UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
x☒ Filed by the Registrant
¨☐ Filed by a Party other than the Registrant
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| Preliminary Proxy Statement | |||||
| Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | |||||
| Definitive Proxy Statement | |||||
| Definitive Additional Materials | |||||
| Soliciting Material Pursuant to §240.14a-12 |
The ExOne Company
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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The ExOne Company
127 Industry Boulevard
North Huntingdon, Pennsylvania 15642
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held On May 16, 2018
Dear Stockholder:
You are cordially invited to attend the 2018 Annual Meeting of Stockholders of The ExOne Company (“ExOne” or the “Company”). The meeting will be held on May 16, 2018 at 10:00 a.m., Eastern Daylight Time, at ExOne’s principal executive offices, 127 Industry Boulevard, North Huntingdon, Pennsylvania 15642. At the meeting, holders of ExOne’s issued and outstanding common stock (NASDAQ: XONE) will act upon the following matters:
(1) Election of six (6) nominees to the Board of Directors identified in the accompanying Proxy Statement, each for a term that expires in 2019;
(2) Ratification of the appointment of Schneider Downs & Co., Inc. as ExOne’s independent registered public accounting firm for the year ending December 31, 2018; and
(3) Any other matters that properly come before the meeting.
The record date for the Annual Meeting is March 19, 2018. Only stockholders of record at the close of business on that date are entitled to receive notice of, to attend and to vote at, the Annual Meeting and any postponements or adjournments thereof.
This year, we are pleased to deliver our proxy materials to stockholders primarily over the Internet. Utilizing Internet delivery allows us to distribute our proxy materials in an environmentally responsible and cost-effective manner. On April 5, 2018, we mailed a Notice of Internet Availability of Proxy Materials (the “Internet Notice”) to certain holders of record as of the record date, and posted our proxy materials on the website referenced in the Internet Notice. The Internet Notice explains how to access the proxy materials and the 2017 Annual Report, free of charge, through the website described in the Internet Notice. The Internet Notice and website also provide information regarding how you may request to receive proxy materials in printed form by mail or electronically by email for this meeting and on an ongoing basis.
If you received your Annual Meeting materials by mail, the Proxy Statement, 2017 Annual Report, Notice of Annual Meeting and proxy card were enclosed. Your vote is very important, and we appreciate you taking the time to vote promptly. The proxy card contains instructions on how to vote by proxy by telephone or through the Internet, or you may complete, sign and return the proxy card by mail.
It is very important that your shares are represented at the Annual Meeting, whether or not you plan to attend in person. Accordingly, we request and urge you to review the proxy materials and vote your shares in advance of the meeting. If you decide to attend the Annual Meeting, and wish to vote in person, you may do so by revoking your proxy at that time. Also, if you plan to attend the meeting in person and need directions, please contact the office of the General Counsel and Corporate Secretary at(724) 863-9663. To ensure your vote is counted at the Annual Meeting, please vote as promptly as possible.
By Order of the Board of Directors, LORETTA L. BENEC General Counsel and Corporate Secretary April 5, 2018 |
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR
THE STOCKHOLDER MEETING TO BE HELD ON MAY 16, 2018: OUR PROXY STATEMENT, 2017
ANNUAL REPORT AND NOTICE OF ANNUAL MEETING ARE AVAILABLE WITH YOUR16-DIGIT
CONTROL NUMBER AT
HTTP://WWW.PROXYVOTE.COM.
PROXY SUMMARY
Meeting Information
Date: | May 16, 2018 | |
Time: | 10:00 a.m. Eastern Daylight Time | |
Place: | Our Principal Executive Offices: 127 Industry Boulevard, North Huntingdon, Pennsylvania 15642 | |
Proposals: | (1) Election of six (6) nominees to the Board of Directors (the “Board”) (2) Ratification of the appointment of Schneider Downs & Co., Inc. as our independent registered public accounting firm for 2018 (3) Any other matters that properly come before the meeting |
How to Vote — Your vote is important
Record Date. You are eligible to vote if you were a stockholder of record at the close of business on Monday, March 19, 2018. To make sure that your shares are represented at the meeting, please cast your vote as soon as possible.
Beneficial Owners. If you hold your shares through a broker, bank or other nominee, you will receive voting instructions from your broker, bank or other nominee. Please follow the instructions that you receive to vote your shares.
Registered Owners. If you are a registered holder, please complete and sign the enclosed proxy card and return it to Broadridge by following the instructions on the card. You also may vote your shares by telephone or over the Internet as described on your proxy card.
Online Access to Proxy Materials
The Proxy Statement, 2017 Annual Report and Notice of Annual Meeting are available with your16-digit control number atHTTP://WWW.PROXYVOTE.COM.
Election of Directors
This year, we are recommending the election of six (6) nominees to the Board:
| Age | Independent | Position with ExOne | |||||||
S. Kent Rockwell | 73 | No | Executive Chairman | |||||||
John Irvin | 63 | No | Director | |||||||
Gregory F. Pashke | 70 | Yes | Director and member of Audit Committee and Nominating and Governance Committee | |||||||
Lloyd A. Semple | 78 | Yes | Lead Director, Chair of Nominating and Governance Committee and member of Compensation Committee | |||||||
William F. Strome | 63 | Yes | Director, Chair of Audit Committee and member of Nominating and Governance Committee and Compensation Committee | |||||||
Bonnie K. Wachtel | 62 | Yes | Director, Chair of Compensation Committee and member of Audit Committee |
Last year, Institutional Shareholder ServicesFour of the six nominees are “independent” under the NASDAQ Stock Market (“ISS”NASDAQ”) recommendedrules.
Compensation Highlights
ExOne’s executive compensation is performance driven.
For 2017, our named executive officers received a combination of base salary and equity incentive awards.
Corporate Governance Highlights
Our Board is committed to establishing and maintaining corporate governance policies and practices that stockholders withhold votes in favor of membersare appropriate for a company like ExOne. Highlights of our implemented measures include:
Strong independent Lead Director and enhanced use of independent committees to ensure a balanced process;
Annual election of directors;
Majority voting standard fornon-contested election of directors;
Supermajority of independent directors on the Board (4 out of 6 independent directors upon election at 2018 Annual Meeting);
100% independent members on Audit, Committee becauseCompensation and Nominating and Governance Committees;
Stock retention policy for directors and executive officers;
Anti-hedging and anti-pledging policies for directors and executive officers;
Clawback policy for restatement of financial statements;
Succession and executive talent planning at the Board level;
Strong ethics policy, whistleblower policy and international policies on import and export matters;
Process for review and approval of related person transactions;
Board compensation in form and amount appropriate for our Company has failed to remediate material weaknesses in internal controls over financial reporting.size and state of development; and
Annual Board self-evaluation process.
Ratification of Independent Registered Accounting Firm
Before you vote this year, I hope you will consider ExOne’s history,We are recommending the tremendous depth and qualityratification of the membersappointment of our Audit Committee and their commitment to overseeingSchneider Downs & Co., Inc. as ExOne’s remediation of these material weaknesses.
We identified these material weaknesses as part of our initialindependent registered public offering (“IPO”) process. Having weaknesses in internal controls over financial reporting means that ExOne has to work harder and take extra steps and precautions to make sure that our financial statements are correct. As discussed in more detail herein, the main improvements needed to correct these material weaknesses are people with the right talents, and processes, including automation of previously manual procedures and controls. In addition, to enable these improvements we identified an enterprise resource planning (“ERP”) solution, the implementation of which is a time consuming and significant process.
We take these material weaknesses very seriously. Following the closing of the IPO, we developed and put into place a comprehensive plan to remediate the underlying causes of the identified material weaknesses. Although these weaknesses still exist, implementation of the remediation plan is very well underway and we have taken many interim measures to shore up our controls. We believe these efforts, collectively, give ExOne the opportunity to remediate the material weaknesses in internal controls when ExOne reports its resultsaccounting firm for the 2015 fiscal year.
Our independent directors, including our Audit Committee members, are highly qualified, committed individuals who deserve to be re-elected. ExOne’s material weaknesses pre-dated their membership on the Board. In fact, the members accepted their roles on the Audit Committee knowing that one of their primary tasks was to oversee management’s remediation of these weaknesses. I have never seen a more vigilant or committed group leading a company through a complex project like this.
As Chairman and Chief Executive Officer and also as ExOne’s largest stockholder, I hope you will follow my recommendation to vote in favor for the re-election of our Board and these important members of our Board.
Sincerely,
S. KENT ROCKWELL
Chairman and Chief Executive Officeryear ending December 31, 2018.
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PROPOSAL 2 — RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | 34 | |
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT | 38 | |
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The ExOne Company
127 Industry Boulevard
North Huntingdon, Pennsylvania 15642
PROXY STATEMENT
FOR THE 2018 ANNUAL MEETING OF STOCKHOLDERS
To Be Held On May 16, 2018 at 10:00 a.m., Eastern Daylight Time
QUESTIONS AND ANSWERS ABOUT THIS PROXY MATERIAL AND VOTING
Why am I receiving these materials?
The Board of Directors (the “Board”) of The ExOne Company (“we,” the “Company,” or “ExOne”) is soliciting your proxy to vote at the 2018 Annual Meeting of Stockholders (the “Annual Meeting”) to be held on May 16, 2018 at 10:00 a.m., Eastern Daylight Time, at ExOne’s principal executive offices, 127 Industry Boulevard, North Huntingdon, Pennsylvania 15642.
You are invited to attend the Annual Meeting to vote on the proposals described in this Proxy Statement. However, you do not need to attend the meeting to vote your shares. If you are a registered holder, you may vote by telephone, over the Internet or by completing, signing and returning a proxy card to Broadridge by following the instructions on the card. If you hold your shares through a broker, bank or other nominee, you will receive voting instructions from your broker, bank or other nominee. Please follow the instructions that you receive to vote your shares.
We intend to mail to all stockholders of record entitled to vote at the Annual Meeting either the Internet Notice or a full set paper copy of this Proxy Statement, together with our 2017 Annual Report, the Notice of Annual Meeting and the accompanying proxy card on or about April 5, 2018.
Copies of our 2017 Annual Report furnished to our stockholders do not contain copies of exhibits to our Annual Report on Form10-K for the year ended December 31, 2017. You can obtain copies of these exhibits electronically at the website of the Securities and Exchange Commission (the “SEC”) atwww.sec.gov or by mail from the Public Reference Section of the SEC at 100 F Street, N.E., Washington, D.C. 20549 at prescribed rates. The exhibits are also available as part of theForm 10-K for the year ended December 31, 2017 which is available on ExOne’s corporate website atwww.exone.com. Stockholders may also obtain copies of exhibits without charge by contacting our General Counsel and Corporate Secretary at(724) 863-9663.
We will also post this Proxy Statement, our 2017 Annual Report and the Notice of Annual Meeting on the Internet atHTTP://WWW.PROXYVOTE.COM on or about April 5, 2018, which you may access using your16-digit control number.
Why did I receive an Internet Notice in the mail regarding the Internet availability of proxy materials instead of a full set paper copy of this Proxy Statement, the 2017 Annual Report and the Notice of Annual Meeting?
We are taking advantage of an SEC rule that allows companies to furnish their proxy materials over the Internet rather than in paper form. This rule allows a company to send some or all of its stockholders the Internet Notice. Instructions on how to access the proxy materials over the Internet or how to request a paper copy of proxy materials may be found in the Internet Notice.
If you would prefer to receive proxy materials (including a proxy card) in printed form by mail or electronically by email, please follow the instructions contained in the Internet Notice.
Why didn’t I receive an Internet Notice in the mail regarding the Internet availability of proxy materials?
The SEC rule that allows us to furnish our proxy materials over the Internet rather than in paper form does not require us to do so for all stockholders. We may choose to send certain stockholders the Internet Notice, while sending other stockholders a full set paper copy of our Proxy Statement, 2017 Annual Report, Notice of Annual Meeting and proxy card.
Who can vote at the Annual Meeting and when is the Record Date?
Only stockholders of record at the close of business on March 19, 2018 are entitled to vote at the Annual Meeting. On the record date, there were 16,202,119 shares of ExOne common stock (“Common Stock”) outstanding. All holders of these outstanding shares are entitled to one vote for each share of Common Stock held by them as of the close of business on March 19, 2018 for each matter to be voted on at the Annual Meeting.
How can I access the proxy materials over the Internet?
An electronic copy of this Proxy Statement, the 2017 Annual Report and the Notice of Annual Meeting are available with your16-digit control number atHTTP://WWW.PROXYVOTE.COM.
What proposals are being considered?
There are two matters scheduled for a vote at the Annual Meeting:
• | Proposal No. 1: Election of the six (6) nominees to the Board identified in Proposal No. 1, each for a term that expires at the 2019 Annual Meeting of Stockholders. |
• | Proposal No. 2: Ratification of the appointment of Schneider Downs & Co., Inc. as ExOne’s independent registered public accounting firm for the year ending December 31, 2018. |
How do I vote?
For Proposal No. 1, you may vote“For” or“Against” each director nominee or you may“Abstain” from voting for any nominee. For Proposal No. 2, you may vote“For” or“Against” the proposal or“Abstain” from voting.
Stockholder of Record (Shares Registered in Your Name) —If on March 19, 2018, your shares were registered directly in your name with ExOne’s transfer agent, American Stock Transfer & Trust, LLP, then you are a stockholder of record with respect to those shares.
As a stockholder of record, you may vote by proxy by telephone, over the Lead Director,Internet or by returning a proxy card, or you may vote in person at the Annual Meeting. Regardless of whether you plan to attend the meeting, we urge you to vote by proxy to ensure your vote is counted. You may still attend the meeting and vote in person if you have already voted by proxy.
If you received your proxy materials in the mail, you may vote your shares by proxy over the Internet, by telephone or by returning your proxy card by mail in the envelope provided. Instructions to vote over the Internet or by telephone are printed on your proxy card. To vote using the proxy card, please complete, sign and date the enclosed proxy card and return it promptly to us. If you vote by proxy by telephone, over the Internet or by returning your signed proxy card to us before the Annual Meeting, we will vote your shares as you direct.
To vote in person, please come to the Annual Meeting and we will give you a ballot when you arrive.
Beneficial Owner (Shares Registered in the Name of a Broker, Bank or Other Nominee) — If on March 19, 2018, your shares were held in an account at a broker, bank, or other similar organization as your
nominee, then you are the beneficial owner of shares held in “street name” and these proxy materials are being forwarded to you by that organization. The organization holding your account is considered the stockholder of record for purposes of voting at the Annual Meeting.
As a beneficial owner, you have the right to direct that organization on how to vote the shares in your account. Please refer to the voting instructions provided by your broker, bank or other nominee. Many organizations allow beneficial owners to give voting instructions via telephone or the Internet, as well as in writing. You also are invited to attend the Annual Meeting, but you will need to bring a copy of a brokerage statement reflecting stock ownership as of March 19, 2018. Because you are not the stockholder of record, you may not vote your shares in person at the meeting unless you provide a valid proxy (sometimes referred to as a “legal proxy”) from your broker, bank or other nominee.
How many votes do I have?
You have one vote for each share of Common Stock you own as of the close of business on March 19, 2018 for each matter to be voted on at the Annual Meeting. You may vote on each proposal presented for consideration at the Annual Meeting. There are no cumulative voting rights with respect to our Common Stock.
What if I return a proxy card but do not make specific choices?
If you return a signed and dated proxy card without marking any voting selections, your shares will be voted“For” the election of each of the six (6) nominees for director, and“For” ratification of Schneider Downs & Co., Inc. as our independent registered public accounting firm for the year ending December 31, 2018. If any other matter is properly presented at the meeting, your proxy (one of the individuals named on your proxy card) will vote your shares using his or her best judgment.
What do I need to do to attend the Annual Meeting in person?
Space for the Annual Meeting is limited. Therefore, admission will be on a first-come, first-served basis. Registration will open at 9:45 a.m. Eastern Daylight Time, and the Annual Meeting will begin at 10:00 a.m. Each stockholder should be prepared to present:
1. | Valid government issued photo identification, such as a driver’s license or passport; and |
2. | Beneficial owners holding their shares through a broker, bank or other nominee will need to bring proof of beneficial ownership as of March 19, 2018, the record date, such as their most recent account statement reflecting their stock ownership prior to March 19, 2018, a copy of the voting instruction card provided by their broker, bank or other nominee, or similar evidence of ownership. |
Use of cameras, recording devices, computers and other electronic devices, such as smart phones and tablets, are not permitted at the Annual Meeting. Photography and video are prohibited at the Annual Meeting.
Please allow ample time forcheck-in. Please note that large bags and packages are not allowed at the Annual Meeting. Persons may be subject to search.
Who is paying for this proxy solicitation?
ExOne will pay for the entire cost of soliciting proxies. In addition to ExOne mailing these proxy materials, ExOne’s directors and employees also may solicit proxies in person, by telephone, or by other means of communication. Directors and employees will not be paid any additional compensation for soliciting proxies. ExOne may reimburse brokerage firms, banks and other agents for the cost of forwarding proxy materials to beneficial owners.
What does it mean if I receive more than one set of proxy materials?
If you receive more than one set of proxy materials (including multiple Internet Notices or multiple copies of this Proxy Statement, Notice of Annual Meeting and proxy card), your shares are registered in more than one name or are registered in different accounts. Please make sure that you vote all of your shares by following the directions on each Internet Notice or proxy card.
Can I change my rolevote after submitting my proxy?
Yes. You can change your vote at any time before the final vote at the meeting.
If you are a stockholder of record, you may change your vote in any one of the following ways:
You may submit another properly completed proxy (including by telephone or over the Internet) with a later date.
You may send a written notice that you are revoking your proxy to our Corporate Secretary at The ExOne Company, 127 Industry Boulevard, North Huntingdon, Pennsylvania 15642.
You may attend the Annual Meeting and vote in person by ballot. Simply attending the meeting will not, by itself, revoke your proxy.
If you are a beneficial owner of shares held in street name, you may change your vote in any one of the following ways:
You may submit new voting instructions to your broker, bank or other nominee.
If you have obtained a legal proxy from the broker, bank or other nominee that holds your shares giving you the right to vote the shares, by attending the Annual Meeting and voting in person.
How are votes counted?
We have designated a representative of Broadridge Financial Services as the inspector of elections who will validate the votes.
With respect to Proposal No. 1, the inspector of elections will count“For” votes and“Against” votes. Abstentions and brokernon-votes will not be counted as having been voted on the proposal, nor will they affect the outcome of Proposal No. 1.
With respect to Proposal No. 2, the inspector of elections will count separately“For,” “Against” and“Abstain” votes and brokernon-votes.“Abstain” votes will be counted towards the vote total for the proposal, and will have the same effect as“Against” votes. Because brokernon-votes are not deemed to be votes entitled to be cast, they will not affect the outcome of Proposal No. 2.
See “How many votes are needed to approve each proposal?” for further details regarding the votes needed to approve each proposal.
What is a “brokernon-vote”?
If your shares are held by your broker, bank or other similar organization as your nominee (that is, in “street name”), you will need to work closelyfollow the voting instructions provided by that organization on how to vote your shares. If you do not provide voting instructions, your shares may constitute “brokernon-votes.” Generally, brokernon-votes occur on a matter when a broker, bank or other nominee is not permitted to vote on that matter, including the election of directors, without instructions from the beneficial owner and instructions are not given.
In tabulating the voting result for any particular proposal, shares that constitute brokernon-votes are not considered entitled to vote on that proposal. Thus, while brokernon-votes will be counted as present for the purpose of determining the presence of a quorum at the meeting, brokernon-votes willnot affect the outcome of any matter being voted on at the meeting.
How many votes are needed to approve each proposal?
Proposal No. 1. Directors will be elected by the vote of a majority of the shares cast with Chairmanrespect to the director at the Annual Meeting. This means that the number of votes cast“For” a director’s election must exceed the number of votes cast“Against” that director’s election. Stockholders may not cumulate votes in the election of directors. Abstentions and CEO Kent Rockwellbrokernon-votes will not be counted as having been voted on the proposal, nor will they affect the outcome of this proposal.
Proposal No. 2. Ratification of the appointment of Schneider Downs & Co., Inc. as ExOne’s independent registered public accounting firm for the year ending December 31, 2018 requires the affirmative vote of a majority of the shares represented at the Annual Meeting and entitled to provide strong leadershipvote on this matter. Abstentions will have the same effect as an“Against” vote. Because brokernon-votes are not deemed to be votes entitled to be cast, they will not affect the outcome of this proposal.
What are the Board’s voting recommendations?
• | Proposal No. 1: “For” election of each of the six (6) nominees to the Board. |
• | Proposal No. 2: “For” ratification of the appointment of Schneider Downs & Co., Inc. as ExOne’s independent registered public accounting firm for the year ending December 31, 2018. |
What is the quorum requirement?
