Joseph Ioia
Mr. Ioia is a leader in the emerging glycol recycling industry. He has a 40-year accomplished background in the petrochemicals and petroleum lubricants industries. Mr. Ioia founded the largest ExxonMobil Distributor in the Metro New York and New Jersey area for the past 25 years. At NY Terminals II, he revamped an aging and underachieving liquid bulk storage terminal into a modern, state-of-the-art facility commonly referred to as the "crown jewel" of the regions privately held terminals. He created and operates a separate transportation business that services both NY Terminals II customers, and clients in the petroleum lubricant and petrochemicals industry. Mr. Ioia also founded Full Circle Manufacturing, one of the largest and most sophisticated glycol recycling facilities in North America. Under his leadership, the business has grown to over $4.3 Million in estimated revenues for 2012. The company is known for its success in recycling difficult to clean hazardous waste glycols created by the automotive services industry.
John Hawley
Mr. Hawley has worked in industry for 35 years. He has held various engineering and operations positions, including Process and Project engineering as well as Utility and Production management positions. He worked for Phone-Poulenc in Green River, WY producing soda ash as a Project Engineer and Utility Manager. Also, with Phone-Poulenc, he worked in Butte, MT producing elemental Phosphorus as Production Superintendent. John then moved to Phoenix, AZ in 1995 and has worked in the Rare Earth alloy industry ever since as Operations Manager for three different employers: Rhodia, Santoku and currently Molycorp. Duties have included managing all duties of day to day operation: production, maintenance, sales, engineering, capital projects and budget and cost control. Internationally, John spent 3 years in the mid-1980s in the Peace Corp serving in Morocco and Kenya. In 1997, he installed and started a Rare Earth alloy facility in Baotou, Inner Mongolia, China. John participates in triathlons and has completed 2 Ironman competitions. John holds a BS degree in Chemical Engineering from the University of Minnesota.
George Melas
Mr. Melas-Kyriazi has extensive experience analyzing, financing, and advising small emerging companies. He is the President of MKH Management Company LLC, a New York based investment firm that focuses on investing in small and micro-cap public companies, which he founded in 2008. From 2002 to 2008, Mr. Melas-Kyriazi was a senior analyst with Lord Abbett, a mutual fund company, and previously worked at Deutsche Bank and Natwest Securities. Mr. Melas-Kyriazi also has experience in community economic and neighborhood development. He received a M.B.A from Yale School of Management and a B.A. in Social Anthropology magna cum laude from Harvard College.Family Relationships
Rick Opler
Since 1998, Mr. Opler has worked in real estate development. Previously Mr. Opler held careers as a commercial real estate agent, VP of Finance for a technology startup firm,John Lorenz and VP of a business consultingJanet Carnell Lorenz are married, and venture capital firm. He also served as director at certain companies. From 1977 to 1985 he worked at World’s Finest Chocolate. Mr. Opler received a Bachelor’s degree from Duke University in 1977Keri Smith and a Master’s degree in business from the University of Chicago in 1981.
KeriTodd Smith
Ms. Smith has 25 years of experience in Securities Services, during which she has occupied many significant operational and management positions. From 2009 to 2012, Ms. Smith served as the Executive Director of the WSS, Global Fund Services Division for JPMorgan Chase, Boston and JPMorgan Chase, London. From 2006 to 2008, she was the Global Head/Director – Worldwide Network Management for RBC Dexia Investor Services, London. From 1998 to 2006, Ms. Smith was the Director – Global Network Management of Investors Bank & Trust Company, and from 1995 to 1998, she was the Vice President – Global Network Management of BankBoston. Ms. Smith received a Bachelor’s degree from the Rhode Island College for Teaching in 1987.
Recommendation
The Board recommends that stockholders vote “FOR” the election of five of the eight nominees named by the Board of Directors.
Vote Required
The five nominees who receive the most votes cast in their favor shall be elected to serve as directors of the Company for a one-year term or until their successors are elected. Abstentions and broker non-votes will have no effect on the outcome of this proposal.
PROPOSAL 2: RATIFICATION OF APPOINTMENT OFINDEPENDENT REGISTERED PUBLIC ACCOUNTANT
We are asking our stockholders to ratify the appointment of Semple, Marchal & Cooper, LLP as the Company’s independent registered public accountants for the fiscal year ending December 31, 2013. The Board believes that such submission is consistent with best practices in corporate governance and is an opportunity for stockholders to provide direct feedback to the Board of Directors on an important issue of corporate governance. In the event that the stockholders do not approve the appointment of Semple, Marchal & Cooper, LLP, the Board will reconsider its appointment of Semple, Marchal & Cooper, LLP.
The Board intends to appoint Semple, Marchal & Cooper, LLP to be the Company’s independent registered public accountant for the fiscal year ending December 31, 2013, and to concurrently dismiss Jorgensen & Co., which served as the Company’s independent registered public accountant for the fiscal years ended December 31, 2012, and December 31, 2011.
The reports provided by Jorgensen & Co. in connection with the Company’s financial statements for the fiscal years ended December 31, 2012, and December 31, 2011, did not contain any adverse opinion or disclaimer of opinion, nor were such reports qualified or modified as to uncertainty, audit scope, or accounting principles, except that they contained an explanatory paragraph in respect to the substantial doubt of the Company’s ability to continue as a going concern. Moreover, during the engagement of Jorgensen & Co., (i) there were no disagreementssiblings. No other family relationship exists between the Company and Jorgensen & Co. on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of Jorgensen & Co., would have caused Jorgensen & Co. to make reference to the subject matter of the disagreements in connection with its reports on the Company’s financial statements; and (ii) there were noindividuals listed above that is reportable events as that term is described inunder Item 304(a)(1)(v)401(d) of Regulation S-K.
During the two most recent completed fiscal years and through the date of appointment, neither the Company nor anyone on its behalf consulted with Semple, Marchal & Cooper, LLP regarding any of the following: (i) the application of accounting principles to a specific transaction, either completed or proposed; (ii) the type of audit opinion that might be rendered on the Company’s financial statements, and none of the following was provided to the Company (a) a written report, or (b) oral advice that Semple, Marchal & Cooper, LLP concluded was an important factor considered by the Company in reaching a decision as to an accounting, auditing, or financial reporting issue; or (iii) any matter that was subject of a disagreement, as that term is defined in Item 304(a)(1)(iv) of Regulation S-K, or a reportable event, as described in Item 304(a)(1)(v) of Regulation S-K.
A representative from Semple, Marchal & Cooper, LLP will be attending the Annual Meeting telephonically and will be available to respond to any questions.
Recommendation
The Board recommends that stockholders vote “FOR” the ratification of the appointment of Semple, Marchal & Cooper, LLP as the Company’s independent registered public accountant for the fiscal year ending December 31, 2013.
Vote Required
Approval of this proposal requires the affirmative vote of a majority of the votes cast on the proposal. Stockholders who return a signed proxy card but do not indicate how they wish to vote on Proposal 2 will be deemed to have voted “FOR” Proposal 2. Abstentions and broker non-votes will have no effect on the outcome of this proposal.
PROPOSAL 3: ADVISORY VOTE ON THE COMPENSATIONOF OUR NAMED EXECUTIVE OFFICERS
Under the Dodd-Frank Wall Street Reform and Consumer Protection Act, more commonly referred to as the Dodd-Frank Act, and Section 14A of the Exchange Act, our stockholders are entitled to vote to approve, on an advisory (non-binding) basis, the compensation of our named executive officers as disclosed in this proxy statement in accordance with the compensation disclosure rules of the SEC. This non-binding advisory vote is commonly referred to as a “say-on-pay” vote.
The compensation of our named executive officers subject to the vote is disclosed in the Executive Compensation section of this proxy statement.
We believe that our executive compensation program is appropriately designed and reasonable in light of the executive compensation programs of similar companies, and further, that it encourages our executive officers to work for meaningful stockholder returns and reflects a pay-for-performance philosophy. We strive to ensure that our compensation program for our executive officers stays competitive to help attract, motivate, and retain talented and experienced individuals to manage and operate all aspects of our business.
The Board asks that stockholders indicate their support for the compensation of our named executive officers as described in this proxy statement by casting a non-binding advisory vote in favor of the following resolution:
“RESOLVED, that the stockholders hereby APPROVE, on a non-binding, advisory basis, the compensation paid to the Company’s named executive officers as disclosed in the Company’s proxy statement prepared in connection with its 2013 Annual Meeting of Stockholders pursuant to the compensation disclosure rules of the Securities and Exchange Commission.”
Recommendation
The Board recommends that stockholders vote “FOR” the approval of the compensation of our named executive officers. Abstentions and broker non-votes will not be counted as participating in the voting and will therefore have no effect.
PROPOSAL 4: ADVISORY VOTE ON THE FREQUENCYOF THE ADVISORY VOTE ON EXECUTIVE COMPENSATION
The Dodd-Frank Act and Section 14A of the Exchange Act enable our stockholders, at least once every six years, to indicate their preference regarding how frequently we should solicit a say-on-pay vote. By voting on this Proposal 4, stockholders may indicate whether they would prefer a non-binding advisory vote on named executive officer compensation once every year, every two years, or every three years.
After carefully considering the benefits and consequences of each alternative, and for the reasons described below, the Board recommends that the non-binding advisory vote on the compensation of our named executive officers be submitted to the stockholders once every three years.
The three-year approach provides regular input by stockholders, while allowing time to evaluate the effects of our compensation program on performance over a longer time. Our compensation programs do not change significantly from year to year and do not contain any significant risks that we believe would be of concern to our stockholders. An advisory vote occurring once every three years will also permit our stockholders to observe and evaluate the impact of any changes to our executive compensation policies and practices which have occurred since the last advisory vote on executive compensation, including changes made in response to the outcome of a prior advisory vote on executive compensation.
We view the advisory vote on the compensation of our named executive officers as an additional, but not exclusive, opportunity for our stockholders to communicate with us regarding their views on our executive compensation program. Although this advisory vote is not binding, the Board will take into account the outcome of the vote when considering the frequency of future advisory votes on the compensation of our named executive officers. In addition, while the Board currently believes that holding an advisory vote on the compensation of our named executive officers every three years will reflect the right balance of considerations in the normal course, we will periodically reassess that view and can provide for an advisory vote on the compensation of our named executive officers on a more frequent basis if changes in our compensation programs or other circumstances suggest that such a vote would be appropriate.
While the Board believes that its recommendation is appropriate at this time, our stockholders are not voting to approve or disapprove that recommendation, but are instead asked to indicate their preference, on an advisory basis, as to whether the nonbinding advisory vote on executive compensation should be held once every year, every two years, or every three years. The option, if any, among those choices that receives the affirmative vote of a majority of the votes cast on the proposal will be deemed to be the frequency preferred by our stockholders. However, because this vote is advisory and therefore not binding on the Board, the Board may decide that it is in the best interests of the stockholders that we hold an advisory vote on executive compensation more or less frequently than the option preferred by our stockholders.
Recommendation
The Board recommends that stockholders vote for the option of “Every 3 Years” as the preferred frequency for holding an advisory vote on the compensation of our named executive officers. Abstentions and broker non-votes will not be counted as participating in the voting and will therefore have no effect.
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The members of the Board of Directors of the Company hold office for a period of one year or until his/her successor is elected and qualified. The officers of the Company are appointed by our Board of Directors and hold office until their death, resignation, or removal from office. A summary of the current composition of the Company’s directors and executive officers, their ages (as of March 31, 2013), and positions held, are as follows:
Name | | Age | | Position | | Director Since | | | | 69 | | Chief Executive Officer, President and Chairman
| | | | | | 66 | | | | | | | | 57 | | | | | | | | 49 | | | | | | | | 59 | | | | | | | | 36 | | Interim Chief Financial Officer, Secretary, Controller and VP of Internal Operations
| | - | | | | 65 | | | | - | |
John Lorenz – Chairman and Chief Executive Officer. Mr. Lorenz served as the Chief Executive Officer, President, and sole director of Global Recycling Technologies from its formation in May 2006 until the reverse triangular merger on November 28, 2011. Upon the consummation of the merger, Mr. Lorenz replaced Ralph M. Amato as the Chief Executive Officer, President and Chairman of the Board of Directors of the Company. Mr. Lorenz is experienced in identifying and managing new technologies, financing industry consolidations and acquisitions, and providing initial financing for such ventures. Mr. Lorenz has served as a founder and management, financial and strategic consultant to a number of emerging, public and private companies. Mr. Lorenz founded Environmental Waste of America, Inc. (“EWA”) in 1986, where he participated in virtually all management aspects of the solid waste industry, including acquisitions and integration. He served as President, Chief Executive Officer, and a director of EWA between 1986 and 1997 until its merger with Envirofil, Inc., a public company that is now Waste Management, Inc. In addition, Mr. Lorenz was formerly a founder, director, and Chief Executive Officer of Automotive Services of America. Earlier in his career, Mr. Lorenz worked as a financial, marketing, and political consultant, doing media, market, and public opinion research. Mr. Lorenz has articles on diachronic survey research, and is an author and editor of the book, The Political Image Merchants , published in 1971. Mr. Lorenz is an “inventor” on patents and is a frequent lecturer at Universities in the United States on capital, financial strategies, and equity development. Mr. Lorenz holds an Adjunct Professorship at Marylhurst University, and is preparing a book for publication in 2014 on financial strategies in challenging economic environments. Mr. Lorenz is an active tri-athlete and regularly competes in triathlons and marathons in the US. Mr. Lorenz holds an undergraduate degree with honors from the University of Portland, and a master’s degree from the University of Chicago.
Jim Flach – Director. Mr. Flach has held a wide range of positions in the communications and software industries over the last thirty years. A partner with Accel for ten years, he was formerly Chairman of Agile Networks (Lucent), Netlink (Cabletron), Sentient Networks (Cisco), Teleos Communications (Madge Networks), and Vivo Software. Jim has served as CEO of Terraspring, Teleos, Bandwidth9, Hybrid Networks, Redback Networks, and Sentient Networks. He also serves on the board of Bandwidth9, CenterBeam, GoDigital Telecommunications, Hybrid Networks, P-Cube, Primarion, Vertical Networks, and Terraspring. Previously, Jim was Vice President of Intel where he was General Manager of the Personal Computer Enhancement Division. He came to Intel in 1989 when Intel acquired his communications company, Jupiter Technology, where he had been CEO since 1986. Prior to joining Intel, Jim held numerous business and technical positions during a seventeen-year career at Xerox Corporation, including Vice President of Systems Engineering, and Vice President and General Manager of the Network Systems Business Unit, and was responsible for the worldwide P&L of the Xerox Network business. Jim holds a B.S. degree in Physics from Rensselaer Polytechnic Institute and an M.S. degree in Applied Mathematics from the Rochester Institute of Technology.
