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NOTICE OF 2011 ANNUAL MEETING AND PROXY STATEMENT
2010 ANNUAL REPORT ON FORM 10-K
TO OUR STOCKHOLDERS:May 22, 2013
2010 ended with a transformative event for at 9:30 a.m., Central Daylight Time.
A second key component of our oncology market participation has been the refinement and expansion of our Cold-PCR assay portfolio in our Pharmacogenomics laboratory. We completed the licensing of COLD-PCR from the world-renowned Dana-Farber Cancer Institute with the specific goal of developing and commercializing the most sensitive DNA mutation detecting technology available in the market. We think we have realized that goal and have a rapidly expanding base of pharmaceutical company partners who are engaging us to apply these new assays to detecting, in patients’ blood rather than tumors, the presence of gene mutations that may be indicative of cancer. We believe that this will provide a significant improvement in the method of and ability to detect developing cancers sooner as well as enhance accurate drug selection to treat such cancers. To further expand this market, we also plan to make available to potential customers throughout the world the ability to use our recent discovery that enhances DNA mutation detection using standard DNA sequencing instruments. Combining these two technologies will offer pharmaceutical company researchers, clinicians and patients the possibility of finding and identifying cancers earlier and detecting recurrenceadvance of the disease soonerAnnual Meeting does not deprive you of your right to attend the Annual Meeting.
We are very excited by“street name”), please contact your broker or other nominee for questions concerning the potential for growth that resides at Transgenomic, and I thankAnnual Meeting.
Craig Tuttle
President and Chief Executive Officer
We look forward to seeing those of you who will be able to attend the Annual Meeting.
| Sincerely yours, | |
| /S/ CRAIG J. TUTTLE | |
| Craig J. Tuttle | |
| President and Chief Executive Officer | |
24, 2013 Under rules issued by the Securities Exchange Commission (the "SEC"), we are providing access to our proxy materials both by sending you this full set of proxy materials and by notifying you of the availability of our proxy materials on the Internet. group Therefore, it is critical that you indicate your vote on these proposals if you want your vote to be counted. If a stockholder votes to “abstain” with respect to this proposal, such stockholder's shares will not be voted with respect to this proposal. Broker non-votes and withheld votes will not be counted as votes cast for this proposal and as such will have no impact on the outcome of this proposal. The Board Name Principal Occupation Antonius P. Schuh, Ph.D. Doit L. Koppler II Rodney S. Markin, M.D., Ph.D. Chairman of the Board, Transgenomic. Inc, President of University of Nebraska Medical Center Physicians(3) Robert M. Patzig Craig J. Tuttle the Company, and the Board December 31, 2012 with management of the Company and with representatives of McGladrey. Our discussions with McGladrey also included the matters required by Statement on Auditing Standards No. 61, as amended (AICPA, Professional Standards, Vol. 1, AU section 380), as adopted by the Public Company Accounting Oversight Board in Rule 3200T. In addition, we received the written disclosures and the letter from McGladrey required by applicable requirements of the PCAOB regarding its communications with the Audit Committee concerning independence, and have discussed with McGladrey its independence from the Company and its management. A fundamental part of risk management is not only understanding the risks a company faces and what steps management is taking to manage those risks, but also understanding what level of risk is appropriate for us. The involvement of our full Board in the risk oversight process allows our Board to assess management's appetite for risk and also determine what constitutes an appropriate level of risk for our Company. Our Board regularly includes agenda items at its meetings relating to its risk oversight role and meets with various members of management on a range of topics, including corporate governance and regulatory obligations, operations and significant transactions, risk management, insurance, pending and threatened litigation and significant commercial disputes. The Board has also delegated primary responsibility of the oversight of all executive compensation and our employee benefit programs to the Compensation Committee.The Compensation Committee balances against undue risk taking. 2012, except that one Form 4 to report a stock purchase made on June 25, 2012 was not filed timely by Mr. Richards and one Form 4 to report an option grant made on September 12, 2012 was not filed timely by Mr. Colonnese. Name Gregory T. Sloma(2) Jeffrey L. Sklar, M.D., Ph.D(2) Rodney Markin Michael B. McNulty(2) Antonius P. Schuh Name Craig J. Tuttle Craig J. Tuttle Craig J. Tuttle Chad M. Richards our health and welfare benefit programs, including medical coverage, dental coverage, disability insurance, life insurance and our 401(k) plan. We offer similar plans in foreign countries. 2012 and 2011, respectively. The 2012 fees included $92,475 for Mr. Frevert's services and $27,805 for other professional services. Effective June 3, 2012, we terminated our contract with CFO Systems and Mr. Frevert's service as our Chief Financial Officer terminated on such date. our accompanying consolidated financial statements. The following non-employee directors during the year ended December 31, 2012. Directors who are our employees did not receive compensation for serving on the Board or its committees in fiscal 2012. “householding,” is designed to reduce our printing and postage costs. However, if a stockholder is residing at such an address and wishes to receive a separate annual report or proxy statement in the future, such stockholder may request them by calling our Corporate Secretary at (402) 452-5400, or by submitting a request in writing to our Corporate Secretary, c/o Transgenomic, Inc., 12325 Emmet Street, Omaha, NE 68164. If a stockholder is receiving multiple copies of our Annual Report and proxy statement, such stockholder can request householding by contacting the Corporate Secretary in the same manner described above. In addition, we will promptly deliver, upon written or oral request to the address or telephone number above, a separate copy of the Annual Report or Proxy Statement to a stockholder at a shared address to which a single copy of the documents was delivered. person, other than Dr. Schuh. A copy of our Annual Report and our Form 10-K is available without charge upon written request to our Corporate Secretary, c/o Transgenomic, Inc., 12325 Emmet Street, Omaha, NE 68164.May 18, 2011TheNotice is hereby given that the 2013 Annual Meeting of Stockholders of Transgenomic, Inc. (the “Company”) will be held at our principal executive offices, 12325 Emmet Street, Omaha, Nebraska, on Wednesday, May 18, 201122, 2013 at 9:30 a.m., Central Daylight Time, for the following purposes:(1)(1 ) To elect one (1) Class III director to be elected by the holders of the Common Stock of the Company asfor a separate voting group; andthree-year term ending in 2016; (2)(2 ) To elect one (1) Class II directorconduct an advisory vote to be elected byapprove executive compensation; and(3 ) To transact such other business as may properly come before the holders of the Series A Convertible Preferred Stock of the Company as a separate voting group.Annual Meeting or any adjournment or postponement thereof.Please read the enclosed Proxy Statement for important information about the Annual Meeting.21, 201127, 2013 are entitled to notice of, and to vote at, the Annual Meeting.Please sign and return the enclosed proxy card using the envelope provided. You can revoke your proxy at any time. If you attend the Annual Meeting in person you may withdraw your proxy and vote in person.By Order of the Board of Directors 
/S/ MARK P. COLONNESE Brett L. Frevert,Mark P. Colonnese, Executive Vice President andChief Financial Officer15, 2011IMPORTANT: IT IS IMPORTANT THAT WE RECEIVE YOUR PROXY TO ENSURE A QUORUM AT THE ANNUAL MEETING. BY PROMPTLY RETURNING YOUR PROXY CARD TO US, YOU WILL SAVE THE COMPANY THE EXPENSE OF FURTHER PROXY SOLICITATION.Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting to be held on May 22, 2013IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE STOCKHOLDER MEETING TO BE HELD ON MAY 18, 2011. THIS PROXY STATEMENT AND THE 2010 ANNUAL REPORT TO STOCKHOLDERS ARE AVAILABLE FREE OF CHARGE ON THE COMPANY’S WEBSITE AThttp://www.transgenomic.com/ir/docs/ar/AR2010.pdf : This Proxy Statement, the accompanying form of proxy card and our Annual Report on Form 10-K for the fiscal year ended December 31, 2012, including financial statements, are available on the Internet at www.transgenomic.com.18, 2011.22, 2013 at 9:30 a.m., Central Daylight Time, at our offices located at 12325 Emmet Street, Omaha, Nebraska. Only those owners (the “Common Stockholders”) of our common stock or Series A Convertible Preferred Stock (the “Series A Preferred Stock”) of record atas of the close of business on March 21, 201127, 2013 (the “Record Date”) are entitled to vote at the Annual Meeting for the election of the Class II director to be elected by the Common Stockholders (the “Common Stock Director”), as a separate voting group.Meeting. This Proxy Statement, along with the Notice of the Annual Meeting, the Annual Report to Stockholders and a proxy card are being first mailed to Common Stockholdersstockholders on or about April 15, 2011.26, 2013. We are not soliciting proxies from the holders (the “Preferred Stockholders”) of the Series A Convertible Preferred Stock of the Company (the “Preferred Stock”Stockholders”) who are entitled to elect the Class III director to be elected by the Preferred Stockholders, (the “Preferred Stock Director”), as a separate voting group. of Directors or our Chief Executive Officer the power to vote on your behalf at the Annual Meeting. All shares of the Company’s commonCompany's voting stock represented by properly executed and unrevoked proxies will be voted by the Board of Directors or the Chief Executive Officer in accordance with the directions given by those proxies. Where no instructions are indicated, the Board of Directors or the Chief Executive Officer will vote as follows: (1) “FOR” the election of the nominee forClass I Director, and (2) “FOR” the Common Stock Director to be elected atapproval, on an advisory basis, of the Annual Meeting.compensation of our named executive officers, as set forth in this Proxy Statement. In addition, the Board of Directors believes outstanding voting shares of common stock owned by current executive officers and directors of the Company will be voted “FOR” the electioneach of the nominee for the Common Stock Director.Proposals One and Two. Shares owned by these persons represent less than 2% of the total shares of commonour voting stock outstanding as of the Record Date. of Directors or the Chief Executive Officer at the Annual Meeting. If you decide to do this, you will need to give the Secretary of the Company written notice that you want to revoke the proxy or you can submit a new proxy to the Secretary.Secretary, or submit a new vote electronically via the Internet or by telephone, if permitted by the broker or other nominee that holds your shares. In addition, if you attend the Annual Meeting in person, you may withdraw your proxy and vote in person. Shares of common stock and Series A Preferred Stock entitled to vote and represented by properly executed, returned and unrevoked proxies will be considered present at the Annual Meeting for purposes of establishing a quorum. This includes shares for which votes are withheld, abstentions are cast or there are broker nonvotes.non-votes. The holders of our common stock and Series A Preferred Stock representing at least a majority of our voting stock issued and outstanding on the Record Date must be present at the Annual Meeting, either in person or by proxy, in order for there to be a quorum.VOTING SECURITIES AND BENEFICIAL OWNERSHIP BYPRINCIPAL STOCKHOLDERS, DIRECTORS AND OFFICERSBeneficial OwnershipCommon Stockcompany stock held in brokerage accounts for their clients who beneficially own the shares, these banks, brokers and other such holders who do not receive voting instructions from their clients have the discretion to vote uninstructed shares on certain matters (“discretionary matters”) but do not have discretion to vote uninstructed shares as to certain other matters (“non-discretionary matters”). A broker may return a proxy card on behalf of a beneficial owner from whom the broker has not received voting instructions that casts a vote with regard to discretionary matters but expressly states that the broker is not voting as to non-discretionary matters. The broker's inability to vote with respect to the non-discretionary matters with respect to which the broker has not received voting instructions from the beneficial owner is referred to as a “broker non-vote.”49,299,67288,245,725 issued and outstanding shares of our common stock.stock and 2,586,205 issued and outstanding shares of Series A Preferred Stock. Each share of common stock is entitled to one vote on each matter to be voted on by the Common Stockholders at the Annual Meeting. Common StockholdersEach share of Series A Preferred Stock is entitled to four votes on each matter to be voted on at the Annual Meeting, except for Proposal One (the election of the Class I director). Accordingly, the owners of Series A Preferred Stock have an aggregate of 10,344,820 votes with respect to each proposal to be voted on at the Annual Meeting except for Proposal One. Only the owners of our common stock as of the Record Date, voting as a separate class, are entitled to vote on Proposal One. The holders of Series A Preferred Stock will vote together as a single class on an as-converted basis with the holders of common stock on Proposal Two.121, 2011,27, 2013, the record date established for our Annual Meeting of Stockholders. Except as indicated in the footnotes to this table, to our knowledge the persons named in the table below have sole voting and investment power with respect to all of common stock of the Company beneficially owned and such shares are owned directly by such person. The number of shares beneficially owned by each person or group as of March 21, 201127, 2013 includes shares of common stock that such person or group had the right to acquire on or within 60 days after March 21, 2011,27, 2013, including, but not limited to, upon the exercise of options or warrants to purchase common stock or the conversion of securities into common stock. Beneficial ownership information of persons other than our current executive officers and directors is based on available information including, but not limited to, Schedules 13D, 13F or 13G filed with the Securities and Exchange Commission (the “SEC”) or information supplied by these persons.NameNumber of SharesBeneficially OwnedPercentOf ClassDirectors and Executive OfficersCraig J. Tuttle, President and Chief Executive Officer, Director600,000(1)1.2% Chad M. Richards, Chief Commercial Officer243,800(2)*Doit L. Koppler II, Director— (3)*Rodney S. Markin, M.D., Ph.D., Director20,000(4)*Robert M. Patzig, Director— (5)*Antonius P. Schuh, Ph.D., Director10,000(6)*All directors and executive officers as a group (6 persons)873,800(7)1.7% Other StockholdersLeRoy C. Kopp13,425,906(8)27.2% AMH Equity, LLC and Leviticus Partners, L.P.4,850,000(9)9.8% Randal J. Kirk15,517,228(10)23.9% *Represents less than 1% of the outstanding common stock of the Company.(1)Consists of options to purchase 200,000 shares at $0.75 per share, 200,000 shares at $0.69 per share and 200,000 shares at $0.66 per share.(2)Consists of 43,800 shares owned by Mr. Richards and options to purchase 200,000 shares at $0.69 per share.(3)Mr. Koppler holds unvested options to purchase 40,000 shares at $0.74 per share.(4)Consists of options to purchase 15,000 shares at $0.70 per share and 5,000 shares at $0.74 per share. Dr. Markin also holds unvested options to purchase 25,000 shares at $0.74 per share, 5,000 shares at $0.58 per share and 5,000 shares at $0.45 per share.(5)Mr. Patzig holds unvested options to purchase 40,000 shares at $0.74 per share.(6)Consists of options to purchase 10,000 shares at $0.45 per share. Dr. Schuh also holds unvested options to purchase an additional 25,000 shares at $0.74 per share, 5,000 shares at $0.58 per share and 5,000 shares at $0.45 per share.(7)Includes shares which may be acquired by executive officers and directors as a group within 60 days through the exercise of stock options.(8)Consists of shares owned directly by Mr. Kopp, shares held in individual retirement accounts established for Mr. Kopp and his spouse; shares held in the Kopp Family Foundation of which he is a director; and shares held in discretionary client accounts managed by Kopp Investment Advisors, LLC of which he is the Chief Executive Officer. The business address of each of these beneficial owners is 7701 France Avenue South, Suite 500, Edina, Minnesota 55435.(9)Consists of shares held by AMH Equity, LLC which is the general partner of Leviticus Partners, L.P. The business address of this beneficial owner is 60 East 42nd Street, Suite 901, New York, New York 10165.(10)Consists of (i) shares of Series A Convertible Preferred Stock (the “Preferred Stock”) convertible into 10,344,820 shares of common stock and (ii) warrants to purchase shares of the Preferred Stock which are convertible into 5,172,408 shares of common stock. These shares of the Preferred Stock and warrants are held 40% by Third Security Senior Staff 2008 LLC, 40% by Third Security Staff 2010 LLC and 20% by Third Security Incentive 2010 LLC, which companies are affiliated with the beneficial owner. Mr. Randal J. Kirk could be deemed to have indirect beneficial ownership of these shares. The business address of these beneficial owners is 1881 Grove Avenue, Radford, Virginia 24141. Number of Shares Beneficially Owned Percent of Class Directors and Executive Officers Craig J. Tuttle, President and Chief Executive Officer, Director 933,333 1.0% Mark P. Colonnese, Executive Vice President and Chief Financial Officer — * — * Chad M. Richards, Chief Commercial Officer 425,167 * Doit L. Koppler II, Director 135,254 * Rodney S. Markin, M.D., Ph.D., Director 75,000 * Robert M. Patzig, Director 119,467 * Antonius P. Schuh, Ph.D., Director 65,000 * All directors and executive officers as a group (7 persons) 1,753,221 2.0% Other Stockholders Randal J. Kirk 29,499,241 30.1% LeRoy C. Kopp 13,559,863 15.4% Kevin Douglas 8,514,812 9.4% AMH Equity, LLC and Leviticus Partners, L.P. 5,248,181 5.9% Fidelity Select Biotechnology Portfolio 5,087,982 5.7% On the Record DateMarch 27, 2013, there were 2,586,205 issued and outstanding shares of our Series A Preferred Stock. Each share of Preferred Stock is entitled to one vote on each matter to be voted on by the Preferred Stockholders at the Annual Meeting.21, 2011, the record date established for our Annual Meeting of Stockholders.27, 2013. The number of shares of Series A Preferred Stock beneficially owned by each person or group as of March 21, 201127, 2013 includes shares of Series A Preferred Stock that such person or group had the right to acquire on or within 60 days after March 21, 2011,27, 2013, including, but not limited to, upon the exercise of warrants to purchase Series A Preferred Stock. Except as indicated in the footnotes to this table, to our knowledge the persons named in the table below have sole voting and investment power with respect to all of the Series A Preferred Stock beneficially owned and such shares are owned directly by such person. Beneficial ownership information of such persons is based on available information including, but not limited to, Schedules 13D, 13F or 13G filed with the SEC or information supplied by these persons.NameNumber of SharesBeneficially OwnedPercentOf ClassRandal J. Kirk3,879,307(1)100% (1)Includes warrants to purchase 1,293,102 shares of the Preferred Stock. These shares of the Preferred Stock and warrants are held 40% by Third Security Senior Staff 2008 LLC, 40% by Third Security Staff 2010 LLC and 20% by Third Security Incentive 2010 LLC, which companies are affiliated with the beneficial owner. Mr. Randal J. Kirk could be deemed to have indirect beneficial ownership of these shares. The business address of these beneficial owners is 1881 Grove Avenue, Radford, Virginia 24141.Name and Address of Beneficial Owner Number of Shares Beneficially Owned Percent of Class Randal J. Kirk 3,879,307 100 % TO ELECT CLASS II COMMON STOCKONE: ELECTION OF DIRECTOR of Directors consists of five directors. The Board of Directors is divided into three classes with directors in each class serving for a term of three years. The terms of office of the current