company's codecommon stock. The board of ethicsdirectors reviews director compensation at least annually based on recommendations by the nominating and governance committee. The nominating and governance committee has the sole authority to engage a consulting firm to evaluate director compensation.
| Position | Annual Cash Retainer | Per Meeting Fee |
| Chair of the Board | $50,000 | $1,000 in person / $500 telephonic |
| All Independent Directors | $25,000 | $1,000 in person / $500 telephonic |
| Audit Committee Chair | $2,500 | $750 |
| Other Audit Committee Members | — | $500 |
| Compensation Committee Chair | — | $750 |
| Other Compensation Committee Members | — | $500 |
| Nominating and Governance Committee Chair | — | $750 |
| Other Nominating and Governance Committee Members | — | $500 |
Board of Directors and Committees
The Board of Directors held twelve meetings during
Audit Committee
The Company's Audit Committee met four times in 2017. As of March 14, 2018,market price on the membersdate of the Audit Committee were Katherine L. Davis (Chair), Gail Pagegrant. Twenty percent (9,375 shares) of the 46,875 shares become exercisable on the date of the original grant, and Peter Kissinger. The Boardan additional twenty percent become exercisable on the date of Directors has determined that each of Ms. Davis and Ms. Page is an "audit committee financial expert," as defined under the rulesfour succeeding anniversaries of the SEC. Eachdate of grant if the director is still a director on that date.
| Director | Fees Earned or Paid in Cash($)(1) | Option Awards($) | Total($)(2) |
| Katherine L. Davis(2) | $75,000 | $— | $150,000 |
| Gail S. Page(2) | 25,000 | — | 90,000 |
| Mary Lake Polan(2)(3)(4) | 10,417 | 197,165.63 | 622,135.72 |
| John G. Potthoff(2)(3)(5) | 12,500 | 155,053.13 | 469,531.25 |
| Peter Kissinger(6) | 12,500 | — | 12,500 |
| Gary Meller(7) | — | — | — |
| (1) | Consist of annual retainer and meeting fees, as described above under “Non-Employee Director Annual Retainer and Meeting Fees.” |
| (2) | On October 8, 2018 each non-employee director received 7,772 restricted shares of common stock that will vest in full on October 8, 2019. The amount of each such grant of restricted shares of $75,000, based on a fair market value of $9.65 per share of common stock on October 8, 2018. The fair value of options at the date of grant was estimated using the Black-Scholes option pricing model. |
| (3) | On the date of the annual meeting of stockholders at which a director is initially elected and every fifth year thereafter at which the director is re-elected, the director receives stock options to acquire 46,875 shares of common stock, with an exercise price equal to the market price on the date of the grant. Twenty percent (9,375 shares) of the 46,875 shares become exercisable on the date of the original grant, and an additional twenty percent become exercisable on the date of each of the four succeeding anniversaries of the date of grant if the director is still a director on that date. The fair value of options at the date of grant was estimated using the Black-Scholes option pricing model. |
| (4) | Commenced serving as a director in August 2018. |
| (5) | Commenced serving as a director in May 2018. |
| (6) | Resigned from the board in May 2018. |
| (7) | Resigned from the board in February 2018. |
| Name | Age | Positions and Business Experience | |||
| John J. Sperzel III | 55 | Please see “Proposal 1. Election of Directors—Information Concerning Nominees for Election as Directors” at page 13. | |||
| Neil A. Goldman | 51 | Professional Experience | |||
| • | Executive Vice President and Chief Financial Officer since December 2017 | ||||
| • | Executive Vice President-Corporate Development and Chief Financial Officer at J.S. Held LLC, a construction consulting firm, from May 2015 to May 2017 | ||||
| • | Global Finance Director for the Delphi Data Connectivity division of Delphi Corp. (now Aptiv plc), an automotive supplier, from October 2014 to April 2015 | ||||
| • | Executive Vice President-Corporate Development and Chief Financial Officer from 2013 to September 2014, Senior Vice President-Chief Operating and Financial Officer from 2006 to 2013, and Chief Financial Officer from 2005 to 2006 at Unwired Technology LLC, a tier-1 global automotive electronics manufacturer and distributor | ||||
| • | Chief Financial Officer at EPPCO Enterprises, Inc., a mechanics tools manufacturer, from 2003 to 2005 | ||||
| • | Senior Manager at Ernst & Young LLP and its successor Cap Gemini Ernst & Young LLC, from 1989 to 2002 | ||||
| • | Certified Public Accountant | ||||
| Education | |||||
| • | Bachelor of Science degree in Business-Accountancy from Miami University (Ohio) | ||||
| Javan Esfandiari | 52 | Professional Experience | |||
| • | Executive Vice President and Chief Scientific and Technology Officer since 2004 and Director of Research and Development, from 2000 to 2004 | ||||
| • | Co-founder and Director of Research and Development of Sinovus Biotech AB, a developer of lateral flow technology, from 1997 to 2000 | ||||
| • | Director of Research and Development with On-Site Biotech/National Veterinary Institute, a government agency for veterinary medicine, from 1993 to 1997 | ||||
| Education | |||||
| • | Master of Science degree in Molecular Biology from Lund University, Sweden | ||||
| • | Bachelor of Science degree in Clinical Chemistry from Lund University, Sweden | ||||
| David Gyorke | 59 | Professional Experience | |||
| • | Senior Vice President, Chief Operations Officer since January 2017 | ||||
| • | Vice President of Operations at Nanomix, Inc., a developer of analytical detection devices for point-of-care diagnostics, from 2011 to 2016 | ||||
| • | Vice President of Operations at NeoVista, Inc., a developer of medical technologies, from 2008 to 2011 | ||||
| • | Vice President of Operations at Farallon Medical, Inc., a developer of point-of-care diagnostic and drug monitoring technologies, from 2004 to 2008 | ||||
| • | Vice President of Operations at Cholestech Corporation, a developer of point-of-care diagnostic systems, from 1999 to 2003 | ||||
| Education | |||||
| • | Bachelor of Engineering (Industrial) degree from California Polytechnic State University | ||||
| Robert Passas | 66 | Professional Experience | |||
| • | Senior Vice President, Chief Commercial Officer since October 2016 | ||||
| • | Director and the Group Commercial Director for Worldwide Sales, Marketing, and Technical and Customer Support at The Binding Site Group Ltd, a supplier of clinical diagnostic tools, from 2011 to 2016 | ||||
| • | Senior Director-International at Quidel Corporation, a manufacturer of diagnostic healthcare products, from 2010 to 2011 | ||||
| • | Executive Vice President for Global Sales and Marketing, from 2007 to 2010 and Vice President of Sales and Marketing, from 2006 to 2007 at Trinity Biotech plc, a developer, manufacturer and marketer of diagnostic test kits | ||||
| • | Regional Director at Abbott Diabetes Care, a manufacturer of blood glucose monitors and meters, from 2003 to 2006 | ||||
| Education | |||||
| • | Doctor of Philosophy degree in Analytical Chemistry from the University of Surrey | ||||
| • | Bachelor of Science degree in Medical Biochemistry from the University of Surrey | ||||
Compensation Committee
The Company's Compensation Committee met one time in 2017. As of March 14, 2018, the members of the Compensation Committee were Gail Page (Chair), Katherine L. Davis, and Peter Kissinger. Each of the Compensation Committee members is deemed "independent" in accordance with the NASDAQ Global Market's requirements for independent directors. The Compensation Committee establishes salaries, incentives and other forms of compensation for executive officers. The Compensation Committee also administers our incentive compensation plan. The Compensation Committee's charter is available on the Company's website at www.chembio.com. The Compensation Committee does not currently delegate its authority to any other party, and does not currently engage any compensation consultants to determine the amount or form of executive and director compensation. Executive officers do not play a role in the determination or recommendation of the form or amount of any executive compensation paid, except that the Compensation Committee may request for the Chief Executive Officer to provide the Committee with oral evaluations of the performance of other executive officers.