A quorum of stockholders is necessary to hold a valid meeting. A quorum will be present if a majority of all outstanding shares entitled to vote is represented by stockholders present at the meeting or represented by proxy. On the record date, there were 16,202,119 shares of Common Stock outstanding and entitled to vote. This means that at least 8,101,060 shares must be represented by stockholders present at the meeting or represented by proxy to have a quorum. Your shares will be counted towards the quorum if you submit a valid proxy or vote at the meeting.
How can I find out the results of the voting at the Annual Meeting?
Preliminary voting results will be announced at the Annual Meeting. Final voting results will be published in a Current Report onForm 8-K filed with the SEC within four business days following the Annual Meeting. In the event we are unable to obtain the final voting results within four business days, we will file the preliminary voting results in a Current Report onForm 8-K within four business days following the Annual Meeting, and will file an amended Current Report onForm 8-K with the final voting results within four business days after the final voting results are known.
How can stockholders submit a proposal for inclusion in our Proxy Statement for the 2019 Annual Meeting of Stockholders?
Our 2019 Annual Meeting of Stockholders will be held on May 15, 2019 at 10:00 a.m. To be included in our Proxy Statement for the 2019 Annual Meeting of Stockholders, stockholder proposals must comply with the requirements ofRule 14a-8 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). To be eligible for inclusion, such proposals must be received by ExOne by December 6, 2018, which is at least 120 calendar days before the anniversary date of the release of ExOne’s Proxy Statement to stockholders in connection with the previous year’s annual meeting.
How can stockholders submit nominations of persons for election to the Board or proposals of business to be transacted by the stockholders for the 2019 Annual Meeting of Stockholders?
A stockholder of record may submit nominations of persons for election to the Board or proposals of business to be transacted by the stockholders only if he or she complies with Article III, Section 13 of our Amended and Restated Bylaws, as amended (the “Bylaws”). This section provides that a stockholder must give advance notice to our Corporate Secretary of any business, including nominations of directors for our Board, that the stockholder wishes to raise at the 2019 Annual Meeting of Stockholders at our principal executive offices (i) not earlier than 120 days prior to such meeting and (ii) at least 45 days prior to the anniversary date of the filing of ExOne’s Proxy Statement with the SEC in connection with the previous year’s annual meeting. Therefore, for the 2019 Annual Meeting, such notice must be received by ExOne no sooner than January 15, 2019 and no later than February 19, 2019.
With respect to a stockholder’s nomination of a candidate for our Board, the stockholder notice to our Corporate Secretary must contain certain information as set forth in our Bylaws about both the nominee and the Company. I welcome this opportunitystockholder making the nomination. With respect to communicate with you as ExOne stockholders.
ExOne is working hard to achieve long-term, sustainable operating and financial performance. We are striving to create value throughany other business that the rightstockholder proposes, the stockholder notice must contain a brief description of such business, strategies, effective corporate governance and executive compensation programs and well-functioning talent and succession planning. The Board oversees these efforts and wants to set the right tonereasons for conducting such business at the top. Wemeeting, any personal or other direct or indirect material interest in such business of such stockholder and the beneficial owner, if any, on whose behalf the proposal is made, and certain other information specified in our Bylaws.
If you wish to bring a stockholder proposal or nominate a candidate for director, you are committedadvised to creatingreview our Bylaws, which contain additional requirements about advance notice of stockholder proposals and director nominations.
If a culture that promotesstockholder wishes only to recommend a candidate for consideration by the Nominating and values performance, integrity, ethics andGovernance Committee as a long-term view aligned withpotential nominee for director, see the interests of our stockholders.
Performance and Strategy
In 2014, ExOne made important progress but fell short of its goals. The Company achieved $43.9 millionprocedures discussed in revenues driven by 45% growth in global non-machine revenue. It is the Board’s responsibility to ensure that management addresses performance and strategy, and, in response, the Board formed a Strategic Oversight Committee to oversee ExOne’s strategies.
“ PROXY SUMMARY Meeting Information (1) Election of six (6) nominees to the Board of Directors (the “Board”) (2) Ratification of the appointment of Schneider Downs & Co., Inc. as our independent registered public accounting firm for 2018 (3) Any other matters that properly come before the meeting How to Vote — Your vote is important Record Date. You are eligible to vote if you were a stockholder of record at the close of business on Monday, March 19, 2018. To make sure that your shares are represented at the meeting, please cast your vote as soon as possible. Beneficial Owners. If you hold your shares through a broker, bank or other nominee, you will receive voting instructions from your broker, bank or other nominee. Please follow the instructions that you receive to vote your shares. Registered Owners. If you are a registered holder, please complete and sign the enclosed proxy card and return it to Broadridge by following the instructions on the card. You also may vote your shares by telephone or over the Internet as described on your proxy card. Online Access to Proxy Materials The Proxy Statement, 2017 Annual Report and Notice of Annual Meeting are available with your16-digit control number atHTTP://WWW.PROXYVOTE.COM. Election of Directors This year, we are recommending the election of six (6) nominees to the Board: Name Position with ExOne S. Kent Rockwell John Irvin Gregory F. Pashke Lloyd A. Semple William F. Strome Bonnie K. Wachtel Four of the six nominees are “independent” under the NASDAQ Stock Market (“NASDAQ”) rules.Date: May 16, 2018 Time: 10:00 a.m. Eastern Daylight Time Place: Our Principal Executive Offices: 127 Industry Boulevard, North Huntingdon, Pennsylvania 15642 Proposals: Age Independent 73 No Executive Chairman 63 No Director 70 Yes Director and member of Audit Committee and Nominating and Governance Committee 78 Yes Lead Director, Chair of Nominating and Governance Committee and member of Compensation Committee 63 Yes Director, Chair of Audit Committee and member of Nominating and Governance Committee and Compensation Committee 62 Yes Director, Chair of Compensation Committee and member of Audit Committee
Compensation Highlights
ExOne’s executive compensation is performance driven.
For 2017, our named executive officers received a combination of base salary and equity incentive awards.
Corporate Governance Highlights
Our Board is committed to establishing and maintaining corporate governance policies and practices that are appropriate for a company like ExOne. OurHighlights of our implemented measures include:
Strong independent Lead Director and enhanced use of independent committees to ensure a balanced process;
Annual election of directors;
Majority voting standard fornon-contested election of directors;
Supermajority of independent directors on the Board (4 out of 6 independent directors upon election at 2018 Annual Meeting);
100% independent members on Audit, Compensation and Nominating and Governance Committees;
Stock retention policy for directors and executive officers;
Anti-hedging and anti-pledging policies for directors and executive officers;
Clawback policy for restatement of financial statements;
Succession and executive talent planning at the Board level;
Strong ethics policy, whistleblower policy and international policies on import and export matters;
Process for review and approval of related person transactions;
Board compensation in form and amount appropriate for our size and state of development; and
Annual Board self-evaluation process.
Ratification of Independent Registered Accounting Firm
We are recommending the ratification of the appointment of Schneider Downs & Co., Inc. as ExOne’s independent registered public accounting firm for the year ending December 31, 2018.
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30 | ||
31 | ||
32 | ||
PROPOSAL 2 — RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | 34 | |
35 | ||
36 | ||
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT | 38 | |
39 | ||
40 |
In 2015, we will continue to consider corporate governance measures that are right for our Company and stockholders.
Executive Compensation
ExOne’s compensation is performance driven. In 2013 we adopted an equity incentive compensation plan. However, the Compensation Committee did not formalize an incentive based program for executives for 2014 for two reasons. First, we are a small emerging growth company. More importantly, four out of five members of our executive team already have significant ownership in the Company having invested their own money in ExOne before or in connection with our initial public offering (“IPO”). In fact, Chairman and Chief Executive Officer Kent Rockwell is ExOne’s largest beneficial owner. We believe that this ownership provides a strong foundation of alignment between ExOne stockholders and our management team.
In addressing compensation decisions for 2014, the Compensation Committee weighed ExOne’s 2014 performance. Our Chief Executive Officer received minimal compensation above his base salary. In December 2014, our President and Chief Operating Officer stepped down from that role to another position within the Company. No executive received a discretionary cash bonus for 2014, although several executives received an equity grant with three-year vesting to reward individual performance and also to maintain long-term stockholder focus. The Board also adopted a stock retention policy in early 2015 that applies to equity awards made to directors and executive officers to further align the interests of stockholders and ExOne directors and executives.
Addressing the material weaknesses in our internal controls
As part of the 2013 IPO process, ExOne identified material weaknesses in its internal controls over financial reporting. Remediation of these weaknesses is a top priority for our Audit Committee, Board and management. However, this is a complex project that takes time to complete correctly. Our Audit Committee, which is composed of highly qualified, independent individuals, oversees this project. Since the IPO, our Audit Committee has met 15 times with remediation of material weaknesses in internal controls over financial reporting as a standing agenda item in 2014.
With the oversight of the Audit Committee, ExOne identified and engaged a consultant to assess alternative systems and choose an enterprise resource planning (“ERP”) system provider. In February 2014 ExOne engaged proALPHA, an ERP system provider based in Germany. Since then ExOne has been implementing an ERP system with proALPHA’s help. The first phase of the implementation went live on January 5, 2015 and included certain modules of the ERP system implemented in our European operations. ExOne has also been working to redesign processes to improve controls over financial reporting and to implement other information technology improvements at the same time that the ERP system is being implemented.
Since the IPO, ExOne has also added substantial accounting and financial reporting talent by hiring a Chief Accounting Officer, a new Chief Financial Officer, a Director of Internal Audit and Controls, a Director of Information Systems and Reporting, a Senior Accountant in the United States and a Senior Accountant in Germany.
These ongoing efforts, collectively, give ExOne the opportunity to remediate the material weaknesses in internal controls when ExOne reports its results for the 2015 fiscal year.
Our Board
Our Board continues to evolve and is comprised of a group of highly capable and diverse directors who are well-equipped to oversee the success of ExOne’s business and effectively represent your interests as stockholders. I encourage you to review the qualifications, skills and experience that we have identified as important attributes for our directors in the Proxy Statement.
Please review the information in the Proxy Statement and in ExOne’s 2014 Annual Report for more information on ExOne. I hope that you will continue to share your thoughts or concerns with the Board on any topic. Communications can be addressed to The Board of Directors, c/o Chief Legal Officer and Corporate Secretary, The ExOne Company, 127 Industry Boulevard, North Huntingdon, PA 15642.
We value your input, your investment and your support. Thank you.
Sincerely,
LLOYD A. SEMPLE
Lead Director
The ExOne Company
127 Industry Boulevard
North Huntingdon, Pennsylvania 15642
NOTICE OFPROXY STATEMENT
FOR THE 2018 ANNUAL MEETING OF STOCKHOLDERS
To Be Held On May 4, 201516, 2018 at 10:00 a.m., Eastern Daylight Time
Dear Stockholder:QUESTIONS AND ANSWERS ABOUT THIS PROXY MATERIAL AND VOTING
You are cordially invitedWhy am I receiving these materials?
The Board of Directors (the “Board”) of The ExOne Company (“we,” the “Company,” or “ExOne”) is soliciting your proxy to attendvote at the 20152018 Annual Meeting of Stockholders of The ExOne Company (“ExOne”(the “Annual Meeting”). The meeting will to be held on May 4, 201516, 2018 at 10:00 a.m., Eastern Daylight Time, at ExOne’s principal executive offices, 127 Industry Boulevard, North Huntingdon, Pennsylvania 15642.
You are invited to attend the Westin Convention Center Pittsburgh, located at 1000 Penn Avenue, Pittsburgh, Pennsylvania 15222. AtAnnual Meeting to vote on the proposals described in this Proxy Statement. However, you do not need to attend the meeting to vote your shares. If you are a registered holder, you may vote by telephone, over the Internet or by completing, signing and returning a proxy card to Broadridge by following the instructions on the card. If you hold your shares through a broker, bank or other nominee, you will receive voting instructions from your broker, bank or other nominee. Please follow the instructions that you receive to vote your shares.
We intend to mail to all stockholders of record entitled to vote at the Annual Meeting either the Internet Notice or a full set paper copy of this Proxy Statement, together with our 2017 Annual Report, the Notice of Annual Meeting and the accompanying proxy card on or about April 5, 2018.
Copies of our 2017 Annual Report furnished to our stockholders do not contain copies of exhibits to our Annual Report on Form10-K for the year ended December 31, 2017. You can obtain copies of these exhibits electronically at the website of the Securities and Exchange Commission (the “SEC”) atwww.sec.gov or by mail from the Public Reference Section of the SEC at 100 F Street, N.E., Washington, D.C. 20549 at prescribed rates. The exhibits are also available as part of theForm 10-K for the year ended December 31, 2017 which is available on ExOne’s corporate website atwww.exone.com. Stockholders may also obtain copies of exhibits without charge by contacting our General Counsel and Corporate Secretary at(724) 863-9663.
We will also post this Proxy Statement, our 2017 Annual Report and the Notice of Annual Meeting on the Internet atHTTP://WWW.PROXYVOTE.COM on or about April 5, 2018, which you may access using your16-digit control number.
Why did I receive an Internet Notice in the mail regarding the Internet availability of proxy materials instead of a full set paper copy of this Proxy Statement, the 2017 Annual Report and the Notice of Annual Meeting?
We are taking advantage of an SEC rule that allows companies to furnish their proxy materials over the Internet rather than in paper form. This rule allows a company to send some or all of its stockholders the Internet Notice. Instructions on how to access the proxy materials over the Internet or how to request a paper copy of proxy materials may be found in the Internet Notice.
If you would prefer to receive proxy materials (including a proxy card) in printed form by mail or electronically by email, please follow the instructions contained in the Internet Notice.
Why didn’t I receive an Internet Notice in the mail regarding the Internet availability of proxy materials?
The SEC rule that allows us to furnish our proxy materials over the Internet rather than in paper form does not require us to do so for all stockholders. We may choose to send certain stockholders the Internet Notice, while sending other stockholders a full set paper copy of our Proxy Statement, 2017 Annual Report, Notice of Annual Meeting and proxy card.
Who can vote at the Annual Meeting and when is the Record Date?
Only stockholders of record at the close of business on March 19, 2018 are entitled to vote at the Annual Meeting. On the record date, there were 16,202,119 shares of ExOne common stock (“Common Stock”) outstanding. All holders of these outstanding shares are entitled to one vote for each share of Common Stock held by them as of the close of business on March 19, 2018 for each matter to be voted on at the Annual Meeting.
How can I access the proxy materials over the Internet?
An electronic copy of this Proxy Statement, the 2017 Annual Report and the Notice of Annual Meeting are available with your16-digit control number atHTTP://WWW.PROXYVOTE.COM.
What proposals are being considered?
There are two matters scheduled for a vote at the Annual Meeting:
• | Proposal No. 1: Election of the six (6) nominees to the Board identified in Proposal No. 1, each for a term that expires at the 2019 Annual Meeting of Stockholders. |
• | Proposal No. 2: Ratification of the appointment of Schneider Downs & Co., Inc. as ExOne’s independent registered public accounting firm for the year ending December 31, 2018. |
How do I vote?
For Proposal No. 1, you may vote“For” or“Against” each director nominee or you may“Abstain” from voting for any nominee. For Proposal No. 2, you may vote“For” or“Against” the proposal or“Abstain” from voting.
Stockholder of Record (Shares Registered in Your Name) —If on March 19, 2018, your shares were registered directly in your name with ExOne’s issuedtransfer agent, American Stock Transfer & Trust, LLP, then you are a stockholder of record with respect to those shares.
As a stockholder of record, you may vote by proxy by telephone, over the Internet or by returning a proxy card, or you may vote in person at the Annual Meeting. Regardless of whether you plan to attend the meeting, we urge you to vote by proxy to ensure your vote is counted. You may still attend the meeting and outstanding commonvote in person if you have already voted by proxy.
If you received your proxy materials in the mail, you may vote your shares by proxy over the Internet, by telephone or by returning your proxy card by mail in the envelope provided. Instructions to vote over the Internet or by telephone are printed on your proxy card. To vote using the proxy card, please complete, sign and date the enclosed proxy card and return it promptly to us. If you vote by proxy by telephone, over the Internet or by returning your signed proxy card to us before the Annual Meeting, we will vote your shares as you direct.
To vote in person, please come to the Annual Meeting and we will give you a ballot when you arrive.
Beneficial Owner (Shares Registered in the Name of a Broker, Bank or Other Nominee) — If on March 19, 2018, your shares were held in an account at a broker, bank, or other similar organization as your
nominee, then you are the beneficial owner of shares held in “street name” and these proxy materials are being forwarded to you by that organization. The organization holding your account is considered the stockholder of record for purposes of voting at the Annual Meeting.
As a beneficial owner, you have the right to direct that organization on how to vote the shares in your account. Please refer to the voting instructions provided by your broker, bank or other nominee. Many organizations allow beneficial owners to give voting instructions via telephone or the Internet, as well as in writing. You also are invited to attend the Annual Meeting, but you will need to bring a copy of a brokerage statement reflecting stock (NASDAQ: XONE)ownership as of March 19, 2018. Because you are not the stockholder of record, you may not vote your shares in person at the meeting unless you provide a valid proxy (sometimes referred to as a “legal proxy”) from your broker, bank or other nominee.
How many votes do I have?
You have one vote for each share of Common Stock you own as of the close of business on March 19, 2018 for each matter to be voted on at the Annual Meeting. You may vote on each proposal presented for consideration at the Annual Meeting. There are no cumulative voting rights with respect to our Common Stock.
What if I return a proxy card but do not make specific choices?
If you return a signed and dated proxy card without marking any voting selections, your shares will act uponbe voted“For” the election of each of the six (6) nominees for director, and“For” ratification of Schneider Downs & Co., Inc. as our independent registered public accounting firm for the year ending December 31, 2018. If any other matter is properly presented at the meeting, your proxy (one of the individuals named on your proxy card) will vote your shares using his or her best judgment.
What do I need to do to attend the Annual Meeting in person?
Space for the Annual Meeting is limited. Therefore, admission will be on a first-come, first-served basis. Registration will open at 9:45 a.m. Eastern Daylight Time, and the Annual Meeting will begin at 10:00 a.m. Each stockholder should be prepared to present:
1. | Valid government issued photo identification, such as a driver’s license or passport; and |
2. | Beneficial owners holding their shares through a broker, bank or other nominee will need to bring proof of beneficial ownership as of March 19, 2018, the record date, such as their most recent account statement reflecting their stock ownership prior to March 19, 2018, a copy of the voting instruction card provided by their broker, bank or other nominee, or similar evidence of ownership. |
Use of cameras, recording devices, computers and other electronic devices, such as smart phones and tablets, are not permitted at the Annual Meeting. Photography and video are prohibited at the Annual Meeting.
Please allow ample time forcheck-in. Please note that large bags and packages are not allowed at the Annual Meeting. Persons may be subject to search.
Who is paying for this proxy solicitation?
ExOne will pay for the entire cost of soliciting proxies. In addition to ExOne mailing these proxy materials, ExOne’s directors and employees also may solicit proxies in person, by telephone, or by other means of communication. Directors and employees will not be paid any additional compensation for soliciting proxies. ExOne may reimburse brokerage firms, banks and other agents for the cost of forwarding proxy materials to beneficial owners.
What does it mean if I receive more than one set of proxy materials?
If you receive more than one set of proxy materials (including multiple Internet Notices or multiple copies of this Proxy Statement, Notice of Annual Meeting and proxy card), your shares are registered in more than one name or are registered in different accounts. Please make sure that you vote all of your shares by following the directions on each Internet Notice or proxy card.
Can I change my vote after submitting my proxy?
Yes. You can change your vote at any time before the final vote at the meeting.
If you are a stockholder of record, you may change your vote in any one of the following matters:ways:
(1) Election
You may submit another properly completed proxy (including by telephone or over the Internet) with a later date.
You may send a written notice that you are revoking your proxy to our Corporate Secretary at The ExOne Company, 127 Industry Boulevard, North Huntingdon, Pennsylvania 15642.
You may attend the Annual Meeting and vote in person by ballot. Simply attending the meeting will not, by itself, revoke your proxy.
If you are a beneficial owner of seven (7) nomineesshares held in street name, you may change your vote in any one of the following ways:
You may submit new voting instructions to your broker, bank or other nominee.
If you have obtained a legal proxy from the broker, bank or other nominee that holds your shares giving you the right to vote the shares, by attending the Annual Meeting and voting in person.
How are votes counted?
We have designated a representative of Broadridge Financial Services as the inspector of elections who will validate the votes.
With respect to Proposal No. 1, the inspector of elections will count“For” votes and“Against” votes. Abstentions and brokernon-votes will not be counted as having been voted on the proposal, nor will they affect the outcome of Proposal No. 1.
With respect to Proposal No. 2, the inspector of elections will count separately“For,” “Against” and“Abstain” votes and brokernon-votes.“Abstain” votes will be counted towards the vote total for the proposal, and will have the same effect as“Against” votes. Because brokernon-votes are not deemed to be votes entitled to be cast, they will not affect the outcome of Proposal No. 2.