Michael Jaap – Director. Mr. Jaap has had an extensive career in the field of nonferrous scrap metal recycling, including the areas of copper recycling and copper related raw material feed procurement. Mr. Jaap has worked with companies such as Amax Copper, where he held positions of purchasing copper and precious metal based scrap. Mike also worked for Commercial Metals, where he ran the yard operations of their Los Angeles facility. Mr. Jaap worked for Metal Traders, Warrenton Refining Company, owned by Phillip Anschutz. Mr. Jaap was involved with scrap copper procurement and copper ingot sales. Cyprus Copper Company acquired Warrenton, and Mr. Jaap worked for the Cyprus Copper Division in Phoenix AZ. The sale of Warrenton by Cyprus prompted Mr. Jaap to set up his own companies over the next 19 years. These companies include CopperEmployment / Consulting Industries, DeReelTech, Southwest Metals, Commodity Choppers, INTL Sieramet, Carbontech, JPH LLC and other ventures not specific to the recycling industry. Mr. Jaap currently owns and operates a copper recycling facility in Indiana, and is an active member of Southwest Metals in Glendale, AZ. Mr. Jaap is a graduate of Michigan State University with a BS in Microbiology and Public Health.
William J. Miller – Director, Senior VP Strategic Planning and Facilities Development. Mr. Miller was the founder and CEO of AutoXray from its beginning in 1994 to its sale in 2004. AutoXray pioneered low cost diagnostic scan tools for automobile computers. The company’s products were selected Popular Mechanics Editor’s choice 6 out of 7 years, and were featured in the Wall Street Journal, USA Today, and many of the PC Magazines, as well as CNN and Motor Trend television. During that time Mr. Miller was selected as an Ernst and Young Entrepreneur of the Year, and the company received the Spirit of Enterprise Award from the WP Carey School of Business at Arizona State University. Prior to his endeavors with AutoXray, Mr. Miller worked in the semiconductor industry and in Europe in the lift truck industry. He holds a Computer Engineering Degree from the University of Arizona. Mr. Miller is an active angel investor in select companies and selectively provides consulting to emerging companies.
Joseph Ioia – Director. Richard GeibMr. Ioia is a leader in - On August 4, 2014, the emerging glycol recycling industry. He has a 40-year accomplished background in the petrochemicals and petroleum lubricants industries. Mr. Ioia founded the largest ExxonMobil Distributor in the Metro New York and New Jersey area for the past 25 years. At NY Terminals II, he revamped an aging and underachieving liquid bulk storage terminalCompany entered into a modern, state-of-the-art facility commonly referred to asConsulting Agreement with Richard Geib, the "crown jewel"Company’s Chief Technical Officer. The Consulting Agreement superseded the terms of the regions privately held terminals. He created and operates a separate transportation business that services both NY Terminals II customers, and clients in the petroleum lubricant and petrochemicals industry. Mr. Ioia also founded Full Circle Manufacturing, one of the largest and most sophisticated glycol recycling facilities in North America. Under his leadership, the business has grown to over $4.3 Million in estimated revenues for 2012. The company is known for its success in recycling difficult to clean hazardous waste glycols created by the automotive services industry.
Alicia Williams, Esq. – Interim Chief Financial Officer, Secretary, Controller and VP of Internal Operations. Ms. Williams was designated by the Board of Directors, on January 15, 2013, to serve as the Company’s interim principal financial officer until such time as a permanent chief financial officer is named. Ms. Williams was appointed as Secretary of the Company by the Board of Directors on November 30, 2011. From October 2008 until the dateConsulting Agreement previously entered into between Global Recycling Technologies, merged withLtd., a Delaware corporation (“Global Recycling”), and intoMr. Geib on May 3, 2010, which the Company Ms. Williams served as the Director of Internal Operations of Global Recycling Technologies. Upon the consummation of the merger of Global Recycling Technologies with and into the Company, Ms. Williams became the Controller and VP of Internal Operations of the Company. From August 2004 until she joined the Company, Ms. Williams was a full-time law student and/or part-time law clerk. From March 2000 to August 2004, Ms. Williams served as a Senior Systems Analyst/Data Lead at Intel Corporation in Chandler, Arizona. Ms. Williams holds a law degree (J.D.) from the University of Southern California Gould School of Law in Los Angeles, California (December 2007) and a Bachelor of Science in Management Information Systems & Accounting (December 2009). Ms. Williams was admitted to practice law in the state of Arizona (2008).
Richard Geib – Chief Technical Officer. Mr. Geib was appointed as the Chief Technical Officer of the Companyassumed upon the consummation of the merger. Mr. Geib served asa reverse triangular merger with Global Recycling Technologies’ Director of Technology and Development from July 2007 until the merger. Since 2002 through current, Mr. Geib has served as the President of WEBA, which develops advanced additive packages for antifreeze and heat transfer fluid and used glycol treatment processes, including re-distillation and recovery technology. Under Mr. Geib’s direction, WEBA launched its additive sales into Canada and Mexico. From 1998 through 2002, Mr. Geib served as President of Additives Inc., a former chemical division of Silco Distributing Co., where he developed new products, added many domestic customers, began industry trade show participation, became chairman of ASTM Coolants Committee, and established a laboratory, customer service, production, and sales department. From 1994 to 1998, Mr. Geib served as the Manager of the Chemical Division of Silco Distributing Company, where he developed and grew his division, developed products, designed a production plant, negotiated contracts for outside production, wrote marketing and technical literature, developed and implemented a sales program, arranged freight, and managed cash flow. From 1990 to 1994, Mr. Geib served as the President of Chemical Sales Company. From 1969 through 1989, Mr. Geib held several positions with Monsanto Company, including, Director of Sales, Detergents and Phosphates Division; Director, Process Chemicals, Europe/Africa Monsanto’s Europe/Africa Headquarters, Brussels, Belgium; Strategic and Financial Planning Director, Process Chemicals Division; Business Manager for Maleic Anhydride, Chlor-Alkali, Phosphate Esters, Fumaric Acid, etc.; Plant Manager Monsanto’s W.G. Krummrich Plant; Operations Superintendent Monsanto’s W.G. Krummrich Plant; Production Supervisor for the 4-Nitrodiphenylamine Chlorine and Caustic Soda/Potash plants; and Design and Plant Engineer World Headquarters.on November 28, 2011.
Key Consultants
The Company engages consultantsConsulting Agreement is for a term of two years and may be extended for additional one-year terms by written agreement. Pursuant to manage our businessthe Consulting Agreement, Mr. Geib will assist in the further development and operations. Specifically,implementation of the Company’s proprietary technology for recycling glycol, the GlyEco TechnologyTM, and perform such other duties as requested by the Company’s Chief Executive Officer. In consideration for his services during the term, the Company relies uponwill compensate Mr. Geib with an initial engagement fee of $50,000, a monthly consulting fee of $12,500 per month for the following key consultants:first year of the term, a to be determined monthly consulting fee for the second year of the term, and a total of 2,700,000 warrants to purchase shares of GlyEco common stock, par value $0.0001 per share, at an exercise price of $0.73 per share, of which half shall vest immediately and the remaining amount shall vest on August 4, 2015. Richard S. Fuld, Jr. – Strategic Operation and Development Consultant. Mr. Fuld has been chairman of Matrix Advisors since its inception in April of 2009. Previously, Mr. Fuld was chairman of theDirector Independence
The Board of Directors of Lehman Brothers Holdings Inc. and Lehman Brothers Inc. from 1994 to 2008. He also served as chief executive officer of Lehman Brothers Inc. from 1993 to 2008, which commenced a Chapter 11 bankruptcy proceeding in September 2008. Duringhas determined that time, Mr. Fuld was also chairmaneach of the Lehman Brothers’ Executive Committee. Mr. Fuld was president and chief operating officer of Lehman Brothers Holdings Inc. and Lehman Brothers Inc. from 1993 to 1994. He was president and co-chief executive officerfollowing qualify as an “independent director” as defined by Section 10A(m)(3)(ii) of the Lehman Brothers DivisionExchange Act and Rule 5065(a)(2) of Shearson Lehman Brothers Inc. from 1990the NASDAQ Marketplace Rules: Michael Jaap, Richard Q. Opler, Keri Smith, Dwight Mamanteo, David Ide, and Melvin L. Keating.
John Lorenz is not an “independent director” due to 1993. Mr. Fuld was a vice chairmanthe fact that he is also an employee of Shearson Lehman Brothers from 1984 until 1990 and has been a directorthe Company.
Board Oversight of Lehman Brothers Inc. since 1984. He joined Lehman Brothers in 1969. Mr. Fuld presently sits on theRisk Management The Board of TrusteesDirectors has responsibility for general oversight of New York Presbyterian Hospitalrisks facing the Company. The Board is informed by senior management on areas of risk facing the Company and periodically conducts discussions regarding risk assessment and risk management. The Board believes that evaluating how the executive team manages the various risks confronting the Company is a memberone of its most important areas of oversight. The Board’s Audit Committee reviews and assesses the Company’s processes to manage financial reporting risk and to manage investment, tax, and other financial risks. Code of Business Council. Mr. Fuld served onConduct and Ethics On August 5, 2014, the Board of Directors of the Federal Reserve BankCompany adopted a Code of New York from 2005 until 2008. He was also a memberBusiness Conduct and Ethics (the “Code of Business Conduct and Ethics”), which sets forth legal and ethical standards of conduct applicable to all directors, officers, and employees of the InternationalCompany. The Code of Business CouncilConduct and Ethics supersedes and replaces the Code of the World Economic Forum. In addition, heEthics previously served onadopted by the Board of Trusteesthe Company on January 20, 2012 (the “Prior Code”). The adoption of Middlebury Collegethe Code of Business Conduct and Ethics did not relate to, or result in, any waiver, explicit or implicit, of any provision of the Prior Code. A copy of the Code of Business Conduct and Ethics may be requested, free of charge, by sending a written communication to Matt Hamilton, General Counsel, at 4802 E. Ray Rd. Ste. 23-408, Phoenix, AZ 85044. The Code of Business Conduct and Ethics has also been posted on the Company’s website, www.glyeco.com. Committees of the Board of Directors and Meeting Attendance Our Board of Directors has an Audit Committee, a Compensation Committee, and a Governance and Nominating Committee, each of which has the composition and responsibilities described below. Audit Committee. Our Audit Committee oversees a broad range of issues surrounding our accounting and financial reporting processes and audits of our financial statements, including the following: | ● | monitors the integrity of our financial statements, our compliance with legal and regulatory requirements, our independent registered public accounting firm’s qualifications and independence, and the performance of our internal audit function and independent registered public accounting firm; | | ● | assumes direct responsibility for the appointment, compensation, retention and oversight of the work of any independent registered public accounting firm engaged for the purpose of performing any audit, review or attest services and for dealing directly with any such accounting firm; | | ● | provides a medium for consideration of matters relating to any audit issues; and | | ● | prepares the audit committee report that the rules require be included in our filings with the SEC. |
The members of our Audit Committee are Richard Q. Opler, Michael Jaap, and Dwight Mamanteo. Mr. Opler serves as chairperson of the Robin Hood Foundation.committee. The Board of Directors has determined that Mr. Fuld received his B.A. fromOpler meets the Universitycriteria of Coloradoan “audit committee financial expert” (as defined under Item 407(d)(5)(ii) of Regulation S-K. Mr. Opler is also an “independent director” as defined by Section 10A(m)(3)(ii) of the Exchange Act and his M.B.A. fromRule 5065(a)(2) of the New York University Stern SchoolNASDAQ Marketplace Rules. The Board of Business.Directors has adopted a written charter for the Audit Committee, a copy of which can be accessed online at www.glyeco.com/corporategov.html. John M. Darcy – Senior VP Management.Compensation Committee Mr. Darcy is a CEO level. Our Compensation Committee reviews and recommends policy relating to compensation and benefits of our directors and executive with global experience managing in Fortune 100 environments, non-performing situationsofficers, including reviewing and younger rapid growth companies. His expertise is in industries driven by marketing, technologyapproving corporate goals and manufacturing, and he has successfully grown companies in food, pharmaceuticals, specialty chemicals, computer software, and e-commerce. Mr. Darcy founded and ran several entrepreneurial ventures, including WorldPrints.com, Triump Pharmaceuticals, Penwest, Aegis, and MyInks.com. Previously, Mr. Darcy was askedobjectives relevant to re-structure Avis Enterprises, an underperforming $1.8 billion conglomerate with holdings in automotive, sporting goods, electronics, commercial real estatethe compensation of our Chief Executive Officer and other areas. As President, Mr. Darcy exceeded targets by focusingsenior officers, evaluating the performance of these persons in light of those goals and objectives and setting compensation of these persons based on market driven priorities, targeting superior financial returns, installing strong management throughout, consolidating or divesting underperforming subsidiaries,such evaluations. The Compensation Committee reviews and improving financial controls. Earlier, Mr. Darcy was Group General Manager and Corporate Vice Presidentevaluates, at Carnation/Nestle where he was responsible for three operating divisions including eight manufacturing facilities generating over $2 billion in revenue. Products under his responsibility included Coffee Mate, Carnation/Nestle Hot Cocoa, Carnation Instant Breakfast, Carnation Milk Products, food service product lines and others. Mr. Darcy has a B.A. from State University of California, Los Angeles.
Janet Carnell Lorenz – Senior VP Corporate Development and Marketing. Ms. Lorenz founded CyberSecurity Group, Inc. (dba Market Tactics) in 2000 to assist develop technologies into innovative and marketable products. She has synthesized a twenty-one year background in computer systems engineering, corporate development and marketing into a resource for creativity and business acumen. Clients include Apple’s iPhone application developers center and Digital Ghost. She provides in-depth knowledge of corporate branding, market validation, product development and positioning, consumer sales, and viral marketing. She has placed dozens of successful product lines with retailers including Best Buy, Office Depot, Amazon.com and Costco Wholesale. Prior to founding CyberSecurity Group, Inc., she was a founding partner at a top ranked marketing representative's firm. She createdleast annually, the company’s international sales division, devising channel and localization strategies which grew sales to over $40 Million per year. Clients included Hewlett-Packard’s PC division, Hitachi Hard Drives, Creative Labs, Lexmark Printers, PNY Electronics, Umax Technologies, and Fuji Digital Cameras. She attended the University of Washington receiving her Bachelor of Arts in Business Administration, has earned several technical certifications, and is an authorized instructor for a number of computing platforms.
Rick Opler – Real Estate and Financial Analysis. Since 1998, Mr. Opler has worked in real estate development. Previously Mr. Opler held careers as a commercial real estate agent, VP of Finance for a technology startup firm, and VP of a business consulting and venture capital firm. He also served as director at certain companies. From 1977 to 1985 he worked at World’s Finest Chocolate. Mr. Opler received a Bachelor’s degree from Duke University in 1977 and a Master’s degree in business from the University of Chicago in 1981.
Eric Menkhus, Esq. – VP Stockholder Relations and HR. As Directorperformance of the Innovation Advancement Program since 2004, Mr. Menkhus workscompensation committee and its members, including compliance of the Compensation Committee with students from across Arizona State University – the Sandra Day O'Connor College of Law, W.P. Carey School of Business, Ira A. Fulton School of Engineering, the College of Liberal Arts and Sciences, and Barrett, The Honors College – to provide essential services to technology start-up companies and entrepreneurs with ties to Arizona. Mr. Menkhus speaks on a wide array of topics to a broad spectrum of audiences, including guest lecturing in engineering and business courses on legal topics such as business-entity formation and intellectual property protection. He also teaches the Legal Studies course in the W.P. Carey Evening MBA Program and has been invited to multiple conferences and panel discussions associated with the Ewing M. Kauffman Foundation. Mr. Menkhus joined the College faculty in 2006. Previously, he worked as an Industrial Engineer and Project Manager at American Express, is Six Sigma trained, was a founding member of a web-design firm, and also worked in the real-estate industry.its charter.