Nominating And Governance Committee
The Company's Nominating And Governance Committee met six times in 2017. As of March 14, 2018, the members of this Committee were Katherine L. Davis (Chair), Gail Page, and Peter Kissinger. Each member of the Committee is deemed "independent" in accordance with the NASDAQ Global Market's requirements for independent directors. The Committee (i) identifies individuals qualified to become members of the Board of Directors, (ii) recommends director candidates to the Company's Board of Directors, (iii) reviews, develops, updates as necessary, and recommends to the Company's Board of Directors corporate governance principles and policies, and (iv) monitors compliance with such principles and policies. The Committee's Charter is available on the Company's website at www.chembio.com. All the nominees for director included in this Proxy Statement were recommended by the Nominating And Governance Committee, which is comprised entirely of non-management directors.
Stockholder Recommendations To The Nominating And Governance Committee
There have been no changes in the past year to the procedures by which stockholders may recommend nominees for director to our Board. For a stockholder recommendation for a director to be considered for nomination by the Board at the next annual meeting of stockholders, the recomendations must be made by a stockholder of record entitled to vote. Stockholder nominations must be made by notice in writing, delivered or mailed by first class U.S. mail, postage prepaid, to the Secretary of the Company at the Company's principal business address, not less than 60 days nor more than 90 days prior to any meeting of the stockholders at which directors are to be elected. Each notice of nomination of directors by a stockholder shall set forth the nominee's name, age, business address, if known, residence address of each nominee proposed in that notice, the principal occupation or employment of each nominee for the five years preceding the
��
date of the notice, the number of shares of the Company's common stock beneficially owned by each nominee, and any arrangement, affiliation, association, agreement or other relationship of the nominee with any Company stockholder.
Stockholder Communications
Stockholders wishing to send communications to the Board may contact Katherine L. Davis, our Board Chair, at the Company's principal executive office address. All such communications shall be shared with the members of the Board, or if applicable, a specified committee or director.
Leadership Structure of the Board
The Board has determined that separating the positions of CEO and Chairman is the best structure to fit the Company's current needs. It has been determined that this structure is preferable because this structure provides a greater role for the independent directors in the oversight of the Company and active participation of the independent directors in setting agendas and establishing priorities and procedures for the work of the Board. However, our Board has no fixed policy with respect to the separation of the offices of the Chairman and CEO. Our Board retains the discretion to make this determination on a case-by-case basis from time to time as it deems in the best interests of the CompanyPresident and our stockholders at any given time.
Risk Management
Management is responsible for assessing and managing the Company's exposure to various risks. At least annually, the Company undertakes its assessment process to identify risks and develop plans to address them. This process is led by the Chief Financial Officer. The Audit Committee has oversight responsibility to review management's risk management process, including the policies and guidelines used by management to identify, assess and manage the Company's exposure to risk. The Chief Financial Officer reports directly to the Audit Committee at least quarterly to provide an update on management's efforts to manage risk. The Audit Committee also has oversight responsibility for financial risks. The Board of Directors has oversight responsibility for all other risks.
Diversity
The Board recognizes the importance of diversity in business experience, education, and professional skills in selecting nominees for director. The Board does not, however, have a formal policy concerning the consideration of diversity.
Audit Committee Report
This report shall not be deemed incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent that we specifically incorporate this information by reference, and shall not otherwise be deemed filed under either of such Acts.
The Audit Committee oversees the Company's financial reporting process. Management has the primary responsibility for the financial statements and the reporting process, including the systems of internal controls. In fulfilling its oversight responsibilities, the Audit Committee reviewed and discussed with management the audited financial statements in the Company's Annual Report on Form 10-K for the year ended December 31, 2017 and the unaudited financial statements included in the Quarterly Reports on Form 10-Q for the first three quarters of the fiscal year ended December 31, 2017.
The Committee discussed with the independent auditors, who are responsible for expressing an opinion on the conformity of audited financial statements with generally accepted accounting principles, the auditors' judgments as to the quality, not just the acceptability, of the Company's accounting principles and such other matters as are required to be discussed by the auditors with the Committee under Statement on Auditing Standard No. 61, as amended. In addition, the Committee discussed with the independent auditors the auditors' independence from management and the Company, including the matters in the written disclosures and the letter that the Committee received from the auditors that is required by the PCAOB independence standards. The Committee considered whether the auditors' providing services on behalf of the Company other than audit services is compatible with maintaining the auditors' independence.
The Committee discussed with the Company's independent auditors the overall scope and plans for their respective audits. The Committee meets with the independent auditors, with and without management present, to discuss the results of the auditors' examinations, their evaluations of the Company's internal controls, and the overall quality of the Company's financial reporting.
In reliance on the reviews and discussions referred to above, the Committee approved and recommended to the Board inclusion of the audited financial statements in the Annual Report on Form 10-K for the year ended December 31, 2017 for filing with the SEC.
The Audit Committee
Katherine Davis (Chair)
Gail Page
Peter Kissinger
March 9, 2018
EXECUTIVE COMPENSATION
The following table summarizes all compensation recorded by the Company in each of the last three completed fiscal years for our principal executive officer, principal financial officer and our threenext two most highly compensated executive officers other than our principal officers whose annual compensation exceeded $100,000.
