UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) OF THE SECURITIES EXCHANGE ACT OFof the
Securities Exchange Act of 1934
(AMENDMENT NO. ____)
Filed by the Registrant
Check the appropriate box:
☐ 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 UnderPursuant to Rule 14a-12
DYADIC INTERNATIONAL, INC.
(Name of Registrant as Specified in itsIn Its Charter)
(Name of Person(s) Filing Proxy Statement, if otherOther than the Registrant)
Payment of Filing Fee (Check the appropriate box):
☒ No fee required.
☐ Fee computed on table below per Exchange Act Rules 14a-6(i)(l)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3)
Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11(4)
Proposed maximum aggregate value of transaction:(5) Total fee paid:
☐ Fee paid previously with preliminary materials.
☐ Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement
(1) Amount Previously Paid:
(2) Form, Scheduleschedule or Registration Statementregistration statement No.:
(3) Filing Party:
(4) Date Filed:
DYADIC INTERNATIONAL, INC. |
Dear Stockholder:
You are cordially invited to attend the 2006 annual meeting2021 Virtual Annual Meeting of stockholdersShareholders (“Annual Meeting”) of Dyadic International, Inc. (“Dyadic”), which we will holdbe held on Monday,Friday, June 12, 200611, 2021 at 10:0010 a.m., local time, at Eastern Daylight Savings Time. With rising concerns around the Doubletree Hotel located at 4431 PGA Boulevard, Palm Beach Gardens, Florida 33410.
At the Annual Meeting, you will be asked to consider and vote on the proposals described in the Notice of 20062021 Virtual Annual Meeting of StockholdersShareholders and Proxy Statement which accompany this letter.
We hope that you will be able to attend the meeting,virtual Annual Meeting, but whatever your plans,in all events, we ask that you please complete, sign and datevote your shares using the enclosedinternet or, if you received paper copies of the proxy materials, by calling the toll-free telephone number specified in the proxy card or completing and return itmailing the proxy card in the postage-paid envelope provided so to ensure that your shares will be represented at the meeting.
On behalf of the board of directors, I would like to express our appreciation for your continued support and interest in Dyadic International, Inc. We look forward to seeing youyour virtual participation at the meeting.
Sincerely, | |||||
/s/ Mark Emalfarb | |||||
Mark Emalfarb |
Jupiter, Florida
April 28, 2006
NOTICE OF 20062021 VIRTUAL ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MONDAY, JUNE 12, 2006Friday, June 11, 2021
VIRTUAL MEETING ONLY - NO PHYSICAL MEETING LOCATION
To the stockholdersShareholders of Dyadic International, Inc.:
NOTICE IS HEREBY GIVEN that the 2021 Virtual Annual Meeting of stockholdersShareholders (“Annual Meeting”) of Dyadic International, Inc., a Delaware corporation (“Dyadic,” “we,” “us”, “our”, or the “Company”), will be held on Monday,Friday, June 12, 2006,11, 2021 at 10:0010 a.m., local time, Eastern Daylight Savings Time, via live webcast at the Doubletree Hotel located at 4431 PGA Boulevard, Palm Beach Gardens, Florida 33410,www.virtualshareholdermeeting.com/DYAI2021 for the following purposes:
1. To elect three Class II directors to our Board of Directors (the “Board”) to serve until the Company’s 2024 Annual Meeting of Shareholders or until their successors are duly elected and qualified;
2. To ratify the appointment of Mayer Hoffman McCann P.C., as the Company’s independent registered public accounting firm for the year ending December 31, 2021;
3. To consider an advisory vote on compensation of the Company’s Named Executive Officers;
4. To approve the adoption of the Company’s 2021 Equity Incentive Award Plan; and
5. To transact such other business as may properly come before the Annual Meeting or any adjournment or postponement thereof.
All shareholders are cordially invited to virtually attend the Annual Meeting. To participate in the accompanyingAnnual Meeting, you will need your 16-digit control number included on your Notice Regarding the Availability of Proxy Materials (“Notice”) or on your proxy statement. This notice, together with the accompanying proxy statement and enclosed proxy card and annual report to stockholders, will be mailed to stockholders on or about May 5, 2006.
Only shareholders of record at the close of business on April 26, 200616, 2021 are entitled to notice of, and to vote at, the annual meetingAnnual Meeting and any adjournment or postponement thereof. The stock transfer books of the annualCompany will remain open between the record date and the date of the meeting. Each share of common stock is entitled to one vote.
We encourage shareholders to vote in person.
• | Vote by Internet: www.proxyvote.com |
Use the Internet to transmit your voting instructions and for electronic delivery of information. Vote by 11:59 p.m., Eastern Daylight Savings Time, on Thursday, June 10, 2021. Have the 16-digit control number included in your Notice or your proxy card in hand when you access the above website and follow the instructions to obtain your records and to create an electronic voting instruction form. |
Vote by Telephone: 1-800-690-6903
If you received paper copies of the proxy materials, use any touch-tone telephone to transmit your voting instruction. Vote by 11:59 p.m., Eastern Daylight Savings Time, on Thursday, June 10, 2021. Have your proxy card in hand when you call and follow the instruction. |
Vote by Mail.