Significant EmployeesThe members of our Compensation Committee are Michael Jaap, Richard Q. Opler, Dwight Mamanteo, and John Lorenz. Mr. Jaap serves as chairperson of the committee.
Todd L. Smith – Senior VP Sales, Mergers & Acquisitions. From 1995 to 2008, Mr. Smith served as PresidentThe Board of Northeast Environmental Services, Inc. (“NES”), located in Cumberland, Rhode Island. NES specialized in the recycling of used engine coolants, and the distribution of recycled automotive antifreezes, as well as various other collection and disposal services offered to the customer base. Mr. Smith was responsible for all aspects of the NES operations, and by 2007, NES had gone from its infancy to achieving $5,000,000 in gross revenues. Mr. Smith supervised the daily operations, research and development, and finances of NES. Additionally, Mr. Smith was directly involved in the development ofDirectors has adopted a sales force that led to a customer base of over 3,000 clients, maintaining account relations and retention, and the expansion of NES from a 100 mile radius to the entire Northeastern United States. In 2000 and 2003, Mr. Smith was nominatedwritten charter for the Small Business Association EntrepreneurCompensation Committee, a copy of the Year Award.which can be accessed online at www.glyeco.com/corporategov.html.
Grant Sahag, Esq. – VP International Development.Governance and Nominating Committee. The Governance and Nominating Committee oversees and assists our Board of Directors in identifying, reviewing and recommending nominees for election as directors; evaluating our Board of Directors and our management; developing, reviewing and recommending corporate governance guidelines and a corporate code of business conduct and ethics; and generally advises our Board of Directors on corporate governance and related matters.
The members of our Governance and Nominating Committee are Dwight Mamanteo, Richard Q. Opler, Michael Jaap, John Lorenz, and Keri Smith. Mr. SahagMamanteo serves as chairperson of the committee. The Board of Directors has adopted a written charter for the Governance and Nominating, a copy of which can be accessed online at www.glyeco.com/corporategov.html. Attendance
During the fiscal year ended December 31, 2013, the Board held three meetings and took action by written consent on two occasions. Each member of the Board attended or participated in 75% or more of the aggregate of (i) the total number of meetings of the Board (held during the period for which such person has been a director) and (ii) the total number of meetings held by all committees of the Board on which such person served (during the periods that such person served).
The Company does not have a written policy requiring directors to attend the annual meeting of stockholders, but attendance is encouraged. In 2013, two of the directors attended our annual meeting of stockholders. We presently anticipate that at least one director will attend this year’s annual meeting of stockholders.
Director Nomination The Governance and Nominating Committee has nominated John Lorenz, Michael Jaap, Richard Q. Opler, Keri Smith, and Dwight Mamanteo, each of whom is a business attorneycurrent member of the Board, for re-election at the Annual Meeting. The committee has also nominated David Ide and Melvin L. Keating for election to the Board as new members. The Board of Directors seeks to ensure that it is composed of members whose particular experience, qualifications, attributes and skills, when taken together, will allow the Board to satisfy its oversight obligations effectively. In selecting Board candidates, it is the Governance and Nominating Committee’s goal to identify persons who specializesit believes have appropriate expertise and experience to contribute to the oversight of a company of the Company’s nature while also reviewing other appropriate factors.
The Board of Directors believes that each of the persons nominated for election at the Annual Meeting have the experience, qualifications, attributes and skills that, when taken as a whole, will enable the Board to satisfy its oversight responsibilities effectively.
Section 16(a) Beneficial Ownership Reporting Compliance Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our executive officers and directors, and persons who beneficially own more than 10% of a registered class of our equity securities to file with the Securities and Exchange Commission initial statements of beneficial ownership, reports of changes in providing strategic business development adviceownership and annual reports concerning their ownership of our common shares and other equity securities, on Forms 3, 4 and 5, respectively. Executive officers, directors and greater than 10% stockholders are required by the Securities and Exchange Commission regulations to emerging growth companies. Mr. Sahag’s practice focusesfurnish us with copies of all Section 16(a) reports they file.
During the last completed fiscal year, the following reports required by Section 16(a) were not timely filed with the Securities and Exchange Commission: | Richard Q. Opler failed to timely file a Form 3 upon becoming a director on July 29, 2013, and failed to timely file a Form 4 upon the receipt of stock options under the Company’s 2012 Equity Incentive Plan on September 20, 2013. |
| Keri Smith failed to timely file a Form 3 upon becoming a director on July 29, 2013, and failed to timely file a Form 4 upon the receipt of stock options under the Company’s 2012 Equity Incentive Plan on September 20, 2013. |
| John Lorenz failed to timely file a Form 4 upon the receipt of stock options under the Company’s 2012 Equity Incentive Plan on September 20, 2013. |
| Michael Jaap failed to timely file a Form 4 upon the receipt of stock options under the Company’s 2012 Equity Incentive Plan on September 20, 2013. |
| Alicia Williams Young failed to timely file a Form 4 upon the receipt of stock options under the Company’s 2012 Equity Incentive Plan on September 20, 2013. |
| Richard Geib failed to timely file a Form 4 upon the receipt of stock options under the Company’s 2012 Equity Incentive Plan on September 20, 2013. |
| Janet Carnell Lorenz failed to timely file a Form 4 upon the receipt of stock options under the Company’s 2012 Equity Incentive Plan on September 20, 2013. |
For the first three quarters of 2013, our directors were paid $500 per quarter for sitting on the Board of Directors. Beginning in the areasfourth quarter of business formation, corporate governance, intellectual property, strategic partnerships, and international development. Mr. Sahag’s past clients include technology start-ups, car dealerships, local and international universities, high school districts, non-profit charities, and several professional athletes. Mr. Sahag has co-lead several international initiatives, including the expansion of retail franchises into Mexico, the development of a top 100 law firm’s China practice, and a supply-chain logistics strategy for a non-profit in east Africa. Mr. Sahag received a Juris Doctor from Arizona State University, specializing in business law, and a B.S. in Business Administration from the University of Arizona, majoring in finance and entrepreneurship. Mr. Sahag is President and Chairman of the non-profit charity Success Through Sports.2013, director compensation was increased to $600 per quarter. The table below sets forth the compensation paid to our directors during the fiscal year ended December 31, 2013. | Director | | Fees Earned or Paid in Cash | | | | | All Other Compensation | | | | | Stock Awards | | | | | Total | | | | $ | 2,100 | | (1) | | | $ | 205,000 | | (1) | | | $ | 198,090 | | (1) | | | $ | 405,190 | | | | $ | 1,000 | | (2) | | | $ | | | | | | $ | - | | | | | $ | 1,000 | | | | $ | 2,100 | | (3) | | | $ | 2,000 | | (3) | | | $ | 44,020 | | (3) | | | $ | 48,120 | | | | $ | 1,000 | | (4) | | | $ | 72,000 | | (4) | | | $ | - | | | | | $ | 73,000 | | Family Relationships John Lorenz and Janet Carnell Lorenz are married.married, and Keri Smith and Todd Smith are siblings. No other family relationship exists between the individuals listed above that is reportable under Item 401(d) of Regulation S-K.
Involvement in Certain Legal ProceedingsEmployment / Consulting Agreements
Richard Geib - On August 4, 2014, the Company entered into a Consulting Agreement with Richard Geib, the Company’s Chief Technical Officer. The Consulting Agreement superseded the terms of the Consulting Agreement previously entered into between Global Recycling Technologies, Ltd., a Delaware corporation (“Global Recycling”), and Mr. Geib on May 3, 2010, which the Company assumed upon the consummation of a reverse triangular merger with Global Recycling on November 28, 2011. NoneThe Consulting Agreement is for a term of two years and may be extended for additional one-year terms by written agreement. Pursuant to the Consulting Agreement, Mr. Geib will assist in the further development and implementation of the Company’s proprietary technology for recycling glycol, the GlyEco TechnologyTM, and perform such other duties as requested by the Company’s Chief Executive Officer. In consideration for his services during the term, the Company will compensate Mr. Geib with an initial engagement fee of $50,000, a monthly consulting fee of $12,500 per month for the first year of the term, a to be determined monthly consulting fee for the second year of the term, and a total of 2,700,000 warrants to purchase shares of GlyEco common stock, par value $0.0001 per share, at an exercise price of $0.73 per share, of which half shall vest immediately and the remaining amount shall vest on August 4, 2015.
Director Independence The Board of Directors has determined that each of the following qualify as an “independent director” as defined by Section 10A(m)(3)(ii) of the Exchange Act and Rule 5065(a)(2) of the NASDAQ Marketplace Rules: Michael Jaap, Richard Q. Opler, Keri Smith, Dwight Mamanteo, David Ide, and Melvin L. Keating.
John Lorenz is not an “independent director” due to the fact that he is also an employee of the Company.
Board Oversight of Risk Management The Board of Directors has responsibility for general oversight of risks facing the Company. The Board is informed by senior management on areas of risk facing the Company and periodically conducts discussions regarding risk assessment and risk management. The Board believes that evaluating how the executive team manages the various risks confronting the Company is one of its most important areas of oversight. The Board’s Audit Committee reviews and assesses the Company’s processes to manage financial reporting risk and to manage investment, tax, and other financial risks. Code of Business Conduct and Ethics On August 5, 2014, the Board of Directors of the Company adopted a Code of Business Conduct and Ethics (the “Code of Business Conduct and Ethics”), which sets forth legal and ethical standards of conduct applicable to all directors, officers, and employees of the Company. The Code of Business Conduct and Ethics supersedes and replaces the Code of Ethics previously adopted by the Board of the Company on January 20, 2012 (the “Prior Code”). The adoption of the Code of Business Conduct and Ethics did not relate to, or result in, any waiver, explicit or implicit, of any provision of the Prior Code. A copy of the Code of Business Conduct and Ethics may be requested, free of charge, by sending a written communication to Matt Hamilton, General Counsel, at 4802 E. Ray Rd. Ste. 23-408, Phoenix, AZ 85044. The Code of Business Conduct and Ethics has also been posted on the Company’s website, www.glyeco.com. Committees of the Board of Directors and Meeting Attendance Our Board of Directors has an Audit Committee, a Compensation Committee, and a Governance and Nominating Committee, each of which has the composition and responsibilities described below. Audit Committee. Our Audit Committee oversees a broad range of issues surrounding our accounting and financial reporting processes and audits of our directors or executive officers has, duringfinancial statements, including the past ten years:following: | | (a)● | Had any bankruptcy petition filed by or against any businessmonitors the integrity of which such person was a general partner or executive officer either atour financial statements, our compliance with legal and regulatory requirements, our independent registered public accounting firm’s qualifications and independence, and the timeperformance of the bankruptcy or within two years prior to that time;our internal audit function and independent registered public accounting firm; | | | ● | assumes direct responsibility for the appointment, compensation, retention and oversight of the work of any independent registered public accounting firm engaged for the purpose of performing any audit, review or attest services and for dealing directly with any such accounting firm; | | | (b)● | Been convicted inprovides a criminal proceeding or subject to a pending criminal proceeding; | | | | | (c) | Been subjectmedium for consideration of matters relating to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities, futures, commodities or banking activities;audit issues; and | | | ● | | | (d) | Been found by a court of competent jurisdiction (in a civil action),prepares the Securities and Exchange Commission oraudit committee report that the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, andrules require be included in our filings with the judgment has not been reversed, suspended, or vacated.SEC. |
The members of our Audit Committee are Richard Q. Opler, Michael Jaap, and Dwight Mamanteo. Mr. Opler serves as chairperson of the committee. The Board of Directors has determined that Mr. Opler meets the criteria of an “audit committee financial expert” (as defined under Item 407(d)(5)(ii) of Regulation S-K. Mr. Opler is also an “independent director” as defined by Section 10A(m)(3)(ii) of the Exchange Act and Rule 5065(a)(2) of the NASDAQ Marketplace Rules. The Board of Directors has adopted a written charter for the Audit Committee, a copy of which can be accessed online at www.glyeco.com/corporategov.html. Compensation Committee. Our Compensation Committee reviews and recommends policy relating to compensation and benefits of our directors and executive officers, including reviewing and approving corporate goals and objectives relevant to the compensation of our Chief Executive Officer and other senior officers, evaluating the performance of these persons in light of those goals and objectives and setting compensation of these persons based on such evaluations. The Compensation Committee reviews and evaluates, at least annually, the performance of the compensation committee and its members, including compliance of the Compensation Committee with its charter. The members of our Compensation Committee are Michael Jaap, Richard Q. Opler, Dwight Mamanteo, and John Lorenz. Mr. Jaap serves as chairperson of the committee. The Board of Directors has adopted a written charter for the Compensation Committee, a copy of which can be accessed online at www.glyeco.com/corporategov.html. Governance and Nominating Committee. The Governance and Nominating Committee oversees and assists our Board of Directors in identifying, reviewing and recommending nominees for election as directors; evaluating our Board of Directors and our management; developing, reviewing and recommending corporate governance guidelines and a corporate code of business conduct and ethics; and generally advises our Board of Directors on corporate governance and related matters. The members of our Governance and Nominating Committee are Dwight Mamanteo, Richard Q. Opler, Michael Jaap, John Lorenz, and Keri Smith. Mr. Mamanteo serves as chairperson of the committee. The Board of Directors has adopted a written charter for the Governance and Nominating, a copy of which can be accessed online at www.glyeco.com/corporategov.html. Attendance
During the fiscal year ended December 31, 2013, the Board held three meetings and took action by written consent on two occasions. Each member of the Board attended or participated in 75% or more of the aggregate of (i) the total number of meetings of the Board (held during the period for which such person has been a director) and (ii) the total number of meetings held by all committees of the Board on which such person served (during the periods that such person served).
The Company does not have a written policy requiring directors to attend the annual meeting of stockholders, but attendance is encouraged. In 2013, two of the directors attended our annual meeting of stockholders. We presently anticipate that at least one director will attend this year’s annual meeting of stockholders.
Director Nomination The Governance and Nominating Committee has nominated John Lorenz, Michael Jaap, Richard Q. Opler, Keri Smith, and Dwight Mamanteo, each of whom is a current member of the Board, for re-election at the Annual Meeting. The committee has also nominated David Ide and Melvin L. Keating for election to the Board as new members. The Board of Directors seeks to ensure that it is composed of members whose particular experience, qualifications, attributes and skills, when taken together, will allow the Board to satisfy its oversight obligations effectively. In selecting Board candidates, it is the Governance and Nominating Committee’s goal to identify persons who it believes have appropriate expertise and experience to contribute to the oversight of a company of the Company’s nature while also reviewing other appropriate factors.
The Board of Directors believes that each of the persons nominated for election at the Annual Meeting have the experience, qualifications, attributes and skills that, when taken as a whole, will enable the Board to satisfy its oversight responsibilities effectively.
Section 16(a) Beneficial Ownership Reporting Compliance Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our executive officers and directors, and persons who beneficially own more than 10% of a registered class of our equity securities to file with the Securities and Exchange Commission initial statements of beneficial ownership, reports of changes in ownership and annual reports concerning their ownership of our common shares and other equity securities, on Forms 3, 4 and 5, respectively. Executive officers, directors and greater than 10% stockholders are required by the Securities and Exchange Commission regulations to furnish us with copies of all Section 16(a) reports they file.