| Name / | Salary1 | Bonus2 | Stock | Option Awards3 | All Other Compensation4 | Total | ||||||||||||||||||||
| Principal | ($) | ($) | Awards | ($) | ($) | ($) | ||||||||||||||||||||
| Position | Year | ($) | ||||||||||||||||||||||||
| John J. Sperzel5 | 2017 | $ | 415,137 | $ | 63,750 | - | $ | 62,998 | - | $ | 541,885 | |||||||||||||||
| CEO | 2016 | $ | 375,000 | $ | 100,000 | - | - | - | $ | 475,000 | ||||||||||||||||
| 2015 | $ | 375,000 | $ | 70,000 | - | - | - | $ | 445,000 | |||||||||||||||||
| Javan Esfandiari | 2017 | $ | 342,308 | $ | 51,750 | - | $ | 9,652 | $ | 12,289 | $ | 415,999 | ||||||||||||||
| CSTO; Executive Vice President | 2016 | $ | 329,135 | $ | 82,500 | - | $ | 144,455 | $ | 11,001 | $ | 422,636 | ||||||||||||||
| 2015 | $ | 304,130 | $ | 60,000 | - | - | $ | 10,520 | $ | 374,650 | ||||||||||||||||
| Sharon Klugewicz | 2017 | $ | 300,192 | $ | 31,500 | - | $ | 9,652 | $ | 5,900 | $ | 347,244 | ||||||||||||||
| Pres. Americas | 2016 | $ | 265,000 | $ | 62,500 | - | - | $ | 5,283 | $ | 332,783 | |||||||||||||||
| 2015 | $ | 259,000 | $ | 40,000 | - | - | $ | 5,180 | $ | 304,180 | ||||||||||||||||
| Robert Passas6 | 2017 | $ | 226,000 | $ | 45,100 | - | - | - | $ | 271,100 | ||||||||||||||||
| Pres. EMEA and APAC | 2016 | $ | 42,707 | - | - | $ | 96,974 | - | $ | 139,681 | ||||||||||||||||
| Neil A. Goldman | 2017 | $ | 5,769 | - | - | $ | 423,882 | - | $ | 224,638 | ||||||||||||||||
| CFO; Executive Vice President | ||||||||||||||||||||||||||
| Richard J. Larkin7 | 2017 | $ | 210,481 | - | - | $ | 9,652 | $ | 4,505 | $ | 224,638 | |||||||||||||||
| Former CFO; Executive Vice President | 2016 | $ | 205,000 | $ | 50,000 | - | - | $ | 4,690 | $ | 259,690 | |||||||||||||||
| 2015 | $ | 202,460 | $ | 20,000 | - | - | $ | 4,094 | $ | 226,554 | ||||||||||||||||
| Name and Principal Position | Year | Salary ($) | Bonus($)(1) | Equity Awards ($)(2) | All Other Compensation($)(3) | Total($) | ||||||
| John J. Sperzel III | 2018 | $416,847 | $89,250 | $950,000 | — | $1,430,597 | ||||||
| Chief Executive Officer and President | 2017 | 415,137 | 63,750 | 62,998 | — | 541,885 | ||||||
| Neil A. Goldman | 2018 | 294,231 | $50,400 | 300,000 | $2,769 | 597,000 | ||||||
| Executive Vice President, Chief Financial Officer | 2017 | 5,769 | — | 423,882 | — | 224,638 | ||||||
| Javan Esfandiari | 2018 | 357,807 | $72,450 | 375,000 | 7,391 | 791,948 | ||||||
Executive Vice President, Chief Science and Technology Officer | 2017 | 342,308 | 51,750 | 9,652 | 5,900 | 347,244 |
| Bonuses earned in 2018 and 2017 |
| (2) | The estimated fair value of any option or common stock granted was determined in accordance with |
| Other compensation includes, where applicable, an employer match to 401(k) contributions and car |
Option Awards | Stock Awards | ||||||||||
| Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price($) | Option Expiration Date | Number of Shares that have not Vested(#) | Market Value of Shares that have not Vested($) | |||||
| John J. Sperzel III | 200,000 | 50,000 | $3.4163 | 3/21/21 | 98,446(1) | 950,000 | |||||
| 5,000 | — | 5.25 | 3/15/22 | — | — | ||||||
| — | 20,000 | 5.3666 | 3/31/24 | — | — | ||||||
| Neil A. Goldman | 41,666 | 83,334 | 7.04 | 12/18/24 | 31,088(2) | 300,000 | |||||
| Javan Esfandiari | 40,000 | 20,000 | 5.64 | 3/11/21 | 38,860(2) | 375,000 | |||||
| 5,000 | — | 5.25 | 3/15/22 | — | — | ||||||
| (1) | One-third of the 98,446 shares of common stock will vest on October 8 of each of 2019, 2020 and 2021. Mr. Sperzel |
| (2) |
severance, and all of his unvested stock options shall immediately become vested. The Sperzel Employment Agreementequity awards will vest immediately. Mr. Sperzel’s employment agreement also contains provisions prohibiting Mr. Sperzelhim from (i) soliciting the Company'sour employees for a period of 24 monthstwo years following his termination, (ii) soliciting the Company'sour customers, agents orand other sources of distribution of the Company's business for a period of twelve monthsone year following his termination, and (iii) except where termination is involuntary upon a "Changedefined change in Control,"control, engaging or participating in any business that directly competes with theour business activities of the Company in any market in which the Company iswe are in business or plansplan to do business during the period in which he is entitled to severance, or for a period of six months if he is not entitled to severance payments under the Employment Agreement.
Mr. Goldman. The Companyhis employment agreement.
Mr. Esfandiari. The CompanyMarch 20, 2019, we entered into an employment agreement effective as of March 5, 2016 (the "Esfandiari Employment Agreement"), with Mr.Javan Esfandiari to continue as the Company'sour Chief Scientific & Technology Officer and Executive Vice President for an additional term of three years through March 5, 2019.December 31, 2021. In the event Mr. Esfandiari's annual base salaryemployment is $335,000, with the possibilityterminated by reason of a discretionary, performance-based annual cash bonus of updisability or for “cause,” as defined in Mr. Esfandiari’s employment agreement, or due to 50% ofMr. Esfandiari's resignation or voluntary termination, all compensation, including his base salary, for each year, which is inhis right to receive a performance bonus, and benefits, and the same proportionsvesting of any unvested equity awards, will cease as described below under "Executive Bonus Plan". The Company also grantedof his termination date, and Mr. Esfandiari pursuant to the Company's 2008 Stock Incentive Plan, incentive stock options to purchase 60,000 shares of the Company's common stock. The price per share of these options is equal to the fair market value of the Company's common stock as of the close of the market on March 11, 2016, which is the trading date on which the Agreement was entered into. Of these stock options, options to purchase 20,000 shares vest on each of the first three anniversaries of the effective date of the Esfandiari Employment Agreement.will receive no severance benefits. If not exercised or terminated sooner in accordance with the Esfandiari Employment Agreement, the stock options expire on March 11, 2021. Mr. Esfandiari is eligible to participate in any profit sharing, stock option, retirement plan, medical and/or hospitalization plan, and/or other benefit plans except for disability and life insurance that the Company may from time to time place in effect for the Company's executives during the term of the Esfandiari Employment Agreement. If the Esfandiari Employment AgreementEsfandiari’s employment agreement is terminated by the Companyus without cause, or if Mr. Esfandiari terminates the Esfandiari Employment Agreementhis employment agreement for a reasonable basis, as defined in the Esfandiari Employment Agreement,his employment agreement, including within 12 months of a change in control, the Company iswe will be required to pay his base salary and our monthly share of health insurance premiums for a period of twelve months as severance, Mr. Esfandiari's salary for twelve months, and all of his unvested stock options shall become immediately become vested. The the Esfandiari Employment Agreementequity awards will vest immediately. Mr. Esfandiari’s employment agreement also contains provisions prohibiting Mr. Esfandiari from (i) soliciting the Company'sour employees for a period of 24 months following his termination, (ii) soliciting the Company'sour customers, agents, or other sources of distribution of the Company'sour business for a period of twelve months following his termination, and (iii) except where termination is involuntary upon a "Change“Change in Control"Control”, for a period of twelve months following his termination, engaging or participating in any business that directly competes with theour business activities of the Company in any market in which the Company iswe are in business or plansplan to do business.