See “How many votes are needed to approve each proposal?” for further details regarding the votes needed to approve each proposal.
What is a “brokernon-vote”?
If your shares are held by your broker, bank or other similar organization as your nominee (that is, in “street name”), you will need to follow the voting instructions provided by that organization on how to vote your shares. If you do not provide voting instructions, your shares may constitute “brokernon-votes.” Generally, brokernon-votes occur on a matter when a broker, bank or other nominee is not permitted to vote on that matter, including the election of directors, without instructions from the beneficial owner and instructions are not given.
In tabulating the voting result for any particular proposal, shares that constitute brokernon-votes are not considered entitled to vote on that proposal. Thus, while brokernon-votes will be counted as present for the purpose of determining the presence of a quorum at the meeting, brokernon-votes willnot affect the outcome of any matter being voted on at the meeting.
How many votes are needed to approve each proposal?
Proposal No. 1. Directors will be elected by the vote of a majority of the shares cast with respect to the Boarddirector at the Annual Meeting. This means that the number of Directors identifiedvotes cast“For” a director’s election must exceed the number of votes cast“Against” that director’s election. Stockholders may not cumulate votes in the accompanying Proxy Statement, each for a term that expires in 2016;election of directors. Abstentions and brokernon-votes will not be counted as having been voted on the proposal, nor will they affect the outcome of this proposal.
(2)Proposal No. 2. Ratification of the appointment of Baker Tilly Virchow Krause, LLPSchneider Downs & Co., Inc. as ExOne’s independent registered public accounting firm for the year ending December 31, 2015; and
(3) Any other matters that properly come before2018 requires the meeting.
Details regardingaffirmative vote of a majority of the business to be conducted at the Annual Meeting are described in the Proxy Statement accompanying this Notice.
The record date for the 2015 Annual Meeting is March 6, 2015. Only stockholders of record at the close of business on that date are entitled to receive notice of, to attend and to voteshares represented at the Annual Meeting and entitled to vote on this matter. Abstentions will have the same effect as an“Against” vote. Because brokernon-votes are not deemed to be votes entitled to be cast, they will not affect the outcome of this proposal.
What are the Board’s voting recommendations?
• | Proposal No. 1: “For” election of each of the six (6) nominees to the Board. |
• | Proposal No. 2: “For” ratification of the appointment of Schneider Downs & Co., Inc. as ExOne’s independent registered public accounting firm for the year ending December 31, 2018. |
What is the quorum requirement?
A quorum of stockholders is necessary to hold a valid meeting. A quorum will be present if a majority of all outstanding shares entitled to vote is represented by stockholders present at the meeting or represented by proxy. On the record date, there were 16,202,119 shares of Common Stock outstanding and entitled to vote. This means that at least 8,101,060 shares must be represented by stockholders present at the meeting or represented by proxy to have a quorum. Your shares will be counted towards the quorum if you submit a valid proxy or vote at the meeting.
How can I find out the results of the voting at the Annual Meeting?
Preliminary voting results will be announced at the Annual Meeting. Final voting results will be published in a Current Report onForm 8-K filed with the SEC within four business days following the Annual Meeting. In the event we are unable to obtain the final voting results within four business days, we will file the preliminary voting results in a Current Report onForm 8-K within four business days following the Annual Meeting, and will file an amended Current Report onForm 8-K with the final voting results within four business days after the final voting results are known.
How can stockholders submit a proposal for inclusion in our Proxy Statement for the 2019 Annual Meeting of Stockholders?
Our 2019 Annual Meeting of Stockholders will be held on May 15, 2019 at 10:00 a.m. To be included in our Proxy Statement for the 2019 Annual Meeting of Stockholders, stockholder proposals must comply with the requirements ofRule 14a-8 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). To be eligible for inclusion, such proposals must be received by ExOne by December 6, 2018, which is at least 120 calendar days before the anniversary date of the release of ExOne’s Proxy Statement to stockholders in connection with the previous year’s annual meeting.
How can stockholders submit nominations of persons for election to the Board or proposals of business to be transacted by the stockholders for the 2019 Annual Meeting of Stockholders?
A stockholder of record may submit nominations of persons for election to the Board or proposals of business to be transacted by the stockholders only if he or she complies with Article III, Section 13 of our Amended and Restated Bylaws, as amended (the “Bylaws”). This section provides that a stockholder must give advance notice to our Corporate Secretary of any postponementsbusiness, including nominations of directors for our Board, that the stockholder wishes to raise at the 2019 Annual Meeting of Stockholders at our principal executive offices (i) not earlier than 120 days prior to such meeting and (ii) at least 45 days prior to the anniversary date of the filing of ExOne’s Proxy Statement with the SEC in connection with the previous year’s annual meeting. Therefore, for the 2019 Annual Meeting, such notice must be received by ExOne no sooner than January 15, 2019 and no later than February 19, 2019.
With respect to a stockholder’s nomination of a candidate for our Board, the stockholder notice to our Corporate Secretary must contain certain information as set forth in our Bylaws about both the nominee and the stockholder making the nomination. With respect to any other business that the stockholder proposes, the stockholder notice must contain a brief description of such business, the reasons for conducting such business at the meeting, any personal or adjournments thereof.other direct or indirect material interest in such business of such stockholder and the beneficial owner, if any, on whose behalf the proposal is made, and certain other information specified in our Bylaws.
If you wish to attend the meeting to vote in person and need directions, please contact the office of the Chief Legal Officer and Corporate Secretary at (724) 863-9663. To ensure that your vote is counted at the Annual Meeting, please vote as promptly as possible. Ifbring a stockholder proposal or nominate a candidate for director, you are a registered holder, please complete, signadvised to review our Bylaws, which contain additional requirements about advance notice of stockholder proposals and date the enclosed proxy card and return it promptly in the enclosed envelope. If you hold your shares through a broker or bank, you will receive voting instructions from your broker or bank. Please follow the instructions that you receive to vote your shares.
| ||
IMPORTANT NOTICE REGARDING AVAILABILITY OF PROXY MATERIALS FORdirector nominations.
STOCKHOLDERS MEETING TO BE HELD ON MAY 4, 2015: OUR 2015 PROXY STATEMENT, 2014
ANNUAL REPORT AND FORM OF PROXY CARD ARE AVAILABLE ATHTTP://WWW.ASTPROXYPORTAL.COM/AST/18123/.
PROXY SUMMARY
Meeting Information
Date: | May | |
Time: | 10:00 a.m. Eastern Daylight Time | |
Place: | ||
Proposals: | (1) Election of | |
(2) Ratification of the appointment of (3) Any other matters that properly come before the meeting |
How to Vote
— Your vote is important.important
Record Date. You are eligible to vote if you were a stockholder of record at the close of business on Friday,Monday, March 6, 2015.19, 2018. To make sure that your shares are represented at the meeting, please cast your vote as soon as possible.
Beneficial Owners.If you hold your shares through a broker, bank or bank,other nominee, you will receive voting instructions from your broker, bank or bank.other nominee. Please follow the instructions that you receive to vote your shares.
Registered Owners.If you are a registered holder, please complete and sign the enclosed proxy card and return it to American Stock TransferBroadridge by following the instructions on the card. You also may vote your shares by telephone or over the Internet as described on your proxy card.
Online Access to Proxy Materials
The Proxy Statement, form of proxy card and 20142017 Annual Report and Notice of Annual Meeting are available at:with your16-digit control number atHTTP://WWW.ASTPROXYPORTAL.COM/AST/18123/.WWW.PROXYVOTE.COM.
Election of Directors
This year, we are recommending the election of sevensix (6) nominees to the Board of Directors:Board:
Name | Age | Independent | Position with ExOne | |||||||
S. Kent Rockwell | No |
| ||||||||
John Irvin | No |
| ||||||||
| Yes |
| ||||||||
| Yes | Lead Director, Chair of | ||||||||
| Yes |
Governance Committee and Compensation Committee | ||||||||
| Yes |
| ||||||||
| Director, Chair of Compensation Committee and member of Audit Committee |
With the electionFour of Mr. Strome, together with the six incumbent directors, we will have five out of seven independent directors.nominees are “independent” under the NASDAQ Stock Market (“NASDAQ”) rules.
Compensation Highlights
ExOne’s executive compensation is performance driven.
While the Compensation Committee did not formalize an incentive based program for executives in 2014, it carefully considered the Company’s performance in 2014 when making compensation decisions.
In light of 2014 performance short of the Company’s goals, ExOne’s Chief Executive Officer received minimal compensation above his base salary. In addition, the President and Chief Operating Officer stepped down in December 2014 from that role to another position within the Company. No executive received a
discretionary cash bonus for 2014. The Committee did, however, approve in 2014 equity grants to several executives with three-year vesting to reward individual performance while also encouraging and maintaining long-term stockholder focus.
The Compensation Committee and full Board have taken several actions for 2015:
Approved an incentive award to the executive team that ties payment to the achievement of budgeted revenue and gross margins.
Adopted a stock retention policy in early 2015 that applies to equity awards made to directors andFor 2017, our named executive officers to further align the interests of stockholders and ExOne directors and executives.
Identified an independent compensation consultant that it may engage to help structure and implementreceived a comprehensive executive compensation program tailored for the Company.
Approved a clawback policy that permits the Board to recover all or any portion of any “Performance-Based Compensation” to any executive officer within the three (3) year period immediately preceding the date on which ExOne is required to prepare an accounting restatement due to material noncompliance with any financial reporting requirement.
The Compensation Committee is also considering the design and implementation of a long-term incentive plan to reward performance over multiple year periods with the goal of having a plan in place for 2016 compensation.
Audit Committee and Remediation of Weaknesses in Internal Controls Over Financial Reporting
In connection with our initial public offering, ExOne concluded that there are material weaknesses in the design and operating effectiveness of ExOne’s internal control over financial reporting. A material weakness is a control deficiency, or combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of annual or interim financial statements will not be prevented or detected on a timely basis.
ExOne’s material weaknesses in internal control over financial reporting are:
The designbase salary and operating effectiveness of internal controls related to our financial reporting process are not sufficient to allow for accurate and timely reporting of our consolidated financial results. We do not maintain adequate control with respect to the application of accounting principles generally accepted in the United States of America (“GAAP”). This is principally due to a lack of personnel with adequate knowledge and experience in GAAP. As a result, we record certain manual, post-close adjustments in order to prepare our consolidated financial statements.equity incentive awards.
The design and operating effectiveness of internal controls related to our information technology systems is not sufficient to allow for accurate and timely reporting of our consolidated financial results. Each of our primary locations (United States, Germany, Italy and Japan) utilizes separate and distinct information technology platforms to record, process and summarize transactions. As a result, our process to consolidate and report financial information is substantially a manual process and inherently subject to error.
The design and operating effectiveness of internal controls related to our consolidation process and management’s review of our consolidated financial results do not operate at a level of precision sufficient to allow for accurate and timely reporting of our consolidated financial results. Our consolidation process is substantially a manual process and inherently subject to error. Further, because of internal control weaknesses identified with respect to our financial reporting process and information technology systems, management is unable to complete an adequate review of either subsidiary or consolidated financial results at a sufficient level of precision to prevent or detect misstatements. As a result, we record certain manual, post-close adjustments in order to prepare our consolidated financial statements.
With the oversight of senior management and our Audit Committee, we have put into place a comprehensive plan to remediate the underlying causes of the identified material weaknesses. Our plan throughout 2014 and into 2015 is to continue to take additional steps and implement measures to remediate the underlying causes of the identified material weaknesses including:
These ongoing efforts, collectively, give ExOne the opportunity to remediate the material weaknesses in internal controls when ExOne reports its results for the 2015 fiscal year.
Corporate Governance Highlights
Our Board is committed to establishing and maintaining corporate governance policies and practices that are appropriate for a company like ExOne. Highlights of our implemented measures include:
Strong independent Lead Director;Director and enhanced use of independent committees to ensure a balanced process;
Annual election of directors;
Majority voting standard fornon-contested election of directors;
Supermajority of independent directors on the Board (5(4 out of 76 independent directors upon election at 20152018 Annual Meeting);
100% independent members on Audit, Compensation and Nominating and Corporate Governance Committees;
Stock retention policy for directors and executive officers;
Anti-hedging and anti-pledging policies for directors and executive officers;
Clawback policy for restatement of financial statements;
Succession and executive talent planning at the Board level;
Strong ethics policy, whistleblower policy and international policies on import and export matters;
Process for review and approval of related person transactions;
Board compensation appropriate in form and amount appropriate for our size and state of development; and
Annual Board self-evaluation process.
Strategic Oversight HighlightsRatification of Independent Registered Accounting Firm
The Board is committed to overseeingWe are recommending the ratification of the appointment of Schneider Downs & Co., Inc. as ExOne’s strategy. Inindependent registered public accounting firm for the year ending December 2014, the Board formed a Strategic Review Committee, which is focused on reviewing and overseeing the implementation of ExOne’s growth and business strategies. As further detailed in our 2014 Annual Report, the principal elements of our growth and business strategy include:31, 2018.
Expanding the network of production service centers;
Qualifying new industrial materials printable in our systems;
Increasing the efficiency of our machines to expand the addressable market;
Focusing on customer training and education to promote awareness;
Achieving revenue balance and diversification;
Advancing pre-print design and post-print processing capabilities to accelerate the growth of our 3D printing technology; and
Pursuing growth opportunities through acquisitions, alliances and/or strategic investments.
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Board Leadership Structure and Our Independent Lead Director | 16 | |||
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Information Regarding the Board | 17 | |||
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Attendance at Annual Meeting of Stockholders by the Board | 20 | |||
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PROPOSAL 2 — RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | 34 | |||
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT | 38 | |||
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i
The ExOne Company
127 Industry Boulevard
North Huntingdon, Pennsylvania 15642
PROXY STATEMENT
FOR THE 20152018 ANNUAL MEETING OF STOCKHOLDERS
To Be Held On May 4, 201516, 2018 at 10:00 a.m., Eastern Daylight Time
QUESTIONS AND ANSWERS ABOUT THIS PROXY MATERIAL AND VOTING
Why am I receiving these materials?
The Board of Directors (the “Board”) of The ExOne Company (“we,” the “Company,” or “ExOne”) is soliciting your proxy to vote at the 20152018 Annual Meeting of Stockholders (the “Annual Meeting”) to be held on May 4, 201516, 2018 at 10:00 a.m., Eastern Daylight Time, at the Westin Convention Center Pittsburgh, 1000 Penn Avenue, Pittsburgh,ExOne’s principal executive offices, 127 Industry Boulevard, North Huntingdon, Pennsylvania 15222.15642.
You are invited to attend the Annual Meeting to vote on the proposals described in this Proxy Statement. However, you do not need to attend the meeting to vote your shares. If you are a registered holder, you may vote by telephone, over the Internet or by completing, signing and returning a proxy card to us at 127 Industry Boulevard, North Huntingdon, Pennsylvania 15642.Broadridge by following the instructions on the card. If you hold your shares through a broker, bank or bank,other nominee, you will receive voting instructions from your broker, bank or bank.other nominee. Please follow the instructions that you receive to vote your shares.
We intend to commence mailingmail to all stockholders of record entitled to vote at the Annual Meeting either the Internet Notice or a full set paper copy of this Proxy Statement, together with our 2017 Annual Report, on Form 10-K for the year ended December 31, 2014, the Notice of Annual Meeting and the accompanying proxy card on or about April 2, 2015.5, 2018.
Copies of our 2017 Annual Report furnished to our stockholders do not contain copies of exhibits to our Annual Report on Form10-K for the year ended December 31, 2017. You can obtain copies of these exhibits electronically at the website of the Securities and Exchange Commission (the “SEC”) atwww.sec.gov or by mail from the Public Reference Section of the SEC at 100 F Street, N.E., Washington, D.C. 20549 at prescribed rates. The exhibits are also available as part of theForm 10-K for the year ended December 31, 2017 which is available on ExOne’s corporate website atwww.exone.com. Stockholders may also obtain copies of exhibits without charge by contacting our General Counsel and Corporate Secretary at(724) 863-9663.
We will also post this Proxy Statement, the proxy card and our 20142017 Annual Report and the Notice of Annual Meeting on the Internet at:atHTTP://WWW.ASTPROXYPORTAL.COM/AST/18123/WWW.PROXYVOTE.COM on or about April 2, 2015.5, 2018, which you may access using your16-digit control number.
Why did I receive an Internet Notice in the mail regarding the Internet availability of proxy materials instead of a full set paper copy of this Proxy Statement, the 2017 Annual Report and the Notice of Annual Meeting?
We are taking advantage of an SEC rule that allows companies to furnish their proxy materials over the Internet rather than in paper form. This rule allows a company to send some or all of its stockholders the Internet Notice. Instructions on how to access the proxy materials over the Internet or how to request a paper copy of proxy materials may be found in the Internet Notice.
If you would prefer to receive proxy materials (including a proxy card) in printed form by mail or electronically by email, please follow the instructions contained in the Internet Notice.
Why didn’t I receive an Internet Notice in the mail regarding the Internet availability of proxy materials?
The SEC rule that allows us to furnish our proxy materials over the Internet rather than in paper form does not require us to do so for all stockholders. We may choose to send certain stockholders the Internet Notice, while sending other stockholders a full set paper copy of our Proxy Statement, 2017 Annual Report, Notice of Annual Meeting and proxy card.
Who can vote at the Annual Meeting and when is the Record Date?
Only stockholders of record at the close of business on March 6, 201519, 2018 are entitled to vote at the Annual Meeting. On the record date, there were 14,516,13716,202,119 shares of ExOne common stock (“Common Stock”) outstanding. All holders of these outstanding shares are entitled to one vote for each share of Common Stock held by them as of the close of business on March 6, 201519, 2018 for each matter to be voted on at the Annual Meeting.
How can I access the proxy materials over the Internet?
The enclosed proxy card contains instructions on how to view the proxy materials on the Internet. An electronic copy of this Proxy Statement, the 2017 Annual Report and the 2014Notice of Annual ReportMeeting are available with your16-digit control number atHTTP://WWW.ASTPROXYPORTAL.COM/AST/18123/WWW.PROXYVOTE.COM.
What proposals are being considered?
There are two matters scheduled for a vote at the Annual Meeting:
• | Proposal No. 1: Election of the |
• | Proposal No. 2: Ratification of the appointment of |
How do I vote?
For Proposal No. 1, you may vote“For” or“Against” each director nominee or you may“Abstain” from voting for any nominee. For Proposal No. 2, you may vote“For”or“Against” the proposal or“Abstain” from voting.
Stockholder of Record (Shares Registered in Your Name) – —If on March 6, 2015,19, 2018, your shares were registered directly in your name with ExOne’s transfer agent, American Stock Transfer & Trust, LLP, then you are a stockholder of record with respect to those shares.
As a stockholder of record, you may vote by proxy usingby telephone, over the Internet or by returning a proxy card, or you may vote in person at the Annual Meeting. Regardless of whether you plan to attend the meeting, we urge you to vote by proxy to ensure your vote is counted. You may still attend the meeting and vote in person if you have already voted by proxy.
If you received your proxy materials in the mail, you may vote your shares by proxy over the Internet, by telephone or by returning your proxy card by mail in the envelope provided. Instructions to vote over the Internet or by telephone are printed on your proxy card. To vote using the proxy card, please complete, sign and date the enclosed proxy card and return it promptly to us. If you returnvote by proxy by telephone, over the Internet or by returning your signed proxy card to us before the Annual Meeting, we will vote your shares as you direct.
To vote in person, please come to the Annual Meeting and we will give you a ballot when you arrive.
Beneficial Owner (Shares Registered in the Name of a Broker, Bank or Bank) –Other Nominee) —If on March 6, 2015,19, 2018, your shares were held in an account at a broker, bank, or other similar organization as your
nominee, then you are the beneficial owner of shares held in “street name” and these proxy materials are being forwarded to you by that organization. The organization holding your account is considered the stockholder of record for purposes of voting at the Annual Meeting.
As a beneficial owner, you have the right to direct that organization on how to vote the shares in your account. Please refer to the voting instructions provided by your broker, bank or broker.other nominee. Many organizations allow beneficial owners to give voting instructions via telephone or the Internet, as well as in writing. You also are invited to attend the Annual Meeting, but you will need to bring a copy of a brokerage statement reflecting stock ownership as of March 6, 2015.19, 2018. Because you are not the stockholder of record, you may not vote your shares in person at the meeting unless you provide a valid proxy (sometimes referred to as a “legal proxy”) from your broker, bank or other similar organization.nominee.
How many votes do I have?
You have one vote for each share of Common Stock you own as of the close of business on March 6, 2015.19, 2018 for each matter to be voted on at the Annual Meeting. You may vote on each proposal presented for consideration at the 2015 Annual Meeting. There are no cumulative voting rights with respect to our Common Stock.
What if I return a proxy card but do not make specific choices?