During the last completed fiscal year, the following reports required by Section 16(a) were not timely filed with the Securities and Exchange Commission: | Richard Q. Opler failed to timely file a Form 3 upon becoming a director on July 29, 2013, and failed to timely file a Form 4 upon the receipt of stock options under the Company’s 2012 Equity Incentive Plan on September 20, 2013. |
· | AKeri Smith failed to timely file a Form 3 upon becoming a director on July 29, 2013, and failed to timely file a Form 4 was not timely filed by Kevin Conner to report that 50,000upon the receipt of stock options with right to buy were granted to Mr. Conner on December 5, 2012, under the Company’s Third Amended 2007 Stock2012 Equity Incentive Plan.Plan on September 20, 2013. |
| John Lorenz failed to timely file a Form 4 upon the receipt of stock options under the Company’s 2012 Equity Incentive Plan on September 20, 2013. |
· | AMichael Jaap failed to timely file a Form 4 was not timely filed by Jim Flach to report that 50,000upon the receipt of stock options with right to buy were granted to Mr. Flach on December 5, 2012, under the Company’s Third Amended 2007 Stock2012 Equity Incentive Plan.Plan on September 20, 2013. |
. | AAlicia Williams Young failed to timely file a Form 4 was not timely filed by Richard Geib to report that 100,000 warrants with right to buy were acquiredupon the receipt of stock options under the Company’s 2012 Equity Incentive Plan on May 3, 2012.September 20, 2013. |
· | ARichard Geib failed to timely file a Form 4 was not timely filed by Michael Jaap to report that 150,000upon the receipt of stock options with right to buy were granted to Mr. Jaap on December 5, 2012, under the Company’s Third Amended 2007 Stock2012 Equity Incentive Plan.Plan on September 20, 2013. |
· | Form 4s were not timely filed by Janet Carnell Lorenz failed to report that: 200timely file a Form 4 upon the receipt of stock options under the Company’s 2012 Equity Incentive Plan on September 20, 2013. |
For the first three quarters of 2013, our directors were paid $500 per quarter for sitting on the Board of Directors. Beginning in the fourth quarter of 2013, director compensation was increased to $600 per quarter. The table below sets forth the compensation paid to our directors during the fiscal year ended December 31, 2013. | Director | | Fees Earned or Paid in Cash | | | | | All Other Compensation | | | | | Stock Awards | | | | | Total | | | | $ | 2,100 | | (1) | | | $ | 205,000 | | (1) | | | $ | 198,090 | | (1) | | | $ | 405,190 | | | | $ | 1,000 | | (2) | | | $ | | | | | | $ | - | | | | | $ | 1,000 | | | | $ | 2,100 | | (3) | | | $ | 2,000 | | (3) | | | $ | 44,020 | | (3) | | | $ | 48,120 | | | | $ | 1,000 | | (4) | | | $ | 72,000 | | (4) | | | $ | - | | | | | $ | 73,000 | | | | $ | 2,100 | | (5) | | | $ | 74,069 | | (5) | | | $ | 44,020 | | (5) | | | $ | 120,189 | | | | $ | 600 | | (6) | | | $ | | | | | | $ | 22,010 | | (6) | | | $ | 22,610 | | | | $ | 600 | | (7) | | | $ | | | | | | $ | 22,010 | | (7) | | | $ | 22,610 | |
| (1) | Mr. Lorenz was paid $205,000 in salaries and bonuses for his position as CEO, in addition to the $2,100 he was paid for sitting on the Board of Directors. Mr. Lorenz was granted on September 20, 2013, 450,000 shares of Common Stock were acquiredissuable upon the exercise of options at $1.00 per share until September 20, 2023. 225,000 of the options granted vested immediately upon grant with the balance of the options vesting fifty percent on each of the next two anniversaries of the grant date. The aggregate grant date estimated fair value of these options, determined by Ms. Lorenz on May 2, 2012, 200 shares of Common Stock were acquired by Ms. Lorenz on May 22, 2012, 50 shares of Common Stock were acquired by Ms. Lorenz on May 31, 2012, and 800,000 optionsthe Black-Scholes method, in accordance with right to buy were granted to Ms. Lorenz on December 5, 2012, under the Company’s Third Amended 2007 Stock Incentive Plan.FASB ASC 718, was $198,090. |
· (2) | Form 4s were not timely filed by John LorenzMr. Flach was paid $1,000 as compensation for sitting on the Board of Directors. Mr. Flach served on the Board of Directors from November 28, 2011, to report that: 200 shares of Common Stock were acquired by Mr. Lorenz on May 2, 2012, 200 shares of Common Stock were acquired by Mr. Lorenz on May 22, 2012, 50 shares of Common Stock were acquired by Mr. Lorenz on May 31, 2012, and 800,000 options with right to buy were granted to Mr. Lorenz on December 5, 2012, under the Company’s Third Amended 2007 Stock Incentive Plan.July 29, 2013. |
· (3) | A Form 4Mr. Jaap was not timely filedpaid $2,000 in consulting services for his work on a special project, in addition to the $2,100 he was paid for sitting on the Board of Directors. Mr. Jaap was granted on September 20, 2013, 100,000 shares of Common Stock issuable upon the exercise of options at $1.00 per share until September 20, 2023. 50,000 of the options granted vested immediately upon grant with the balance of the options vesting fifty percent on each of the next two anniversaries of the grant date. The aggregate grant date estimated fair value of these options, determined by William J. Miller to report that 350,000 optionsthe Black-Scholes method, in accordance with right to buy were granted to Mr. Miller on December 5, 2012, under the Company’s Third Amended 2007 Stock Incentive Plan.FASB ASC 718, was $44,020.. |
. (4) | A Form 4Mr. Miller was not timely filed by Alicia Williamspaid $72,000 in consulting services for his work on a special project, in addition to report that 355,000 options with rightthe $1,000 he was paid for sitting on the Board of Directors. Mr. Miller served on the Board of Directors from November 28, 2011, to buy were granted to Ms. Williams on December 5, 2012, under the Company’s Third Amended 2007 Stock Incentive Plan.July 29, 2013. |
.(5) | Form 5sMr. Ioia, who until August 22, 2014 was a member of our Board of Directors, was paid $74,069 pursuant to his consulting agreement, in addition to his compensation of $2,100 for sitting on the fiscal year ended December 31, 2102, were not timely filedBoard of Directors. On September 23, 2013, Mr. Ioia was granted 100,000 shares of Common Stock issuable upon the exercise of options at $1.00 per share until September 20, 2023. 50,000 of the options granted vested immediately upon grant with the balance of the options vesting fifty percent on each of the next two anniversaries of the grant date. The aggregate grant date estimated fair value of these options, determined by Messrs. Conner, Flach, Geib, Jaap, Lorenz, Miller, Ms. Lorenz, and Ms. Williams. Such filings were made between March 20, 2013, and March 22, 2013.the Black-Scholes method, in accordance with FASB ASC 718, was $44,020. |
Employment / Consulting Agreements
Conner LLP - On September 23, 2011, Global Recycling Technologies entered into a Consulting Agreement with Conner LLP (“Conner”). The Company assumed the Consulting Agreement upon the consummation of the reverse triangular merger on November 28, 2011. The term of the Consulting Agreement was from September 23, 2011 until November 15, 2012, unless earlier terminated by either party pursuant to the Consulting Agreement. Pursuant to the Consulting Agreement, Kevin J. Conner held the position of Chief Financial Officer and with the assistance of the professionals of Conner, LLP oversaw the financial issues and reporting requirements for the Company. Conner’s duties included, but were not limited to the following: (i) assist management of the Company (post‐merger) in the financial due diligence on future potential mergers and acquisitions, (ii) assist management of the Company in drafting the Form 10‐Qs and related financial statements (post‐merger and acceptance of the 8‐K by the SEC) through the quarterly period ending September 30, 2012, (iii) assist management of the Company and its SEC legal counsel in drafting the Form 10‐K and related financial statements as of and for the year ending December 31, 2011, (iv) assist management of the Company in its post‐merger period to integrate its financial reporting systems.
In consideration of the services provided by Conner, the Company issued to Kevin J. Conner, a Partner of Conner LLP stock options to purchase 75,000 shares of the common stock of the Company at an exercise price of $0.50 per share for 75 hours of work prior to December 31, 2011. The options were granted from the Company’s 2007 Stock Plan. Of the 75,000 shares, 55% vested immediately, with the remaining to vest at a rate of 15% per year for the next three years, commencing October 25, 2012. In addition, Conner will be paid $5,000 per month for 20 hours of work, beginning after the first round of financing is obtained, or December 31, 2011, whichever is earlier, until November 15, 2012. If the number of hours exceeded on a monthly, non-cumulative basis, an agreed upon hourly rate will be charged.| (6) | Mr. Opler was paid $600 as compensation for sitting on the Board of Directors. On September 20, 2013, Mr. Opler was granted 50,000 shares of Common Stock issuable upon the exercise of options at $1.00 per share until September 20, 2023. 25,000 of the options granted vested immediately upon grant with the balance of the options vesting fifty percent on each of the next two anniversaries of the grant date. The aggregate grant date estimated fair value of these options, determined by the Black-Scholes method, in accordance with FASB ASC 718, was $22,010. |
On January 14, 2013, Mr. Conner resigned his position as CFO of the Company in order to allow the Company to retain the services of a full-time CFO based in Phoenix, Arizona. On that same date, the Company entered into a Consulting Agreement with Conner, LLP to retain the services of Kevin Conner as a management consultant to the Company. Mr. Conner’s duties include, but are not limited to the following; (i) financial due diligence on future potential mergers and acquisitions (ii) assist management of the Company in evaluating equity and debt financing and structuring, (iii) review of GAAP and Tax differences and closing issues, (iv) review and guidance on SEC filings, and (v) assist management in the evaluation of uplisting to the NASDAQ/Amex.
Compensation under the agreement consists of (i) the balance of the 22,500 unvested options that were granted to Mr. Conner in November 2011 will continue to vest in accordance with the Company’s 2007 Plan, (ii) 50,000 options will be granted to Mr. Conner at the time this agreement is executed subject to the provisions in the Company’s 2007 Plan, and (iii) $1,000 per month for five hours of consulting time commencing on 25 January 2013 and will continue monthly for one year with additional time compensated on an hourly basis of $225.
Audit, Nominating and Compensation Committees
Our Board of Directors has not formally established standing audit, nominating or compensation committees though it performs many of the functions that would otherwise be delegated to such committees. Previously, our Board of Directors believed that the cost of establishing such committees, including the costs necessary to recruit and retain qualified independent directors to serve on our Board of Directors and such committees and the legal costs to properly form and document the authority, policies and procedures of such committees were not justified under our circumstances. However, we anticipate that we will seek qualified independent directors to serve on the Board and ultimately form standing nominating and compensation committees and nominate other directors to serve on its audit committee.
Audit Committee Financial Expert. As disclosed above, the Board of Directors has not established a standing audit committee. Accordingly, no Board member has been designated as an “audit committee financial expert” (as defined under Item 407(d)(5)(ii) of Regulation S-K). Notwithstanding the foregoing, the entire Board of Directors perform the duties of a standing audit committee when required and have designated James Flach to be the Board’s financial expert based on his extensive business experience. Mr. Flach is also an “independent director” as defined by Section 10A(m)(3)(ii) of the Exchange Act and Rule 5065(a)(2) of the NASDAQ Marketplace Rules.
Code of Ethics
On January 20, 2012, our Board of Directors adopted a Code of Ethics. A copy of the Code of Ethics has been incorporated by reference as Exhibit 14.1 to this Form 10-K and has been posted on the Company’s website, www.glyeco.com. The Company shall provide to any person, without charge, a copy of the Company’s Code of Ethics upon written request to Alicia Williams, the Company’s Secretary and VP of Internal Operations, at the Company’s executive offices.
Director Compensation
The table below sets forth the Compensation paid to our directors during the fiscal year ended December 31, 2012. Each director is provided an annual compensation of $2,000 for sitting on the Board of Directors.
| Director | | Fees Earned or Paid in Cash | | | Stock Awards | | | Total | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(1)(7) | Mr. Lorenz received additional compensation for serving as the Company’s Chief Executive Officer and President, as outlined below in the Executive Compensation section. |
(2) | Mr. MillerMs. Smith was paid $5,000, in addition to his yearly$600 as compensation of $2,000 for sitting on the Board of Directors, for his work on a special project. |
(3) | Directors. On December 5, 2012, Mr. Lorenz was granted 450,000 shares of Common Stock issuable upon the exercise of options at $0.50 per share until December 5, 2022. The estimated value of these warrants, determined by the Black-Scholes method, in accordance with FASB ASC Topic 718, was $0. |
(4) | On December 5, 2012, Mr. FlachSeptember 20, 2013, Ms. Smith was granted 50,000 shares of Common Stock issuable upon the exercise of options at $0.50$1.00 per share until December 5, 2022.September 20, 2023. 25,000 of the options granted vested immediately upon grant with the balance of the options vesting fifty percent on each of the next two anniversaries of the grant date. The aggregate grant date estimated fair value of these warrants,options, determined by the Black-Scholes method, in accordance with FASB ASC Topic 718, was $0.$22,010. |
(5) | On December 5, 2012, Mr. Jaap was granted 150,000 shares of Common Stock issuable upon the exercise of options at $0.50 per share until December 5, 2022. The estimated value of these warrants, determined by the Black-Scholes method, in accordance with FASB ASC Topic 718, was $0. |
(6) | On December 5, 2012, Mr. Miller was granted 350,000 shares of Common Stock issuable upon the exercise of options at $0.50 per share until December 5, 2022. The estimated value of these warrants, determined by the Black-Scholes method, in accordance with FASB ASC Topic 718, was $0. |
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONSAs previously reported by the Company on a Form 8-K filed with the Securities and Exchange Commission on December 13, 2012, on December 10, 2012, the Company and GlyEco Acquisition Corp. #4 (“Acquisition Sub #4”), an Arizona corporation and wholly-owned subsidiary of the Company, entered into a transaction with Joseph Ioia (“Mr. Ioia”) and Full Circle Manufacturing Group, Inc. (“Full Circle), a New Jersey corporation wholly owned by Mr. Ioia, pursuant to which Mr. Ioia sold to Acquisition Sub #4 the worldwide right, title, and interest in the exclusive glycol remanufacturing process used by Full Circle in consideration for $2,000,000 provided by the Company, and Full Circle agreed to perform the manufacturing and distribution services relating to its glycol recycling business to exclusively produce remanufactured glycol for the benefit of Acquisition Sub #4. The Company issued 3,000,000 unregistered shares of the Company’s Common Stock, at a fair market value of $0.50 per share, to Mr. Ioia as additional consideration for the transaction. The Company and Mr. Ioia entered into an Escrow Agreement as a part of the transaction by which an escrow agent will hold 1,000,000 of those shares in escrow to secure performance of the transaction. As previously reported by the Company on a Form 8-K filed with the Securities and Exchange Commission on January 22, 2013, on January 15, 2013, the Company’s Board of Directors elected Mr. Ioia to be a director of the Company.