Ms. Klugewicz. The Company entered into an employment agreement with Ms. Klugewicz (the "Klugewicz Employment Agreement"), effective as of May 22, 2017 (the "Effective Date"). The Agreement provides that she will serve as the Company's President, Americas Region for an additional term of one year. Ms. Klugewicz will receive an annual base salary of $280,000, with
the possibility of a discretionary, performance-based annual cash bonus of up to 37.5% of her base salary. In the event Ms. Klugewicz's employment is terminated by reason of disability or for "cause," as defined in the Klugewicz Employment Agreement, all compensation, including her base salary, her right to receive a performance bonus, and the vesting of any unvested options, will cease as of her termination date, and Ms. Klugewicz will receive no severance benefits. If the Company terminates Ms. Klugewicz's employment without cause or Ms. Klugewicz terminates her employment for a reasonable basis, as defined in the Klugewicz Employment Agreement (which includes involuntary termination within a six-month period upon a "Change of Control"), then the Company will pay Ms. Klugewicz her base salary for a period of six months as severance. The Klugewicz Employment Agreement also contains provisions prohibiting Ms. Klugewicz from (i) soliciting the Company's employees for a period of 24 months following her termination, (ii) soliciting the Company's customers, agents, or other sources of distribution of the Company's business for a period of twelve months following her termination, and (iii) except where termination is involuntary upon a "Change in Control", for a period of 12 months following termination of the Klugewicz Employment Agreement, engaging or participating in any business that directly competes with the business activities of the Company in any market in which the Company is in business or plans to do business.
None of theour other executive officers of the Company has an employment contract with the Company.
Executive Bonus Plan
The Company has establishedus.
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END December 31, 2017
The following table summarizes information regarding the outstanding equity awards held by eachtermination of the named executive officersofficer’s employment or a change in control, see “—Employment Agreements” above.
| Option Awards | Stock Awards | ||||||||||
| Name | Number of Securities Underlying Unexercised Options Exercisable (#) | Number of Securities Underlying Unexercised Options Unexercisable (#) | Option Exercise Price ($) | Option Expiration Date | Option Vesting Date | Number of Shares of Stock That Have Not Vested (#) | Market Value of Shares of Stock That Have Not Vested ($) | Equity Incentive Plan Awards: Number of Unearned Shares That Have Not Vested (#) | Equity Incentive Plan Awards: Market Value of Unearned Shares That Have Not Vested ($) | Foot- note | |
| John J. Sperzel | 25,000 | 3.4163 | 3/21/2021 | 3/13/2015 | 1 | ||||||
| 25,000 | 3.4163 | 3/21/2021 | 3/13/2015 | 2 | |||||||
| 18,132 | 3.4163 | 3/21/2021 | 3/13/2016 | 1 | |||||||
| 31,868 | 3.4163 | 3/21/2021 | 3/13/2016 | 2 | |||||||
| 50,000 | 3.4163 | 3/21/2021 | 3/13/2017 | 2 | |||||||
| 5,000 | 5.25 | 3/15/2022 | 3/15/2017 | 5 | |||||||
| 50,000 | 3.4163 | 3/21/2021 | 3/13/2018 | 2 | |||||||
| 50,000 | 3.4163 | 3/21/2021 | 3/13/2019 | 2 | |||||||
| 20,000 | 5.3666 | 3/31/2024 | 3/31/2020 | 5 | |||||||
| Neil A. Goldman | 41,666 | 7.038 | 12/18/2024 | 12/18/2018 | 4 | ||||||
| 41,667 | 7.038 | 12/18/2024 | 12/18/2019 | 4 | |||||||
| 41,667 | 7.038 | 12/18/2024 | 12/18/2020 | 4 | |||||||
| Javan Esfandiari | 20,000 | 5.64 | 3/11/2021 | 3/11/2017 | 1 | ||||||
| 5,000 | 5.25 | 3/15/2022 | 3/15/2017 | 8 | |||||||
| 20,000 | 5.64 | 3/11/2021 | 3/11/2018 | 1 | |||||||
| 20,000 | 5.64 | 3/11/2021 | 3/11/2019 | 1 | |||||||
| Sharon Klugewicz | 630 | 5.56 | 2/26/2018 | 2/26/2013 | 1 | ||||||
| 2,500 | 4.50 | 5/22/2018 | 5/22/2014 | 1 | |||||||
| 2,500 | 4.50 | 5/22/2018 | 5/22/2015 | 1 | |||||||
| 5,000 | 5.25 | 3/15/2022 | 3/15/2017 | 3 | |||||||
| 5,000 | 5.90 | 5/22/2022 | 5/22/2018 | 3 | |||||||
| 5,000 | 5.90 | 5/22/2022 | 5/22/2019 | 3 | |||||||
| Robert Passas | 12,000 | 7.15 | 10/11/2021 | 10/11/2017 | 9 | ||||||
| 12,000 | 7.15 | 10/11/2021 | 10/11/2018 | 9 | |||||||
| 12,000 | 7.15 | 10/11/2021 | 10/11/2019 | 9 | |||||||
| Richard J. Larkin6 | 5,000 | 5.25 | 3/15/2022 | 3/15/2017 | 7 | ||||||
Director Compensation
All non-employee directors are paid a $25,000 annual fee in semi-annual payments.“performance-based” under Section 162(m) was deductible without regard to this $1 million limit. In addition, once every five2018 and prior years, on the date of the annual meeting of stockholders at which a director is elected or re-elected (every 5 years), that director receives stock options to acquire, subject to vesting as described below, 46,875 shares of the Company's common stock, with an exercise price equal to the market price on the date of the grant. Stock options to acquire 9,375 shares become exercisable on the date of the original grant, and options to acquire an additional 9,375 shares become exercisable on the date of each of the four succeeding anniversaries of the date of grant if and to the extent that the non-employee director is still a director on each such vesting date. These options grants also are described in note 2 below. The non-employee board chair is paid a monthly fee of $4,167. The audit committee chair is paid an annual fee of $2,500, paid semi-annually. In addition, the non-employee directors are paid $1,000 for each board of directors' meeting attended, and paid $500 for each telephonic board of directors meeting. The non-employee directors who are members of a committee of the board of directors areand the compensation committee designed awards that were intended to qualify for this performance-based compensation exception. However, the Tax Cuts and Jobs Act, which was signed into law December 22, 2017, eliminated this performance-based compensation exception effective January 1, 2018, subject to a special rule that “grandfathers” certain awards and arrangements that were in effect on or before November 2, 2017. As a result, compensation that the compensation committee structured in 2018 and prior years with the intent of qualifying as performance-based compensation under Section 162(m) that is paid $500 for each committee meeting attended,on or $750 for each committee meeting attended if that non-employee director isafter January 1, 2018 may not be fully deductible, depending on the committee chair. Directors also may be paid for serving on ad hoc committeesapplication of the Board.