If you return a signed and dated proxy card without marking any voting selections, your shares will be voted“For”the election of each of the seven (7)six (6) nominees for director, and“For”ratification of Baker Tilly Virchow Krause, LLPSchneider Downs & Co., Inc. as our independent registered public accounting firm for the year ending December 31, 2015.2018. If any other matter is properly presented at the meeting, your proxy (one of the individuals named on your proxy card) will vote your shares using his or her best judgment.
What do I need to do to attend the Annual Meeting in person?
Space for the Annual Meeting is limited. Therefore, admission will be on a first-come, first-served basis. Registration will open at 9:0045 a.m. Eastern Daylight Time, and the Annual Meeting will begin at 10:00 a.m. Each stockholder should be prepared to present:
1. | Valid government issued photo identification, such as a driver’s license or passport; and |
2. | Beneficial |
Use of cameras, recording devices, computers and other electronic devices, such as smart phones and tablets, are not be permitted at the Annual Meeting. Photography and video are prohibited at the Annual Meeting.
Please allow ample time forcheck-in. Please note that large bags and packages are not allowed at the Annual Meeting. Persons may be subject to search.
Who is paying for this proxy solicitation?
ExOne will pay for the entire cost of soliciting proxies. In addition to ExOne mailing these proxy materials, ExOne’s directors and employees also may solicit proxies in person, by telephone, or by other means of communication. Directors and employees will not be paid any additional compensation for soliciting proxies. ExOne may reimburse brokerage firms, banks and other agents for the cost of forwarding proxy materials to beneficial owners.
What does it mean if I receive more than one set of proxy materials?
If you receive more than one set of proxy materials (including multiple notices,Internet Notices or multiple copies of this Proxy Statement, orNotice of Annual Meeting and proxy cards)card), your shares are registered in more than one name or are registered in different accounts. Please make sure that you vote all of your shares by following the directions inon each noticeInternet Notice or completing, signing and returning each proxy card to ensure that all of your shares are voted.card.
Can I change my vote after submitting my proxy?
Yes. You can change your vote at any time before the final vote at the meeting.
If you are a stockholder of record, you may change your vote in any one of the following ways:
You may submit another properly completed proxy card(including by telephone or over the Internet) with a later date.
You may send a written notice that you are revoking your proxy to our Corporate Secretary at The ExOne Company, 127 Industry Boulevard, North Huntingdon, Pennsylvania 15642.
You may attend the Annual Meeting and vote in person by ballot. Simply attending the meeting will not, by itself, revoke your proxy.
If you are a beneficial owner of shares held in street name, you may change your vote in any one of the following ways:
You may submit new voting instructions to your broker, trusteebank or other nominee.
If you have obtained a legal proxy from the broker, trusteebank or other nominee that holds your shares giving you the right to vote the shares, by attending the Annual Meeting and voting in person.
How are votes counted?
We have designated American Stock Transfer & Trust Company, LLPa representative of Broadridge Financial Services as the inspector of elections who will validate the votes.
With respect to Proposal No. 1, the inspector of elections will count“For” votes and“Against” votes. Abstentions and brokernon-votes will not be counted as having been voted on the proposal, nor will they affect the outcome of Proposal No. 1.
With respect to Proposal No. 2, the inspector of elections will count separately“For,” “Against” and“Abstain” votes and brokernon-votes.“Abstain”votes will be counted towards the vote total for the proposal, and will have the same effect as“Against”votes. Because brokernon-votes are not deemed to be votes entitled to be cast, they will not affect the outcome of Proposal No. 2.
See “How many votes are needed to approve each proposal?” for further details regarding the votes needed to approve each proposal.
What is a “brokernon-vote”?
If your shares are held by your broker, bank or other similar organization as your nominee (that is, in “street name”), you will need to follow the voting instructions provided by that organization on how to vote your shares. If you do not provide voting instructions, your shares may constitute “brokernon-votes.” Generally, brokernon-votes occur on a matter when a broker, bank or other organizationnominee is not permitted to vote on that matter, including the election of directors, without instructions from the beneficial owner and instructions are not given.
In tabulating the voting result for any particular proposal, shares that constitute brokernon-votes are not considered entitled to vote on that proposal. Thus, while brokernon-votes will be counted as present for the purpose of determining the presence of a quorum at the meeting, brokernon-votes willnot affect the outcome of any matter being voted on at the meeting.
How many votes are needed to approve each proposal?
Proposal No. 1. Directors will be elected by the vote of thea majority of the shares cast with respect to the director at the Annual Meeting. This means that the number of votes cast“For” a director’s election must exceed the number of votes cast“Against” that director’s election. Stockholders may not cumulate votes in the election of directors. Abstentions and brokernon-votes will not be counted as having been voted on the proposal, nor will they affect the outcome of this proposal.
Proposal No. 2. Ratification of the appointment of Baker Tilly Virchow Krause, LLPSchneider Downs & Co., Inc. as ExOne’s independent registered public accounting firm for the year ending December 31, 20152018 requires the affirmative vote of a majority of the shares represented at the Annual Meeting and entitled to vote on this matter. Abstentions will have the same effect as an“Against” vote. Broker Because brokernon-votes are not deemed to be votes entitled to be cast, they will not be counted as having been voted onaffect the outcome of this proposal.
What are the Board’s voting recommendations?
• | Proposal No. 1: “For” election of each of the six (6) nominees to the |
• | Proposal No. 2: “For” ratification of the appointment of |
What is the quorum requirement?
A quorum of stockholders is necessary to hold a valid meeting. A quorum will be present if a majority of all outstanding shares entitled to vote is represented by stockholders present at the meeting or represented by proxy. On the
record date, there were 14,516,13716,202,119 shares of Common Stock outstanding and entitled to vote. This means that 7,258,069at least 8,101,060 shares must be represented by stockholders present at the meeting or represented by proxy to have a quorum. Your shares will be counted towards the quorum if you submit a valid proxy or vote at the meeting.
How can I find out the results of the voting at the Annual Meeting?
Preliminary voting results will be announced at the Annual Meeting. Final voting results will be published in a Current Report onForm 8-K filed with the SEC within four business days following the Annual Meeting. In the event we are unable to obtain the final voting results within four business days, we will file the preliminary voting results in a Current Report onForm 8-K within four business days following the Annual Meeting, and will file an amended Current Report onForm 8-K with the final voting results within four business days after the final voting results are known.
How can stockholders submit a proposal under Rule 14a-8 for inclusion in our Proxy Statement for the 20162019 Annual Meeting of Stockholders?
Our 20162019 Annual Meeting of Stockholders will be held on May 11, 201615, 2019 at 10:00 a.m. To be included in our Proxy Statement for the 20162019 Annual Meeting of Stockholders, stockholder proposals must comply with the requirements ofRule 14a-8 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). To be eligible for inclusion, such proposals must be received by ExOne by December 4, 2015,6, 2018, which is at least 120 calendar days before the anniversary date of the release of ExOne’s Proxy Statement to stockholders in connection with the previous year’s annual meeting.
How can stockholders submit nominations of persons for election to the Board of Directors or proposals of business to be transacted by the stockholders for the 20162019 Annual Meeting of Stockholders?
A stockholder of record may submit nominations of persons for election to the Board of Directors or proposals of business to be transacted by the stockholders only if he or she complies with Article III, Section 13 of our Amended and Restated Bylaws, as amended (the “Bylaws”). This section provides that a stockholder must give advance notice to our Corporate Secretary of any business, including nominations of directors for our Board, that the stockholder wishes to raise at the 20162019 Annual Meeting of Stockholders at our principal executive offices (i) not earlier than 120 days prior to such meeting and (ii) at least 45 days prior to the anniversary date of the filing of ExOne’s proxy statementProxy Statement with the SEC in connection with the previous year’s annual meeting. Therefore, for the 20162019 Annual Meeting, such notice must be received by ExOne no sooner than January 12, 201615, 2019 and no later than February 10, 2016.19, 2019.
With respect to a stockholder’s nomination of a candidate for our Board, the stockholder notice to our Corporate Secretary must contain certain information as set forth in our Bylaws about both the nominee and the stockholder making the nomination. With respect to any other business that the stockholder proposes, the stockholder notice must contain a brief description of such business, the reasons for conducting such business at the meeting, any personal or other direct or indirect material interest in such business of such stockholder and the beneficial owner, if any, on whose behalf the proposal is made, and certain other information specified in our Bylaws.
If you wish to bring a stockholder proposal or nominate a candidate for director, you are advised to review our Bylaws, which contain additional requirements about advance notice of stockholder proposals and director nominations.
If a stockholder wishes only to recommend a candidate for consideration by the Nominating and Governance Committee as a potential nominee for director, see the procedures discussed in “Corporate Governance — Nominating and Governance Committee.”
What are the implications of being an “emerging growth company”?
As a company with less than $1.0 billion in revenue during our last fiscal year, weWe qualify as an “emerging growth company” as defined in the Jumpstart our Business Startups Act of 2012 (the “JOBS Act”)JOBS Act). An emerging growth company may take advantage of specified reduced reporting requirements and is relieved of certain other significant requirements that are otherwise generally applicable to public companies.
As an emerging growth company:
We are exempt from the requirement to obtain an attestation and report from our independent registered public accounting firm on the assessment of our internal control over financial reporting pursuant to the Sarbanes-Oxley Act of 2002;
We are permitted to provide less extensive disclosure about our executive compensation arrangements;
We are not required to give our stockholdersnon-binding advisory votes on executive compensation or golden parachute arrangements; and
We have elected to use an extended transition period for complying with new or revised accounting standards.
We may choose to take advantage of some, but not all, of these reduced burdens. We will continue to operate under these provisions for up to five yearsthrough December 31, 2018, or such earlier time that we are no longer an emerging growth company. We would cease to be an emerging growth company if we have more than $1.0$1.07 billion in annual revenues, qualify as a “large accelerated filer” under the Exchange Act, which requires us to have more than $700 million in market value of our common stockCommon Stock held bynon-affiliates, or issue more than $1.0 billion ofnon-convertible debt over a three-year period. We may choose to take advantage of some, but not all, of these reduced burdens.
PROPOSAL 1 — ELECTION OF DIRECTORS
General
This year, the Nominating and Governance Committee has elected sevenselected six (6) nominees for election to the Board of Directors, andfor consideration at the Annual Meeting; our Board has approved the nominees. All nominees are current members of the Board. Each nominee elected as a director at the Annual Meeting will continue to serve until the 20162019 Annual Meeting of Stockholders, until his or her successor has been elected or qualified, or until his or her earlier death, resignation or removal.
David Burns will be stepping down as a director when his term expires at this Annual Meeting. The Nominating and Governance Committee has nominated Mr. William F. Strome to fill the vacancy created by the expiration of Mr. Burns’ term.
Director Qualifications
Our Nominating and Governance Committee believes each member of our Board of Directors possesses the individual qualities necessary to serve on ExOne’s Board, of Directors, including high personal and professional ethical standards and integrity, honesty and good values. Our directors are highly educated and have diverse backgrounds and extensive track records of success in what we believe are highly relevant positions with large international companies, firms and major private and public institutions. TheyOur directors have each demonstrated an ability to exercise sound judgment and have exhibited a commitment of service to ExOne and to the Board, and each of our directors possesses strong communication skills. In addition, we believe that each director brings the skills, experience and perspective that, when taken as a whole, createscreate a Board that possesses the requirements necessary to oversee ExOne’s business. Each nominee’s particular experience, qualifications, attributes and skills that led the Board to conclude that such nominee should serve as a director for ExOne are set forth below under“Nominees”.
Vote Required
Directors will be elected by the vote of thea majority of the shares cast with respect to the director at the Annual Meeting. This means that the number of votes cast“For” a director’s election must exceed the total number of votes cast“Against” that director’s election. Abstentions and brokernon-votes will not be counted as having been voted on the proposal, nor will they affect the outcome of Proposal No. 1.
If a nominee is not elected, the director shall offer to tender his or her resignation to the Board of Directors.Board. The Nominating and Governance Committee of the Board of Directors will make a recommendation to the Board of Directors as to whether to accept or reject the resignation, or whether other action should be taken. The Board of Directors will act on the Nominating and Governance Committee’s recommendation and publicly disclose its decision and rationale within 90 days following the date of the certification of the election results. The director who tenders his or her resignation will not participate in the Board’s decision with respect to that resignation.
The proxy holders intend to vote all proxies received by them“For” the nominees listed below unless otherwise instructed. In the event that any nominee is unable or declines to serve as a director at the time of the Annual Meeting, the proxies will be voted for any nominee who may be designated by the current Board of Directors to fill the vacancy. As of the date of this Proxy Statement, the Board of Directors is not aware that any nominee is unable or will decline to serve as a director.
The Board of Directors Recommends a Vote “FOR” the Election of All Nominees.Each Director Nominee.
Nominees
The following is a description of each nominee (in alphabetical order) for election to the Board of Directors:Board:
Name | Age | Experience and Qualification | ||
John Irvin | Mr. Irvin began serving |
Name | Age | Experience and Qualification | ||
Name | Age | Experience and Qualification | ||
S. Kent Rockwell | Mr. Rockwell has served as our Executive Chairman since August 2016 and previously served as our Chairman and Chief Executive Officer | |||
|
| |||
Lloyd A. Semple | Mr. Semple began serving on our Board |
Name | Age | Experience and Qualification | ||
William F. Strome | Mr. Strome began serving on our Board on May 4, 2015. Since August 2015, Mr. Strome has served as an adjunct professor at the John F. Donahue Graduate School of Business, Duquesne University. Mr. Strome also currently serves |
Name | Age | Experience and Qualification | ||
Bonnie K. Wachtel | Ms. Wachtel began serving on our Board |
The following table and the discussion below provide information about our executive officers as of March 6, 2015, each of whom is elected annually.19, 2018.
Name | Age | Positions and Offices Held with ExOne | ||||
S. Kent Rockwell | ||||||
| Executive | |||||
| ||||||
Rick Lucas | Chief Technology Officer | |||||
| ||||||
Brian W. Smith | Chief Financial Officer and Treasurer |
S. Kent Rockwell — Mr. Rockwell’s biography is set forth in “Proposal Numberunder “Proposal 1 – — Election of Directors” sectionDirectors” above.
JoEllen Lyons DillonLoretta L. Benec — Ms. DillonBenec has served as our Executive Vice President, Chief Legal OfficerGeneral Counsel and Corporate Secretary since December 2014,October 2017. Beginning in November 2016, Ms. Benec has provided corporate and she previouslycommercial legal services as General Counsel to Cumberland Highstreet Partners, Inc., a manufacturing consulting business. Previously, Ms. Benec was Assistant General Counsel for RTI International Metals, Inc. (now Arconic Inc.), a NYSE-listed global supplier of advanced titanium products primarily to the commercial aerospace market, from July 2010 to August 2015, and also served as our Chief Legal Officerits Secretary from April 2013 to August 2015 and as its Director of Corporate Secretary beginningGovernance from July 2010 to April 2013. Prior to RTI, Ms. Benec enjoyed a more than twelve-year career in March 2013. From May 2012 through February 2013, she was a legal consultant on our initial public offering. She previously was a partner at two nationalthe law firms, Reed Smith LLP from 2002 until 2011 and Buchanan Ingersoll & Rooney PC from 1988 until 2002, where she became a partner after starting as an associate with the firm. Ms. Dillon has served on the Boarddepartment of Directors of Mylan Inc.H. J. Heinz Company (now The Kraft Heinz Company), a NYSE-listed global pharmaceutical company, since May 2014. She also serves onpackaged food company. Ms. Benec received a B.A. in History with High Honors, cum laude from Dartmouth College in 1992 and a J.D., cum laude, from the Mylan Board’s Compliance Committee. Ms. Dillon was the former Chair, and currently serves as the Audit Committee ChairUniversity of the Allegheny District chapterPittsburgh School of the National Multiple Sclerosis Society. She also is a Vice President of the Wine & Spirits Advisory Council to the Pennsylvania Liquor Control Board.Law in 1995.
Rainer Hoechsmann — Mr. Hoechsmann has served as Chief Development Officer since January 1, 2014, and also has served as General Manager of ExOne GmbH and ExOne Property GmbH, subsidiaries of ExOne, since 2003 and 2013, respectively. He is responsible for our operations in Europe.Mr. Hoechsmann is the inventor and co-inventor of certain AM technology covered by a number of our patents. In 2003, he co-founded Prometal RCT GmbH in Augsburg, which is the predecessor to ExOne GmbH. In 1999, he co-founded Generis GmbH, one of the first companies implementing 3D printing applications, in Augsburg, Germany. Mr. Hoechsmann has received a number of industry awards, including the OCE Printing Award from OCE Printers AG, the Technical University of Munich Award for 3D Printing and the McKinsey & Company Start-Up Award. He is a member of the Association of German Engineers.
Rick Lucas — Mr. Lucas has served as our Chief Technology Officer since June 2012. He served inPrior to joining ExOne, he held various positions from October 2001 to June 2012 at Touchstone Research Laboratory, a broad-based product development research facility that focuses on the development of next-generation materials and products, where he directed operations and research activities and served as Director of Operations from March 2010 to June 2012. From November 1989 to October 2001, Mr. Lucas managed product development for Lake Shore Cryotronics, a privately held developer of cryogenic temperature sensors and other instrumentation. He currently is serving on the Governance Board for the National Additive Manufacturing Innovation Institute (NAMII), an additive manufacturing center.
Hans J. SackJames L. McCarley— Mr. Sack began servingMcCarley has served as our Chief Executive Officer since August 2016. Mr. McCarley formerly served as Executive Vice President on March 16,— Operations of RTI International Metals, Inc., a NYSE-listed global supplier of advanced titanium products primarily to the commercial aerospace market, from May 2010 until July 2015, when Alcoa Inc. acquired RTI by merger. Mr. McCarley also served in the same position during the transition period after the merger, through September 2015. PriorDuring his time at RTI, Mr. McCarley was its highest ranking operating officer, overseeing daily operations, asset and cash management, talent recruitment/retention, customer care, and growth strategy deployment. Mr. McCarley had previously served as the Chief Executive Officer of General Vortex Energy, Inc., a private developer of engine and combustion technologies, from September 2009 to becomingMay 2010. From 1996 through 2009, Mr. McCarley held a variety of management positions within the forging segment of Precision Castparts Company, including Division President of the Company, he served on our Board of Directors (and chaired the Strategic Oversight Committee)Wyman Gordon Forging West from December 17, 20142008 to March 10, 2015. Mr. Sack was a Managing Director of HEADWATERS | SC, a private consulting firm, from 2013 to March 2015. In that position, Mr. Sack worked on client engagements on matters relating to business growth strategy development2009, and implementation, operational improvement initiatives, and
acquisition and consolidation strategies and related due diligence. Prior to joining Headwaters, from 2010 to 2012, Mr. Sack served asVice President and CEOGeneral Manager of Berg Steel Pipe Corp., the U.S. subsidiary of Europipe GmbH, a global leader in large diameter pipe for oil and gas pipelines. Mr. Sack served as President & CEO of Latrobe Specialty Steel Company, a producer of aerospace metals and tool steels owned by private equity firms,Wyman Gordon Forging, Inc. from 2006 to 2009.2008. From 19901987 to 2006,1996, he gained engineering and other relevant experience working for various companies, including Quantum Chemical, Cameron Iron Works, and General Electric Company. Mr. Sack worked for The Timken Company’s (NYSE: TKR) steel business, which is now known as TimkenSteel Corporation (NYSE: TMST), beginning in 1990 as a senior steel business specialist, serving in subsequent positions in the Steel Group as manager–small bar mill, project manager–parts strategy, general manager–precision steel components, and vice president–manufacturing–steel, becoming President & CEO of Timken Latrobe Steel in 1996 and becoming an officer of The Timken Company in 1998. Mr. SackMcCarley received a master’s degreeB.S. in mechanical engineeringElectrical Engineering from RWTH Aachen, Germany, and a master’s degreeTexas Tech University in business administration from the Harvard University Graduate School of Business Administration. Mr. Sack is a member of the Board of Directors of Saint Vincent College and its McKenna School of Business, Economics and Government.1987.
Brian W. Smith — Mr. Smith has served as our Chief Financial Officer and Treasurer since January 1, 2014. Mr. Smith previously was an Assurance Client Service Partner in the Pittsburgh office of PricewaterhouseCoopers LLP (“PwC”). Mr. Smith joined PwC in 1984, was admitted as a Partner in 1995, and has spent several years working in a PwC advisory business assisting industrial products, healthcare and energy companies with internal control reviews, system implementations, process transformation and change management. Mr. Smith held various leadership roles within PwC through December 2013, including leading initiatives in specific consumer and industrial product sectors. Mr. Smith ishas held leadership roles in a Certifiednumber charitable and professional organizations and currently sits on the Board of Trustees of The Pittsburgh Public AccountantTheater, The Ruffed Grouse Society and received a B.A. with a concentration in accounting and minor in economics from Westminster College in 1980.Chartiers Country Club.