Upon the consummation of the reverse triangular merger on November 21, 2011, the Board of Directors of the Company (then Environmental Credits, Ltd.) resigned and John Lorenz, the Chief Executive Officer, President and Chairman of Global Recycling Technologies, was appointed as the Chief Executive Officer, President and Chairman of Board of Directors of the Company. As the then sole Board member, Mr. Lorenz elected James Flach, Michael Jaap, and William Miller each as new members to the Company’s Board of Directors. On January 15, 2013, the Company’s Board of Directors elected Joseph Ioia to be a director. Messrs. Flach, Jaap and Miller each qualify as an “independent director” as defined by Section 10A(m)(3)(ii) of the Exchange Act and Rule 5065(a)(2) of the NASDAQ Marketplace Rules. John Lorenz is not an “independent director” due to the fact that he is also an executive officer of the Company. Joseph Ioia is also not an “independent director” because he received a payment from the Company in excess of $60,000 as part of the transaction described in the preceding section – Certain Relationships and Related Transactions. Mr. Miller will soon not be an “independent director” because he will have received compensation as a consultant to the Company in excess of $60,000.
The following table sets forth all plan and non-plan compensation for the last two completed fiscal years paid to all individuals who served as the Company’s principal executive officer (“PEO”), principal financial officer (“PFO”), or acting in similar capacity during the last completed fiscal year (“PEO”), regardless of compensation level, and other individuals as required by Item 402(m)(2) of Regulation S-K. We refer to all of these individuals collectively as our “named executive officers.”
Summary Compensation Table | Name & Principal Position | | Year | | Salary ($) | | | Bonus ($) | | | Stock Awards ($) | | | | Option Awards ($) | | | | Non-Equity Incentive Plan Compensation ($) | | | Change in Pension Value and Non-Qualified Deferred Compensation Earnings ($) | | | All Other Compensation ($) | | | | Total ($) | | | Year | | Salary ($) | | | Bonus ($) | | | Warrant Awards ($) | | | | | Option Awards ($)(15) | | | | | Non-Equity Incentive Plan Compensation ($) | | | Change in Pension Value and Non- Qualified Deferred Compensation Earnings ($) | | | All Other Compensation ($) | | | | | Total ($) | | John Lorenz, President and CEO (PEO) | | | | $ | 137,500 | | | $ | - | | | $ | - | | | $ | 18,068 | | (1) | | $ | - | | | $ | - | | | $ | 14,500 | | (2) | | $ | 170,068 | | | | | $ | 175,000 | | | $ | 30,000 | | | $ | - | | | | | $ | 198,090 | | (1) | | | $ | - | | | $ | - | | | $ | 2,100 | | (8) | | | $ | 405,190 | | | | | | | $ | - | | | | - | | | | -- | | (3) | | | - | | | | | - | | | | - | | | $ | 150,000 | | (4) | | $ | 150,000 | | | | | | 137,500 | | | | - | | | | - | | | | | | 36,135 | | (1) | | | | - | | | | - | | | | 13,000 | | (9) | | | | 186,635 | | | | | | | - | | | | - | | | | - | | | | | 2,008 | | (5) | | | - | | | | - | | | $ | 72,245 | | (6) | | $ | 74,253 | | | | | | - | | | | - | | | | - | | | | | | | | | | | | - | | | | - | | | | 31,775 | | (10) | | | | 31,775 | | | | | | | | | - | | | | - | | | | - | | | | | | 4,015 | | (2) | | | | | | | | - | | | | 72,245 | | (10) | | | | 76,260 | | Alicia Williams Young, CFO (PFO) | | | | | | 100,500 | | | | 17,500 | | | | - | | | | | | 132,060 | | (3) | | | | - | | | | - | | | | | | | | | | 250,060 | | | | | | | | | 58,500 | | | | 1,500 | | | | - | | | | | | 28,507 | | (3) | | | | - | | | | - | | | | 19,500 | | (11) | | | | 108,007 | | Richard Geib, Chief Technical Officer | | | | | | - | | | | - | | | | 58,000 | | (4) | | | | 44,020 | | (5) | | | | - | | | | - | | | | - | | | | | | 102020 | | | | | | | | | - | | | | - | | | | 4,940 | | (4) | | | | - | | | | | | - | | | | - | | | | - | | | | | | 4,940 | | Janet Carnell Lorenz, Chief Business Development Officer | | | | | | - | | | | 5,000 | | | | - | | | | | | 132,060 | | (6) | | | | - | | | | - | | | | 108,000 | | (12) | | | | 245,060 | | | | | | | | | - | | | | | | | | - | | | | | | 28,105 | | (6) | | | | - | | | | - | | | | 77,000 | | (13) | | | | 105,105 | | Todd Smith, Chief Operating Officer | | | | | | 120,000 | | | | 5,000 | | | | - | | | | | | 132,060 | | (7) | | | | - | | | | - | | | | | | | | | | 257,060 | | | | | | | | | 69,000 | | | | | | | | - | | | | | | 34,128 | | (7) | | | | - | | | | - | | | | 21,000 | | (14) | | | | 124,128 | |
| (1) | The estimated value of the options issued to Mr. John Lorenz is based on the Black-Scholes method. See the disclosure below under “Option/SAR Grants in Fiscal Years Ended December 31, 2012 and 2013.” | | (2) | The estimated value of the options issued to Mr. Kevin Conner is based on the Black-Scholes method. See the disclosure below under “Option/SAR Grants in Fiscal Years Ended December 31, 2012 and 2013.” | | (3) | The estimated value of options issued to Ms. Williams Young is based on the Black-Scholes method. See disclosure below under “Option/SAR Grants in the Fiscal Years Ended December 31, 2012 and 2013.” |
| (4) | The estimated value of the warrants issued to Mr. Geib is based on the Black-Scholes method. See disclosure below under “Options/SAR Grants in the Fiscal Years Ended December 31, 2012 and 2013.” | | (5) | The estimated value of the options issued to Mr. Geib is based on the Black-Scholes method. See disclosure below under “Options/SAR Grants in the Fiscal Years Ended December 31, 2012 and 2013.” | | (6) | The estimated value of the options issued to Ms. Carnell Lorenz is based on the Black-Scholes method. See disclosure below under “Options/SAR Grants in the Fiscal Year Ended December 31, 2012.2012 and 2013.” | (2)(7) | The estimated value of the options issued to Mr. Smith is based on the Black-Scholes method. See disclosure below under “Options/SAR Grants in the Fiscal Years Ended December 31, 2012 and 2013.” | | (8) | Consisted $2,100 paid to Mr. Lorenz as compensation for being a Director. | | (9) | Consisted of consulting service fees paid to Mr. Lorenz by the Company. Mr. Lorenz provided management consulting services to the Company through Barcid Investment Group (Barcid), a corporation solely owned by Mr. Lorenz. Neither Barcid nor Mr. Lorenz has a formal written consulting agreement with the Company. Mr. Lorenz, by and through Barcid, iswas paid on a monthly basis and earned $12,500 for consulting services rendered to the Company in January of 2012. Mr. Lorenz became an employee of the Company in February of 2012. In addition, Mr. Lorenz earned $2,000was paid $500 for compensation for being a Director. Barcid was paid $73,000 for consulting services in 2012, and was owed $211,400 at December 31, 2012. The beginning balance due to Mr. Lorenz, through Barcid, on January 1, 2011 was $278,602. | (3) | The estimated value of warrants issued to Barcid Investment Group, a corporation solely owned by Mr. Lorenz, is based on the Black-Scholes method. See the disclosure below under “Option/SAR Grants in Fiscal Year Ended December 31, 2011.” | (4) | Consisted of consulting service fees paid to Mr. Lorenz by Global Recycling Technologies. Mr. Lorenz provided management consulting services to Global Recycling Technologies through Barcid Investment Group (Barcid), a corporation solely owned by Mr. Lorenz. Neither Barcid nor Mr. Lorenz has a formal written consulting agreement with the Company or Global Recycling Technologies. Mr. Lorenz, by and through Barcid, is paid on a monthly basis and earned $150,000 for consulting services rendered to the Company and Global Recycling Technologies in 2011. Barcid was paid $87,000 for consulting services in 2011, and was owed $278,602 at December 31, 2011. The beginning balance due to Mr. Lorenz, through Barcid, on January 1, 2010 was $208,800. | (5) | The estimated value of the options issued to Mr. Kevin Conner is based on the Black-Scholes method. See the disclosure below under “Option/SAR Grants in Fiscal Year Ended December 31, 2012.” | (6)(10) | Consisted of consulting service fees paid to Mr. Conner by the Company. Mr. Conner provided accounting and management consulting services to the Company through Conner LLP. Conner LLP hadhas a formal written consulting agreement with the Company, by which it is paid on a monthly basis. Conner LLP invoiced $72,245 |
| (11) | Consisted of consulting service fees paid to Ms. Williams Young by the Company. Ms. Williams Young provided accounting and business management consulting services to the Company through AJile Concepts LLC, a company owned by Ms. Williams Young and her husband. Neither Ms. Williams Young nor AJile Concepts has a formal written consulting agreement with the Company. Ms. Williams Young, by and through AJile Concepts, was paid $55,000on a monthly basis and earned $6,500 for consulting services rendered to the Company from January 2012 to March 2012. Ms. Williams Young became an employee of the Company in April 2012. | | (12) | Consisted of consulting service fees paid to Ms. Carnell Lorenz by the Company. Ms. Carnell Lorenz provided marketing consulting services to the Company through Market Tactics, Inc., a corporation solely owned by Ms. Carnell Lorenz. Neither Ms. Carnell Lorenz nor Market Tactics has a formal written consulting agreement with the Company. Ms. Carnell Lorenz, by and through Market Tactics, was paid on a monthly basis and earned $7,500 from January 2013 to March 2013 and $9,500 from April 2013 to December 2013. | | (13) | Consisted of consulting service fees paid to Ms. Carnell Lorenz by the Company. Ms. Carnell Lorenz provided marketing consulting services to the Company through CyberSecurity, Inc., a corporation solely owned by Ms. Carnell Lorenz. Neither Ms. Carnell Lorenz nor CyberSecurity has a formal written consulting agreement with the Company. Ms. Carnell Lorenz, by and through CyberSecurity, was paid on a monthly basis and earned $5,500 in January 2013 and $6,500 from February 2013 to December 2013. | | (14) | Consisted of consulting service fees paid to Mr. Smith by the Company. Mr. Smith provided operations consulting services to the Company through Ocean State Absorbents, a company owned solely by Mr. Smith. Neither Mr. Smith nor Ocean State Absorbents has a formal written consulting agreement with the Company. Mr. Smith, by and through Ocean State Absorbents, was paid on a monthly basis and earned $7,000 for consulting services rendered to the Company from January 2012 to March 2012. Mr. Smith became an employee of the Company in April 2012. | | (15) | These amounts represent full grant date fair value of these awards, in accordance with the Financial Accounting Standard Board’s (“FASB”) ASC Topic 718. Assumptions used in the calculation of dollar amounts of these awards are included in Note 11 of our audited financial statements for the fiscal year ended December 31, 2013. |
Option/SAR Grants in Fiscal Year Ended December 31, 2013
In 2013, our named executive officers were granted the following:
| Mr. Lorenz was granted on September 20, 2013, 450,000 shares of Common Stock issuable upon the exercise of options at $1.00 per share until September 20, 2023. 225,000 of the options granted vested immediately upon grant with the balance of the options vesting fifty percent on each of the next two anniversaries of the grant date. The aggregate grant date estimated fair value of these options, determined by the Black-Scholes method, was $198,090. | | Ms. Williams Young was granted on September 20, 2013, 300,000 shares of Common Stock issuable upon the exercise of options at $1.00 per share until September 20, 2023. 150,000 of the options granted vested immediately upon grant with the balance of the options vesting fifty percent on each of the next two anniversaries of the grant date. The aggregate grant date estimated fair value of these options, determined by the Black-Scholes method, was $132,060. |
| Mr. Geib was granted on September 20, 2013, 100,000 shares of Common Stock issuable upon the exercise of options at $1.00 per share until September 20, 2023. 50,000 of the options granted vested immediately upon grant with the balance of the options vesting fifty percent on each of the next two anniversaries of the grant date. The aggregate grant date estimated fair value of these options, determined by the Black-Scholes method, was $44,020. Pursuant to his consulting agreement, Mr. Geib was also issued 100,000 shares of Common Stock issuable upon the exercise of warrants at $0.50 per share until May 3, 2018. The aggregate grant date estimated fair value of these warrants, determined by the Black-Scholes method, was $58,000. |
| Ms. Carnell Lorenz was granted on September 20, 2013, 300,000 shares of Common Stock issuable upon the exercise of options at $1.00 per share until September 20, 2023. 150,000 of the options granted vested immediately upon grant with the balance of the options vesting fifty percent on each of the next two anniversaries of the grant date. The aggregate grant date estimated fair value of these options, determined by the Black-Scholes method, was $132,060. |
| Mr. Smith was granted on September 20, 2013, 300,000 shares of Common Stock issuable upon the exercise of options at $1.00 per share until September 20, 2023. 225,000 of the options granted vested immediately upon grant with the balance of the options vesting fifty percent on each of the next two anniversaries of the grant date. The aggregate grant date estimated fair value of these options, determined by the Black-Scholes method, was $132,060. |
Option/SAR Grants in Fiscal Year Ended December 31, 2012
In 2012, Mr. Lorenz wasour named executive officers were granted 450,000 shares of Common Stock issuable upon the exercise of options at $0.50 per share until December 5, 2022. The estimated value of these options, determined by the Black-Scholes method, was $0.following: | Mr. Lorenz was granted on December 5, 2012, 450,000 shares of Common Stock issuable upon the exercise of options at $0.50 per share until December 5, 2022. Of these, 225,000 vested immediately upon grant with the balance of the options vesting fifty percent on each of the next two anniversaries of the grant date. The aggregate grant date estimated fair value of these options, determined by the Black-Scholes method, was $36,135. |
Option/SAR Grants in Fiscal Year Ended December 31, 2011 | Mr. Conner was granted on December 5, 2012, 50,000 shares of Common Stock issuable upon the exercise of options at $0.50 per share until December 5, 2022. Of these, 25,000 vested immediately upon grant with the balance of the options vesting fifty percent on each of the next two anniversaries of the grant date. The aggregate grant date estimated fair value of these options, determined by the Black-Scholes method, was $4,015. |
| Ms. Williams Young was granted on December 5, 2012, 355,000 shares of Common Stock issuable upon the exercise of options at $0.50 per share until December 5, 2022. Of these, 177,500 vested immediately upon grant with the balance of the options vesting fifty percent on each of the next two anniversaries of the grant date. The aggregate grant date estimated fair value of these options, determined by the Black-Scholes method, was $28,507. Mr. Geib was granted pursuant to his consulting agreement on May 3, 2012, 100,000 shares of Common Stock issuable upon the exercise of warrants at $0.50 per share until May 3, 2017. The aggregate grant date estimated fair value of these warrants, determined by the Black-Scholes method, was $4,940. |
In 2011, Mr. Lorenz was granted 437,528 shares of Common Stock issuable upon the exercise of warrants at $1.00 per share until June 27, 2021 and 575,000 shares of Common Stock issuable upon the exercise of options at $0.50 per share until October 25, 2021. The estimated value of these warrants, determined by the Black-Scholes method, was $0. | Ms. Carnell Lorenz was granted on December 5, 2012, 350,000 shares of Common Stock issuable upon the exercise of options at $0.50 per share until December 5, 2022. Of these, 175,000 vested immediately upon grant with the balance of the options vesting fifty percent on each of the next two anniversaries of the grant date. The aggregate grant date estimated fair value of these options, determined by the Black-Scholes method, was $28,105. |
| Mr. Smith was granted on December 5, 2012, 425,000 shares of Common Stock issuable upon the exercise of options at $0.50 per share until December 5, 2022. Of these, 212,500 vested immediately upon grant with the balance of the options vesting fifty percent on each of the next two anniversaries of the grant date. The aggregate grant date estimated fair value of these options, determined by the Black-Scholes method, was $34,128. |
Outstanding Equity Awards at Fiscal Year-End Table
The following table sets forth information for the named executive officer regarding the number of shares subject to both exercisable and unexercisable stock options, as well as the exercise prices and expiration dates thereof, as of December 31, 2012.2013. | Name | | Number of Securities underlying Unexercised Options (#) Exercisable | | Number of Securities underlying Unexercised Options (#) Unexercisable | | Option Exercise Price ($/Sh) | | Option Expiration Date | | Number of Securities underlying Unexercised Options (#) Exercisable | | Number of Securities underlying Unexercised Unearned Options (#) Unexercisable | | Option Exercise Price ($/Sh) | | Option Expiration Date | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (1) | The unearned options vest on October 25, 2014 | | (2) | The unearned options vest on December 5, 2014 | | (3) | The unearned options vest 50% on September 20, 2014 and 50% on September 20, 2015. |