DIRECTOR COMPENSATION
| Name | Fees Earned or Paid in Cash ($)1 | Stock Awards ($) | Option Awards ($)2 | Total ($) | ||||||||||||
| Katherine L. Davis | $ | 88,500 | $ | - | $ | - | $ | 88,500 | ||||||||
| Peter Kissinger | $ | 36,000 | $ | - | $ | - | $ | 36,000 | ||||||||
| Gary Meller3 | $ | 38,250 | $ | - | $ | - | 38,250 | |||||||||
| Gail S. Page | $ | 16,000 | $ | - | $ | 102,005 | $ | 118,005 | ||||||||
Compensation Committee Interlocks and Insider Participation
No executive officer of the Company served as a member of the Board of any other public company during the year ended December 31, 2017. No member of the Compensation Committee served as an executive officer of any other public company during the year ended December 31, 2017. No interlocking relationship exists between the members of our Compensation Committee and the Board or compensation committee of any other company. As of March 14, 2018, the members of the Compensation Committee were Gail Page (Chair), Katherine Davis, and Dr. Peter Kissinger, each of whom is deemed by the Board of Directors to be independent.
CEO PAY RATIO DISCLOSURE
As required by the Dodd-Frank Wall Street Reform and Consumer Protection Act and rules of the Securities and Exchange Commission, we are providing the ratio of the total annual compensation of our CEO, John J. Sperzel III, to that of the median employee for 2017. The compensation for our CEO in 2017 was approximately 13 times the median pay of our employees.
Our CEO-to-median-employee pay ratio is calculated in accordance with what the SEC requires pursuant to Item 402(u) of Regulation S-K. We identified the median employee by examining the 2017 total cash compensation for all individuals, excluding our CEO, who
were employed by us on December 31, 2017, the last day of our payroll year. We included all employees, whether employed on a full-time, part-time, or seasonal basis. We did not make any assumptions, adjustments, or estimates with respect to total cash compensation, and we did not annualize the compensation for any full-time employees that were not employed by us for all of 2017. We believe the use of total cash compensation for all employees is a consistently applied compensation measure because we do not widely distribute annual equity awards to employees.
After identifying the median employee based on total cash compensation, we calculated annual total compensation for such employee using the same methodology we use for our named executive officers as set forth ingenerally will not be deductible. While the “Executive Compensation Table” above.
COMPENSATION DISCUSSION AND ANALYSIS
Executive Summary
Named Executive Officers. The following persons are referred to herein asTax Cuts and Jobs Act will limit the "Named Executive Officers" or "NEOs": John J. Sperzel III, who served as the Company's CEO during fiscal 2017, Neil A. Goldman, who became the Company's Chief Financial Officer on December 18, 2017, Javan Esfandiari, Sharon Klugewicz, Robert Passas, and Richard J. Larkin, who served as the Company’s Chief Financial Officer in 2017 until his retirement on December 18, 2017.
Biographical information concerning eachdeductibility of our NEOs is included above in this Proxy Statement under "INFORMATION REGARDING THE BOARD OF DIRECTORS AND EXECUTIVE OFFICERS".
Compensation Philosophy and Objectives. Our policies regarding executive compensation programs are intended to balance motivating, rewarding and retaining executives with a competitive compensation package, and maximizing long-term stockholder value by linking compensation earned to both individual and Company performance. Compensation typically includes base salary, eligibility for annual cash bonuses and equity-based awards, retirement plan contributions, and other Company-sponsored benefits. A significant portion of each NEO's cash bonus and equity-based awards are dependent upon the Company's and/or the individual's achieving business and financial goals and realizing other performance objectives. Examples of Company performance metrics for which we measure achievement are net revenue, gross profit, profit margins, operating income, and net earnings, as well as achievements and other developments in the Company's business operations (such as product development, regulatory approval and/or marketing launch, new customer contracts, etc.). Annual performance targets for these metrics are set after consideration of the Company's strategic plan, historical results, and other factors. Our compensation programs are intended to reward individual contributions (for example, bringing a new product to market) and Company-wide achievement of performance metric targets (for example, overall revenue and net earnings).
The Compensation Committee is responsible for ongoing oversight of compliance with this compensation philosophy. The Compensation Committee strives to ensure that, in its judgment, the total compensation paid to the NEOs is fair, reasonable and competitive.
At our 2017 annual meeting of stockholders, we once again held an advisory, "say-on-pay" vote onnamed executive officers, the compensation committee will design compensation programs that are intended to be in the best long-term interests of our NEOs. At that time, ourcompany and stockholders, approved the compensation of our NEOs, with approximately 95.6% of votes cast in favor of the prior year's compensation of our NEOs. Based on the strong stockholder support from the 2017 say-on-pay vote, the Compensation Committee concluded that stockholders were confirming their concurrence with the compensation paid to the NEOs and that the stockholders did not believe that the Compensation Committee needed to make substantial revisions to the compensation of the Company's NEOs.
Establishing Compensation Levels. Compensation levels for the NEOs are driven by market pay levels, the NEO's individual achievement and leadership performance, and overall Company performance. The Compensation Committee relies upon a combination of judgment (which is necessarily subjective) and guidelines (discussed above and elsewhere herein) in determining the amount and mixdeductibility of compensation components for the NEOs. Although the Compensation Committee considers the inputbeing one of our CEO as a crucial componentvariety of its compensation processes and decisions relating to NEO compensation, the Compensation Committee is not obligated to follow or otherwise adhere in any regard to those recommendations. The Company does not engage in strict numerical benchmarking in determining compensation for the NEOs.
Market Pay Levels and Role of the Compensation Consultant. Under its charter, the Compensation Committee is authorized in its discretion to engage outside advisors at the Company's expense. In fiscal 2017, the Compensation Committee did not engage an outside compensation consultant.
Pay levels for the NEOs generally are determined for each fiscal (calendar) year during the first four months of that year.
Most of our compensation decisions are made in the first few months of our fiscal year, after review of the Company's performance and the performance of our NEOs. We believe the compensation of all of our NEOs for 2017 was consistent with the Company's performance in 2017 as well as the criteria and objectives of our executive compensation policies.
Company Performance. We set Company performance metric targets that are considered in establishing the performance-based component of our compensation programs. Performance metric targets that areconsiderations taken into consideration in ouraccount.
Recovery of Prior Awards. Except as provided by applicable laws and regulations, we do not have a policy with respect to adjustment or recovery of awards or payments if relevant Company performance measures upon which previous awards were based are restated or otherwise adjusted in a manner that would reduce the size of such award or payment. Under those circumstances, we expect that the Compensation Committee and the Board would evaluate whether compensation adjustments were appropriate based upon the facts and circumstances surrounding the applicable restatement or adjustment.