Highlights of Our Corporate Governance Practices
Our Board is committed to establishing and maintaining corporate governance policies and practices that are appropriate for a company like ExOne. Highlights of our implemented measures include:
Strong independent Lead Director;Director and enhanced use of independent committees to ensure a balanced process;
Annual election of directors;
Majority voting standard fornon-contested election of directors;
Supermajority of independent directors on the Board (5(4 out of 76 independent directors upon election at 20152018 Annual Meeting);
100% independent members on Audit, Compensation and Nominating and Corporate Governance Committees;
Stock retention policy for directors and executive officers;
Anti-hedging and anti-pledging policies for directors and executive officers;
Clawback policy for restatement of financial statements;
Succession and executive talent planning at the Board level;
Strong ethics policy, whistleblower policy and international policies on import and export matters;
Process for review and approval of related person transactions;
Board compensation appropriate in form and amount appropriate for our size and state of development; and
Annual Board self-evaluation process.
Structure and Size of the Board of Directors
Our Board of Directors may establish the authorized number of directors from time to timetime-to-time by resolution, as permitted under our Bylaws. Currently, the Board of Directors has established that the Board will have sevensix (6) members. Our current directors, (ifif elected at the Annual Meeting)Meeting, will continue to serve until the 20162019 Annual Meeting of Stockholders, until his or her successor has been elected or qualified, or until his or her earlier death, resignation or removal.
Independence of the Board of Directors and Committees
A majority of our Board of Directorsdirectors are independent under the applicable rules of the NASDAQ Stock Market.NASDAQ. The Board determined in February 20152018 that Messrs. Kilmer, Sellier,Pashke, Semple and SempleStrome and Ms. Wachtel each qualify as independent directors in accordance with the published listing requirements of NASDAQ. The Board also determined that William F. Strome, a nominee for election to the Board of Directors, will also qualify as an independent director in accordance with the NASDAQ requirements if he is elected to the Board at the 2015 Annual Meeting. Finally, the Board determined that Mr. Sack was independent during his tenure on the Board from December 2014 to March 10, 2015.
As required by the NASDAQ rules, the Board of Directors has made a subjective determination as to each independent director that no relationships exist which, in the opinion of the Board, of Directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. In making these determinations, the directors reviewed and discussed information provided by the directors and ExOne with regard to each director’s business and personal activities as they may relate to us and our management.
Upon the election of the directors at the 20152018 Annual Meeting, we will have fivefour (4) out of sevensix (6) independent directors on the Board, and each committee will have only have independent members.
Board Leadership Structure and Our Independent Lead Director
Our Bylaws give the Board the flexibility to determine whether the roles of Chief Executive Officer and Board Chairman should be held by the same person or by two separate individuals. Currently, S. Kent Rockwell serves as bothIn August 2016, our Board made the decision to split the roles of Chairman and Chief Executive Officer, and appointed S. Kent Rockwell to serve as Executive Chairman and James L. McCarley to serve as our Chief Executive Officer.
Mr. Rockwell’s role as Executive Chairman is to focus on the strategy of the Company and its business and leading the Board. As the founder of the Company and former Chief Executive Officer, the Board believes that Mr. Rockwell has been managing ExOne (or its predecessors) since 2008.
At this time,is uniquely positioned to continue to take the lead on strategic planning for the Company, management succession issues and leading the Board has determined that havingwhile transitioning away from handling the Company’s daily operations. As the leader of the Board, Mr. Rockwell servecontinues to set Board agendas and lead Board meetings. As part of this transition, the Board appointed Mr. McCarley as both the Chief Executive Officer, who oversees and leads the Chairman is in the best interest of our stockholders. We believe this structure makes the best use of Mr. Rockwell’s extensive knowledge of ExOne, our strategic initiativesCompany’s operations and our industry and also fosters real-time communication between management and the Board.business.
The Board also has elected Mr. Semple to serve as the Lead Director of our independent directors.directors, which is an important role for our Company because he provides leadership to the Board if circumstances arise in which Mr. Rockwell (who is also a significant stockholder) may be, or may be perceived to be, in conflict with the Company. As the Lead Director, Mr. Semple:Semple also:
Regularly meets with and assists the Chairman and Chief Executive OfficerMr. Rockwell in preparing for meetings of the Board of Directors;Board;
Presides at executive sessions of the independent directors;
Provides leadership to the Board if circumstances arise in which the role of the Chairman and Chief Executive Officer may be, or may be perceived to be, in conflict and also chairs theChairs certain meetings when the Executive Chairman is not in attendance;
Serves as a liaison between the other independent directors and Mr. Rockwell;
Guides the Board’s governance processes, including annual self-evaluations, succession planning and other governance related matters;
May call meetings of the independent directors in his discretion;
Makes himself available for consultation and direct communication with our major stockholders; and
Performs any other functions as the Board may direct.
Generally, eachEach meeting of the Board of Directors includes a meeting of the independent directors (led by our Lead Director), which takes place without any members of management or employees present.
Our management is responsible for theday-to-day management of the risks that we face including, without limitation, strategic, financial, operational, legal/compliance and reputational risks.
Our Board, of Directors as a whole, has responsibility for the oversight of enterprise risk management, and our Audit Committee is responsible for overseeing the process by which management assesses and manages our exposure to risk, as well as our major financial risk exposures and the steps management takes to monitor and control such exposures, based on consultation with our management and independent auditors. The Board’s and Audit Committee’s oversight roles are supported by management reporting processes that are designed to provide the Board and the Audit Committee insight into the identification, assessment and management of critical risks. The Board receives regular updates related to risks and risk management.
Information Regarding the Board of Directors and its Committees
Our Board of Directors has established fourthree committees: an Audit Committee, a Compensation Committee and a Nominating and Governance Committee and a Strategic Oversight Committee.
The following table provides membership information for each of the Board committees as of March 26, 2015:19, 2018:
Name | Audit Committee | Compensation Committee | Nominating and Governance Committee | |||||||||||||
S. Kent Rockwell | ||||||||||||||||
| ||||||||||||||||
John Irvin | ||||||||||||||||
| X | |||||||||||||||
| X | |||||||||||||||
Lloyd A. Semple (Lead Director) | X | C | ||||||||||||||
William F. Strome | C | X | X | |||||||||||||
Bonnie K. Wachtel | X | C |
C | Denotes committee |
Below is a description of each committee of the Board of Directors. CopiesBoard. A copy of the charters of the Audit, Compensation and Nominating and Governance committees arecharter for each committee is posted on our website athttp://www.exone.com under the Corporate Governance section and within the Investor Relations section.
During 2014,2017, the Board met eighttwelve (12) times. During that period, each director attended 75% or more of the total meetings of the Board and the committees on which he or she served.
The Audit Committee of our Board of Directors assists the Board of Directors in overseeing:
The integrity of our financial statements;
The effectiveness of our internal control over financial reporting;
Our compliance with legal and regulatory requirements;
The independence, qualifications and performance of our independent registered public accounting firm;
Our processes and procedures relating to risk assessment and risk management; and
Related partyReview and approval of significant related person transactions.
During 2014,2017, the Audit Committee met sevenfive (5) times. The current members of the Audit Committee are Messrs. SellierPashke and KilmerStrome and Ms. Wachtel, each of whom is independent for Audit Committee purposes under the rules and regulations of the SEC and the listing standards of NASDAQ. Mr. SellierStrome currently chairs the Audit Committee.
The Board of Directors has determined that Mr. SellierStrome is an “audit committee financial expert” as defined in Item 407(d)(5)(ii) ofRegulation S-K and that he, therefore, also satisfies the “financial sophistication” requirement of the NASDAQ rules. The designation does not impose on Mr. SellierStrome any duties, obligations or liabilities that are greater than are generally imposed on him as a member of the Audit Committee and the Board of Directors.Board.
Most importantly, the Audit Committee is overseeing ExOne’s remediation of the material weaknesses ExOne has identified in its internal controls over financial reporting. In connection with our initial public offering (“IPO”), ExOne concluded that there are material weaknesses in the design and operating effectiveness of ExOne’s internal control over financial reporting. A material weakness is a control deficiency, or combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of annual or interim financial statements will not be prevented or detected on a timely basis.
ExOne’s material weaknesses in internal control over financial reporting are:
The design and operating effectiveness of internal controls related to our financial reporting process are not sufficient to allow for accurate and timely reporting of our consolidated financial results. We do not maintain adequate control with respect to the application of accounting principles generally accepted in the United States of America (“GAAP”). This is principally due to a lack of personnel with adequate knowledge and experience in GAAP. As a result, we record certain manual, post-close adjustments in order to prepare our consolidated financial statements.
The design and operating effectiveness of internal controls related to our information technology systems is not sufficient to allow for accurate and timely reporting of our consolidated financial results. Each of our primary locations (United States, Germany, Italy and Japan) utilizes separate and distinct information technology platforms to record, process and summarize transactions. As a result, our process to consolidate and report financial information is substantially a manual process and inherently subject to error.
The design and operating effectiveness of internal controls related to our consolidation process and management’s review of our consolidated financial results does not operate at a level of precision sufficient to allow for accurate and timely reporting of our consolidated financial results. Our consolidation process is substantially a manual process and inherently subject to error. Further, because of internal control weaknesses identified with respect to our financial reporting process and information technology systems, management is unable to complete an adequate review of either subsidiary or consolidated financial results at a sufficient level of precision to prevent or detect misstatements. As a result, we record certain manual, post-close adjustments in order to prepare our consolidated financial statements.
With the oversight of senior management and our Audit Committee, we have put into place a comprehensive plan to remediate the underlying causes of the identified material weaknesses. Our plan throughout 2014 and into 2015 is to continue to take additional steps and implement measures to remediate the underlying causes of the identified material weaknesses including:
These ongoing efforts, collectively, give ExOne the opportunity to remediate the material weaknesses in internal controls when ExOne reports its results for the 2015 fiscal year.
The Compensation Committee is charged with the following responsibilities, among others:
Reviewing and approving annually the corporate goals and objectives applicable to the compensation of the Chief Executive Officer, evaluating at least annually the Chief Executive Officer’s performance in light of those goals and objectives, and determining and approving the Chief Executive Officer’s compensation level based on this evaluation;
Reviewing and making recommendations regarding the compensation of all other executive officers;
Administering and making recommendations to the Board of Directors with respect to our 2013 Equity Incentive Plan (including any plans adopted under the 2013 Equity Incentive Plan) and any other compensation plans;
Reviewing and approving the executive compensation information included in ExOne’s Annual Report and Proxy Statement;
Reviewing and approving or providing recommendations with respect to any employment agreements or severance arrangements or plans;plans, including any benefits to be provided in connection with a change in control, for the Chief Executive Officer and other executive officers;
Determining stock ownership guidelines for the Chief Executive Officer and other executive officers and monitoring compliance with such guidelines;
Reviewing and approving or providing recommendations with respect to all employee benefit plans;
Reviewing the Company’s incentive compensation arrangements to determine whether they encourage excessive risk-taking, reviewing and discussing at least annually the relationship between risk management policies and practices and compensation, and evaluating compensation policies and practices that could mitigate any such risk;
Reviewing and recommending for Board approval the proposals regarding“say-on-pay” and the frequency of the“say-on-pay” vote, if required to be included in the Company’s Proxy Statement; and
Developing and recommending to the Board for approval officer succession plans and monitoring and updating such plans as needed.
During 2014,2017, the Compensation Committee met six (6) times. The current members of our Compensation Committee are Messrs. KilmerSemple and SempleStrome and Ms. Wachtel, each of whom is independent for Compensation Committee purposes under the rules and regulations of the SEC and the listing standards of NASDAQ (including those that became effective in 2014).NASDAQ. Ms. Wachtel currently chairs the Compensation Committee. Each of the members also is a “non-employee“non-employee director” within the meaning ofRule 16b-3 of the Exchange Act and an “outside director,” as that term is defined under Section 162(m) of the Internal Revenue Code of 1986.Act.
OurNeither our Executive Chairman nor Chief Executive Officer will not participateparticipates in the determination of his own compensation or the compensation of directors. However, he will makeeach makes recommendations to the Compensation Committee regarding the amount and form of the compensation of the other executive officers and key employees, and he will participateeach participates in the Compensation Committee’s deliberations about the compensation of the other executive officers and key employees. No other executive officers or employees will participate in the determination of the amount or form of the compensation of executive officers or directors.
ExOne has not retained any compensation consultants. In March 2015,2017, the Compensation Committee identifieddid not engage an independent compensation consultant that the Committee may engage to advise it on various executive compensation matters from time to time as the Committee may request. At that time, the Committee determined that the identified consultant was independent.it.
The Compensation Committee shall have the authority to delegate any of its responsibilities, along with the authority to take action in relation to such responsibilities, to one or more subcommittees as the Compensation Committee may deem appropriate in its sole discretion. The Compensation Committee reviews its charter annually to ensure that it complies with NASDAQ listing requirements.
Compensation Committee Interlocks and Insider Participation
None of Ms. Wachtell,Wachtel, Mr. KilmerStrome, or Mr. Semple, the current members of our Compensation Committee, has been an officer or employee of ExOne. None of our executive officers havehas served as a member of a Compensation Committeecompensation committee or the Boardboard of Directorsdirectors of any other entity that has an executive officer serving as a member of our Board of Directors or our Compensation Committee.
Nominating and Governance Committee
The Nominating and Governance Committee of our Board of Directors is charged with the following responsibilities, among others:
Determining qualifications, qualities, skills, and other expertise required to be a director and developing and recommending to the Board for its approval, criteria to be considered in selecting nominees for director;
Identifying and recommending candidates to fill vacancies on the Board of Directors and for election by the stockholders;
Recommending committee assignments for directors to the Board of Directors;Board;
Monitoring and assessing the performance of the Board of Directors and individualnon-employee directors;
Reviewing compensation received by directors for service on the Board of Directors and its committees; and
Developing and recommending to the Board of Directors appropriate corporate governance policies, practices and procedures for our Company.
During 2014,2017, the Nominating and Governance Committee met four (4) times. The current members of our Nominating and Governance Committee are Messrs. Semple, KilmerPashke and Sellier,Strome, each of whom is independent under the listing standards of NASDAQ. Mr. Semple currently chairs the Nominating and Governance Committee.
The Strategic Oversight Committee of our Board of Directors is charged with overseeing the strategic direction of the Company.
The Nominating and Governance Committee believes that members of the Board of Directors should have certain minimum qualifications, including having the highest professional and personal ethics and values, broad experience at the policy-making level in business, government, education, technology or public interest, a commitment to enhancing stockholder value, and sufficient time to carry out their duties and to provide insight and practical wisdom based on experience. The Nominating and Governance Committee also considers such other guidelines and various relevant career experience, relevant skills, such as an understanding of the telecommunications and high-speed Internet provider industries, financial expertise, diversity and local and community ties. While we do not maintain a formal policy requiring the consideration of diversity in identifying nominees for director, diversity is, as noted above, one of the factors our Nominating and Governance Committee considers in conducting its assessment of director nominees. We view diversity expansively to include those attributes that we believe will contribute to a Board of Directors that, through a variety of backgrounds, viewpoints, professional experiences, skills, educational experiences and other such attributes, is best able to guide ExOne and its strategic direction. Candidates for director nominees are reviewed in the context of the currentmake-up of the Board of Directors.Board. The Nominating and Governance Committee will conduct any appropriate and necessary inquiries into the backgrounds and qualifications of possible candidates after considering the function and needs of the Board of Directors.Board. The Nominating and Governance Committee meets to discuss and consider such candidates’ qualifications and then selects a nominee for recommendation to the Board of Directors.Board.
The Nominating and Governance Committee will consider director candidates recommended by stockholders, although a formal policy has not been adopted with respect to consideration of such candidates because stockholder recommendations may be informally submitted and considered by the Nominating and Governance Committee under its charter. Director candidates recommended by stockholders will be evaluated by the Nominating and Governance Committee using the same criteria as candidates identified by the Board of Directors or the Nominating and Governance Committee for consideration. If a stockholder of ExOne wishes to recommend a director candidate for consideration by the Nominating and Governance Committee, the stockholder should refer to pages 5-6page 6 of this Proxy Statement for information regarding advance notice. The stockholder recommendation should be delivered to the Corporate Secretary of ExOne at our principal executive offices and should include:
To the extent reasonably available, information relating to such director candidate that would be required to be disclosed in a proxy statement pursuant to Regulation 14A under the Exchange Act, in which such individual is a nominee for election to the Board of Directors;Board;
The director candidate’s written consent to (i) if selected, be named in ExOne’s Proxy Statement and proxy; and (ii) if elected, serve on the Board of Directors;Board; and
Any other information that such stockholder believes is relevant in considering the director candidate.
Code of Ethics and Business Conduct
Our Board of Directors has adopted a code of ethics and business conduct. The code of ethics and business conduct applies to all of our employees, officers and directors. The full text of our code of ethics and business conduct is posted on our website athttp://www.exone.com under the Corporate Governance section within the Investor Relations section. We will disclose any future amendments to the code of ethics and business conduct that relate to our executive officers on our website, as well as any waivers of the code of ethics and business conduct that relate to the executive officers of ExOne.
Stockholder Communications with the Board of Directors
Stockholders may communicate with our Board, of Directors, either generally or with a particular director, by writing to the following address:
The Board of Directors
c/o Chief Legal OfficerGeneral Counsel and Corporate Secretary
The ExOne Company
127 Industry Boulevard
North Huntingdon, PA 15642
Each such communication should set forth (i) the name and address of such stockholder, as they appear on ExOne’s books, and if the stock is held by a nominee, the name and address of the beneficial owner of the stock, and (ii) the class and number of shares of ExOne’s stock that are owned of record by such record holder and beneficially by such beneficial owner.
The person receiving such stockholder communication shall, in consultation with appropriate members of the Board of Directors as necessary, generally screen out communications from stockholders to identify communications that are (i) solicitations for products and services, (ii) matters of a personal nature not relevant for stockholders, or (iii) matters that are of a type that render them improper or irrelevant to the functioning of the Board of Directors and ExOne.
Attendance at Annual Meeting of Stockholders by the Board of Directors
We do not have a formal policy regarding attendance by members of the Board of Directors at our Annual Meeting of Stockholders. All directors and director nominees attended the 20142017 Annual Meeting of Stockholders. Directors are encouraged, but not required, to attend the 20152018 Annual Meeting of Stockholders.
TRANSACTIONS WITH RELATED PERSONS
Approval of Related PartyPerson Transactions
On March 26, 2013, the Board of Directors ofUnder its written policy, The ExOne adopted ourCompany Policy and Procedures with Respect to Related Person Transactions. Under the written policy,Transactions, ExOne will enter into or ratify related person transactions involving more than $50,000 only when the Board, of Directors, acting through the Audit Committee, has determined that the transaction in question is in, or is not inconsistent with, the best interests of ExOne. Prior to entering into a related person transaction, the related person shallis required to provide notice to the Chief Legal OfficerExOne’s chief legal officer of the facts and circumstances of the transaction. Upon determining that the proposed transaction involves an amount greater than $50,000 and is a related person transaction, the proposed transaction shallwill be submitted to the Audit Committee for consideration. The Audit Committee shallwill consider all relevant facts and circumstances and approve only those related person transactions that are in the best interests of ExOne and its stockholders.
Related Person Transactions Between
Revolving Credit Facility with LBM Holdings, LLC
On March 12, 2018, the Company and its ExOne Americas LLC and Entities ControlledExOne GmbH subsidiaries, as guarantors (collectively, the “Loan Parties”), entered into a Credit Agreement and related ancillary agreements with LBM Holdings, LLC (“LBM”), a company controlled by Mr. Rockwell,
ExOne has purchased certain raw materials our Executive Chairman (a related person), relating to a $15,000,000 revolving credit facility (the “Credit Agreement”) to provide additional funding for working capital and components, website design servicesgeneral corporate purposes. The Credit Agreement provides for a term of three years (through March 12, 2021) and bears interest at a rate of one month LIBOR plus an applicable margin of 500 basis points (approximately 6.7% at inception). The Credit Agreement requires a commitment fee of 75 basis points, or 0.75%, on the corporate use of an airplane and leased office space from related entities under common control by our Chairman and Chief Executive Officer, Mr. Rockwell. The cost of these products and/or services was approximately $90,000 for the year ended December 31, 2014. Noneunused portion of the transactions met a threshold requiring review and approvalfacility, payable monthly in arrears. In addition, anup-front commitment fee of 125 basis points, or 1.25% (approximately $187,500), was required at closing. Borrowings under ExOne’s related party transactions policy described above.
During 2014, ExOne also received the benefitCredit Agreement are required to be in minimum increments of $1,000,000. The Company may terminate or reduce the credit commitment at any time during the term of the corporate useCredit Agreement without penalty. The Company may also make prepayments against the Credit Agreement at any time without penalty. Borrowings under the Credit Agreement have been collateralized by the accounts receivable, inventories and machinery and equipment of the Loan Parties. The total estimated value of collateral was in significant excess of the maximum capacity of the Credit Agreement at inception. Prior to entering into the credit facility with LBM, the Audit Committee approved the transaction pursuant to The ExOne Company Policy and Procedures with Respect to Related Person Transactions. There have been no borrowings under the Credit Agreement since its inception.