Class I, Class II and Class III directors will expire in 2013, 20112014 and 2012,2015, respectively. The holders of Series A Preferred Stock are entitled, as a separate voting group, to elect two (2) of the five directors (“Preferred Stock Directors”). The Common Stockholders are entitled, as a separate voting group, to elect the three (3) remaining directors (“Common Stock Directors”). There is one Common Stock Director in each class of directors. There is one Preferred Stock Director in each of Class I and Class II, but not a Preferred Stock Director in Class III.andCraig J. Tuttle is the current Common Stock Director in the Class I directors, Doit L. Koppler II is the current Preferred Stock Director in the Class II directors.directors and Antonius P. Schuh, Ph.D. is the current Common Stock Director in the Class II directors and Rodney S. Markin, M.D., PhD., is the current Class III director. We expect the holders of Series A Preferred StockholdersStock to reelect Mr. KopplerPatzig as a Class III director at the Annual Meeting or by written consent prior to such meeting.3of Directors has nominated Anthony P. SchuhCraig J. Tuttle for election by the Common Stockholders as the Class III Common Stock Director to serve a three-year term expiring in 2014.2016. Mr. Schuh is the current Class II Common Stock Director and heTuttle has expressed an intention to continue to serve on the Board of Directors if he is elected. There are no arrangements or understandings between Mr. SchuhTuttle and any other person pursuant to which he was selected as a nominee.SchuhTuttle as the Class III Common Stock Director. This means that votes withheld and broker nonvotesnon-votes with respect to the election of the Class III Common Stock Director will have no effect on the election of such director. If Mr. SchuhTuttle is unable to serve as a director, the Board of Directors may nominate a substitute nominee. In that case, the Board of Directors will vote all valid proxies that voted in favor of Mr. SchuhTuttle for the election of the substitute nominee.Name Age Principal Occupation Director Since Term to Expire CLASS I DIRECTOR NOMINEES Robert M. Patzig, Preferred Stock Director 44 Senior Managing Director and Chief Investment Officer, Third Security, LLC 2010 2013 Craig J. Tuttle, Common Stock Director 60 President and Chief Executive Officer of Transgenomic, Inc. 2007 2013 CLASS II DIRECTORS CONTINUING IN OFFICE Doit L. Koppler II, Preferred Stock Director 49 Managing Director and Treasurer, Third Security, LLC 2010 2014 Antonius P. Schuh, Ph.D., Common Stock Director 49 Chief Executive Officer of Trovagene, Inc. 2009 2014 CLASS III DIRECTOR CONTINUING IN OFFICE Rodney S. Markin, M.D., Ph.D., Common Stock Director 56 Chairman of the Board, Transgenomic, Inc., Chief Technology Officer, University of Nebraska Medical Center 2007 2015 TheRobert M. Patzig. Mr. Patzig is a Senior Managing Director and the Chief Investment Officer for Third Security, LLC. Mr. Patzig joined Third Security upon the company's inception in 1998. Mr. Patzig's responsibilities include identifying and researching investment opportunities for Third Security and its funds, securities valuation and portfolio management. Mr. Patzig was a Director of Cyntellect Inc., a privately held scientific instrumentation company. Mr. Patzig has served as Chairman of the Board of Intrexon Corporation and Cyntellect, Inc. and served as a member of the Board of Directors recommends thatof Synchrony, Inc. He previously served as a Director of the Common Stockholders vote “FOR” the election ofVirginia Biotechnology Association, a non-profit industry advocacy group, from 2006-2011. Mr. SchuhPatzig served as the Class II Common Stock Director.head of the Investment Committee for Howe and Rusling, Inc., a registered investment advisor, from 2001 until its sale in 2006. Mr. Patzig served as the Chief Executive Officer and Chief Compliance Officer of New River Advisors LLC from June of 2003 until August of 2007. Prior to the formation of Third Security, Mr. Patzig served as Director of Market Research and Analysis at GIV Holdings, Inc. and Director of Research Services at General Injectables & Vaccines, Inc. Mr. Patzig received a B.A. in Philosophy and English from Virginia Tech, where he taught as an instructor for several years prior to 1996.believesselected Mr. Patzig as a director because of his substantial biotech industry experience as well as his securities and investment expertise.Class II Common Stock Director nominee possessesApogent Technologies group of companies. Mr. Tuttle has also held senior management positions at Boehringer Mannheim, Bayer Diagnostics and Difco Laboratories. He began his career at Syva Company, a subsidiary of Syntex Pharmaceuticals and Cetus Corporation where he led the qualitiesdevelopment of the first thermocycler system for automating PCR. Mr. Tuttle holds a B.S. in Biochemistry from UCLA, an M.S. in Biochemistry from the University of Colorado and an M.B.A. in Business and Marketing from St. Mary's College. The Board selected Mr. Tuttle to serve as a director because he is our Chief Executive Officer. He has expansive knowledge and experience that nominees should possess. in the biotech industry, as well as relationships with chief executives and other senior management at biotech companies.Schuh’sKoppler joined Third Security as Managing Director and Treasurer in 2001 and manages the finance function of Third Security and is involved with several portfolio companies of Third Security's managed investment funds. Mr. Koppler served as Vice President, Treasurer and a member of the Board of Directors of Vital Diagnostics Holding Corp., a global supplier of products and services for the clinical laboratory in the traditional in vitro diagnostics market with a focus onbiotech industry, makes himwhich brings a unique and valuable member ofperspective to the Board. The Board seeks out,the Board is comprised of, individuals whose background and experience complement those of other Board members.The following table sets forth information about our directors, including the Class II Common Stock Director nominee who is to be voted on by the Common StockholdersAssociate Vice Chancellor for Business Development at the Annual Meeting. The BoardUniversity of Directors has determined that Messrs. Koppler, Patzig, MarkinNebraska Medical Center and Schuh are independent directorsa Professor of the Company under the listing standards adopted by the SEC. Age Director
Since Term
To
Expire CLASS II COMMON STOCK DIRECTOR NOMINEE 47 Chief Executive Officer of Sorrento Therapeutics, Inc. (1) 2009 2014 CURRENT CLASS II PREFERRED STOCK DIRECTOR 47 Managing Director and Treasurer, Third Security, LLC (2) 2010 2014 DIRECTORS CONTINUING IN OFFICE 54 2007 2012 42 Senior Managing Director and Chief Investment Officer, Third Security, LLC (4) 2010 2013 59 President & Chief Executive officer of Transgenomic, Inc.(5) 1997 2013 (1)Dr. Schuh co-founded Sorrento Therapeutics, Inc. in January 2006 and has served as its Chairman since such time and as its Chief Executive Officer since November 2008. From April 2006 to September 2008 Dr. Schuh served as CEO of AviaraDx, Inc. (now bioTheranostics, Inc., a bioMerieux Company). From March 2005 to April 2006 Dr. Schuh was CEO of Arcturus Bioscience, Inc. In addition Dr. Schuh was a director of Sequenom, Inc. from May 2000 to February 2005. The Board selected Dr. Schuh to serve as a4director because it believes he possesses valuable biotech experience and extensive executive management experience in the industry which brings a unique and valuable perspective to the Board.(2)Mr. Koppler joined Third Security in 2001 and manages the finance function of Third Security and is involved with several portfolio companies of Third Security’s managed investment funds. Mr. Koppler currently serves as Vice President, Treasurer and a member of the Board of Directors of Vital Diagnostics Holding Corp., a global supplier of products and services for the clinical laboratory in the traditional in vitro diagnostics market with a focus on the physician’s office, hospital and small-to-medium sized laboratory segments. Mr. Koppler served as Chairman and Chief Executive Officer of New River Funds, a family of no-load mutual funds, from its inception in 2003 through 2008 and as the Chief Investment Officer of New River Advisers, LLC, the investment adviser to New River Small Cap Fund, predecessor to Southern Sun Small Cap Fund. Mr. Koppler served as a member of the Board of Directors of IntelliMat, Inc. from November 2006 to July 2008. Prior to joining Third Security, Mr. Koppler served as Vice President and Controller of General Injectables & Vaccines, Inc., a $120 million distributor of injectable biologics and vaccines primarily to outpatient physician offices, from 1992-2000. From 1987-1992, he was a Manager in the audit practice of Ernst & Young LLP. Mr. Koppler is a Certified Public Accountant and a Member of the American Institute of Certified Public Accountants. He has also held Series 7 and Series 66 securities registrations. Mr. Koppler received a B.S. in Accounting from Salem International University. The Board selected Mr. Koppler to serve as a director because of his valuable financial expertise, including his public accounting and financial reporting experience. The Company also benefits from Mr. Koppler’s status as a financial expert under the Sarbanes Oxley Act of 2002.(3)Dr. Markin is also Professor of Pathology and Microbiology and Surgery, Senior Associate Dean for Clinical Affairs, College of Medicine at the University of Nebraska Medical Center and Chairman and President of UNMC Physicians (the UNMC medical practice).Pathology and Microbiology; David T. Purtilo Distinguished Professor Pathology and Microbiology and Courtesy Professor of Surgery. Dr. Markin is also a director of Nebraska Surgical Solutions, Inc. The Board selected Dr. Markin to serve as a director because he has valuable executive experience in the healthcare business. Dr. Markin also has extensive experience serving on other boards. His ability to communicate and encourage discussion makes him an effective lead independent director for the Board.