Stock Option Plans Third Amended and Restated 2007 Stock Incentive Plan
Upon the consummation of the reverse triangular merger, Global Recycling’s Third Amended and Restated 2007 Stock Incentive Plan (the “2007 Stock Plan”) was assumed by the Company. The following is a summary of certain of the more significant provisions of the 2007 Stock Plan. The statements contained in this summary concerning the provisions of the 2007 Stock Plan are merely summaries and do not purport to be complete. They are subject to and qualified in their entirety by the actual terms of the 2007 Stock Plan. A copy of the 2007 Stock Plan has been attachedincorporated by reference as Exhibit 4.4 to the Company’sour Annual Report on Form 10-K for the fiscal year endedending December 31, 2012,2013 and is incorporated by reference herein. Shares Reserved Under the 2007 Stock Plan We have reserved 6,742,606 shares of our common stock issuable upon exercise of options granted under the 2007 Stock Plan to employees, directors, proposed employees and directors, advisors, independent contractors (and their employees and agents), and other persons who provide valuable services to ourthe Company (collectively, “Eligible Persons”). As of the date of this Form 10-K,August 2014, we have issued 6,647,606 options to purchase the shares of our common stock originally reserved under the 2007 Stock Plan. All previously granted options issued pursuant to the 2007 Stock Plan will be subject to the requirements set forth in the 2007 Stock Plan and are Non-Qualified Stock Options. The aggregate number of shares that may be granted to any one Eligible Person in any year will not exceed 50.0% of the total number of shares that may be issued under the 2007 Stock Plan. At the discretion of the Plan Administrator (defined below), the number and type of shares of our common stock available for award under the 2007 Stock Plan (including the number and type of shares and the exercise price covered by any outstanding award) may be adjusted for any increase or decrease in the number of issued shares of our common stock resulting from any stock split, reverse stock split, split-up, combination or exchange of shares, consolidation, spin-off, reorganization, or recapitalization of shares. Administration The 2007 Stock Plan is currently being administered by our Board of Directors. Our Board of Directors may delegate its authority and duties under the 2007 Stock Plan to a committee. Our Board of Directors and/or any committee that has been delegated the authority to administer the 2007 Stock Plan is referred to as the “Plan Administrator.” Subject to certain restrictions, the Plan Administrator generally has full discretion and power to (i) determine all matters relating to awards issued under the 2007 Stock Plan, including the persons to be granted awards, the time of grant, the type of awards, the number of shares of our common stock subject to an award, vesting conditions, and any and all other terms, conditions, restrictions, and limitations of an award, (ii) interpret, amend, and rescind any rules and regulations relating to the 2007 Stock Plan, (iii) determine the terms of any award agreement made pursuant to the 2007 Stock Plan, and (iv) make all other determinations that may be necessary or advisable for the administration of the 2007 Stock Plan. All decisions made by the Plan Administrator relating to the 2007 Stock Plan will be final, conclusive, and binding on all persons. Eligibility The Plan Administrator may grant any award permitted under the 2007 Stock Plan to any Eligible Person. With respect to awards that are options, directors who are not employees of ourthe Company, proposed non-employee directors, proposed employees, and independent contractors will be eligible to receive only Non-Qualified Stock Options (“NQSOs”). An award may be granted to a proposed employee or director prior to the date he, she, or it performs services for ourthe Company, so long as the award will not vest prior to the date on which the proposed employee or director first performs such services. Awards under the 2007 Stock Plan Under the 2007 Stock Plan, Eligible Persons may be granted: (a) stock options (“Options”), which may be designated as NQSOs or Incentive Stock Options (“ISOs”); (b) stock appreciation rights (“SARs”); (c) restricted stock awards (“Restricted Stock”); (d) performance share awards (“Performance Awards”); or (e) other forms of stock-based incentive awards (collectively, the “Awards”). An Eligible Person who has been granted an Option is referred to in this summary as an “Optionee” and an Eligible Person who has been granted any other type of Award is referred to in this summary as a “Participant.” No Award granted under the 2007 Stock Plan can be inconsistent with the terms and purposes of the 2007 Stock Plan. Additionally, the applicable exercise price for which shares of our common stock may be purchased upon exercise of an Award will not be less than (i) 100.0% of the Fair Market Value (as defined in the 2007 Stock Plan) of shares of our common stock on the date that the Award is granted, or (ii) 110.0% of the Fair Market Value if the Award is granted to an Eligible Person who, directly or indirectly, holds more than 10.0% of the total voting power of ourthe Company. The Plan Administrator may grant to Optionees NQSOs or ISOs that are evidenced by stock option agreements. A NQSO is a right to purchase a specific number of shares of our common stock during such time as the Plan Administrator may determine. A NQSO that is exercisable at the time an Optionee ceases providing services to ourthe Company will remain exercisable for such period of time as determined by the Plan Administrator. Generally, Options that are intended to be ISOs will be treated as NQSOs to the extent that the Fair Market Value of the common stock issuable upon exercise of such ISO, plus all other ISOs held by such Optionee that become exercisable for the first time during any calendar year, exceeds $100,000. An ISO is an Option that meets the requirements of Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”). To qualify as an ISO under the Code, the Option generally must (among other things) (x) be granted only to employees, (y) have an exercise price equal to or greater than the Fair Market Value on the date of grant, and (z) terminate if not exercised within 10 years from the date of grant (or five years if granted to an Optionee who, at the time the ISO is granted, directly or indirectly, holds more than 10.0% of the total voting power of ourthe Company). Except in certain limited instances (including termination for cause, death, or disability), if any Optionee ceases to provide services to ourthe Company, the Optionee’s rights to exercise vested ISOs will expire within three months following the date of termination. A SAR is a right granted to a Participant to receive, upon surrender of the right, payment in an amount equal to (i) the excess of the Fair Market Value of one share of common stock on the date the right is exercised, over (ii) the Fair Market Value of one share of common stock on the date the right is granted. Restricted Stock is common stock that is issued to a Participant at a price determined by the Plan Administrator. Restricted stock awards may be subject to (i) forfeiture upon termination of employment or service during an applicable restriction period, (ii) restrictions on transferability, (iii) limitations on the right to vote such shares, (iv) limitations on the right to receive dividends with respect to such shares, (v) attainment of certain performance goals, and (vi) such other conditions, limitations, and restrictions as determined by the Plan Administrator. A Performance Award grants the Participant the right to receive payment upon achievement of certain performance goals established by the Plan Administrator. Such payments will be valued as determined by the Plan Administrator and will be payable to or exercisable by the Participant for cash, shares of our common stock, other awards, or other property determined by the Plan Administrator. Other Awards may be issued under the 2007 Stock Plan, which include, without limitation, (i) shares of our common stock awarded purely as a bonus and not subject to any restrictions or conditions, (ii) convertible or exchangeable debt or equity securities, (iii) other rights convertible or exchangeable into shares of our common stock, and (iv) awards valued by reference to the value of shares of our common stock or the value of securities or the performance of specified subsidiaries of ourthe Company. Exercise Price The price for which shares of our common stock may be purchased upon exercise of a particular Award will be determined by the Plan Administrator at the time of grant. However, the applicable exercise price for which shares of our common stock may be purchased upon exercise of an Award will not be less than (i) 100.0% of the Fair Market Value (as defined in the 2007 Stock Plan) of shares of our common stock on the date that the Award is granted, or (ii) 110.0% of the Fair Market Value if the Award is granted to an Eligible Person who, directly or indirectly, holds more than 10.0% of the total voting power of ourthe Company. No Deferral Features No Award granted under the 2007 Stock Plan will contain a deferral feature. Awards cannot be modified or otherwise extended. No Award will contain a provision providing a reduction in the applicable exercise price, an addition of a deferral feature, or any extension of the term of the award. Payment / Exercise of Award An Award may be exercised using as the form of payment (a) cash or cash equivalent, (b) stock-for-stock payment, (c) cashless exercises, (d) the granting of replacement awards, (e) any combination of the above, or (f) such other means as the Plan Administrator may approve. No shares of our common stock will be delivered in connection with the exercise of any Award until payment in full of the exercise price is received by ourthe Company. Change of Control The Stock Option provides that if a Change of Control (as defined in the 2007 Stock Plan) occurs, then the surviving, continuing, successor, or purchasing entity (the “Acquiring Company”), will either assume our rights and obligations under outstanding Awards or substitute for outstanding Awards substantially equivalent awards for the Acquiring Company’s capital stock. If the Acquiring Company elects not to assume or substitute for such outstanding Awards in connection with a Change of Control, our Board of Directors may determine that all or any unexercisable and/or unvested portions of outstanding Awards will be immediately vested and exercisable in full upon consummation of the Change of Control. Unless otherwise determined by our Board of Directors, Awards that are neither (i) assumed or substituted for by the Acquiring Company in connection with the Change of Control, nor (ii) exercised upon consummation of the Change of Control, will terminate and cease to be outstanding effective as of the date of the Change of Control. Upon the consummation of the Merger, the Company assumed the obligations of Global Recycling under the Plan. Amendment Our Board of Directors may, without action on the part of our stockholders, amend, change, make additions to, or suspend or terminate the 2007 Stock Plan as it may deem necessary or appropriate and in the best interests of ourthe Company; provided, , however, , that our Board of Directors may not, without the consent of the Participants, take any action that disqualifies any previously granted Option for treatment as an ISO or which adversely affects or impairs the rights of the holder of any outstanding Award. Additionally, our Board of Directors will need to obtain the consent of our stockholders in order to (a) amend the 2007 Stock Plan to increase the aggregate number of shares of our common stock subject to the plan, or (b) amend the 2007 Stock Plan if stockholder approval is required either (i) to comply with Section 422 of the Code with respect to ISOs, or (ii) for purposes of Section 162(m) of the Code. Term The 2007 Stock Plan will remain in full force and effect through May 30, 2017, unless terminated earlier by our Board of Directors. After the 2007 Stock Plan is terminated, no future Awards may be granted under the 2007 Stock Plan, but Awards previously granted will remain outstanding in accordance with their applicable terms and conditions.
2012 Equity Incentive Plan
On February 23, 2012, subject to stockholder approval, the Company’s Board of Directors approved of the Company’s 2012 Equity Incentive Plan (the “2012 Plan”),. By written consent in lieu of a meeting, dated March 14, 2012, Company stockholders owning an aggregate of 14,398,402 shares of Common Stock (representing approximately 66.1% of the 22,551,991 outstanding shares of Common Stock) approved and adopted the 2012 Plan. Also by written consent in lieu of a meeting, dated July 27, 2012, Stockholdersstockholders of the Company owning an aggregate of 12,676,202 shares of Common Stock (representing approximately 51.8% of the then 24,451,991 outstanding shares of Common Stock) approved an amendment to the 2012 Plan to increase the number of shares reserved for issuance under the 2012 Plan by 3,000,000 shares. There are an aggregate of 6,500,000 shares of our Common Stock reserved for issuance upon exercise of awards granted under the 2012 Plan to employees, directors, proposed employees and directors, advisors, independent contractors (and their employees and agents), and other persons who provide valuable services to ourthe Company. As of the date of this Proxy Statement,August 2014, we have issued 355,0004,338,072 options under the 2012 Plan. The following description of the 2012 Plan does not purport to be complete and is qualified in its entirety by reference to the full text of the 2012 Plan. A copy of the 2012 Plan has been attachedfiled as Exhibit 4.5 to the Company’sour Annual Report on Form 10-K for the fiscal year endedending December 31, 2012,2013 and is incorporated by reference herein.
Purpose of the 2012 Plan
The purpose of the 2012 Plan is to attract, retain, and motivate employees, directors, advisors, independent contractors (and their employees and agents, or, in the Plan Administrator’s discretion, any of their employees or contractors), and other persons who provide valuable services to the Company by providing them with the opportunity to acquire a proprietary interest in the Company and to link their interest and efforts to the long-term interests of the Company’s stockholders. The Company believes that increased share ownership by such persons will more closely align stockholder and employee interests by encouraging a greater focus on the profitability of the Company. The Company has reserved and authorized the issuance of up to 6,500,000 shares of the Company’s Common Stock pursuant to awards granted under the 2012 Plan, subject to adjustment in the case of any stock dividend, forward or reverse stock split, split-up, combination or exchange of shares, consolidation, spin-off, reorganization, or recapitalization of shares or any like capital adjustment.
The 2012 Plan includes a variety of forms of awards, including (i) stock options intended to qualify as Incentive Stock Options (“Incentive Stock Options”) under the Section 422 of the United States Internal Revenue Code of 1986, as amended (the “Code”), (ii) stock options not intended to qualify as Incentive Stock Options under the Code (“Nonqualified Stock Options”), (iii) stock appreciation rights, (iv) restricted stock awards, (v) performance stock awards and (vi) other stock-based awards to allow the Company to adapt its incentive compensation program to meet the needs of the Company. No awards have been granted under the 2012 Plan.
Plan Administration
The 2012 Plan will be administered by the Board of Directors of the Company (the “Board”). The Board may delegate all or any portion of its authority and duties under the 2012 Plan to one or more committees appointed by the Board and consisting of at least one member of the Board, under such conditions and limitations as the Board may from time to time establish. Notwithstanding anything contained in the 2012 Plan to the contrary, only the Board or a committee thereof composed of two or more “Non-Employee Directors” (as that term is defined in Rule 16b-3 of the Exchange Act may make determinations regarding grants of awards to executive officers, directors, and 10% stockholders of the Company (“Affiliates”). The Board and/or any committee that has been delegated the authority to administer the 2012 Plan, as the case may be, will be referred to as the “Plan Administrator.”
The Plan Administrator has the authority, in its sole and absolute discretion, to grant awards as an alternative to, as a replacement of, or as the form of payment for grants or rights earned or due under the 2012 Plan or other compensation plans or arrangements of the Company or a subsidiary of the Company, including the 2012 Plan of any entity acquired by the Company or a subsidiary of the Company.