At the time of execution of the Credit Agreement, the $15,000,000 in available loan proceeds were deposited into an airplane fromescrow account with an unrelated, third party financial institution pursuant to a related entityseparate Escrow Agreement by and among the parties. Loan proceeds held in escrow will be available to us upon our submission to the escrow agent of a loan request. Such proceeds will not be available to LBM until paymentin-full of the obligations under common control by Mr. Rockwell for no consideration.
Also in 2014, the Company entered into a mutually beneficial arrangement withCredit Agreement and termination of the titanium powder and atomization company Puris, LLP (“Puris”), a related entity under common control by Mr. Rockwell. Pursuant to this arrangement, the Company provided Puris with a 3D printing machine, ancillary equipment, and installation trainingCredit Agreement. Payments of principal and other services valued at $1.0 million in the aggregate. In return, the Company received consideration in the form of assets and cash valued at $1.0 million in the aggregate.
Consulting Transaction with Mr. Sack
In December 2014, the Company entered into a consulting arrangement with Hans J. Sack who was subsequently appointedobligations will be made to the Board on December 17, 2014. Total considerationescrow agent, while interest payments will be made directly to LBM. Provided there exists no potential default or event of default, the Credit Agreement and Escrow Agreement prohibit any acceleration of repayment of any amount outstanding under the consulting arrangement was approximately $75,000,Credit Agreement and prohibit termination of which $25,000 was paid in 2014 (as reported under “2014 Director Compensation”) and $50,00 was paid in 2015. In connection with his appointment to the Board, approvalCredit Agreement or withdrawal from escrow of this arrangement was approved under ExOne’s related party transactions policy described above.any unused portion of the Credit Agreement.
20142017 Director Compensation
Our Nominating and Corporate Governance Committee of the Board is responsible for reviewing and setting the compensation of our directors. The Nominating and Corporate Governance Committee approved, and ournon-employee directors received, the following compensation for 2014:2017:
Annual Cash Retainercash retainer of $40,000;$50,000;
Annual fee for Chair of the Audit Committee of $5,000;
Annual fee for Chair of the Compensation Committee of $5,000;
Annual fee for the Lead Director of $5,000;
Annual fee for Chair of the Strategic Oversight Committee of $5,000; and
Grant of 1,2505,000 shares of commonrestricted stock as a stock bonus award to eachnon-employee director then serving on March 20, 2014.February 10, 2017, which fully vested on February 10, 2018 (except with respect to Mr. Kilmer, as described below).
The following table shows the compensation paid to ournon-employee directors in 2014.2017.
Director | Fees paid in cash ($)(1) | Stock award ($)(2) | Total ($) | Fees paid in cash ($)(1) | Stock award ($)(2) | Total ($) | ||||||||||||||||||
Raymond J. Kilmer | $ | 40,000 | $ | 49,250 | $ | 89,250 | ||||||||||||||||||
Hans J. Sack(3) | $ | 25,000 | — | $ | 25,000 | |||||||||||||||||||
Victor Sellier | $ | 45,000 | $ | 49,250 | $ | 94,250 | ||||||||||||||||||
John Irvin | $ | 50,000 | $ | 50,500 | $ | 100,500 | ||||||||||||||||||
Raymond J. Kilmer(3) | $ | 39,810 | $ | 40,040 | $ | 79,850 | ||||||||||||||||||
Gregory F. Pashke | $ | 50,000 | $ | 50,500 | $ | 100,500 | ||||||||||||||||||
Lloyd A. Semple | $ | 45,000 | $ | 49,250 | $ | 94,250 | $ | 55,000 | $ | 50,500 | $ | 105,500 | ||||||||||||
William F. Strome | $ | 55,000 | $ | 50,500 | $ | 105,500 | ||||||||||||||||||
Bonnie K. Wachtel | $ | 45,000 | $ | 49,250 | $ | 94,250 | $ | 55,000 | $ | 50,500 | $ | 105,500 |
(1) | This column includes the annual cash retainer paid to eachnon-employee director and annual fees paid to |
(2) |
(3) | The Board accepted the resignation of Mr. |
Directors who are also full-time officers or employeesMr. Rockwell, as an officer of ExOne (Messrs. Burns, Irvin and Rockwell) dothe Company, does not receive any additional compensation for serving as directors.a director.
2015 Director Compensation
Our Nominating and Corporate Governance Committee of the Board is responsible for reviewing and setting the compensation of our directors. The Nominating and Corporate Governance Committee has approved the following compensation for our non-employee directors for 2015:
Annual cash retainer of $40,000;
Annual fee for Chairman of the Audit Committee of $5,000;
Annual fee for Chairman of the Compensation Committee of $5,000;
Annual fee for the Chairman of the Strategic Review Committee of $5,000;
Annual fee for the Lead Director of $5,000; and
Grant of 3,500 shares of restricted common stock as a stock bonus award to each non-employee director on February 6, 2015. The restricted stock will vest in full on February 6, 2016 provided that such director continues to provide services to ExOne at the time of vesting.
COMPENSATION OF NAMED EXECUTIVE OFFICERS
ExOne isAs an emerging growth company. As a result,company, ExOne is permitted to exclude a compensation discussionCompensation Discussion and analysisAnalysis from this Proxy Statement and to omit some disclosure on compensation that is required of larger publicnon-emerging growth companies. In addition, as an emerging growth company ExOne is not required to conduct a say-on-pay“say-on-pay” advisory vote on executive compensation.
Compensation Discussion and Analysis
Although ExOne is permitted under the SEC rules to omit a Compensation Discussion and Analysis, theThe Compensation Committee and management are committed to providing transparent disclosure to ExOne’s investors on the compensation of our executives. Accordingly, the Compensation Committee and management have elected to provide the following Compensation Discussion and Analysis on a voluntary basis.
Overview
ExOne’sFor purposes of this discussion, we define “Named Executive Officers” to include James L. McCarley, Brian Smith, Mark Cianci, JoEllen Lyons Dillon and S. Kent Rockwell. Disclosure about executive compensation is performance driven.required in this Proxy Statement for:
While the Compensation Committee did not formalize an incentive based program for executives in 2014, it carefully considered the Company’s performance in 2014 when making compensation decisions.
In light of 2014 performance short of the Company’s goals, ExOne’seach person who served as our Chief Executive Officer received minimal compensation above his base salary. In addition, the President and Chief Operating Officer stepped down in December 2014 from that role to another position within the Company. No executive received a discretionary cash bonus for 2014. The Committee did, however, approve in 2014 equity grants to several executives with three-year vesting to reward individual performance while also encouraging and maintaining long-term stockholder focus.
The Compensation Committee and full Board have taken several actions for 2015:
Approved an incentive award to the executive team that ties payment to the achievement of targeted revenue and gross margins.2017 (Mr. McCarley),
Adopted a stock retention policy in early 2015 that applies to equity awards made to directors andeach of the next two most highly compensated executive officers to further align the interestswho were serving as executive officers as of stockholdersDecember 31, 2017 (Messrs. Smith and ExOne directorsCianci), and executives.
Identified an independent compensation consultant that it may engage to help structure and implement a comprehensiveformer executive compensation program tailoredofficer who would have qualified under the second bullet above but for the Company.
Approved a clawback policyfact that permits the Board of Directorsindividual did not continue to recover all or any portion of any “Performance-Based Compensation” to anyserve as an executive officer withinas of December 31, 2017 (Ms. Dillon).
Disclosure of Mr. Rockwell’s compensation is not required in this Proxy Statement and is being voluntarily provided by ExOne. Mr. Rockwell is not the three (3) year period immediately precedingnext most highly compensated executive officer of ExOne.
Any references to “executive officers” include the date on which ExOne is required to prepare an accounting restatement due to material noncompliance with any financial reporting requirements.
The Compensation Committee is also considering the design and implementationexecutive officers listed in “Executive Officers of a long-term incentive plan to reward performance over multiple year periods with the goalExOne” section of having a plan in place for 2016 compensation.this Proxy Statement.
Compensation GoalPay Philosophy
The Compensation Committee has responsibility for reviewing the compensation of ExOne’s Executive Chairman and Chief Executive Officer andas well as the executivesother executive officers of the Company and making recommendationrecommendations about this compensation to the Board.
The goal ofIn February 2018, the Compensation Committee when consideringcodified ExOne’s compensation goals and governing principals through adoption of a written Pay Philosophy Governing Executive Compensation (the “Pay Philosophy”). As described in the Pay Philosophy, ExOne’s compensation program has three principal goals:
1. | To attract and retain executives who can excel in our innovative, fast-changing and competitive industry; |
2. | To align the interests of management with creation of long-term shareholder value; and |
3. | To motivate and reward management for performance that advances ExOne’s goals. |
These goals are balanced and aligned with our plans to conserve cash for operations while the Company advances toward generating positive cash flows from operations.
Our compensation plan relies on a mix of base salary and equity compensation. We have not historically relied on a performance-based bonus plan because of the challenge in setting fixed targets in an immature and fast-changing market. The philosophy behind each component of executive officer compensation is as follows:
Salary. Salary is paid to attract and retain qualified executives, to recognize consistent good performance over a number of years, and to provide a base level of income regardless of fluctuations in the Company’s stock price and performance. Our executive salaries are intended to be set at or below comparable positions in industry.
Bonus.The Company may institute a performance-based bonus plan based on meeting financial or other predetermined objectives, to motivate and reward performance over a fiscal year, payable in cash, equity or a combination thereof under our 2013 Equity Incentive Plan (the “2013 Equity Incentive Plan”).
Long-Term Equity Incentives.Our long-term incentives are typically granted in the form of restricted stock or stock options under our 2013 Equity Incentive Plan. They are intended to reward executives for the creation of shareholder value as reflected in a higher Company stock price and are also intended to encourage retention of high performing executives over a number of years.
Benefits. We provide our executives with other benefits that we believe are reasonable, competitive and consistent with our overall executive compensation is to provide performance based compensation to ourprogram.
Retirement Benefits. Our executives may participate in the Company’s 401(k) defined contribution employee savings and to retain and reward leadersinvestment plan, in which the Company currently makes discretionary matching contributions of 50% of the first 8% of an executive’s base salary, subject to applicable Internal Revenue Code limits and in accordance with plan documents. ExOne does not offer a pension plan or a supplemental retirement plan.
Limited Perquisites. The Company who create long-term value for our stockholders. This goal affects the compensation elements we use and our compensation decisions.does not provide any perquisites to its Chief Executive Officer other than a company contribution to a 401(k) retirement plan described above. ExOne also provides a car allowance to Mr. Smith.
Significant Equity Ownership Creates Strong Alignment Between Our Leadership Team and Our Stockholders
We believe that the interests of the ExOneExOne’s executive teamofficers are strongly aligned with the interests of our stockholders. Four outstockholders through equity ownership. Our Executive Chairman, Mr. Rockwell, is ExOne’s largest beneficial owner (as the beneficial owner of five membersapproximately 28.4% of ExOne’sour outstanding Common Stock as of March 19, 2018). In addition, certain of our other executive teamofficers have significant ownership in the Company having invested their own money in ExOne before or in connection withand all of them have been granted equity incentive awards for their service to the IPO. Chairman and Chief Executive Officer Kent Rockwell is ExOne’s largest beneficial owner, controlling over 20% of ExOne common stock.Company. This ownership provides a strong foundation of alignment between ExOne stockholders and the ExOne management team.
20142017 Compensation Considerations
For 2014, the Compensation Committee considered three elements of compensation:
Base salary
Cash bonus or incentive compensation
Equity incentive compensation
Chairman and Chief2017, our Named Executive Officer Kent Rockwell is paidOfficers received a base salary of $300,000 per year. Our other executive officers are paid comparable base salaries. The amountcombination of base salary and equity incentive awards with the exception of Mr. Rockwell who received only a salary. The Compensation Committee determined not to establish a short-term cash bonus or an annual incentive award plan for 2017.
Salary for each executive dependsof our Named Executive Officers (except Mr. Rockwell) is based on the scope of the executive’sindividual’s responsibility, his or her leadership skills, and values, and his or her performance and length of service. Mr. Rockwell receives a salary of $50,000 per year for his services as Executive Chairman.
2014 Performance Resulted in No Discretionary Cash Bonus for 2014
In 2014, ExOne made important progress but fell short of its goals. The Company achieved $43.9 million in revenues driven by 45% growth in global non-machine revenue 2014. In addressing compensation decisions for 2014, the Compensation Committee weighed ExOne’s 2014 performance. ExOne Chairmanelected to award stock options to Messrs. Cianci and Chief Executive Officer received minimal compensation above his base salary. In December 2014,McCarley, and restricted stock to Mr. Smith and Ms. Dillon, as incentive awards for 2017 with the goal of further aligning the interests of our Presidentexecutives with those of our stockholders as well as to retain and Chief Operating Officer stepped down from that role to another position withinreward the Company. No executive received a discretionary cash bonusexecutives for 2014.creating long-term value for our stockholders.
2013 Equity Incentive Plan
On January 24, 2013, ourThe Board of Directors adopted our 2013 Equity Incentive Plan (the “Plan”).on January 24, 2013. The 2013 Equity Incentive Plan was approved by stockholders on August 19, 2013. The purpose of the 2013 Equity Incentive Plan is to provide incentives to attract, retain and motivate eligible persons whose present and potential contributions are important to the success of ExOne and its subsidiaries, by offering them an opportunity to participate in ExOne’s future performance through the grant of awards. The 2013 Equity Incentive Plan permits a variety of awards to be made at the discretion of the Compensation Committee including stock options, restricted stock, restricted stock units,
stock bonus awards, performance awards and stock appreciation rights. The 2013 Equity Incentive Plan will terminate January 24, 2023, unless it is terminated earlier by our Board. The 2013 Equity Incentive Plan is administered by the Compensation Committee.
2014Equity grants under the 2013 Equity Incentive Awards
ThePlan are generally made two business days after the date of approval by the Compensation Committee granted equity incentive awardsCommittee. No person is eligible to certainreceive more than 100,000 shares in any calendar year under the 2013 Equity Incentive Plan, except that ExOne executives in 2014. The grants weremay choose to issue a new employee up to 500,000 shares under the plan in the formcalendar year in which the employee commences employment. The total grant pool is determined with reference to industry practice and impact on the Company’s capitalization. Total awards under the 2013 Equity Incentive Plan are limited by share count of eitherno more than 1,992,241 shares, which is 15% of the Company’s total outstanding shares immediately following its initial public offering. Individual awards are determined on a discretionary basis, principally with reference to an executive’s responsibility, salary structure and performance. Restricted stock options or restricted stock. Each award vests in equal parts over a three-year period.
We believe that equity awards reward individual performanceawarded under the 2013 Equity Incentive Plan is granted at fair market value and also maintain long-term stockholder focus. We also believe that equity awards serve as a retention tool for key membersthe exercise price of our management team. In determining grant amounts,each stock option awarded under the Compensation Committee considers each executive’s position with2013 Equity Incentive Plan is the Company, the executive’s responsibilities with the Company, the executive’s base salary and any other compensation awarded in that year. Stock options have value only to the extent that theclosing price of ExOne stock rises between the grant date and the exercise date. Restricted stock rewards and retains the executives by offering them the opportunity to retain the ExOne stock if they are still employed by us on the date of grant. Equity grants are subject to vesting requirements as determined by the restrictions lapse.Committee.
20152018 Annual Incentive PlanProgram
In March 2015,On February 7, 2018, the Compensation Committee adopted the 2015 ExOne Umbrella Annual Incentive Plan2018 senior executive annual incentive program (the “Program”), which is part of a comprehensive annual incentive compensation program that will be implemented throughout the Company.
The Program provides an opportunity for employees. The plan has been structured as a subplanperformance-based compensation to senior executive officers of the ExOne 2013 Equity Incentive Plan.
Company (excluding the Executive Chairman) (each an “Executive”), among others. The plan is an umbrella plan that provides a bonus opportunity to ExOne employees selected by the Compensation Committee, which include the Chairman and Chief Executive Officer. The bonus opportunitytarget annual incentive award for each employeeExecutive is expressed as a percentage of base salary. Paymentsalary – 50% for the Chief Executive Officer and 35% for the other Executives. Achievement of the bonusaward will be conditioned on the Company meeting targeted revenue and gross margincertain goals for 2015. Payment against each financial performance measure2018 relating to revenue growth, adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) (as described below), total cash and restricted cash (net of any debt incurred) and stockholder value (collectively, the “Goals”). Adjusted EBITDA is defined as net income (loss), as calculated under accounting principles generally accepted in the United States, plus interest expense, provision (benefit) for income taxes, depreciation and amortization, equity-based compensation, and other (income) expense – net. Added to adjusted EBITDA will only commence if the minimum threshold of 95%also be certain qualifying research and development expenses, Program expenses and other costs.
An Executive will earn payment of the performanceaward based on achievement of the equally-weighted Goals, as then adjusted by a multiplier that could decrease or increase the award depending on the number of goals achieved. In no event may payment exceed 125% of the target is achieved. Thereafter, paymentsannual incentive award for each Executive. The Compensation Committee retains negative discretion over final payment amounts.
Final payment will be tiedmade to the percentage level of performance achieved, with a maximum bonus of 125% of salary that can be earned.
After calculation of the formulaic payoutExecutives 100% in common stock based on the Company’s actual performance for 2015,closing stock price of the plan permitsCompany on the Compensation Committee to exercise negative discretion to reduce an executive’s bonus based on an annual individual performance review. In addition, the measurementdate of specific individual performance goals developed for an executive may also be used to reduce the payout. In addition, the Compensation Committee at all times has the discretion to reduce or eliminate all payment or awards under the plan for any reason without regard to any particular factors. Payment of earned awards will be 50% in cash2013 Equity Incentive Plan. The performance period begins January 1, 2018 and 50% in stock options and/or restricted stock unless the Compensation Committee elects a different form or mix of payment. In addition,ends on December 31, 2018, and continued employment through the payment date of payment is required.
This plan is structured to comply with the requirements of Section 162(m) of the Internal Revenue Code.
No Perquisites
The Company does not provide any perquisites to its Chief Executive Officer or other executive officers other than a Company contribution to a 401(k) retirement plan sponsored by the Company.
Benefits
We provide our named executives with other benefits that we believe are reasonable, competitive and consistent with our overall executive compensation program.
Clawback Policy and Other Actions Available to ExOne for Misconduct
In March 2015, theThe Compensation Committee has adopted a clawback policy that enables ExOne to recover all or any portion of any “Performance-Based Compensation” granted or paid to any current or former “Section 16 Officer”, or in which any current or former Section 16 Officer became vested, at any time within the three (3) year period immediately preceding the date on which ExOne is required to prepare an accounting restatement due to material noncompliancenon-compliance with any financial reporting requirements under the securities laws, as determined by the Audit Committee and confirmed by our independent registered public accounting firm.
In addition, in cases of detrimental misconduct by an executive officer, the Board may also take a range of other actions to remedy the misconduct, prevent its recurrence, and discipline the individual as appropriate, including, depending on the facts and circumstances, terminating the individual’s employment. These remedies would be in addition to, and not in lieu of, any actions imposed by law enforcement agencies, regulators or other authorities.
Stock Retention Policy and Equity Grant Practices
Stock Retention PolicyPolicy.. In February 2015, the The Compensation Committee has adopted a stock retention policy that requires our directors and our Section 16 executive officers to retain 50% of all shares received on the vesting of equity awards (net of any shares withheld or sold to pay exercise price or taxes). All shares must be retained for a period of at least one year after the vesting. Once theone-year period has ended, directors and executives may sell shares so long as the director or executive holds a total minimum amount equal to two times such director’s annual retainer or such executive’s base salary.
Anti-hedging policy.We do not believe our executive officers or directors should speculate or hedge their interests in our stock. We therefore prohibit them (in our insider trading policy) from making short sales of ExOne stock or from purchasing or selling options, puts, calls, straddles, equity swaps or other derivative securities that are directly linked to ExOne stock.
Anti-pledging policy.In addition, our insider trading policy prohibits our executive officers and directors from pledging ExOne stock.
Equity grant practices.All equityEquity grants are generally made two business days after the date of approval by the Compensation Committee. The exercise price of each stock option awarded under the 2013 Equity Incentive Plan is the closing price of ExOne stock on the date of grant. ExOne Board and Committeecommittee meetings are generally scheduled at least a year in advance and without regard to anticipated earnings releases or otherunanticipated major company announcements.