(4)Mr. Patzig joined Third Security upon the company’s inception in 1998. Mr. Patzig’s responsibilities include identifying and researching investment opportunities for Third Security and its funds, securities valuation and portfolio management. Mr. Patzig is a Director of the Virginia Biotechnology Association, a non-profit industry advocacy group, a member of the Virginia Tech English Department Distinguished Alumni. Mr. Patzig has served as Chairman of the Board of Intrexon Corporation and Cyntellect, Inc. and served as a member of the Board of Directors of Synchrony, Inc. Mr. Patzig served as the head of the Investment Committee for Howe and Rusling, Inc., a registered investment advisor, from 2001 until its sale in 2006. Mr. Patzig served as the Chief Executive Officer and Chief Compliance Officer of New River Advisors LLC from June of 2003 until August of 2007. Prior to the formation of Third Security, Mr. Patzig served as Director of Market Research and Analysis at GIV Holdings, Inc. and Director of Research Services at General Injectables & Vaccines, Inc. Mr. Patzig received a B.A. in Philosophy and English from Virginia Tech.(5)From 2004 to 2005, Mr. Tuttle was President and Chief Operating Officer of Duke Scientific. From 1999 to 2003, Mr. Tuttle served as President and Chief Executive Officer of Applied Biotech, Inc. The Board selected Mr. Tuttle to serve as a director because he is the Company’s Chief Executive Officer. He has expansive knowledge and experience in the biotech industry, as well as relationships with chief executives and other senior management at biotech companies.In conjunction with the consummation of the financing related to our acquisition of the FAMILION family of genetic tests on December 29, 2010: (i) the former directors of the Company consisting of Gregory Sloma, Jeffrey Sklar and Michael McNulty resigned from the Board; (ii) the size of the Board was decreased to five members; and (iii) Robert M. Patzig and Doit L. Koppler II were appointed to serve on the Board as Preferred Stock Directors as required byof Children's Hospital and Medical Center Foundation and on the purchasersBoard of the Preferred Stock pursuantTrustees for Keck Graduate Institute. The Board selected Dr. Markin to the financing documents for such5transaction as well as the Certificate of Designation for the Preferred Stock. Mr. Patzig and Mr. Koppler were designated as Class I and Class II Preferred Stock Directors, respectively, and filled vacancies created by the resignation of the former directors.There are no family relationships among directors or executive officers of the Company. Other than as indicated in this Proxy Statement, there are no arrangements or understandings between any of our directors and any other person pursuant to which such person was or is to be selectedserve as a director director nominee orbecause he has valuable executive officer, nor are there any transactionsexperience in the healthcare business. Dr. Markin also has extensive experience serving on other boards. His experience and ability to which the Company is or was a participant in which any of our directors has a material interest subject to disclosure under Item 404(a) of Regulation S-K.Information regarding our other executive officers is found in our Form 10-K that is partencourage discussion makes him an effective Chairman of the Annual Report to Stockholders that accompanies this Proxy Statement. TheBoard. of Directors has adopted a code of ethical conduct that applies to our principal executive officersofficer, principal financial officer and senior financial officers as required by Section 406 of the Sarbanes Oxley Act of 2002.officers. This code of ethical conduct is embodied within our Business Ethics Policy, which applies to all persons associated with theour Company, including our directors, officers and employees.employees (including our principal executive officer, principal financial officer, principal accounting officer and controller). The Business Ethics Policy is available in the Investor Relations section of our website at www.transgenomic.com. In order to satisfy our disclosure requirements under Item 5.05 of Form 8-K, we will disclose amendments to, or waivers of, certain provisions of our Business Ethics Policy relating to our chief executive officer, chief financial officer, chief accounting officer, controller or persons performing similar functions on our website atwww.transgenomic.com.promptly following the adoption of any such amendment or waiver.The of Directors is comprised of fourLeadership Structuredirectors and one employee director Mr. Tuttle, who is the Chief Executive Officer of the Company. Dr. Markin isserve as the Chairman of the Board. The Board believes that its structure with four independent directors (oneis in the best interests of whom isour stockholders. Our Chairman of the Board)Board is Rodney S. Markin, Ph.D. Our President and its Chief Executive Officer, Mr. Tuttle,its remaining director, achieves independentlong-term strategy, we believe splitting these leadership positions enables Mr. Tuttle to focus his efforts on running our business and managing our Company while permitting Dr. Markin to focus more on the governance of our Company, including oversight of management and open communications with management.Theour Board. of Directors conducts its business through meetings of the Board, both in person and telephonic, and actions taken by written consent in lieu of meetings and by the actions of its committees.meetings. During the year ended December 31, 2010,2012, the Board of Directors held sixseven meetings and acted by written consent in lieu of a meeting eightseven times. All directors attended at least 75% of the meetings of the Board of Directors and of the committees of the Board of Directors on which they served during 20102012.Markin. Dr. MarkinSchuh, attended 67%our 2012 Annual Meeting of theStockholders. meetings and 100% of the Audit Committee meetings.None of our directors, director nominees or executive officers have been subject to legal or regulatory proceedings during the past ten years which are material to an evaluation of the ability or integrity of such person to serve the Company.The of Directors has established and assigneddelegated certain responsibilities to anits standing Audit Committee and a Compensation Committee. We do not have a standing nominating committee. The Board determined that due to the relatively small size of the Board, and due to the policy on director nominations, which is described below, it was not necessary to form a separate committee to evaluate director nominations. Under the director nomination policy, director candidates are identified primarily through suggestions made by directors, management and stockholders of the Company. We have implemented no material changes to the procedures by which stockholders may recommend nominees for the Board of Directors.Board. The Board of Directors will consider director nominees recommended by stockholders that are submitted in writing to the Secretary or Chief Executive Officer of the Company in a timely manner and which provide necessary biographical and business experience information regarding the nominee. All candidates for director will be evaluated based on their independence, character, judgment, diversity of experience, financial or business acumen, ability to represent and act on behalf of all stockholders, and the needs of the Board. The Board also values diversity as a factor in selecting nominees to serve on the Board. Although the Board does not have a specific policy on diversity, the Board considers the criteria noted above in selecting nominees for directors, including members from diverse backgrounds who combine a broad spectrum of experience and expertise. Absent other factors which may be material to its evaluation of a candidate, the Board expects to nominate incumbent directors who express an interest in continuing to serve on the Board. The independent directors of the Company review and consider all candidates to serve as a director of the Company who are properly suggested by directors, management and stockholders of6 of Directors selects its nominees to serve as a director of the Company from among those candidates who are recommended to the Board of Directors by a majority of the independent directors of the Company.Committee.CommitteeCommittee’sCommittee's primary duties and responsibilities include monitoring the integrity of our financial statements, monitoring the independence and performance of our external auditors, and monitoring our compliance with applicable legal and regulatory requirements. The functions of the Audit Committee also include reviewing periodically with independent auditors the performance of the services for which they are engaged, including reviewing the scope of the annual audit and its results, reviewing with management and the auditors the adequacy of our internal accounting controls, reviewing with management and the auditors the financial results prior to the filing of quarterly and annual reports, reviewing fees charged by our independent auditors and reviewing any transactions between theour Company and related parties. Our independent auditors report directly and are accountable solely to the Audit Committee. The Audit Committee has the sole authority to hire and fire the independent auditors and is responsible for the oversight of the performance of their duties, including ensuring the independence of the independent auditors. The Audit Committee also approves in advance the retention of, and all fees to be paid to, the independent auditors. The rendering of any auditing services and all non-auditing services by the independent auditors is subject to theprior approval in advance of the Audit Committee.onin the Investor Relations section of our website at www.transgenomic.com.www.transgenomic.com. The Audit Committee is required to be composed of directors who are independent of the Company under the rules of the SEC. SEC and the NASDAQ listing standards.Koppler,Dr. Markin and Patzig.Dr. Schuh, each of whom has been determined by the Board to be independent under the rules adopted by the SEC and NASDAQ listing standards. The Board of Directors has determined that Mr. KopplerDr. Markin qualifies as an “audit committee financial expert” under the rules adopted by the SEC and the Sarbanes Oxleyfoursix times during 2010.2012. 