Eligibility
Any employee, director, proposed employee or director, independent contractor (or employee or agent thereof), or other agent or person who provides valuable services to the Company will be eligible to receive awards under the 2012 Plan. With respect to awards that are options, directors who are not employees of the Company, proposed non-employee directors, proposed employees, and independent contractors (and their employees and agents, or, in the Plan Administrator’s discretion, any of their employees or contractors) will be eligible to receive only Nonqualified Stock Options.
Change of Control
Unless otherwise provided by the Board, in the event of a Change of Control (as defined in the 2012 Plan), the surviving, continuing, successor, or purchasing entity or parent entity thereof, as the case may be (the “Acquiring Company”), will either assume the Company’s rights and obligations under outstanding awards or substitute for outstanding awards substantially equivalent awards for the Acquiring Company’s capital stock. In the event the Acquiring Company elects not to assume or substitute for such outstanding awards in connection with a Change of Control, the Board may, in its sole and absolute discretion, provide that all or any unexercisable and/or unvested portions of the outstanding awards will be immediately vested and exercisable in full upon consummation of the Change of Control. The vesting and/or exercise of any award that is permissible solely by reason of this section will be conditioned upon the consummation of the Change of Control. Unless otherwise provided by the Board, any awards that are neither (i) assumed or substituted for by the Acquiring Company in connection with the Change of Control, nor (ii) exercised upon consummation of the Change of Control, will terminate and cease to be outstanding effective as of the date of the Change of Control.
Exercise Price of Options
The price for which shares of Common Stock may be purchased upon exercise of a particular option will be determined by the Plan Administrator at the time of grant; provided, however, that the exercise price of any award granted under the 2012 Plan will not be less than 100% of the Fair Market Value (as defined in the 2012 Plan) of the Common Stock on the date such option is granted (or 110% of the Fair Market Value of the Common Stock if the award is granted to a stockholder who, at the time the option is granted, owns or is deemed to own stock possessing more than 10% of the total combined voting power of all classes of capital stock of the Company or of any parent or subsidiary of the Company).
Term of Options; Modifications
The Plan Administrator will set the term of each stock option, but no Incentive Stock Option will be exercisable more than ten years after the date such option is granted (or five years for an Incentive Stock Option granted to a stockholder who, at the time the option is granted, owns or is deemed to own stock possessing more than 10% of the total combined voting power of all classes of capital stock of the Company or of any parent or subsidiary of the Company).
Payment; No Deferrals.
Awards granted under the 2012 Plan may be settled through exercise by (i) cash payments, (ii) the delivery of Common Stock (valued at Fair Market Value), (iii) the cashless exercise of such award, (iv) the granting of replacement awards, (v) combinations thereof as the Plan Administrator will determine, in its sole and absolute discretion, or (vi) any other method authorized by the 2012 Plan. The Plan Administrator will not permit or require the deferral of any award payment, including, without limitation, the payment or crediting of interest or dividend equivalents and converting such credits to deferred stock unit equivalents. No award granted under the 2012 Plan will contain any deferral feature. Other Stock-Based Awards
Stock Appreciation Rights.
The Plan Administrator may grant stock appreciation rights, either in tandem with a stock option granted under the 2012 Plan or with respect to a number of shares for which no option has been granted. A stock appreciation right will entitle the holder to receive, with respect to each share of stock as to which the right is exercised, payment in an amount equal to (i) the excess of the Fair Market Value of one share of Common Stock on the date the right is exercised, over (ii) the Fair Market Value of one share of Common Stock on the date the right is granted; provided, however, that in the case of stock appreciation rights granted in tandem with or otherwise related to any award under the 2012 Plan, the grant price per share will be at least the Fair Market Value per share of Common Stock on the date the right was granted. The Plan Administrator may establish a maximum appreciationappreciation value payable for stock appreciation rights and such other terms and conditions for such rights as the Plan Administrator may determine, in its sole and absolute discretion.
Restricted Stock Awards.
The Plan Administrator may grant restricted stock awards consisting of shares of Common Stock or denominated in units of Common Stock in such amounts as determined by the Plan Administrator, in its sole and absolute discretion. Restricted stock awards may be subject to (i) forfeiture of such shares upon termination of employment or Service (as defined below) during the applicable restriction period, (ii) restrictions on transferability, (iii) limitations on the right to vote such shares, (iv) limitations on the right to receive dividends with respect to such shares, (v) attainment of certain performance goals, such as those described in Section 5.8(c) of the 2012 Plan, and (vi) such other conditions, limitations, and restrictions as determined by the Plan Administrator, in its sole and absolute discretion, and as set forth in the instrument evidencing the award. These restrictions may lapse separately or in combinations or may be waived at such times, under such circumstances, in such installments, or otherwise as determined by the Plan Administrator, in its sole and absolute discretion. Certificates representing shares of Common Stock subject to restricted stock awards will bear an appropriate legend and may be held subject to escrow and such other conditions as determined by the Plan Administrator until such time as all applicable restrictions lapse. Performance Share Awards.
The Plan Administrator may grant performance share awards that give the award recipient the right to receive payment upon achievement of certain performance goals established by the Plan Administrator, in its sole and absolute discretion, as set forth in the instrument evidencing the award. Such payments will be valued as determined by the Plan Administrator and payable to or exercisable by the award recipient for cash, shares of Common Stock (including the value of Common Stock as a part of a cashless exercise), other awards, or other property as determined by the Plan Administrator. Such conditions or restrictions may be based upon continuous Service (as defined below) with the Company or the attainment of performance goals related to the award holder’s performance or the Company’s profits, profit growth, profit-related return ratios, cash flow, stockholder returns, or such other criteria as determined by the Plan Administrator. Such performance goals may be (i) stated in absolute terms, (ii) relative to other companies or specified indices, (iii) to be achieved during a period of time, or (iv) as otherwise determined by the Plan Administrator.
Other Stock-Based Awards.
The Plan Administrator may grant such other awards that are payable in, valued in whole or in part by reference to, or otherwise based on or related to shares of Common Stock, as may be deemed by the Plan Administrator to be consistent with the purposes of the 2012 Plan and applicable laws and regulations. Such other awards may include, without limitation, (i) shares of Common Stock awarded purely as a bonus and not subject to any restrictions or conditions, (ii) convertible or exchangeable debt or equity securities, (iii) other rights convertible or exchangeable into shares of Common Stock, and (iv) awards valued by reference to the value of shares of Common Stock or the value of securities or the performance of specified subsidiaries of the Company.
Transferability
Any Incentive Stock Option granted under the 2012 Plan will, during the recipient’s lifetime, be exercisable only by such recipient, and will not be assignable or transferable by such recipient other than by will or the laws of descent and distribution. Except as specifically allowed by the Plan Administrator, any other award granted under the 2012 Plan and any of the rights and privileges conferred thereby will not be assignable or transferable by the recipient other than by will or the laws of descent and distribution and such award will be exercisable during the recipient’s lifetime only by the recipient. Term of the 2012 Plan
The 2012 Plan will terminate on February 23, 2022, unless sooner terminated by the Board. After the 2012 Plan is terminated, no future awards may be granted under the 2012 Plan, but awards previously granted will remain outstanding in accordance with their applicable terms and conditions and the 2012 Plan’s terms and conditions.
Consideration The Board or Committee will grant Stock Options under the 2012 Plan in consideration for services rendered. There will be no other consideration received or to be received by the Company or any of its subsidiaries for the granting or extension of Stock Option under the 2012 Plan. Golden Parachute Compensation
There exists no agreement or understanding, whether written or unwritten, concerning any type of compensation, whether present, deferred, or contingent, that is based on or otherwise relates to an acquisition, merger, consolidation, sale or other disposition of the assets of the Company.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The following table sets forth certain information regarding our Common Stock beneficially owned on June 18, 2013,August 29, 2014, for (i) each stockholder known to be the beneficial owner of 5% or more of our outstanding common stock, (ii) each executive officer, director, and director nominee and (iii) all executive officers, directors, and directorsdirector nominees as a group. In general, a person is deemed to be a “beneficial owner” of a security if that person has or shares the power to vote or direct the voting of such security, or the power to dispose or to direct the disposition of such security. A person is also deemed to be a beneficial owner of any securities of which the person has the right to acquire beneficial ownership within 60 days. Shares of Common Stock subject to options, warrants or convertible securities exercisable or convertible within 60 days of the date of determination are deemed outstanding for computing the percentage of the person or entity holding such options, warrants or convertible securities but are not deemed outstanding for computing the percentage of any other person. To the best of our knowledge, subject to community and marital property laws, all persons named have sole voting and investment power with respect to such shares, except as otherwise noted. | Name and Address of Beneficial Owner (1) | | Number of Shares Beneficially Owned | | | Percentage of Outstanding Common Stock (2) | | | | | | | | | | | | | Executive Officers, Directors, and Director Nominees | | | | | | | | | John Lorenz --CEO, President, and Chairman of the Board of Directors | | | 6,152,751 | | (3) | | | | 10.09 | % | | | | | | | | | | | | | Alicia Williams Young --Chief Financial Officer, Secretary, and VP of Internal Operations | | | 940,311 | | (4) | | | | 1.60 | % | | | | | | | | | | | | | Richard Geib --Chief Technical Officer | | | 2,084,900 | | (5) | | | | 3.47 | % | | | | | | | | | | | | | Todd Smith --Chief Operating Officer | | | 1,544,752 | | (6) | | | | 2.62 | % | | | | | | | | | | | | | Janet Carnell Lorenz --Chief Business Development Officer | | | 6,152,751 | | (7) | | | | 10.09 | % | | | | | | | | | | | | | Michael Jaap --Director | | | 358,500 | | (8) | | | | * | | | | | | | | | | | | | | Keri Smith --Director | | | 84,700 | | (9) | | | | * | | | | | | | | | | | | | | Richard Q. Opler --Director | | | 192,200 | | (10) | | | | * | | | | | | | | | | | | | | Dwight Mamanteo --Director | | | 175,000 | | (11) | | | | * | | | | | | | | | | | | | | David Ide --Director Nominee | | | 5,000 | | (12) | | | | * | | | | | | | | | | | | | | Melvin L. Keating --Director Nominee | | | 0 | | | | | | * | | | | | | | | | | | | | | Executive Officers, Directors, and Director Nominees as a group (11 persons) | | | 11,538,114 | | (13) | | | | 17.77 | % | | | | | | | | | | | | | | 5% Stockholders | | | | | | | | | | | | | | | | | | | | | | | Leonid Frenkel 401 City Avenue, Suite 528 Bala Cynwyd, PA 19004 | | | 8,753,656 | | (14) | | | | 13.94 | % | | | | | | | | | | | | | Ralph M. Amato 2098 Cherry Creek Circle Summerlin, NV 89135 | | | 7,321,600 | | (15) | | | | 12.42 | % | | | | | | | | | | | | | Wynnefield Capital Management, LLC 450 Seventh Avenue, Suite 509 New York, NY 10123 | | | 4,481,339 | | (16) | | | | 7.70 | % |
Name and Address (1) of Beneficial Owner | | Number of Shares Beneficially Owned | | | Percentage of Outstanding Common Stock (2) | | | | | | | | | | | Executive Officers and Directors | | | | | | | | | | | | | | | | --CEO, President, and Chairman of the Board of Directors | | | | | | | | | | | | | | | | | | | | | | | | | | | | --Chief Financial Officer, Secretary, Controller and VP of Internal Operations | | | | | | | | | | | | | | | | | | | Richard Geib --Chief Technical Officer | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Executive Officers and Directors as a group (7 persons) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Leonid Frenkel 401 City Avenue, Suite 528 Bala Cynwyd, PA 19004 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Ralph M. Amato 2098 Cherry Creek Circle Summerlin, NV 89135 | | | | | | | | | | | | | | | | | | | Greg and Nola Casserly Trust 620 Newport Center Drive 14th Floor Newport Beach, CA 92660 | | | | | | | | |
*Represents less than 1%
| (1) | Unless otherwise indicated, the business address of each individual named is 4802 East Ray Road, Suite 23-408, Phoenix, Arizona 85044 and our telephone number is (866) 960-1539. 85044. | | | | (2) | Based on 40,352,61858,190,649 shares of Common Stock and 2,342,750 of Series AA Preferred Stock of GlyEco, Inc. outstanding as of June 18, 2013.August 29, 2014. | | | | | (3) | Includes an aggregate of (i) 437,528 shares of Common Stock issuable upon the exercise of warrantsoptions at $1.00 per share until June 27, 2021, (ii) 402,500488,750 shares of Common Stock issuable upon the exercise of options at $0.50 per share until October 25, 2021, (iii) 225,000337,500 shares of Common Stock issuable upon the exercise of options at $0.50 per share until December 5, 2022, (iv) 337,500 shares of Common Stock issuable upon the exercise of options at $1.00 per share until September 20, 2023 and (iv)(v) 156,000 shares of Common Stock issuable upon exercise of warrants at $1.25 per share until February 15, 2016 .2016. Also includes an aggregate of 3,372,1183,751,139 shares of Common Stock beneficially held by Mr. Lorenz’s wife, Janet Lynn Carnell.Carnell Lorenz. Pursuant to Section 13 of the Securities Exchange Act of 1934, as amended, Mr. Lorenz is deemed to beneficially own shares of Common Stock held by his wife. | | | | (4) | Includes (i) 15,000 shares of Common Stock issuable upon the exercise of optionswarrants at $1.00 per share until June 27, 2021, (ii) 175,000212,500 shares of Common Stock issuable upon the exercise of options at $0.50 per share until October 25, 2021, and (iii) 177,500266,250 shares of Common Stock issuable upon the exercise of options at $0.50 per share until December 5, 2013 2022, (iv) 225,000 shares of Common Stock issuable upon the exercise of options at $1.00 per share until September 20, 2023, and (v) 21,521 shares of Common Stock issuable upon the exercise of options at $0.69 per share until June 30, 2024. | | | | (5) | Includes an aggregate of (i) 100,000 shares of Common Stock issuable upon the exercise of warrants at $0.50 per share until May 3, 2016, (ii) 40,000 shares of Common Stock issuable upon exercise of a warrant at $1.00 per share until June 27, 2021, (iii) 60,000 shares of Common Stock issuable upon exercise of options at $1.00 per share until June 27, 2021, (iv) 105,000127,500 shares of Common Stock issuable upon the exercise of options at $0.50 per share until October 25, 2021, (v) 100,0001,350,000 shares of Common Stock issuable upon the exercise of warrants at $0.73 per share until August 4, 2017, and (vi) 50,000 shares of Common Stock issuable upon the exercise of options at $1.00 per share until September 20, 2023. | | | | (6) | Includes (i) 255,000 shares of Common Stock issuable upon the exercise of options at $0.50 per share until May 3, 2017,October 25, 2021, (ii) 318,750 shares of Common Stock issuable upon the exercise of options at $0.50 per share until December 5, 2022, and (vi) 100,000(iii) 225,000 shares of Common Stock issuable upon the exercise of options at $1.00 per share until September 20, 2023. |
(7) | Includes (i) 180,000 shares of Common Stock issuable upon the exercise of warrants at $1.00 per share until June 27, 2021 (ii) 255,000 shares of Common Stock issuable upon the exercise of options at $0.50 per share until May 3, 2018,.October 25, 2021, (iii) 262,500 shares of Common Stock issuable upon the exercise of options at $0.50 per share until December 5, 2022, (iv) 225,000 shares of Common Stock issuable upon the exercise of options at $1.00 per share until September 20, 2023. and (v) 21,521 shares of Common Stock issuable upon the exercise of options at $0.69 per share until June 30, 2024. Also includes an aggregate of 2,401,612 shares of Common Stock beneficially held by Ms. Carnell Lorenz’s husband, John Lorenz. Pursuant to Section 13 of the Securities Exchange Act of 1934, as amended, Ms. Carnell Lorenz is deemed to beneficially own shares of Common Stock held by her husband. | | | | (6)(8) | Includes(i) 35,000Includes (i) 85,000 shares of Common Stock issuable upon the exercise of options at $0.50 per share until October 25, 2021, (ii) 112,500 shares of Common Stock issuable upon the exercise of options at $0.50 per share until December 5, 2022, (iii) 75,000 shares of Common Stock issuable upon the exercise of options at $1.00 per share until September 20, 2023, and (iv) 30,000 shares of Common Stock issuable upon the exercise of warrants at $1.25 until February 15, 2016.