Other Compensation Practices and Policies
Compensation Committee Oversees Executive Compensation and Succession Planning. The Compensation Committee has the primary responsibility for helping the Board of Directors develop and evaluate potential candidates for executive positions and for overseeing the development of executive succession plans. As part of this responsibility, the Compensation Committee oversees the design, development and implementation of the compensation program for the Chief Executive Officer and the other executives.executive officers. Our Chief Executive Officer assists the Compensation Committee in administering our compensation program.
Limited Use of Compensation Consultant. For 2014, theThe Compensation Committee has previously engaged the use of a compensation consultant for special assignments but did not useengage the services of a compensation consultant. In March 2015, the Compensation Committee identified an independent compensation consultant that it may engage to advise it on various executive compensation matters from time to time as the Committee may request. At that time, the Committee determined that proposed compensation consultant is independent.in 2017.
Peer group comparisons.The Compensation Committee reviews many factors in setting pay. It does not target a peer group or percentile within a peer group in exercising its judgment about the types and amounts of compensation the Company provides.
Employment AgreementsArrangements with Named Executive Officers
We haveJames L McCarley.In connection with Mr. McCarley’s appointment as Chief Executive Officer, the Company entered into an employment agreement with Mr. Rockwell, for a renewed one yearMcCarley, the initial term endingof which commenced on September 1, 2015. The employment agreement with Mr. Rockwell will automatically extend for an additional one year termAugust 19, 2016 and terminates on each subsequent anniversary, unless not later than 90 days immediately preceding any anniversary, we or Mr. Rockwell has given written noticeDecember 31, 2018. Pursuant to the other that they do not wish to extend the employment agreement. Under the employment agreement, Mr. RockwellMcCarley is entitled to receive an annual base salary and is eligible to participate in an annual bonus plan on terms established from time to timeof $375,000, which may be adjusted by the Board. During the term of the employment agreement, Mr. Rockwell isCompensation Committee upon its annual review thereof, and he will be eligible to participate in any annual bonus plan or long-term incentive compensation plan andmaintained by the Company, in both cases on the terms established from
time-to-time by the Company’s Board of Directors or its Compensation Committee. Furthermore, under the employment agreement, Mr. McCarley may participate in all employee benefit and fringe benefit plans and arrangements made available by the Company to the Company’s employees generally or its executives.
The employment agreement provides, among other matters, that if the executive resigns for “good reason” (as defined in the employment agreement) or is terminated without “cause” (as defined in the employment agreement) and in each such case has timely delivered a release of claims, he is entitled to receive, among other severance payments and benefits, an amount equal to one times his then-current base salary and one timesapro-rata portion of his bonus for the target annual bonus amountyear of termination (subject to his compliance with the confidentiality,non-competition andnon-solicitation restrictions set forth in the employment agreement) and payment of the executive’s COBRA health insurance continuation premium for the COBRA continuation period (generally 18 months) or until such time as the executive is employed, whichever is earlier. The confidentiality provisions survive the termination of Mr. Rockwell’sMcCarley’s employment with us and thenon-competition andnon-solicitation provisions survive for a period of two yearsone year following the termination of his employment.
We alsoBrian Smith. Mr. Smith is anat-will employee and does not have an individual employment, agreementsseverance orchange-of-control agreement.
Mark Cianci. Mr. Cianci was anat-will employee who resigned from the Company effective February 9, 2018.
S. Kent Rockwell. Our employment agreement with Mr. Hoechsmann, which extendRockwell automatically extended for an additional one year term ending on September 1, 2018, and will continue to automatically be extended for a newone-year term on each one year anniversary thereof unless terminated with three months’not later than 90 days immediately preceding any anniversary, we or Mr. Rockwell has given written notice prior to the end of any fiscal quarter.other that they do not wish to extend the employment agreement.
Under the employment agreement, Mr. HoechsmannRockwell is entitled to receive an annual base salary, which may be adjusted by the Board upon its annual review thereof, and he is eligible to participate in an annual bonus andplan on terms established fromtime-to-time by the Board. Mr. Rockwell currently receives a base salary of $50,000. During the term of the employment agreement, Mr. Rockwell is eligible to participate in any long termlong-term incentive plan, and in all employee benefit and fringe benefit plans and arrangements made available to the Company’s employees generally or its executives.
The agreements alsoemployment agreement provides, among other matters, that all inventionsif the executive resigns for “good reason” (as defined in the employment agreement) or patents developed byis terminated without “cause” (as defined in the employment agreement) and in each such case has timely delivered a release of claims, he is entitled to receive, among other severance payments and benefits, an amount equal to one times his then-current base salary, one times the target annual bonus amount (subject to his compliance with the confidentiality,non-competition andnon-solicitation restrictions set forth in the employment agreement), apro-rata portion of his target bonus for the year of termination and payment of the executive’s COBRA health insurance continuation premium for the COBRA continuation period (generally 18 months) or until such time as the executive is employed, whichever is earlier. The confidentiality provisions survive the termination of Mr. HoechsmannRockwell’s employment with us and thenon-competition andnon-solicitation provisions survive for a period of two years following the termination of his employment.
JoEllen Lyons Dillon. We entered into an executiveat-will employment agreement with Ms. Dillon on August 4, 2017, which replaced Ms. Dillon’s previous employment agreement with the Company dated March 7, 2013. Pursuant to the executiveat-will employment agreement, Ms. Dillon continued her employment with the Company in a new role as Vice President – Strategic Development and Capital Markets, Chief Legal Officer and Corporate Secretary and was entitled to receive an annual base salary of $300,000. In connection with histhe replacement of Ms. Dillon’s prior employment are our propertyagreement with the August 2017 agreement and that Mr. Hoechsmann is subjecther delivery of
the related release and waiver, she received (i) aone-time cash payment in the amount of $240,000 (the “Company Payment”), (ii) a grant of 15,000 fully-vested shares of the Company’s common stock representing all bonus and long-term incentive plan compensation payable to Ms. Dillon for 2017 under the prior employment agreement, and (iii) aone-time cash payment in the amount of $36,923 (less applicable withholdings) for all accrued but unpaid vacation as of June 30, 2017, and all other remaining benefits owed to Ms. Dillon under the prior employment agreement.
Ms. Dillon’s employment under the employment agreement wasat-will and on August 23, 2017, Ms. Dillon left the Company to pursue other interests and opportunities. Following the separation of Ms. Dillon from the Company, and after delivering to the Company a non-competition clause throughout his employmentsigned waiver and release of claims agreement, Ms. Dillon received: (i) salary continuation from the date of separation through December 31, 2017, (ii) cash payment for two years thereafter, subject to payment per year,all accrued but unused vacation pay through her separation date, (iii) COBRA healthcare continuation for the two year non-competea period of fifty percentup to 18 months following the separation date or such earlier date that Ms. Dillon is covered under another health plan, (iv) immediate acceleration of vesting of all outstanding shares of the average remuneration he received forCompany’s restricted stock awarded to Ms. Dillon under the last three years.
Mr. Smith serves at the will2013 Equity Incentive Plan, (v) reimbursement of certain expenses pursuant to Company policy, and (vi) survival of Ms. Dillon’s change of control benefits, as described below. The confidentiality provisions of the Boardemployment survive the separation of Ms. Dillon from the Company and thenon-competition andnon-solicitation provisions survive for a period of one year following her separation. If a change of control of the Company occurs on or before December 31, 2018, and Ms. Dillon does not havequalify for benefits under any such change of control severance plan, then Ms. Dillon may be entitled to receive a payment equal to two times her annual base salary less the amount of the Company Payment, and certain other conditions relating to the change of control and Ms. Dillon’s separation are met, as described in the employment agreement.
Change of Control Severance Plan
In August 2017, the Compensation Committee adopted The ExOne Company Change of Control Severance Plan (the “Severance Plan”). The terms of the Severance Plan provide certain benefits to participants in the event of a change of control of ExOne. If a change of control occurs during the protection period (described below), and any of the participants either (i) has a voluntary termination of employment for good reason, or (ii) has an individualinvoluntary termination of employment, severanceother than for death, disability or change-of-control agreement. This preservescause, then the Company’s flexibilityparticipant is entitled to setreceive the following:
If the participant is designated as a Tier I employee under the Severance Plan, aone-time cash payment equal to two and a half times the participant’s annual base salary and certain health and welfare benefits for 18 months after termination;
If the participant is designated as a Tier II employee under the Severance Plan, aone-time cash payment equal to two times the participant’s annual base salary and certain health and welfare benefits for 18 months after termination; or
If the participant is designated as a Tier III employee under the Severance Plan, aone-time cash payment equal to one times the participant’s annual base salary and certain health and welfare benefits for 18 months after termination.
The protection period begins on the date on which a definitive agreement that, if consummated, would result in a change of control (or if no agreement, the date of the change of control itself), and ends on the earlier of (i) the date which is 18 months following the occurrence of the change of control or (ii) the public announcement that the transaction contemplated by the definitive agreement will not take place.
If any participant designated as a Tier I employee under the Severance Plan has a voluntary termination of employment (with or without good reason) within 30 days following the date of a change of control, then the participant is entitled to receive aone-time cash payment equal to two times the participant’s annual base salary.
If any participant designated as a Tier II or Tier III employee under the Severance Plan has a voluntary termination of employment (with or without good reason) within 30 days following the18-month anniversary of a change of control, then the participant is entitled to receive the following:
If the participant is designated as a Tier II employee under the Severance Plan, aone-time cash payment equal to nine months of the participant’s monthly base salary; or
If the participant is designated as a Tier III employee under the Severance Plan, aone-time cash payment equal to six months of the participant’s monthly base salary.
In addition to the cash payments described above, upon the occurrence of a change of control, 50% of any unvested stock options, restricted stock, restricted stock units or other equity based awards of ExOne held by a participant will immediately vest and become exercisable. The remaining 50% of such unvested awards held by the participant will vest and become exercisable pursuant to the terms of anythe awards, or immediately upon (i) voluntary termination of the participant’s employment for good reason, or (ii) involuntary termination based onof the particular facts and circumstances.
We terminated Mr. Burns’participant’s employment, agreement in December 2014 when Mr. Burns stepped down as President and Chief Operating Officer to move to another positionother than for death, disability or cause of the participant, if such termination occurs within the Company.18 months following a change of control.
Tax DeductibilityUnder the Severance Plan, a “change of Compensation
Undercontrol” is defined as the occurrence of any of the following, so long as such event also constitutes a change in control event as defined under Section 409A of the Internal Revenue Code of 1986, as amended: (i) if any person is or becomes the beneficial owner, directly or indirectly, of the Company’s securities representing greater than 50% of the combined voting power of the Company’s then outstanding securities, (ii) during any period of two consecutive years, individuals who at the beginning of such period constitute the Board and any new directors whose election by the Board or nomination for election by the Company’s stockholders was approved by at leasttwo-thirds of the directors then still in office who either were directors at the beginning of the period or whose election was previously so approved, cease for any reason to constitute a public companymajority thereof; (iii) the sale or disposition by the Company of all or substantially all the Company’s assets; (iv) the stockholders of the Company approve a plan of complete liquidation or dissolution of the Company; or (v) the consummation of a merger, combination or consolidation of the Company with any other corporation or entity; provided, however, a change of control shall not be deemed to have occurred: (a) if such merger, combination or consolidation would result in all or a portion of the Company’s voting securities outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) either directly or indirectly more than 50% of the combined voting power of the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation, or (b) if the corporate existence of the Company is limitednot affected and following the merger or consolidation, the majority of the directors of the Company prior to such merger or consolidation constitute at least a $1 million deduction for compensation paidmajority of the Board or the entity that directly or indirectly controls the Company after such merger or consolidation
No Section 280G excise taxgross-up or other taxgross-up is provided under the Severance Plan. Outside of the protection period, the Severance Plan is subject to itstermination or amendment by the Board or the Compensation Committee.
Among our Named Executive Officers, our Chief Executive Officer or any of its threeJames McCarley is defined as a Tier I employee and no other most highly compensated executive officers (other than theExecutives are expected to be named in this Tier. Our Chief Financial Officer) who are employed at year-end. This limitation does not apply to compensation that meets the tax code requirements for qualifying performance-based compensation (compensation paid only if the individual’s performance meets pre-established objective goals based on performance criteria approved by shareowners).Officer, Brian Smith, is named as a Tier II employee.
The Compensation Committee has reviewed the Compensation Discussion and Analysis and discussed that analysis with management. Based on its review and discussions with management, the Committee recommended to the Board that the Compensation Discussion and Analysis be included in the Company’s 20152018 Proxy Statement.
This report is provided by the following independent directors, who comprise the Compensation Committee:
Members of the Compensation Committee: |
Bonnie K. Wachtel (Chair) |
Lloyd A. Semple |
William F. Strome |
Bonnie K. Wachtel (Chair)
Raymond Kilmer
Lloyd A. Semple
SUMMARY COMPENSATION TABLESummary Compensation Table
The following table provides information regarding the compensation awarded to or earned during 20132017 and 20142016 by our ChiefNamed Executive Officer and each of the next two most highly compensated executive officers who were serving as executive officersOfficers through December 31, 20142017 (collectively, with David Burns, the “Named Executive Officers”). This following table also includes information for David Burns, who served as our President and Chief Operating Officer until December 18, 2014.
Name and Position | Year | Salary | Bonus | Stock Awards(5) | Option Awards | Non-Equity Incentive Compensation | All Other Compensation(6) | Total Compensation | ||||||||||||||||||||||||
S. Kent Rockwell, Chairman & Chief Executive Officer |
| 2014 2013 |
| $ $ | 299,998 207,691 |
|
| — — |
| $
| 39,350 — |
|
| — — |
|
| — — |
| $ $ | 3,231 3,231 |
| $ $ | 342,579 210,922 |
| ||||||||
Rainer Hoechsmann, Chief Development Officer and General Manager of ExOne GmbH(1)(2) | 2014 | $ | 269,491 | $ | 2,768 | $ | 196,750 | — | — | — | $ | 469,009 | ||||||||||||||||||||
Brian Smith, Chief Financial Officer and Treasurer(2)(3) | 2014 | $ | 275,000 | — | $ | 470,050 | — | — | $ | 9,344 | $ | 754,394 | ||||||||||||||||||||
David Burns, Global Head of Sales(2)(4) | 2014 | $ | 301,290 | — | — | — | — | $ | 351,444 | $ | 652,734 |
Name and Position | Year | Salary | Bonus | Stock Awards(9) | Option Awards(9) | Non-Equity Incentive Compensation | All Other Compensation(10) | Total Compensation | ||||||||||||||||||||||||
James L. McCarley, | 2017 | $ | 375,003 | — | — | $ | 438,000 | (1) | — | $ | 10,800 | $ | 823,803 | |||||||||||||||||||
Chief Executive Officer | 2016 | $ | 124,040 | — | — | $ | 797,472 | (2) | — | $ | 4,637 | $ | 926,149 | |||||||||||||||||||
Brian Smith, | 2017 | $ | 274,997 | — | $ | 118,650 | (3) | — | — | $ | 22,800 | $ | 416,447 | |||||||||||||||||||
Chief Financial Officer and Treasurer | 2016 | $ | 274,997 | — | $ | 101,025 | (4) | — | — | $ | 22,600 | $ | 398,622 | |||||||||||||||||||
Mark Cianci, | 2017 | $ | 249,995 | — | — | $ | 150,530 | (5) | — | $ | 7,500 | $ | 408,025 | |||||||||||||||||||
Former Chief Commercial Officer | ||||||||||||||||||||||||||||||||
S. Kent Rockwell, | 2017 | $ | 50,003 | — | — | — | — | $ | 2,000 | $ | 52,003 | |||||||||||||||||||||
Executive Chairman(11) | 2016 | $ | 217,308 | — | $ | 101,025 | (6) | — | — | $ | 8,692 | $ | 327,025 | |||||||||||||||||||
JoEllen Lyons Dillon, | 2017 | $ | 208,634 | — | $ | 192,169 | (7) | — | — | $ | 358,320 | $ | 759,123 | |||||||||||||||||||
Former Executive Vice President – Strategic Development and Capital Markets, Chief Legal Officer and Corporate Secretary | 2016 | $ | 240,011 | — | $ | 101,025 | (8) | — | — | $ | 9,641 | $ | 350,677 |
(1) |
(2) |
(3) | Mr. Smith received |
(4) | Mr. Smith received a grant of |
(5) | Mr. Cianci received a grant of options to purchase 12,000 shares of Common Stock on February 10, 2017 and a grant of options to purchase 25,000 shares of Common Stock on August 14, 2017. The unvested portion of the options granted on August 14, 2017 (options for 12,500 shares) was forfeited on February 9, 2018 when Mr. Cianci ceased to be employed by the Company. Mr. Cianci will no longer have a right to exercise his outstanding options after May 10, 2018. |
(6) | Mr. Rockwell received a grant of 7,500 shares of restricted stock on August 12, 2016. |
(7) | Ms. Dillon received a grant of 15,000 shares of unvested restricted stock on August 14, 2017. In addition, on August 23, 2017, in connection with Ms. Dillon’s separation from the Company, the vesting was accelerated as to 9,167 shares of unvested restricted stock she held from previous grants in 2014 and 2016. |
(8) | Ms. Dillon received a grant of 7,500 shares of restricted stock on August 12, 2016. |
(9) | The amounts disclosed in |
of $73,519 (calculated as of the accelerated vesting date) as determined pursuant to FASB ASC Topic 718 relating to 9,167 unvested shares of restricted stock for which vesting accelerated on August 23, 2017 in connection with Ms. Dillon’s separation from the Company, consisting of (i) 4,167 unvested shares of restricted stock which were originally granted in December 2014 and valued at $33,419 at the time of accelerated vesting; and (ii) 5,000 unvested shares of restricted stock which were originally granted in August 2016 and valued at $40,100 at the time of accelerated vesting. |
(10) | Includes Company contributions to the respective individual accounts of the defined contribution plan (401(k) plan) that is sponsored by the Company as follows: (a) Mr. |
(11) | Disclosure of Mr. Rockwell’s compensation is not required in this Proxy Statement and is being voluntarily provided by ExOne. Mr. Rockwell is not the next most highly compensated executive officer of ExOne. |
OUTSTANDING EQUITY AWARDS AT DECEMBEROutstanding Equity Awards at December 31, 20142017
The following table sets forth all shares of unvested options and restricted stock that were awarded to our Named Executive Officers by ExOne under the 2013 Equity Incentive Plan and were outstanding as of December 31, 2014. None of the Named Executive Officers held any unexercised stock options for the purchase of ExOne common shares as of December 31, 2014.2017.
Stock awards | ||||||||||||||||
Name | Number of shares or units of stock that have not vested (#) | Market value of shares of units of stock that have not vested ($) | Equity incentive plan awards: Number of un- earned shares, units or other rights that have not vested (#) | Equity incentive plan awards: Market or payout value of unearned shares, units, or other rights that have not vested ($)(4) | ||||||||||||
Mr. Rockwell(1) | — | — | 2,500 | $ | 42,000 | |||||||||||
Mr. Hoechsmann(2) | — | — | 12,500 | $ | 210,000 | |||||||||||
Mr. Smith(3) | — | — | 15,000 | $ | 252,000 | |||||||||||
Mr. Burns | — | — | — | — |
Option Awards | Stock Awards | |||||||||||||||||||||||||||
Name | Year of Option Grant | Number of Securities Underlying Unexercised Options (#) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($)(6) | ||||||||||||||||||||||
Exercisable | Unexercisable | |||||||||||||||||||||||||||
James L. McCarley (1) | 2017 | 33,333 | 66,667 | $ | 7.91 | 8/14/2027 | — | — | ||||||||||||||||||||
2016 | 66,666 | 33,334 | $ | 13.82 | 8/19/2026 | — | — | |||||||||||||||||||||
Brian Smith(2) | — | — | — | — | — | 12,500 | $ | 105,000 | ||||||||||||||||||||
Mark Cianci(3) | 2017 | 12,500 | 12,500 | $ | 7.91 | 8/14/2022 | — | — | ||||||||||||||||||||
2017 | 12,000 | — | $ | 10.10 | 2/10/2027 | — | — | |||||||||||||||||||||
S. Kent Rockwell(4) | — | — | — | — | — | 5,000 | $ | 42,000 | ||||||||||||||||||||
JoEllen Lyons Dillon(5) | — | — | — | — | — | — | — |
(1) | On August 14, 2017, the Company granted to Mr. |
(2) | Mr. Smith was granted |
In addition, Mr. |
(3) | On August 14, 2017, the Company granted to Mr. |
(4) | Mr. Rockwell was granted 7,500 shares of restricted stock on |
(5) | Ms. Dillon was granted 7,500 shares of restricted stock on |
Based on the closing price of our |
PROPOSAL 2 — RATIFICATION OF APPOINTMENT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee of the Board of Directors has selected Baker Tilly Virchow Krause, LLPSchneider Downs & Co., Inc. as our independent registered public accounting firm for the year ending December 31, 2015,2018, and has further directed that management submit the appointment of the independent registered public accounting firm for ratification by the stockholders at the Annual Meeting.