2012 2011 Audit fees $ 275,305 $ 321,005 Audit-related fees 31,250 25,999 Tax fees 28,035 30,190 All other fees — — Total fees $ 334,590 $ 377,194 Management.Managementtheour Board is responsible for satisfying itself that the risk management processes designed and implemented by management are adequate and functioning as designed. TheOur Board assesses major risks facing theour Company and options for their mitigation in order to promote its stockholders’our stockholders' interests in the long-term health and theour overall success of the Company and its financial strength.theour Board is ultimately responsible for risk oversight, various committees of the Board has delegatedoversee risk management in their respective areas and regularly report on their activities to our entire Board. In particular, the Audit Committee has the primary responsibility for the oversight of financial risks facing theour Company. The Audit Committee’sCommittee's charter provides that it will discuss our major financial risk exposures and the steps we have taken to monitor and control such exposures.reviewsstrives to create incentives that encourage a level of risk-taking behavior consistent with our business strategy.approvesthat our compensation policy, changes in salary levelsBoard's leadership structure provides appropriate checks and bonus payments to our executive officers and other management and determines the timing and terms of awards made pursuant to our 2006 Equity Incentive Plan. The Compensation Committee operates under a written charter which is available on our website atwww.transgenomic.com. The Compensation Committee currently consists of directors Schuh, Markin and Patzig each of whom has been determined by the Board of Directors to be independent under the rules adopted by the SEC. The Compensation Committee did not meet during 2010, but acted by written consent in lieu of a meeting two times.. Item 405Regulation S-K requires disclosurethe Exchange Act and the rules of any known late filing or failure by an insiderthe SEC require our directors, certain officers and beneficial owners of more than 10% of our outstanding common stock to file a report required by Section 16reports of their ownership and changes in ownership of our common stock with the Securities Exchange Act of 1934.SEC. We believe all Section 16 reports were filed in a timely manner during 2010.72010 DIRECTOR COMPENSATION TABLEtable provides information regardingis a description of transactions or series of transactions since January 1, 2012, or any currently proposed transaction, to which we were or are to be a participant in which the Company’samount involved in the transaction or series of transactions exceeds $120,000, and in which any of our directors, executive officers or persons who we know to be 5% beneficial owners of our common stock, including their immediate family members, had or will have a direct or indirect material interest, other than compensation for non-employee directors duringarrangements that are described under “Agreements with Our Named Executive Officers” below:year ended December 31, 2010. Directors who“Third Security Entities”), in the aggregate amount of $3,000,000. The Third Security Entities are employeescurrently the holders of 100% of our Series A Preferred Stock and collectively represent a more than 10% beneficial ownership interest in our common stock.Company do not receive compensationThird Security Entities a convertible note with a March 31, 2012 maturity date (collectively, the “Convertible Notes”). The Note Purchase Agreement and Convertible Notes provided for servingconversion of any amount remaining due to the Third Security Entities under the Convertible Notes into our equity of the same class(es) or series and at the same price as our equity securities sold in our first sale or issuance of our equity securities after December 30, 2011, in the aggregate amount of at least $3,000,000.Boardsame terms as the other 2012 Investors.Directors16,600,000 shares of our common stock at a price per share of $0.50 (the “Common Shares”) for aggregate gross proceeds of approximately $8,300,000; and (ii) issued to the 2013 Investors warrants (the “Warrants”) to purchase up to an aggregate of 8,300,000 shares of our common stock with an exercise price of $0.75 per share (collectively, the “2013 Offering”). The Warrants may be exercised, in whole or its committees. Fees Earned or
Paid in Cash
($) Option Awards
($)(1) Total
($) $ 28,000 $ 2,065 $ 30,065 22,500 2,065 24,565 26,500 2,065 28,565 22,500 2,065 24,565 22,500 2,065 24,565 (1)Represents the grant date fair value of stock option awards granted in fiscal 2010 in accordance with U.S. GAAP. For valuation assumptions used for the fair value of the awards, refer to our Form 10-K for the fiscal year ended December 31, 2010, Part II, Item 8, Section B – Summary of Significant Accounting Policies, “Stock Based Compensation”.(2)These former directors resigned from the Board of Directors effective December 29, 2010.Directors who are also employeesin part, at any time from January 30, 2013 until January 30, 2018 and contain both cash and “cashless exercise” features. As part of the Company are not separately compensated for serving2013 Offering, the Third Security entities purchased 6,000,000 Common Shares and 3,000,000 Warrants on the Boardsame terms as the other 2013 Investors.Directorscredit (the “Revolving Line”) with borrowing availability of up to $4 million, subject to reduction based on our eligible accounts receivable, and (b) a term loan (the “Term Loan”) of $4 million (the “Loan Agreement”).reimbursement for out-of-pocket expenses related to attendance at boardour President and committee meetings. Independent directors are paidChief Executive Officer, Craig J. Tuttle (who is not independent by virtue of his employment with us), is an annual retainer of $20,000independent director and they receive reimbursement for out-of-pocket expenses related to attendance at board and committee meetings. Independent directors serving on any committeeall standing committees of the Board are composed entirely of Directors are paid an additional annual retainerindependent directors, in each case under NASDAQ's independence definition. For a director to be considered independent, the Board must determine that the director has no relationship which, in the opinion of $2,500 unless they are also a chairmanthe Board, would interfere with the exercise of independent judgment in carrying out the responsibilities of a committee. The Chairmandirector. Members of the Audit Committee receivesalso must satisfy a separate SEC independence requirement, which provides that they may not accept directly or indirectly any consulting, advisory or other compensatory fee from us or any of our subsidiaries other than their directors' compensation. In addition, under SEC rules, an additionalAudit Committee member who is an affiliate of the issuer (other than through service as a director) cannot be deemed to be independent. The four independent members of the Board are Rodney S. Markin, M.D., Ph.D., Doit L. Koppler, II, Robert M. Patzig and Antonius P. Schuh, Ph.D.Name Age Title(s) Craig J. Tuttle 60 President and Chief Executive Officer Mark P. Colonnese 57 Executive Vice President and Chief Financial Officer Chad M. Richards 43 Chief Commercial Officer retainerbasis.$8,000this Proxy Statement our compensation policies are designed to align our key executives' compensation with both our business objectives and the chairmaninterests of our stockholders. We also seek to provide compensation policies that attract, motivate and retain key executives who are critical to our success. A significant portion of the compensation we provide to our key executives is directly related to our financial performance and stockholder value.• the ability of the executive to drive results for our Company; • the executive's understanding of our business and his/her organizational savvy; • the ability of the executive to make complex decisions and his/her strategic abilities; • the executive's ability to manage work process; • the communication skills of the executive; and • the executive's ability to manage diversity and ethics. Element of Compensation Purpose Pay-for-Performance Considerations Cash and Short-Term Variable Compensation: Base Compensation Provides competitive, fixed compensation to attract and retain exceptional executive talent. Adjustments to base salary consider the individual's overall performance, contribution to the business and internal and external comparisons. Cash Bonus Encourages and rewards achievement of strong financial, operational and strategic performance. The amount of any discretionary bonus received by an executive officer, if any, depends on the degree we achieve strong annual financial, operational or strategic performance and the extent to which the executive officer contributes to the achievement. Long-Term Compensation: Stock Options Encourages executive officers to focus on our long-term performance, links an executive officer's incentives to our stockholders' interests in increasing our stockholder value, encourages significant ownership of our common stock and promotes long-term retention of our executive officers. The potential appreciation in our stock price above the exercise price for stock options motivates our executives to build stockholder value as the executive officer only realizes value from the stock option if the stock price appreciates. Other Elements: Health, Retirement and Other Benefits Provides broad-based market competitive employee benefit programs such as participation in benefit plans generally available to our employees, including, employee stock purchase plan, 401(k) retirement plan, life, health and dental insurance and short-term and long-term disability plans. Not applicable. committee receivesfactors. Generally, the base compensation of our executives is based on our understanding of compensation for comparable positions at similarly situated companies at the time, the individual experience and skills of, and expected contribution from each executive, the roles and responsibilities of the executive, the base compensation of our existing executives and other factors.additional annual retainerincentive bonus plan (the “2012 Bonus Plan”), which provided variable incentive compensation to our executives, including our named executive officers, and senior management. The 2012 Bonus Plan$4,000. All directors’ feesthe applicable bonus opportunity, if the threshold performance levels were not attained, to 225% of the applicable bonus opportunity, if all performance was above the levels established to qualify for maximum payouts. Performance attainment levels of the targeted performance objectives ranged from 5% to 60% and correspond to payment levels ranging from 0% to 225% of the target bonus opportunity.annuallyas cash bonuses. However, with respect to our named