| | | | (9) | Includes 37,500 shares of Common Stock issuable upon the exercise of options at $1.00 per share until September 20, 2023. | | | | (10) | Includes (i) 20,000 shares of Common Stock issuable upon the exercise of warrants at $1.00 per share until June 27, 2021 (ii) 42,500 shares of Common Stock issuable upon the exercise of options at $0.50 per share until October 25, 2021, and (ii)(iii) 37,500 shares of Common Stock issuable upon the exercise of options at $1.00 per share until September 20, 2023. |
| (11) | Includes 25,000 shares of Common Stock issuable upon the exercise of options at $0.50$1.04 per share until December 5, 2013 .January 15, 2024. | (7) | | | (12) | Includes (i)70,0005,000 shares of Common Stock issuable upon the exercise of options at $0.50$0.69 per share until October 25, 2021, (ii) 75,000June 30, 2024. | | | | (13) | Includes 6,742,820 shares that all executive officers, directors, and director nominees as a group have the right to acquire within 60 days of the date of the table set forth above. The 6,152,751 shares of Common Stock issuable uponthat are deemed to be beneficially owned by both John Lorenz and Janet Carnell Lorenz, and that are included in the exercisetotal beneficial ownership of options at $0.50 per share until December 5, 2013, and (iii) 30,000Common Stock reported for each of them, are only counted once in the total number of shares of Common Stock issuable uponreported as beneficially owned by the exercise of warrants at $1.25 per share until February 15, 2016.executive officers, directors, and director nominees. | (8) | Includes 245,000 shares of Common Stock issuable upon the exercise of options at $0.50 per share until October 25, 2021, and (ii) 175,000 shares of Common Stock issuable upon the exercise of options at $0.50 per share until December 5, 2013. Entities included: William Miller, R. Wesley Company LLC, and William Jeffrey Miller Revocable Trust.
| (9)(14) | Consists of (i) 1,000,000 shares of Common Stock issuable upon the exercise of a warrant at a purchase price of $0.0001 per share until May 25, 2015, (ii) 480,000940,000 shares of Common Stock issuable upon the exercise of a warrant at a purchase price of $0.025 per share$1.00 until September 8, 2013, andFebruary 15, 2016, (iii) 940,0002,605,513 shares of Common Stock issuable upon the exercise of warrantsa warrant at a purchase price of $1.00 per share until February 15, 2016. Entities included: Periscope Partners L.P.,March 14, 2017, and IRA FBO Leonid Frenkel, Pershing LLC. | (10) | Janet Lynn Carnell is Senior VP of Corporate Development and Marketing of the Company and the wife of John Lorenz, the Chief Executive Officer, President, Secretary, and Chairman of the Board of the Company. Pursuant to Section 13 of the Securities Exchange Act of 1934, as amended, Ms. Carnell is deemed to beneficially own the 1,865,362 shares of Common Stock beneficially owned by her husband. Also includes (i) 260,000 shares of Common Stock issuable upon the exercise of warrants at $1.00 per share until June 27, 2021 (ii) 210,000(iv) 56,250 shares of Common Stock issuable upon the exercise of options at $0.50$1.00 per share until October 25, 2021, and (iii) 175,000 shares of Common Stock issuable upon the exercise of options at $0.50 per share until December 5, 2013 .
September 20, 2023. | (11) | Consists of
| | (15) | Includes (i) 200,000100,000 shares of Common Stock issuable upon the exercise of a warrant at a purchase price of $1.00 per share until September 1, 2015, (ii) 250,000 shares of Common Stock issuable upon the exercise of a warrant at a purchase price of $1.00 per share until December 1, 2015, and (iii) 400,000 shares of Common Stock issuable upon the exercise of a warrant at a purchase price of $1.00 per share until December 10, 2015,2015. | (12) | Consists | | (16) | Entities included: Wynnefield Partners Small Cap Value, L.P.I, Wynnefield Partners Small Cap Value, L.P., and Wynnefield Small Cap Value Offshore Fund, Ltd. Mr. Mamanteo, a member of (i) 1,000,000 sharesour Board of Common Stock issuable upon the exercise ofDirectors, serves as a warrantPortfolio Manager at a purchase price of $1.00 per share until December 21, 2014, and (ii) 400,000 shares of Common Stock issuable upon the exercise of a warrant at a purchase price of $1.00 per share until September 6, 2015.Wynnefield Capital. |
ELECTION OF DIRECTORS
Nominees for Election at the 2014 Annual Meeting of Shareholders The Governance & Nominating Committee of the Board has nominated John Lorenz, Michael Jaap, Richard Q. Opler, Keri Smith, Dwight Mamanteo, David Ide, and Melvin L. Keating for election as set forth above, theredirectors to serve until the next annual meeting of stockholder or until their successors are duly elected and qualified. If you sign your proxy or voting instruction card but do not give instructions with respect to the voting of directors, your shares will be voted for the nominees recommended by our Board. If you wish to give specific instructions with respect to the voting of directors, you may do so by indicating your instructions on your proxy or voting instruction card. The Board expects that the nominees will be available to serve as directors. If any nominee becomes unavailable, however, the proxy holders intend to vote for any nominee designated by the Board, unless the Board chooses to reduce the number of directors serving on the Board. If additional persons are nominated for election as directors, the proxy holders intend to vote all proxies received by them in such a manner as to assure the election of John Lorenz, Michael Jaap, Richard Q. Opler, Keri Smith, Dwight Mamanteo, David Ide, and Melvin L. Keating.
Vote Required and Board Recommendation
Directors are elected by a “plurality” of the shares voted. Plurality means that the nominee with the largest number of votes is elected, up to the maximum number of directors to be chosen (in this case, seven directors). Stockholders can either vote “for” the nominee or withhold authority to vote for the nominee. However, shares that are withheld will have no arrangements known to us,effect on the operationoutcome of which may at a subsequent date result in a change in controlthe election of ourdirectors. Broker non-votes also will have no effect on the outcome of the election of the directors.
The Board recommends that shareholders vote “FOR” the election of each of John Lorenz, Michael Jaap, Richard Q. Opler, Keri Smith, Dwight Mamanteo, David Ide, and Melvin L. Keating as directors of the Company.
RATIFICATION OF SEMPLE, MARCHAL & COOPER LLP AS OURINDEPENDENT REGISTERED PUBLIC ACCOUNTANTS
Audit Committee Appointment – Semple, Marchal & Cooper LLP Our Audit Committee, pursuant to authority granted to it by the Board, has selected Semple, Marchal & Cooper LLP as the Company’s independent public accountants to examine our annual consolidated financial statements for the fiscal year ending December 31, 2014. The Board is submitting this proposal to the vote of the shareholders in order to ratify the Audit Committee’s selection. If shareholders do not ratify the selection of Semple, Marchal & Cooper LLP, the Audit Committee will reconsider its selection of our independent public accountants for fiscal 2014, although the Audit Committee will be under no obligation to change its selection. Semple, Marchal & Cooper LLP has been the Company’s independent public accounting firm since July 29, 2013.
Change in Independent Public Accountants
On July 15, 2013, the Board appointed Semple, Marchal & Cooper, LLP to be the Company’s independent registered public accountants. Concurrent with the appointment of Semple, Marchal & Cooper, LLP, on July 15, 2013, the Board dismissed Jorgensen & Co., which had served as the Company’s independent registered public accountants for the fiscal years ended December 31, 2012, and December 31, 2011. The reports provided by Jorgensen & Co. in connection with the Company’s financial statements for the fiscal years ended December 31, 2012, and December 31, 2011, did not contain any adverse opinion or disclaimer of opinion, nor were such reports qualified or modified as to uncertainty, audit scope, or accounting principles, except that they contained an explanatory paragraph in respect to the substantial doubt of the Company’s ability to continue as a going concern. During the two fiscal years prior to dismissal and through July 15, 2013, there was only one disagreement between the Company and Jorgensen & Co. The disagreement was in connection with the audit of the Company’s financial statements for the fiscal year ended December 31, 2012, and concerned the fair market value of shares issued in non-monetary transactions. The view of Jorgensen & Co. was that market conditions for the cash sale of securities (at $0.50) weighed heavily in the valuation of the shares, notwithstanding contractual agreements (at $1.00) for the parties to the non-monetary exchanges. The Board did not directly discuss the subject matter of the disagreement with Jorgensen & Co., and the disagreement was ultimately resolved to the satisfaction of Jorgensen & Co. The Company engagedauthorized Jorgensen & Co. to serverespond fully to any inquiries of Semple, Marchal & Cooper LLP concerning the subject matter of the disagreement. Notwithstanding the disagreement disclosed above, there were no other disagreements between the Company and Jorgensen & Co. on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of Jorgensen & Co., would have caused Jorgensen & Co. to make reference to the subject matter of the disagreements in connection with their reports on the Company’s financial statements, and there were no other reportable events as that term is described in Item 304(a)(1)(v) of Regulation S-K. On July 15, 2013, the Board appointed Semple, Marchal & Cooper, LLP to be the Company’s independent registered public accountants. During the two fiscal years prior to appointment and through July 15, 2013, neither the Company nor anyone on its behalf consulted with Semple, Marchal & Cooper, LLP regarding any of the following: (i) the application of accounting principles to a specific transaction, either completed or proposed; (ii) the type of audit opinion that might be rendered on the Company’s financial statements, and none of the following was provided to the Company (a) a written report, or (b) oral advice that Semple, Marchal & Cooper, LLP concluded was an important factor considered by the Company in reaching a decision as to an accounting, auditing, or financial reporting issue; or (iii) any matter that was subject of a disagreement, as that term is defined in Item 304(a)(1)(iv) of Regulation S-K, or a reportable event, as described in Item 304(a)(1)(v) of Regulation S-K On July 29, 2013, the Company’s stockholders ratified the appointment of Semple, Marchal & Cooper, LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2013. Principal Accounting Fees and Services
Set forth below are the fees paid to Semple, Marchal & Cooper, LLP and Jorgensen & Co. for each of the last two fiscal years.years:
Audit Fees Set below are the aggregate fees billed for each of the last two fiscal years for professional services rendered by the Company’s principal accountant for the audit of the Company’s annual financial statements and review of financial statements included in the Company’s Form 10-Q or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years. | Auditor: | | 2011 | | 2012 | | | 2013 | | 2012 | | | Semple, Marchal & Cooper, LLP | | | $ | 38,803 | | $ | - | | | | | | | | | | | 77,500 | | 53,500 | |
Audit-Related Fees Set forth below are the aggregate fees billed in each of the last two fiscal years for assurance and related services by the Company’s principal accountant that are reasonably related to the performance of the audit or review of the Company’s financial statements and are not reported under “Audit Fees” above. | Auditor: | | 2011 | | | 2012 | | | 2012 | | 2013 | | | | $ | 0 | | | $ | | | | $ | - | | $ | 2,375 | |
Tax Fees
Set forth below are the aggregate fees billed in each of the last two fiscal years for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning.
| Auditor: | | 2011 | | 2012 | | | 2012 | | 2013 | | | | | | | | | | | $ | - | | $ | 600 | |
All Other Fees Set forth below are the aggregate fees billed in each of the last two fiscal years for products and services provided by the principal accountant, other than the services reported in above. Registrants shall describe the nature of the services comprising the fees disclosed under this category.
| Auditor: | | 2011 | | 2012 | | | 2012 | | 2013 | | | | | | | | | | | $ | 80,500 | (1) | | $ | - | |
(1) The Company paid Jorgensen & Co. $80,500 for the audit of three companies that were acquired or to be acquired by the Company: MMT Technologies, Full Circle Manufacturing, and Antifreeze Recycling.
Pre-Approval Policies and Procedures Before an independent registered public accounting firm is engaged by the Company to render audit or permissible non-audit services the engagement is approved by the Company'sAudit Committee of the Board. Attendance at Annual Meeting Representatives of Semple, Marchal & Cooper, LLP are not expected to be present at the Annual Meeting. Vote Required and Board Recommendation Approval of Directors actingthis proposal requires the affirmative vote of a majority of the votes cast on the proposal. Stockholders who return a signed proxy card but do not indicate how they wish to vote on Proposal 2 will be deemed to have voted “FOR” Proposal 2. Abstentions and broker non-votes will have no effect on the outcome of this proposal.
The Board recommends that shareholders vote “FOR” ratification of the selection of Semple, Marchal & Cooper LLP as the audit committee.company’s independent registered public accounting firm for the fiscal year ending December 31, 2014.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS None reportable under Item 404 of Regulation S-K.
Qualified stockholders who wishIf any shareholder of the Company intends to present a proposal for consideration at the 2015 Annual Meeting of Stockholders and desires to have proposalssuch proposal included in ourthe proxy statement in connectionand form of proxy distributed by the Board with our 2014 Annual Meeting pursuantrespect to Rule 14a-8 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”),such meeting, such proposal must deliver such proposals so that they arebe received at our principal executive offices at 4802 E. Ray Rd., Ste. 23-408, Phoenix, AZ 85044, by April 30, 2014, in orderAttention: Corporate Secretary, not later than June 14, 2015. Proposals received after such date, including with respect to the nomination of directors, will not be considered for inclusion in next year’s proxy statement. timely.
For any stockholder proposal submitted outside Rule 14a-8 ofeach matter that you wish to bring before the Exchange Act to be considered timely for purposes of Rule 14a-4(c) undermeeting, provide the Exchange Act, the Company must receive notice of such proposal, or any nomination of a director by a stockholder, by May 5, 2014.following information: | · | a brief description of the business and the reason for bringing it to the meeting; | | · | your name and record address; | | · | the number of shares of Company stock which you own; and | | · | any material interest (such as financial or personal interest) that you have in the matter. |
We know of no other matters to be presented at the Annual Meeting other than the election of directors and the ratification of the company’s independent registered public accounting firm, as described above. If other matters are properly presented at the meeting, the proxies will vote on these matters in accordance with their judgment of the best interests of the Company.
We will provide a free copy of our Annual Report on Form 10-K for the fiscal year ended December 31, 2012.2013. Requests should be in writing and addressed to Alicia Williams, the Company’s Interim Chief Financial Officer, Secretary, Controller and VP of Internal Operations,Matt Hamilton, General Counsel, at 4802 E. Ray Rd. Ste. 23-408, Phoenix, AZ 85044.
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