Representatives of Baker Tilly Virchow Krause, LLPSchneider Downs & Co., Inc. are expected to be present at the Annual Meeting. They will have an opportunity to make a statement if they so desire and will be available to respond to appropriate questions.
Neither our Bylaws nor other governing documents or law require stockholder ratification of the appointment of Baker Tilly Virchow Krause, LLPSchneider Downs & Company, Inc. as our independent registered public accounting firm. However, the Board of Directors is submitting the appointment of Baker Tilly Virchow Krause, LLPSchneider Downs & Co., Inc. to the stockholders for ratification as a matter of good corporate practice. If the stockholders fail to ratify the appointment, the Audit Committee will reconsider whether or not to retain that firm. Even if the appointment is ratified, the Audit Committee in its discretion may direct the appointment of a different independent registered public accounting firm at any time during the year if it determines that such a change would be in the best interests of ExOne and our stockholders.
Ratification of the appointment of Baker Tilly Virchow Krause, LLPSchneider Downs & Co., Inc. as ExOne’s independent registered public accounting firm for the year ending December 31, 20152018 requires the affirmative vote of a majority of the shares represented at the Annual Meeting and entitled to vote on this matter. Abstentions will have the same effect as an “Against” vote. Broker Because brokernon-votes are not deemed to be votes entitled to be cast, they will not be counted as having been voted onaffect the outcome of this proposal.
The Board of Directors Recommends a Vote “FOR” the Ratification of the Appointment of Baker Tilly Virchow Krause, LLPSchneider Downs & Co., Inc. as ExOne’s Independent Registered Public Accounting Firm for the Year Ending December 31, 2015.2018.
The Audit Committee has reviewed and discussed with our management the audited financial statements of ExOne included in our Annual Report onForm 10-K for the year ended December 31, 2014.2017. The Audit Committee has also reviewed and discussed with Baker Tilly Virchow Krause, LLP,Schneider Downs & Co., Inc., ExOne’s independent registered public accounting firm for 2017, the audited financial statements and the audit results. In addition, the Audit Committee discussed with Baker Tilly Virchow Krause, LLPSchneider Downs & Co., Inc. the matters required to be discussed by AS 16,Communications with Audit Committees, Rule2-07,Communication with Audit Committees, ofRegulation S-X, and other PCAOB Rules and Standards.
In addition, we received from and discussed with Baker Tilly Virchow Krause, LLPSchneider Downs & Co., Inc. the written disclosures and the letter required by PCAOB Rule 3526,Communication With Audit Committees Concerning Independence, and discussed Baker Tilly Virchow Krause, LLP’sSchneider Downs & Co., Inc.’s independence with them. Upon completing these activities, the Audit Committee concluded that Baker Tilly Virchow Krause, LLPSchneider Downs & Co., Inc. is independent from ExOne and its management.
ExOne’s management is responsible for preparing our financial statements and ensuring they are complete and accurate and prepared in accordance with generally accepted accounting principles. Baker Tilly Virchow Krause, LLP, ourOur independent registered public accounting firm is responsible for performing an independent audit of our financial statements and expressing an opinion on the conformity of those financial statements with generally accepted accounting principles.
Based upon the review and discussions described above, the Audit Committee recommended to the Board, of Directors, and the Board of Directors approved, that the audited financial statements be included in ExOne’s Annual Report on Form10-K for the year ended December 31, 20142017 and filed with the Securities and Exchange Commission.
Members of the Audit Committee:
Victor Sellier(Chair)
Raymond J. Kilmer
Members of the Audit Committee: |
William F. Strome (Chair) |
Gregory F. Pashke |
Bonnie K. Wachtel |
Bonnie K. Wachtel
On October 1, 2014,Changes in Independent Registered Public Accounting Firms
The Audit Committee conducted a comprehensive, competitive process to determine the Company was notifiedCompany’s independent registered public accounting firm for the year ending December 31, 2016. The Audit Committee considered a number of registered public accounting firms, and narrowed that the audit practice of ParenteBeard LLC was combined withgroup down to two firms, including Baker Tilly Virchow Krause, LLP.LLP, the Company’s then-current independent registered public accounting firm. As a consequence, on that same date, ParenteBeard LLC resignedresult of this process, effective March 24, 2016, the Audit Committee approved the engagement of Schneider Downs & Co., Inc. as the Company’s independent registered public accounting firm. ParenteBeard LLC’s report of independent registered public accounting firm regardingfor the year ending December 31, 2016, and dismissed Baker Tilly Virchow Krause, LLP from that role. Baker Tilly Virchow Krause, LLP’s reports on the Company’s consolidated financial statements as of and for the years ended December 31, 20132015 and 20122014, did not contain anyan adverse opinion or a disclaimer of opinion and waswere not qualified or modified as to the uncertainty, audit scope or accounting principles.
During the years ended December 31, 20132015 and 2012,2014, and during the subsequent interim period through October 1, 2014,March 24, 2016, there were (i) no “disagreements” as that term is defined in Item 304(a)(1)(iv) of the SEC’s RegulationS-K, between the Company did not have any disagreements with ParenteBeard LLCand Baker Tilly Virchow Krause, LLP on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedures,procedure, any of which disagreements,that, if not resolved to theBaker Tilly Virchow Krause, LLP’s satisfaction, of ParenteBeard LLC, would have caused itBaker Tilly Virchow Krause, LLP to make reference to the subject matter of any such disagreement in connection with its report. Duringreports for such years and interim period and (ii) no reportable events within the years ended December 31, 2013 and 2012 and the subsequent period through October 1, 2014, the Company did not have any “reportable events” as described inmeaning of Item 304(a)(1)(v) of the SEC’s Regulation S-K.
Prior to engagingS-K during the years ended December 31, 2015 and 2014 and the subsequent interim period, except for the material weaknesses in internal control over financial reporting disclosed in the Company’s Annual Reports on Form10-K for the years ended December 31, 2015 and December 31, 2014. These material weaknesses were discussed by the Company’s management and the Audit Committee with Baker Tilly Virchow Krause, LLP. The Audit Committee authorized Baker Tilly Virchow Krause, LLP on October 1, 2014,to respond fully to the inquiries of Schneider Downs & Co., Inc., the Company’s new independent registered public accounting firm, concerning these material weaknesses.
On March 25, 2016, the Company did not consult withfiled a Current Report on Form8-K disclosing the appointment of Schneider Downs & Co., Inc. as its new independent registered public accounting firm and the related dismissal of Baker Tilly Virchow Krause, LLP from that role. The Company provided Baker Tilly Virchow Krause, LLP with a copy of the disclosures in the Current Report on Form8-K prior to the time that it was filed with the SEC, and requested that Baker Tilly Virchow Krause, LLP furnish a letter addressed to the SEC stating whether or not it agrees with the statements made therein. A copy of Baker Tilly Virchow Krause, LLP’s letter dated March 25, 2016 was attached as Exhibit 16.1 to that report.
Prior to engaging Schneider Downs & Co., Inc. on March 24, 2016, neither the Company nor anyone on its behalf consulted with Schneider Downs & Co., Inc. regarding (i) the application of accounting principles to a specific transaction, either completed or contemplated transactionproposed, or regarding the type of audit opinionsopinion that might be rendered by Baker Tilly Virchow Krause, LLP on the Company’s consolidated financial statements and Baker Tilly Virchow Krause, LLP did not provide anyneither a written orreport nor oral advice was provided to the Company that Schneider Downs & Co., Inc. concluded was an important factor considered by the Company in reaching a decision as to any such accounting, auditing, or financial reporting issue.issue, (ii) any matter that was the subject of a disagreement within the meaning of Item 304(a)(1)(iv) of the SEC’s RegulationS-K, or (iii) any reportable event within the meaning of Item 304(a)(1)(v) of the SEC’s RegulationS-K.
Schneider Downs & Co., Inc.’s report on the Company’s consolidated financial statements as of and for the years ended December 31, 2017 and December 31, 2016, included in the Company’s Annual Reports on Form10-K for the years ended December 31, 2017 and December 31, 2016, respectively, did not contain an adverse opinion or a disclaimer of opinion and was not qualified or modified as to the uncertainty, audit scope or accounting principles.
Audit and Other Fees
The following table shows the fees paid by the Company in 20142017 and 20132016 for the audit and other services provided by Baker Tilly Virchow Krause, LLP and its predecessor, ParenteBeard LLC,Schneider Downs & Co., Inc. for those years:
2014 | 2013 | 2017 | 2016 | |||||||||||||
(in thousands) | (in thousands) | |||||||||||||||
Audit fees | $ | 822 | $ | 940 | $ | 706 | $ | 688 | ||||||||
Audit-related fees | — | 15 | 15 | 17 | ||||||||||||
Tax fees | — | — | — | — | ||||||||||||
All other fees | 28 | 25 | — | — | ||||||||||||
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Total fees | $ | 850 | $ | 980 | $ | 721 | $ | 705 | ||||||||
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Audit fees for 20142017 and 20132016 include fees associated with the annual audit, theinterim reviews of the Company’s quarterly reports on Form 10-Q, and fees associated with the filing of various registration statements. Audit-related fees for 20132017 and 2016 include fees associated with various acquisition related activities. All other fees for 2014 and 2013 include certain agreed upon procedures reports.the annual audit of the Company’s 401(k) plan.
Pre-Approval Policies and Procedures
The Audit Committee’s policy is topre-approve all audit and permissiblenon-audit services rendered by Baker Tilly Virchow Krause, LLP, our independent registered public accounting firm, in order to assure that the provision of such services does not impair the independent registered public accounting firm’s independence. The Audit Committee canpre-approve specified services in defined categories of (i) audit services, (ii) audit-related services, (iii) tax services and (iv) other services up to specified amounts, as part of the Audit Committee’s approval of the scope of the engagement of Baker Tilly Virchow Krause, LLPthe independent registered public accounting firm or on an individualcase-by-case basis before Baker Tilly Virchow Krause, LLPthe independent registered public accounting firm is engaged to provide a service. The term of anypre-approval is 12 months from the date ofpre-approval, unless the Audit Committee specifically provides for a different period. All of the 20142017 and 20132016 services described above werepre-approved by the Audit Committee.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The table below sets forth information regarding common stock ownership by our directors and executive officers and certain beneficial owners. We includethe beneficial ownership of common stockCommon Stock as of March 16, 2015,19, 2018, when there were 14,521,13716,202,119 issued and outstanding shares, for each person known by us to beneficially own more than five percent of our common stock,Common Stock, each director (including all nominees for director), each Named Executive Officer, and all directors (including director nominees) and executive officers as a group. Unless we otherwise note, each person exercises sole voting and investment power over these shares of common stock.Common Stock.
We determine the number of shares in the table below as beneficially owned by each director and executive officer pursuant to SEC regulations. This information does not necessarily indicate beneficial ownership for any other purpose. Beneficial ownership includes any shares of common stockCommon Stock as to which the individual has sole or shared voting power or investment power. We also include any shares of common stockCommon Stock that the individual has the right to acquire within 60 days of March 16, 201519, 2018 through the exercise of any option, warrant or right.
Beneficial Ownership | ||||||||
Name and Address of Beneficial Owner(1) | Number | Percent | ||||||
Directors, Nominees and Named Executive Officers | ||||||||
S. Kent Rockwell(2) | 3,165,127 | 21.8 | % | |||||
David J. Burns | 259,000 | 1.8 | % | |||||
Rainer Hoechsmann(3) | 213,500 | 1.5 | % | |||||
John Irvin(4) | 254,500 | 1.8 | % | |||||
Raymond J. Kilmer(5) | 7,250 | * | ||||||
Hans J. Sack(6) | 8,500 | * | ||||||
Victor Sellier(7) | 10,250 | * | ||||||
Lloyd A. Semple(8) | 15,050 | * | ||||||
Brian Smith(9) | 15,000 | * | ||||||
William F. Strome | — | — | ||||||
Bonnie K. Wachtel(10) | 7,250 | * | ||||||
All Directors/Executive Officers as a group (12 persons) | 4,041,428 | 27.8 | % | |||||
Certain Beneficial Owners | ||||||||
Novel Century Ventures Limited(11) | 1,397,764 | 9.6 | % |
Beneficial Ownership | ||||||||
Name and Address of Beneficial Owner | Number | Percent | ||||||
Directors, Nominees and Named Executive Officers | ||||||||
S. Kent Rockwell(1) | 4,596,505 | 28.4 | % | |||||
John Irvin(2) | 217,300 | 1.3 | % | |||||
James L. McCarley(3) | 107,199 | * | ||||||
Gregory F. Pashke(4) | 13,250 | * | ||||||
Lloyd A. Semple(5) | 30,050 | * | ||||||
Brian Smith(6) | 46,700 | * | ||||||
William F. Strome(7) | 18,500 | * | ||||||
Bonnie K. Wachtel(8) | 21,000 | * | ||||||
Mark Cianci(9) | 24,500 | * | ||||||
JoEllen Lyons Dillon(10) | 78,500 | * | ||||||
All Directors/Executive Officers as a group (10 persons) | 5,113,004 | 31.3 | % | |||||
Certain Beneficial Owners | ||||||||
ARK Investment Management LLC(11) | 1,260,716 | 7.8 | % | |||||
Novel Century Ventures Limited(12) | 1,397,764 | 8.6 | % |
* | Less than 1%. |
(1) |
Includes |
Includes (a) |
Includes |
(4) | Includes (a) 400 shares held jointly by Mr. Pashke and his wife over which Mr. Pashke has shared voting and dispositive power and (b) 5,000 shares of unvested restricted stock held directly by Mr. Pashke, over which Mr. |
Includes (a) 300 shares held by Mr. |
(6) | Includes 12,500 shares of unvested restricted stock held directly by Mr. Smith, over which he has sole voting power and no dispositive power. |
(7) | Includes |
(8) | Includes |
(9) | Includes |
(10) | Includes |
(11) | ARK Investment Management LLC (“ARK”), an investment adviser, has (a) sole voting power with respect to 873,160 of the listed shares, (b) sole dispositive power with respect to 1,253,979 of the listed shares, and (c) shared voting power and dispositive power with respect to 6,737 of the listed shares. The address for ARK is 155 West 19th Street, 5th Floor, New York, New York 10011. This information is based solely on the Reporting Person’s Statement on Schedule 13G filed with the SEC dated February 14, 2018, updated for shares outstanding as of March 19, 2018. |
(12) | Novel Century Ventures Limited (“Novel”) has sole voting and dispositive power, and Mega Fame Holdings Limited (“Mega”) and Ms. Tu Guihua (together with Novel and Mega, the “Reporting Persons”) have shared voting and dispositive power, over the listed shares. Novel is a wholly owned subsidiary of Mega and Ms. Guihua owns all of the issued and outstanding capital stock of Mega. The address for Novel and Mega is P.O. Box 957, Offshore Incorporations Centre, Road Town, Tortola, British Virgin Islands. The address for Ms. Guihua is Rm.24-2, Bld 10, Project B, Huaguoyuan, Nanming District Guiyang, Guizhou Province, China. This information is based solely on the Reporting Persons’ most recent Statement on Schedule 13G filed with the SEC dated September 15, 2014, updated for shares outstanding as of March |
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires persons who own more than ten percent of a registered class of our equity securities and our directors and executive officers to file with the SEC initial reports of ownership and reports in changes in ownership of any ExOne equity securities. Except as set forth below, basedBased upon a review of filings with the SEC and written representations from our directors and executive officers, we believe that all of our ten percent holders, directors and executive officers complied during the year ended December 31, 2014,2017, with the reporting requirements of Section 16(a) of the Exchange Act. Novel Century Ventures Limited filed one Form 4, reporting one transaction, on an untimely basis.
The Board of Directors knows of no other matters that will be presented for consideration at the Annual Meeting. If any other matters are properly brought before the meeting, it is the intention of the persons named in the accompanying proxy to vote on such matters in accordance with their best judgment.
By Order of the Board of Directors, |
LORETTA L. BENEC |
General Counsel and Corporate Secretary |
April 5, 2018 |
VOTE BY INTERNET - www.proxyvote.com Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time the day before the meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically viae-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years. VOTE BY PHONE -1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time the day before the meeting date. Have your proxy card in hand when you call and then follow the instructions. VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. |
JOELLEN LYONS DILLON
Executive Vice President, Chief Legal Officer and
Corporate Secretary
March 26, 2015
ANNUAL MEETING OF STOCKHOLDERS OF
THE EXONE COMPANY
May 4, 2015
GO GREEN
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: ☒ KEEP THIS PORTION FOR YOUR RECORDS |
IMPORTANT NOTICE REGARDING INTERNET AVAILABILITY OF PROXY MATERIALS:
The proxy statement and Company’s 2014 Annual Report to stockholders
are available atHTTP://WWW.ASTPROXYPORTAL.COM/AST/18123/
Please sign, date and mail
your proxy card in the
envelope provided as soon
as possible.
Please detach along perforated line and mail in the envelope provided.
The Board of Directors recommends a vote “FOR” each of the nominees listed and “FOR” proposal number 2.
PLEASE SIGN, DATETHIS PROXY CARD IS VALID ONLY WHEN SIGNED AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERExDATED.
The Board of Directors recommends you vote FOR the election of the following director nominees: | ||||||||||||||||||||||||||||||||||||||||||||||||||
1. |
Election of | |||||||||||||||||||||||||||||||||||||||||||||||||
Nominees | For | Against | Abstain | |||||||||||||||||||||||||||||||||||||||||||||||
1A | S. Kent Rockwell | ☐ | ☐ | ☐ | ||||||||||||||||||||||||||||||||||||||||||||||
1B | John Irvin | ☐ | ☐ | ☐ | ||||||||||||||||||||||||||||||||||||||||||||||
1C | Gregory F. Pashke | ☐ | ☐ | ☐ | ||||||||||||||||||||||||||||||||||||||||||||||
1D | Lloyd A. Semple | ☐ | ☐ | ☐ | ||||||||||||||||||||||||||||||||||||||||||||||
1E | William F. Strome | ☐ | ☐ | ☐ | ||||||||||||||||||||||||||||||||||||||||||||||
1F | Bonnie K. Wachtel | ☐ | ☐ | ☐ | ||||||||||||||||||||||||||||||||||||||||||||||
The Board of Directors recommends you vote FOR the following proposal: | For | Against | Abstain | |||||||||||||||||||||||||||||||||||||||||||||||
2. | Ratification of the | ☐ | ☐ | ☐ | ||||||||||||||||||||||||||||||||||||||||||||||
Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer. | ||||||||||||||||||||||||||||||||||||||||||||||||||
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Signature [PLEASE SIGN WITHIN BOX] | Date | Signature (Joint Owners) | Date | |||||||||||||||||||||||||||||||||||||||||||||||
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The Notice & Proxy Statement and 2017 Annual Report are available atwww.proxyvote.com.
Annual Meeting of Stockholders | |||||||||||||||||||||||||||||||
May 16, 2018 10:00 AM | |||||||||||||||||||||||||||||||
This proxy is solicited by the Board of Directors | |||||||||||||||||||||||||||||||
The stockholder(s) hereby appoint(s) S. Kent Rockwell, James L. McCarley and Loretta L. Benec, or any of them, as proxies, each with full power of substitution, and hereby authorizes them to represent and to vote, as designated on the reverse side of this ballot, all of the shares of common stock of THE EXONE COMPANY that the stockholder(s) is/are entitled to vote at the Annual Meeting of Stockholders to be held at 10:00 AM, Eastern Daylight Time, on May 16, 2018, and any adjournment or postponement thereof. | |||||||||||||||||||||||||||||||
This proxy, when properly executed, will be voted in the manner directed herein. If no such direction is made, this proxy will be voted FOR each of the director nominees listed in proposal 1 and FOR proposal 2. In their discretion, the proxies are authorized to vote upon such other matters as may properly come before the meeting or any adjournment or postponement thereof. | |||||||||||||||||||||||||||||||
Continued and to be signed on reverse side | |||||||||||||||||||||||||||||||
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THE EXONE COMPANY
127 Industry Boulevard
North Huntingdon, Pennsylvania 15642
This Proxy is Solicited on Behalf of the
Board of Directors of the Company
The undersigned stockholder hereby appoints S. Kent Rockwell, Brian Smith and JoEllen Lyons Dillon, and each of them, as proxies for the undersigned, each with full power of substitution for and in the name of the undersigned to vote all of the shares of common stock of The ExOne Company (the “Company”) that the undersigned is entitled to vote at the 2015 Annual Meeting of Stockholders of the Company (the “Annual Meeting”) to be held on Monday, May 4, 2015, at 10:00 a.m. Eastern Daylight Time, and at any and all adjournments thereof, on any matters that properly come before the meeting.
The shares represented by this proxy will be voted as directed by the undersigned on the reverse side. If not otherwise specified, shares will be voted in the election of directors FOR the nominees listed and FOR proposal number 2. In their discretion, the proxies are authorized to vote upon such other matters as may properly come before the meeting or any adjournments thereof.