Summary Compensation Sheets. In setting the NEOs' compensation, the Compensation Committee reviews all components of such compensation through the use of summary compensation sheets. These sheets provide the amount of total compensation paid or earned by each NEO based on his or her base salary, cash bonus, and equity-based awards. The summary compensation sheets provide the information that is reflected in the Executive Compensation Table, including the relationships of each element of compensation with each of the other elements. As a result, the summary compensation sheet allows the Compensation Committee to consider an executive's overall compensation rather than only one or two specific components of an executive's compensation. This helps the Compensation Committee to make compensation decisions and evaluate management recommendations based on a complete analysis of an executive's total compensation.
Below is a summary of practices that highlight certain features in our compensation programs:
What Chembio Does. Pays for performance. A significant portion of executive pay is not guaranteed, but rather is tied to the achievement of various performance metrics and to the discretion of the Board as to the individual's overall performance.
Sets NEO salary guidelines in an effort to be responsive to industry trends. Target compensation for NEOs is set after consideration of market data on compensation at other peer companies.
Balances short-term and long-term incentives. The incentive programs provide what the Compensation Committee considers to be an appropriate balance of annual and longer-term incentives.
Uses multiple performance metrics and considers risk assessment. The risk of the undue influence of a single metric is mitigated by utilizing multiple performance measures for annual incentive awards and multi-year vesting for long-term incentive awards. In addition, the Committee periodically conducts a compensation risk assessment to determine whether the compensation policies and practices, or components thereof, create risks that are reasonably likely to have a material adverse effect on the Company.
Caps award payouts. Amounts that can be earned under the Company's cash bonus are capped at a specified percentage of the NEO's salary.
Maintains an independent Compensation Committee consisting entirely of independent directors.
Elements of Compensation Packages. Chembio's executive compensation and benefits packages consist of base salary, cash bonuses, long-term equity incentive awards, Company-sponsored benefit and retirement plans, and (for certain NEOs with specific provisions in an employment contract) change-in-control severance benefits. Each of these components has a certain risk profile concerning the Committee's assessment of the risk that the component would have an adverse effect on the interests of the Company's stockholders.
The Compensation Committee has reviewed the risk profile of the components of the Company's executive compensation program, including the performance objectives and target levels used in connection with incentive awards, and has considered the risks that an NEO might be incentivized to take with respect to such components. When establishing the mix among these components, the Compensation Committee is careful not to encourage excessive risk taking. Specifically, the performance objectives contained in the Company's executive compensation programs have been balanced between annual and long-term incentive compensation to ensure that both components are aligned and consistent with our long-term business plan and that our overall mix of equity-based awards has been allocated to promote an appropriate combination of incentive and retention objectives. As a result, the Compensation Committee believes that the Company's executive compensation program does not incentivize the NEOs to engage in business activities or other behavior that would threaten the value of the Company or the investments of its stockholders.
The Compensation Committee continues to monitor and evaluate on an on-going basis the mix of compensation, especially equity compensation, awarded to the NEOs, and the extent to which such compensation aligns the interests of the NEOs with those of the Company's stockholders. In connection with this practice, the Compensation Committee has, from time to time, reconsidered the structure of the Company's executive compensation program and the relative weighting of various compensation elements.
Interplay of Compensation Elements. We believe that each element of our compensation program plays a substantial role in maximizing long-term value for our stockholders and employees because of the significant emphasis on pay-for-performance principles.
We strive to achieve an appropriate mix between equity incentive awards and cash payments in order to meet our objectives. Our mix of compensation elements is designed to reward recent results and motivate long-term performance through a combination of cash and equity-based awards. We believe the most important indicator of whether our compensation objectives are being met is our ability to motivate our NEOs to deliver superior performance and retain them to continue their careers with Chembio on a cost-effective basis.
Base Salary. The Company pays salaries that are designed to attract, motivate and retain experienced executives who will drive superior Company performance and maintain long-term stockholder value. The Compensation Committee considers recommendations from the CEO and approves annual base salaries that are commensurate with each NEO's responsibilities and performance, as well as
Company performance in the prior fiscal year, which are competitive with similar positions locally and in the industry.
Cash Bonuses. The Compensation Committee believes that employees should be rewarded based on Company results and individual performance. The Compensation Committee awards cash bonuses contingent upon both Company and individual performance. Cash bonuses, if earned, are paid in the first quarter of each fiscal year, for the prior year's performance.
Long-Term Incentive Awards. The Compensation Committee believes that equity-based compensation encourages employees to commit to the long-term goals of the Company. This ensures that the Company's NEOs have a stake in the long-term creation of stockholder value. A significant portion of the awards is performance-based, meaning the NEOs' ability to vest in that portion of awards is contingent upon the Company achieving a minimum level of net earnings.
Although Chembio does not have a written policy regarding the timing or practices related to granting equity awards, neither Chembio nor the Compensation Committee engages in spring-loading, back-dating or bullet-dodging practices. At any time that the Compensation Committee determines to grant stock options, those options are granted at the closing market price on the date of grant.
Company-Sponsored Benefit and Retirement Plans. NEOs participate in the Company's benefit and retirement plans on the same basis as other Company employees. The core benefit package includes health, short and long-term disability, and group term life insurance. Chembio generally provides retirement benefits to executives through its 401K Plan. The Company also pays a matching contribution to the Company's 401(k) Plan for all employees. This matching contribution is equal to a maximum of two percent of the employee's compensation.
Other Personal Benefits. One of the NEOs receives an auto allowance that is paid by the Company, the costs of which are included in the All Other Compensation table on page 15. The Company believes payment of this allowance to this one NEO is reasonable given the nature of NEO's the position and is consistent with the Company's overall executive compensation philosophy.
2017 Business Overview.
|
2018 Actions.
NEO salaries were increased an average of 3% for 2018.
In March 2018, the Compensation Committee approved cash bonuses for the following NEOs: Mr. Sperzel, Mr. Esfandiari, Ms. Klugewicz, and Mr. Passas. Also in March 2018, the Compensation Committee approved cash bonuses for three other officers.
Management and the Compensation Committee have intended that the earnings thresholds should be set at meaningful rates so that management must be diligent, focused and effective in order to achieve these goals. In other words, the Company and management believed at the time of the establishment of these thresholds that they would be challenging to achieve and would require substantial efforts from management. To this end, the Compensation Committee tends to set the thresholds consistent with the earnings range requiring that the low end of guidance is achieved before bonuses are paid.
CEO Employment Agreement
Effective as of March 13, 2017, the Company and Mr. Sperzel entered into the Sperzel Employment Agreement with a term of three years. The Sperzel Employment Agreement provides that Mr. Sperzel is entitled to receive an established minimum annual salary and that he is eligible to participate in the Company's bonus and stock incentive plans. The Sperzel Employment Agreement also provides that Mr. Sperzel receive a grant of 20,000 stock options vesting on the three-year anniversary of the effective date of the Sperzel Employment Agreement.