executive officers, the plan provided that our named executive officers would be paid as follows:Target Attainment Percentage Form of Payment 100% Cash Above 100% quarterly were pro rated for partial periods. In addition, any independent director who attends more than four meetings per quarter, which includes committee meetings, receives $500can be directly impacted by the executive officer.meeting attended overparticipant, including our named executive officers, with performance metrics and related targets that include a mix of company-level financial metrics and business unit and individual metrics tailored to include the four.Our practice during 2010important factors under the executive's control. The company-level metrics consist of net revenue, MEBITDA and a p/s multiple. The individual performance metrics are specific operational and financial goals that are controlled by or can be directly impacted by the individual and include, for instance, objectives-related implementation of investment relations, product initiatives and other corporate strategies, organizational development and targeted product revenues as well as other objectives tailored to the individual. The objective of the 2012 Bonus Plan was to encourage executives to contribute toward the attainment of our consolidated financial and performance goals for fiscal year 2012. See “Analysis of Named Executive Officer Compensation” below for the on-target bonus amounts that our named executive officers were eligible to receive under the 2012 Bonus Plan. None of our named executive officers were awarded bonuses under the 2012 Bonus Plan for fiscal year 2012.each new non-employee director anlong-term equity incentive awards in the form of stock options to executives as part of our total compensation package. We place a significant emphasis on performance-based incentive compensation. These awards generally represent a significant portion of total executive compensation. We use long-term equity incentive awards in order to align the interests of our executives and our stockholders by providing our executives with strong incentives to increase stockholder value and a significant reward for doing so. Our decisions regarding the amount and type of long-term equity incentive compensation and relative weighting of these awards among total executive compensation have also been based on our understanding of market practices and take into account additional factors such as level of individual responsibility, experience and performance.15,000 shares of our common stock underat a fixed exercise price, typically for a period of up to ten years, subject to continued employment with our Company. Stock options are earned based on continued service to us and generally vest over three years, with one-third vesting on each anniversary of the grant date.at(the “2006 Incentive Plan”) and the next Compensation Committee meeting following a director’s initial appointment to the Board. The optionsexercise price of each stock option granted to a non-employee director upon initial appointment to the Board vested at the rate of 33 1/3% per year of service on the Board. Beginning in 2011, our practice changed to grant each new non-employee director an option to purchase 40,000 shares of common stock under our 2006 Equity Incentive Plan at the next Compensation Committee meeting following a director’s initial appointment to the Board, which option vests after one (1) year.Our practice during 2010 was to grant annually to each continuing non-employee director an option to purchase 5,000 shares of common stock, which option vested after three (3) years. Our practice changed in 2011 to grant annually to each continuing non-employee director an option to purchase 25,000 shares of common stock, which option vests after one (1) year. Additional annual grants of options will be made each year by the Compensation Committee in its sole discretion. All options granted to non-employee directors have exercise prices that representedis based on the fair market value of our common stock on the grant date. Exercise pricesUnder the terms of the 2006 Incentive Plan, when our common stock is not listed on outstanding options granted toa national stock exchange but traded on an over-the-counter market, fair market value is defined as the average of the bid and ask price of our non-employee directors range from $0.45 per share to $0.74 per share.8EXECUTIVE COMPENSATION2010 SUMMARY COMPENSATION TABLEThe following table providescommon stock on the trading date immediately preceding the grant date. See “Equity Incentive Plan and Other Compensation Plans - 2006 Equity Incentive Plan” for additional information regardingon the annual and long-term compensation received by2006 Incentive Plan.for services rendered during the two years ended December 31, 2010.Name and PrincipalPositionYearSalary($)Bonus($)OptionAwards(1)($)All OtherCompensation($)Total($)Craig J. Tuttle(2)President andChief Executive Officer20102009$325,000325,000— — — — $18,37717,559(3)(3)$343,377342,559Debra A. Schneider(4)Chief Financial Officer2010200996,737209,333— — — — 15,0553,568(5)(6)111,792212,901Brett L. FrevertChief Financial Officer20102009— — — — — — 96,225— (7)96,225— Chad M. Richards(8)Chief Commercial Officer20102009188,708182,250— — — — 13,47611,340(9)(9)202,184193,590(1)Figures in all years reflect new SEC rules where long-term incentive compensation must be valued based on the grant date fair value of all awards made during the year as opposed to the accounting expense for all awards that has been in prior years.(2)Mr. Tuttle joined the Company as President and Chief Executive Officer on July 12, 2006. See “Agreements with Named Executive Officers” for a description of Mr. Tuttle’s employment agreement with the Company.(3)Amounts paid to Mr. Tuttle in 2010 and 2009 consisted of an automobile allowance as provided in his Employment Agreement, a 401(k) matching contribution, group life insurance and long term disability insurance.(4)Ms. Schneider joined the Company as Chief Financial Officer on December 4, 2006 and resigned on June 16, 2010.(5)Amounts paid to Ms. Schneider in 2010 consisted of a vacation payout, 401(k) matching contribution, group life insurance and long term disability insurance.(6)Amounts paid to Ms. Schneider in 2009 consisted of a 401(k) matching contribution, group life insurance and long term disability insurance.(7)Mr. Frevert began serving as our Chief Financial Officer effective June 30, 2010 when we entered into a letter agreement with CFO Systems, LLC relating to his service. All compensation received by Mr. Frevert represents amounts paid to CFO Systems, LLC for Mr. Frevert’s services as our Chief Financial Officer. See “Agreements with Named Executive Officers” for a description of the arrangement with CFO Systems, LLC.(8)Mr. Richards joined the Company as Senior Vice President, Sales and Marketing on October 8, 2007 and was promoted to Chief Commercial Officer in January 2011.(9)Amounts paid to Mr. Richards in 2010 and 2009 consisted of an automobile allowance, a 401(k) matching contribution, group life insurance and long-term life insurance.9OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END 2010The following table provides certain information concerning outstanding option awards held by the executive officers of the Company whose compensation is reportedmay participate in the Summary Compensation Table as of December 31, 2010. Option Awards Number of
Securities
Underlying
Unexercised
Options
(#) Number of
Securities
Underlying
Unexercised
Options
(#) Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options
(#) Option
Exercise
Price
($) Option
Expiration
Date Exercisable Unexercisable 200,000 — — 0.69 8/31/2016 200,000 — — 0.75 1/16/2017 200,000 — — 0.66 7/11/2017 200,000 — — 0.69 10/7/2017 2006 Equity Incentive Plan. The Company’s 2006 Equity Incentive Plan (the “Plan”)the Companyus to make awards of various types of equity-based compensation, including stock options, dividend equivalent rights (“DERs”), stock appreciation rights, (“SARs”), restricted stock, restricted stock units, performance units, performance shares and other awards, to our employees and directors of the Company.directors. The Plan provides that the2006 total number of shares of common stock that the Companywe may issue is 10,000,000 shares under the 2006 Incentive Plan; provided, that no more than 5,000,000 of such shares may be used for grants of restricted stock, restricted stock units, performance units, performance shares and other awards. OutstandingAs of March 27, 2013, there were 4,621,500 outstanding options exercisable for a total of 2,519,667 shares of our common stock are outstanding atgranted under the Record Date,2006 Incentive Plan, of which 2,233,0002,853,477 may be exercised at this time. Outstanding options have exercise prices ranging from $0.39 to $10.00 per share. of Directors (the “Committee”) which has the authority to set the number, exercise price, term and vesting provisions of the awards granted under the 2006 Incentive Plan, subject to the terms thereof. Either incentive or non-qualified stock options may be granted to our employees, of the Company, but only non-qualified stock options may be granted to non-employee directors and advisors. However, in either case, the 2006 Incentive Plan requires that stock options must be granted at exercise prices not less than the fair market value of the common stock on the date of the grant. Options issued under the plan2006 Incentive Plan vest over periods as determined by the Compensation Committee and expire ten years after the date the option was granted. Compensation expense is based on the calculated fair value of the awards as measured at the grant date and is expensed ratably over the service period of the awards (generally the vesting period). If the option holder ceases to be employed by or affiliated with the Company, the Company will have the right to terminate any outstanding but unexercised options.Plan. The Company maintainsPlanCode.Code of 1986, as amended (the “Code”). This plan allows for voluntary contributions up to statutory maximums by eligible employees. We matchHistorically, we matched a specific proportion of these contributions, subject to limitations imposed by law. We may make additional contributions to the savings plan on behalf of our employees if our Board of Directors decides to do so. For the years ended December 31, 2010 and 2009, Company contributions to the 401(k) plan were $105,131 and $73,933, respectively. For the year ended December 31, 2009 we discontinued matching 401(k) contributions for the third and fourth quarters due to our expense reduction initiatives. We reinstatedprovided matching 401(k) contributions for the first three quarters of 2010. Effective2010; however, effective October 1, 2010, we discontinued matching 401(k) contributions. We reinstated matching 401(k) contributions effective January 1, 2012. Our named executive officers are eligible to participate in the 401(k) retirement plan on the same terms as our other employees..10CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONSAgreementsDuring 2010 - CEO Employment Agreement” for additional information on Mr. Tuttle's employment agreement. In 2012, based on a review of the Company’sperformance of Mr. Tuttle during 2011 and the first quarter of 2012, which included the cost effective management and the successful completion of a private placement offering, the Compensation Committee increased Mr. Tuttle's base salary from $325,000 to $350,000, a 7.7% increase, effective March 1, 2012, which reflects the first increase in Mr. Tuttle's base salary since 2008. Under the 2012 Bonus Plan, Mr. Tuttle's annual on-target bonus opportunity was $175,000. Mr. Tuttle was not eligible for a bonus under the 2012 Bonus Plan because the corporate goals were not met. It was necessary to meet company-wide corporate goals before he was eligible for compensation tied to personal goals. Under the 2013 Management Incentive Program, Mr. Tuttle's annual on-target bonus opportunity is $175,000.Officer, wasOfficer. The employment agreement provides that the term of the agreement will be one year, but shall be automatically extended for additional one-year terms unless either we or Mr. Tuttle provides written notice to the other of an intention not to extend no later than sixty (60) days prior to the end of the then-current term. The employment agreement most recently automatically renewed for an additional year ending on July 12, 2011. 2013.the Companyus if his employment is terminated involuntarily except if such termination is based on “just cause”“Just Cause”, as that term is defined in the employment agreement. The severance payment payable in such circumstances is equal to his annual base salary at the time of termination and will be paid to him over a twelve-month period. The employment agreement provides that the severance payment provisions will be honored if theour Company is acquired by, or merged into, another company and hisMr. Tuttle's position is eliminated as a result of such acquisition or merger. This severance payment is designed to provide him with an amount of cash sufficient to provide for living expenses and other needs which would normally be paid from his monthly base salary payments in situations where the executive officer’sofficer's employment was not terminated voluntarily or for Just Cause. In addition, the payments are designed so as to not exceed the maximum amount which may be paid without imposition of the excise tax imposed by Section 4999 of the Code or to not result in a loss of our income tax deduction for any portion of these payments under Section 280G of the Code if such payments are made after, or in contemplation of, a change in control transaction.Internal Revenue Code or resultingto not result in a loss of the Company’sour income tax deduction for any portion of these payments under Section 280G of the Internal Revenue Code if such payments are made after, or in contemplation of, a change ofin control transaction.Mr. Richards does not have an employment agreement with the Company.LLC and Brett L. Frevert. Under the letter agreement, CFO Systems will provideprovided financial and consulting services to us at rates of $75 to $150 per hour depending on the level of expertise involved. The services will includeincluded providing Chief Financial Officer duties and other financial and accounting expertise on a time share basis. The letter agreement provided that either CFO Systems LLC or the Company maywe could terminate the agreement upon thirty (30) days written notification. In connection with the letter agreement, Mr. Frevert agreed to serve as our Chief Financial Officer. We were charged $126,459$120,280 and $405,763 for the services provided by CFO Systems LLC during 2010.AUDITCOMPENSATION COMMITTEEThe Auditis comprised of Doit L. Koppler II, Rodney S. Markin, M.D., Ph.D., and Robert M. Patzig, eachthe Board of whom is an independent directorDirectors of the Company, under the rules adopted by the SEC.The Company’s management is responsible for the preparation of the Company’s financial statements and for maintaining an adequate system of internal controls and processes for that purpose. McGladrey & Pullen LLP (“McGladrey”) acts as the Company’s independent auditors and they are responsible for conducting an independent audit of the Company’s annual financial statements in accordance with auditing standards generally accepted in the United States of America and issuing a report on the results of their audit. The Audit Committee is responsible for providing independent, objective oversight of both of these processes.The Audit Committee hashave reviewed and discussed the Company’s audited financial statementsCompensation Discussion and Analysis set forth above with the management of the Company, and, based on such review and discussion, have recommended to the Board of Directors inclusion of the Compensation Discussion and Analysis in the Company's Annual Report on Form 10-K for the year ended December 31, 2010 with management2012 and its Proxy Statement for the 2013 Annual Meeting of Stockholders.MEMBERS OF THE COMPENSATION COMMITTEE: Antonius P. Schuh, Ph.D. Rodney S. Markin, MD, Ph.D. Robert M. Patzig CompanyCompensation Committee was at any time during 2012, or at any other time, an officer or employee of ours. During fiscal 2012, none of our executive officers served as a member of the board of directors or compensation committee of any entity that had one or more executive officers serving as a member of our Board or its Compensation Committee.Name and Principal Position Year Salary ($) Bonus ($) All Other Compensation ($) Total ($) 2012 $ 345,833 $ — $ — $ 17,973 $ 363,806 President and 2011 325,000 10,000 457,950 12,102 805,052 Chief Executive Officer 2010 325,000 — — 18,377 343,377 2012 96,106 — 198,250 2,056 296,412 Executive Vice President and Chief Financial Officer 2012 — — — 92,475 92,475 Former Chief Financial Officer 2011 — 5,000 228,975 242,250 476,225 2010 — — — 96,225 96,225 2012 202,792 — — 15,256 218,048 Chief Commercial Officer 2011 199,167 6,000 228,975 9,338 443,480 2010 188,708 — — 13,476 202,184 representativesFASB ASC Topic 718, excluding the effect of McGladrey.estimated forfeitures. The amounts shown do not correspond to the actual value that will be recognized by the named executive officer. The assumptions used in the calculation of these amounts are included in Footnote 11 "Equity Incentive Plan" to our accompanying consolidated financial statements. See the "2012 Grants of Plan-Based Awards" table for information on stock options granted in 2012.discussionsNamed Executive Officers - CEO Employment Agreement” for a description of Mr. Tuttle's employment agreement with McGladrey also included the matters required by Statementus.Auditing Standard No. 114. In addition,September 12, 2012. See “Agreements with Our Named Executive Officers - CFO Employment Agreement” for a description of Mr. Colonnese's employment agreement with us.received written disclosures andentered into a letter from McGladrey regarding its independenceagreement with CFO Systems relating to his service. All compensation listed under “All Other Compensation” as requiredreceived by Independent Standards Board Standard No. 1 and this information was discussedMr. Frevert represents amounts paid to CFO Systems for Mr. Frevert's services on an hourly basis as our Chief Financial Officer in accordance with McGladrey.Based on the foregoing, the Audit Committee has recommended that the audited financial statementsterms of the CompanyLetter Agreement with CFO Systems. See “Agreements with Our Named Executive Officers - CFO Systems Letter Agreement” for a description of the arrangement with CFO Systems. Effective June 3, 2012, we terminated our agreement with CFO Systems and Mr. Frevert's service as our Chief Financial Officer terminated on such date.2010,2012, no other equity awards were granted to our named executive officers.The option award vests over three years, with one-third vesting on the anniversary of the grant date, and has a term of ten years.Name Grant Date All Other Option Awards: Number of Securities Underlying Options (#) Mark P. Colonnese 9/12/2012 250,000 $ 0.98 $ 198,250 the Company’s Annual Report on Form 10-KFootnote 11 "Equity Incentive Plan" to be filed with the SEC.Doit L. Koppler IIRodney S. Markin, M.D., Ph.D.Robert M. Patzig11ACCOUNTING FEES AND SERVICESfeestable provides certain information concerning outstanding option awards held by our named executive officers as of December 31, 2012. As of December 31, 2012, no other equity awards granted to our named executive officers were billed oroutstanding. Option Awards Name Option Award / Grant Date Number of Securities Underlying Unexercised Options (#) Exercisable Number of Securities Underlying Unexercised Options (#) Unexercisable Option Exercise Price ($) Option Expiration Date Craig J. Tuttle 9/1/2006 200,000 — $ 0.69 8/31/2016 Craig J. Tuttle 1/17/2007 200,000 — 0.75 1/16/2017 Craig J. Tuttle 7/12/2007 200,000 — 0.66 7/11/2017 Craig J. Tuttle 5/18/2011 166,667 333,333 1.19 5/17/2021 Mark P. Colonnese 9/12/2012 — 250,000 0.98 9/12/2022 Chad M. Richards 10/8/2007 200,000 — 0.69 10/7/2017 Chad M. Richards 5/18/2011 83,334 166,666 1.19 5/17/2021 expected to be billedexercised by McGladrey & Pullen LLP, our current accounting firm, to us for professional services provided during 2010 and 2009.Audit Fees. McGladrey & Pullen LLP billed us a total of $205,315 and $188,607 in 2010 and 2009, respectively, for professional services rendered for the auditany of our annual financial statements for those fiscal years and to review our interim financial statements included in Quarterly Reports on Form 10-Q filed by us with the SEC during that year.Audit-Related Fees. McGladrey & Pullen LLP billed us a total of $127,200 and $7,500 in 2010 and 2009, respectively, for audit-related services. Audit-related services generally include fees for the audits of our employee benefit plans and fees incurred in connection with services associated with SEC registration statements, periodic reports and other documents filed with the SEC. In 2010 we incurred fees related to the audits, review and consultation for our acquisition of the FAMILION family of genetic tests.Tax Fees. McGladrey & Pullen LLP billed us a total of $34,055 and $34,760 in 2010 and 2009, respectively, for tax services. Tax services consist primarily of planning, advice and compliance, or return preparation, for U.S. federal, state and local, as well as international jurisdictions.All Other Fees. McGladrey & Pullen LLP did not render any services other than the services described above in 2010 or 2009.The Audit Committee approved all services provided by McGladreynamed executive officers during fiscal year 20102012.has determined thatMr. Colonnese. In the provisionevent of these services did not adversely affect McGladrey’s independence. Itinvoluntary discharge, Mr. Tuttle is currently the policyentitled to receive a severance payment equal to his then current annual base salary and Mr. Colonnese is eligible to receive a severance payment equal to nine months of the Audit Committee to reviewhis then current annual base salary and pre-approve all services provided by the independent auditor to the Company in order to assure that the provision of such servicesany earned but unpaid bonus. Mr. Richards does not impairhave an employment agreement.auditor’s independence. Unless a type of service to be provided by the independent auditor has received general pre-approval, itoptionee will require specific preapproval by the Audit Committee. Any proposed services exceeding pre-approved cost levels will require specific pre-approval by the Audit Committee. The term of any pre-approval is 12have three months from the date of pre-approval,termination to exercise any vested stock options granted under the 2006 Incentive Plan. However, the 2006 Incentive Plan also provides that if the optionee's employment terminates due to death, disability or retirement, all stock options will immediately vest upon the optionee's death or disability and the optionee (or his or her estate or personal representative) will have twelve months from the date of death, disability or retirement to exercise the stock options; provided such optionee had continuously served as an employee, director or advisor for at least three years, or such shorter period as the Compensation Committee may prescribe. The 2006 Incentive Plan also provides that all unvested stock options will immediately vest upon the occurrence of a Change in Control of our Company (as defined in the 2006 Incentive Plan) unless provisions are made in connection with the transaction resulting in the Change in Control for the assumption of such option grants, or the substitution for such option grants of new grants, by the successor entity or parent thereof.Name Benefit Cause Voluntary Termination Craig. J. Tuttle Cash $ — $ 350,000 $ — $ 350,000 $ — $ — $ — Stock options — — — — — — — Benefits — — — — — — — Total $ — $ 350,000 $ — $ 350,000 $ — $ — $ — Mark P. Colonnese Cash $ — $ 206,250 $ — $ 206,250 $ — $ — $ — Stock options — — — — — — — Benefits — — — — — — — Total $ — $ 206,250 $ — $ 206,250 $ — $ — $ — Brett L. Frevert Cash $ — $ — $ — $ — $ — $ — $ — Stock options — — — — — — — Benefits — — — — — — — Total $ — $ — $ — $ — $ — $ — $ — Chad M. Richards Cash $ — $ — $ — $ — $ — $ — $ — Stock options — — — — — — — Benefits — — — — — — — Total $ — $ — $ — $ — $ — $ — $ — specificallyreceives an additional annual retainer of $8,000 and the chairman of any other committee receives an additional annual retainer of $4,000. All directors' fees paid annually or quarterly were prorated for partial periods. In addition, any independent director who attends more than four meetings per quarter, which includes committee meetings, receives $500 for each meeting attended over the four.a different period.Name Fees Earned or Paid in Cash ($) Total ($) Doit Koppler, II $22,000 $32,127 $54,127 Robert Patzig 24,625 32,127 56,752 Rodney Markin, M.D., Ph.D. 31,625 32,127 63,752 Antonius Schuh, Ph.D. 28,875 32,127 61,002 Name Vested Stock Option Awards Unvested Stock Option Awards Aggregate Stock Option Awards Doit Koppler, II 65,000 — 65,000 Robert Patzig 65,000 — 65,000 Rodney Markin, M.D., Ph.D. 75,000 5,000 80,000 Antonius Schuh, Ph.D. 65,000 5,000 70,000 corporateCorporate Secretary at the address of our home officec/o Transgenomic, Inc., 12325 Emmet Street, Omaha, NE 68164 no later than 35 days prior to the date of the Annual Meeting. If less than 35 days’days' notice of the Annual Meeting is given, then stockholder proposals must be received by our corporateCorporate Secretary no later than 7 days after the mailing date of the notice of the Annual Meeting to stockholders. Accordingly, stockholder proposals to be submitted for presentation at the Annual Meeting must be received by our Corporate Secretary by no later than May 3, 2013. Any stockholder nomination for a Common Stock Director must set forth the name, age, address and principal occupation of the person nominated, the number of shares of our common stock owned by the nominee and the nominating stockholder and other information required to be disclosed about the nominee under federal proxy solicitation rules.Proxy Statementproxy statement relating to next year’syear's annual meeting, stockholder proposals must be submitted in writing by December 15, 201118, 2013 to our corporateCorporate Secretary at the address of our home office.c/o Transgenomic, Inc., 12325 Emmet Street, Omaha, NE 68164. The inclusion of any such proposal in our proxy materials will be subject to the requirements of the proxy rules adopted under the Securities Exchange ActAct.1934,our Annual Report is being mailed to our stockholders along with this Proxy Statement. We are sending only one Annual Report and Proxy Statement to “street name” stockholders who share a single address unless we received contrary instructions from any stockholder at that address. This practice, known as amended.12of Directors to vote on any matter proposed by stockholders for consideration at the Annual Meeting.corporateCorporate Secretary at our home office. All communications received by the corporateCorporate Secretary will be forwarded to the appropriate directors. In addition, it is the policy of our Board of Directors that, whenever possible, directors attend, and be available to discuss stockholder concerns at, the Annual Meeting. All directors participated in last year’syear's Annual Meeting via conference call or in person.headingheadings “Report of the Audit Committee” and "Report of the Compensation Committee" is deemed to be “soliciting material” or to be “filed” with the SEC or subject to the SEC’sSEC's proxy rules or to the liabilities of Section 18 of the Securities Exchange Act, of 1934 (the “1934 Act”), and this information will not be deemed to be incorporated by reference into any prior or subsequent filing by the Company under the Securities Act of 1933, as amended, or the 1934Exchange Act.By Order of the Board of DirectorsBrett L. Frevert, Chief Financial OfficerOmaha, NebraskaApril 15, 201113TRANSGENOMIC, INC.ANNUAL MEETING OF STOCKHOLDERSWednesday, May 18, 20119:30 A.M., Central Daylight TimeTransgenomic, Inc.12325 Emmet StreetOmaha, Nebraska
TRANSGENOMIC, INC.revocable proxyTHIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF TRANSGENOMIC, INC. FOR USE ONLY AT THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON WEDNESDAY, MAY 18, 2011 AND AT ANY ADJOURNMENT THEREOF.The undersigned hereby authorizes the Board of Directors and Chief Executive Officer of Transgenomic, Inc. (the “Company”), or any successors in their respective positions, as proxy, with full powers of substitution, to represent the undersigned at the Annual Meeting of Stockholders of the Company to be held at the offices of Transgenomic, Inc., 12325 Emmet Street, Omaha, Nebraska on Wednesday, May 18, 2011, at 9:30 a.m., Central Daylight Time, and at any adjournment of said meeting, and thereat to act with respect to all votes that the undersigned would be entitled to cast, if then personally present, in accordance with the instructions below and on the reverse side hereof.THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE LISTED NOMINEE FOR DIRECTOR.This proxy is revocable and the undersigned may revoke it at any time prior to the Annual Meeting by giving written notice of such revocation to the Secretary of the Company. Should the undersigned be present and want to vote in person at the Annual Meeting, or at any adjournment thereof, the undersigned may revoke this proxy by giving written notice of such revocation to the Secretary of the Company on a form provided at the meeting. The undersigned hereby acknowledges receipt of a Notice of Annual Meeting of Stockholders of the Company called for May 18, 2011, and the Proxy Statement for the Annual Meeting and the Company’s 2010 Annual Report to Stockholders prior to the signing of this proxy.See reverse for voting instructions.111605
TRANSGENOMIC, INC.Shareowner ServicesSMP.O. Box 64945St. Paul, MN 55164-0945TO VOTE BY MAIL AS THE BOARD OF DIRECTORS RECOMMENDS ON ALL ITEMS BELOW,SIMPLY SIGN, DATE, AND RETURN THIS PROXY CARD.ò Please detach here ò TheBy Order of the Board of Directors Recommends a Vote FOR Items 1 and 2. /S/ MARK P. COLONNESE 1.ELECTION OF DIRECTOR(S)NOMINEE FOR CLASS II (term to expire in 2014):¨Vote FOR all nominees(except as marked)¨WITHHOLD authorityto vote for the nominee(s)01 Antonius P. Schuh(Instructions: To withhold authority to vote for any indicated nominee, write the number(s) of the nominee(s) in the box provided to the right.)2.To vote, in its discretion upon any other business that may properly come before the Annual Meeting or any adjournment thereof. Management is not aware of any other matters which should come before the Annual Meeting.THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION IS GIVEN, WILL BE VOTEDFOR EACH PROPOSAL.Address Change? Mark box, sign and indicate changes below: ¨Date , 2011Signature(s) in BoxPlease date and sign exactly as your name(s) appear(s) on this proxy. When shares are held by joint tenants, both should sign. When signing as attorney, executor, administrator, trustee or guardian, please give your full title. If a corporation, please sign in full corporate name by authorized officer. If a partnership, please sign in partnership name by authorized person.