The Sperzel Employment Agreement provides for potential payments to Mr. Sperzel upon a change in control of the Company. These payments are described on page 15 of this Proxy Statement.
CFO Employment Agreement
Effective as of December 18, 2017, the Company and Mr. Goldman entered into the Goldman Employment Agreement with a term of one year. The Goldman Employment Agreement provides that Mr. Goldman is entitled to receive an established minimum annual salary and that he is eligible to participate in the Company's bonus and stock incentive plans. The Goldman Employment Agreement also provides that Mr. Goldman will receive a grant of 125,000 stock options one-third of the options vesting yearly beginning on the first anniversary of the effective date of the Goldman Employment Agreement.
The Goldman Employment Agreement provides for potential payments to Mr. Goldman upon a change in control of the Company. These payments are described on page 16 of this Proxy Statement.
Javan Esfandiari Employment Agreement
Effective as of March 5, 2016, the Company and Mr. Esfandiari entered into the Esfandiari Employment Agreement for a term of three years. The agreement provides that Mr. Esfandiari is entitled to receive an established minimum annual salary and that he is eligible to participate in the Company's bonus and stock incentive plans. The Esfandiari Employment Agreement also provides that he shall be awarded options to acquire 60,000 shares of the Company's common stock, with one-third vesting yearly beginning on the first anniversary of the effective date of the Esfandiari Employment Agreement.
The Esfandiari Employment Agreement provides for potential payments to Mr. Esfandiari upon a change in control of the Company. These payments are described on page 16 of this Proxy Statement.
Sharon Klugewicz Employment Agreement
Effective as of May 22, 2017, the Company and Sharon Klugewicz entered into the Klugewicz Employment Agreement with a term of one year providing for the terms of Ms. Klugewicz's employment as President, Americas Region, of the Company. Ms. Klugewicz is responsible for sales, marketing, customer support, clinical and regulatory affairs, and quality systems in the Americas, and is tasked with leading the U.S. commercial team and expanding commercial operations throughout Latin America, the U.S., and Canada. The Klugewicz Employment Agreement provides that Ms. Klugewicz's annual base salary shall be $280,000, and that she shall be entitled to participate in the Company's bonus and stock incentive plans.
The Klugewicz Employment Agreement provides for potential payments to Ms. Klugewicz upon a change in control of the Company. These payments are described on page 17 of this Proxy Statement.
Tax Deductibility of Pay
Section 162(m) of the Internal Revenue Code contains compensation deduction limitations for certain highly compensated employees. One exception to this limitation is for performance-based compensation that is approved by, among other things, a committee of "outside directors" (as defined under IRS treasury regulations). The Committee believes that all compensation paid to the NEOsour named executive officers for fiscal year 20172018 is properly deductible under Section 162(m), but no assurance can be made in this regard.
COMPENSATION COMMITTEE REPORT
The Compensation Committee has reviewed and discussed the Compensation Discussion And Analysis required by Item 402(b) of Regulation S-K with management. Based on these reviews and discussions, the Compensation Committee recommended to the Board of Directors that the foregoing Compensation Discussion And Analysis be included in the Company's Proxy Statement on Schedule 14A.
Members of the Compensation Committee
Gail Page (Chair)
Katherine L. Davis
Peter Kissinger
ITEM 2. PROPOSAL TO RATIFY THE SELECTION OF BDO USA, LLP
AS THE COMPANY'S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE YEAR ENDING DECEMBER 31, 2018
On May 25, 2011, the Company, through and with the approval of the Audit Committee of the Company's Board of Directors, engaged BDO USA, LLP ("BDO")
| Plan Category | Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights | Weighted Average Exercise Price of Outstanding Options, Warrants and Rights | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans | ||||
| Equity compensation plans approved by stockholders(1) | 711,268 | $5.62 | 21,061 | ||||
| Equity compensation plans not approved by stockholders | — | — | — | ||||
| Totals | 711,268 | 21,061 | |||||
| (1) | “Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights” consists of 99,132 shares under the 2008 Stock Incentive Plan, 390,968 shares under the 2014 Stock Incentive Plan, and 206,868 shares issued outside of those plans, and options to purchase 15,000 shares that have since been cancelled or expired. The 2008 Stock Incentive Plan was increased by 125,000 shares at the Annual Stockholder meeting held on September 23, 2011. “Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans” represents zero shares under the 2008 Stock Incentive Plan and 21,061 under the 2014 Stock Incentive Plan. |
It is expected that one or more representatives of BDO will be present, or available by phone, at the Annual Meeting and will be given the opportunity to make a statement if they desire to do so. They also will be available to respond to appropriate questions from stockholders.
Principal Accountant Fees and Services
Audit Fees
Forfor professional services rendered for the years ended December 31, 20172018 and 2016 the Company engaged BDO USA, LLP as its independent registered public accounting firm to perform an audit of the Company's annual financial statements included on Form 10-K, including reviews of the quarterly financial statements and assistance with and review of documents filed with the SEC, for $428,289 and $336,757, respectively in fees.
Audit-Related Fees
For the years ended December 31, 2017 and 2016, the Company's independent registered public accounting firm, BDO USA, LLP, did not provide the Company with any assurance and related services reasonably related to the performance of the audit or review of the Company's financial statements that are not reported above under "Audit Fees."
Tax Fees
For the years ended December 31, 2017 and 2016, the Company's independent registered public accounting firm, BDO USA, LLP, billed the Company $21,000 and $26,900, respectively for professional services for tax compliance, tax advice and tax planning.
All Other Fees
For the years ended December 31, 2017 and 2016, the Company's independent registered public accounting firm, BDO USA, LLP, did not provide the Company with any services for other matters.
2017:
| 2018 | 2017 | |||
| Audit Fees(1) | $548,863 | $428,289 | ||
| Audit-related Fees(2) | 87,780 | — | ||
| Tax Fees(3) | 21,000 | 21,000 | ||
| Total Fees | $657,643 | $449,289 |
| (1) | Includes services relating to the audit of the annual consolidated financial statements, review of quarterly consolidated financial statements, statutory audits, comfort letters, and consents and review of documentation filed with SEC-registered and other securities offerings. |
| (2) | Includes services related to assistance with general accounting matters, work performed on acquisitions and divestitures, employee benefit plan audits and assistance with statutory audit matters. |
| (3) | Includes services for tax compliance, tax advice and tax planning. |
Required Vote; Board Recommendation
In order to ratify the selection
Directors. The Audit Committee is responsible for providing independent, objective oversight of the financial reporting processes and internal controls of Chembio Diagnostics, Inc., or Chembio. The Audit Committee operates under a written charter approved by the Board of Directors recommends that the stockholders vote FOR ratifying the selectionDirectors. A copy of the certified publiccurrent charter is available on Chembio’s website at chembiodiagnosticsinc.gcs-web.com/static-files/9834f839-d259-45c5-8b25-f6fce52b724a.
ITEM 3. ADVISORY VOTE ON COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS
We are providing our stockholders with an opportunity to vote to approve, on an advisory, non-binding basis,that the compensationaudited consolidated financial statements as of our "Named Executive Officers". As stated elsewhere in this Proxy Statement our "Named Executive Officers" are John J. Sperzel III, Chief Executive Officer, Neil A. Goldman, Chief Financial Officer and Executive Vice President, Javan Esfandiari, Chief Scientific &
Technology Officer and Executive Vice President, Sharon Klugewicz, President, Americas Region, Robert Passas, President EMEA and APAC Regions, and Richard J. Larkin,for the former Chief Financial Officer and Executive Vice President. This proposal, which is often referred to as a "say-on-pay" proposal, is required by the Dodd-Frank Wall Street Reform And Consumer Protection Act. The Board of Directors is providing stockholders with the opportunity to cast an advisory vote on the compensation of our "Named Executive Officers." This proposal gives you, as a stockholder, the opportunity to endorse or not endorse executive compensation programs and policies and the compensation paid to our Named Executive Officers as disclosed in this Proxy Statement
The Compensation Committee's compensation objectives are to attract and retain highly qualified individuals with a demonstrated record of achievement, reward past performance, provide incentives for future performance, and align the interests of the executive officers with the interests of our stockholders. The Board is asking stockholders to support this proposal based on the disclosure set forth in these sections of this Proxy Statement, which, among other things, demonstrates our commitment to ensuring that executive compensation is aligned with our corporate strategies and business objectives and is competitive with those of other companies in our industry.
The Board is asking stockholders to cast a non-binding, advisory vote "FOR" the compensation paid to our Named Executive Officers as disclosed in this Proxy Statement pursuant to the compensation disclosure rules of the SEC, including the compensation tables and accompanying narrative disclosure under the heading "Executive Compensation"year ended December 31, 2018 be included in this Proxy Statement. Accordingly, we are asking our stockholders to approve the following advisory resolution at our 2018 Annual Meeting:
RESOLVED, that the Company's stockholders, hereby approve, on an advisory basis, the compensation paid for 2017 to the Company's "Named Executive Officers" as set forth pursuant to Item 402 of Regulation S-K, including the compensation tables and accompanying narrative disclosure under the heading "Executive Compensation", all as contained in the Company's 2018 Proxy Statement for the 2018 Annual Meeting of Stockholders.
Although the say-on-pay vote we are asking you to cast is non-binding, and the results of this vote will not require the Board or the Compensation Committee to take any action regarding executive compensation, the Board and the Compensation Committee value the views of our stockholders and carefully will consider the outcome of the vote when determining future compensation arrangements for our Named Executive Officers.
Board Recommendation
The Board of Directors recommends that stockholders vote "FOR" the compensation paid to our Named Executive Officers.
Comments Concerning Advisory Vote on Frequency Of Stockholder Say-On-Pay Voting
In accordance with Section 14A of the Securities Exchange Act of 1934, the Board may ask stockholders to cast a non-binding, advisory vote on how frequently we should have stockholder say-on-pay votes. We are required to hold this advisory vote at least once every six years, although our Board can determine to hold such a vote sooner. When that occurs, stockholders may vote to hold say-on-pay votes every one, two or three years. At the 2013 Annual Meeting Of Stockholders, the stockholders voted to have a stockholder say-on-pay vote every year. The Board has determined not to hold an advisory vote on the frequency of stockholder say-on-pay voting this year, and thereby continue with adherence with the stockholders' vote at the 2013 Annual Meeting Of Stockholders.
ANNUAL REPORT TO STOCKHOLDERS
Included with this Proxy Statement is the Company'sChembio’s Annual Report on Form 10-K for the year ended December 31, 2017.
RESOLUTIONS PROPOSED BY INDIVIDUAL STOCKHOLDERS
Under2018. The Audit Committee selected BDO as Chembio’s independent auditor for the fiscal year ending December 31, 2019, and recommended that the selection be submitted for ratification by the stockholders of Chembio.
In addition, under Rule 14a-4(c)(1)record.
the 2018 Annual Meeting.
OTHER BUSINESS
The Board of Directors is not aware of any other matters that are to be presented atInternet, the Annual Meeting and it has not been advised that anyproxy materials, as well as all other person will present any other mattersexpenses of soliciting proxies for consideration at the meeting. Nevertheless, if other matters should properly come before the Annual Meeting the stockholders present, or the persons, if any, authorized by a valid proxy to vote on their behalf shall vote on such matters in accordance with their judgment.
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This Notice and Proxy Statement is sent by order of the Boardboard of Directors.
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June 18, 2019
(Continued and to be signed on the reverse side)
5PLEASE DETACH ALONG PERFORATED LINE AND MAIL IN THE ENVELOPE PROVIDED.5
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 PLEASE DETACH ALONG PERFORATED LINE AND MAIL IN THE ENVELOPE PROVIDED. |
Nominees: | FOR all nominees | WITHHOLD AUTHORITY for all nominees | FOR all nominees except as noted: |
01 Katherine L. Davis |
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02 Gail S. Page | ☐ | ☐ | ☐ |
03 Mary Lake Polan | |||
04 John G. Potthoff
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05 John J. Sperzel III |
DO NOT PRINT IN THIS AREA (Stockholder Name & Address Data) |
Address Change/Comments: (If you noted any Address Changes and/or Comments above, please mark box.) | Please indicate if youplan to attend this meeting ☐ |
CONTROL NUMBER | ||
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PROPOSALS 1-4 AND A VOTE OF “1 YEAR” FOR PROPOSAL 5.
Date |
Signature |
Signature | |
(Joint Owners) | |
| PLEASE DETACH ALONG PERFORATED LINE AND MAIL IN THE ENVELOPE PROVIDED. |
CONTROL NUMBER | ||
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| 1. | PURPOSE |
| 2. | DEFINITIONS |
| 3. | ADMINISTRATION OF THE PLAN |
| 4. | STOCK SUBJECT TO THE PLAN |
| 5. | EFFECTIVE DATE, DURATION, AND AMENDMENTS |
| 6. | AWARD ELIGIBILITY AND LIMITATIONS |
| 7. | AWARD AGREEMENT |
| 8. | TERMS AND CONDITIONS OF OPTIONS |
| 9. | TERMS AND CONDITIONS OF STOCK APPRECIATION RIGHTS |
| 10. | TERMS AND CONDITIONS OF RESTRICTED STOCK AND RESTRICTED STOCK UNITS |
| 11. | FORM OF PAYMENT FOR OPTIONS AND RESTRICTED STOCK |
| 12. | OTHER STOCK-BASED AWARDS |
| 13. | REQUIREMENTS OF LAW |
| 14. | EFFECT OF CHANGES IN CAPITALIZATION |
| 15. | NO LIMITATIONS ON COMPANY |
| 16. | TERMS APPLICABLE GENERALLY TO AWARDS GRANTED UNDER THE PLAN |