If you received paper copies of the proxy materials, please 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. |
Vote During the Annual Meeting.
You can vote your shares during the Annual Meeting at www.virtualshareholdermeeting.com/DYAI2021. To participate in the Annual Meeting, you will need the 16-digit control number included in your Notice or on your proxy card. |
You need only vote in one way (so that, if you vote by internet or telephone, you need not return the proxy card).
If you hold your shares through a broker, bank, or other nominee, you should receive separate voting instructions from the firm holding your shares describing the procedure for voting those shares. You may complete and mail a voting instruction card to your broker or nominee or, in most cases, submit voting instructions by telephone or the Internet to your broker or nominee. If you provide specific voting instructions by mail, telephone or the Internet, your broker or nominee will vote your shares as you have directed.
Should you receive more than one proxy because your shares are heldregistered in different names and addresses, each proxy should be signed and returned to ensure that all your shares will be voted. Your proxy is revocable in accordance with the procedures set forth in the attached proxy statement.
BY ORDER OF THE BOARD OF DIRECTORS | |||||
/s/ Mark Emalfarb | |||||
Mark Emalfarb |
April 27, 2021
Jupiter, Florida
INTERNET AVAILABILITY OF PROXY MATERIALS
*****IMPORTANT NOTICE*****
This Notice of Meeting, Proxy Statement and our Annual Report on Form 10-K for the fiscal year ended December 31, 2020, are available online at a brokerage firm or bank, you must provide them with instructions on how to vote your shares.
DYADIC INTERNATIONAL, INC.
140 Intracoastal Pointe Drive, Suite 404
Jupiter, FLFlorida 33477
(561) 743-8333
VIRTUAL MEETING ONLY - NO PHYSICAL MEETING LOCATION
The Board of Directors of the Company (the “Board”) is soliciting proxies for the 2021 Virtual Annual Meeting of Shareholders of Dyadic International, Inc. (“Annual Meeting”). This proxy statement contains important information for you to consider when deciding how to vote on the matters brought before the Annual Meeting. Please read it carefully.
This proxy statement contains information related to our 2006 annual meeting of stockholdersthe Annual Meeting to be held on Monday,Friday, June 12, 2006,11, 2021 at 10:0010 a.m., local time, at the Doubletree Hotel located at 4431 PGA Boulevard, Palm Beach Gardens, Florida 33410, Eastern Daylight Savings Time, and at any adjournments or postponements thereof. This year, considering the rising concerns around the spread of COVID-19 in the United States and globally, to mitigate health risks, the Annual Meeting will be conducted in virtual format only. Shareholders can access the Annual Meeting by visiting www.virtualshareholdermeeting.com/DYAI2021. Shareholders will not be able to attend the Annual Meeting in person. The approximateCompany believes that a virtual meeting will provide meaningful shareholder access and participation and protect the health and safety of our shareholders, employees, and other stakeholders, and will also improve meeting efficiency and reduce costs.
The Board set April 16, 2021, as the record date for the Annual Meeting. Shareholders who owned the Company’s common stock on that date are entitled to vote at the Annual Meeting, with each share entitled to one vote. There were 27,554,157 shares of the Company’s common stock outstanding as of the record date.
We are furnishing proxy materials to our shareholders primarily via the Internet under the SEC’s “Notice and Access” rules. On or about April 27, 2021, we expect to mail to our shareholders a Notice of Internet Availability (the “Notice”) containing instructions on how to access our proxy materials, including our Proxy Statement and Annual Report filed on Form 10-K with the SEC (“Annual Report on Form 10-K”). The Notice also will instruct you on how to access and submit your proxy through the internet.
We are providing internet distribution of our proxy materials to expedite receipt by shareholders, reduce costs and conserve paper. However, if you would like to receive printed proxy materials, please follow the instructions on the Notice. Additionally, this proxy statement the accompanying notice of annual meeting and the enclosed form ofAnnual Report on Form 10-K are available at www.dyadic.com by clicking the “Investors” link. In accordance with Securities and Exchange Commission rules, our proxy materials posted on both our website and our 2005 annual report to stockholdersthe website described below do not contain any cookies or other tracking features.
INTERNET AVAILABILITY OF PROXY MATERIALS
*****IMPORTANT NOTICE*****
The Proxy Statement and Annual Report on Form 10-K are first being mailed to stockholders is May 5, 2006. We are furnishing this proxy statement to stockholders of Dyadic as part of the solicitation of proxies by Dyadic’s board of directors for useavailable at the annual meeting. You should review this information in conjunction with our 2005 annual report to stockholders which accompanies this proxy statement.
ABOUTABOUT THE ANNUAL MEETING
What is the purpose of the annual meeting?
At the annual meeting,Annual Meeting, we are asking stockholders:shareholders:
To elect three Class II directors for a term ending in 2024;
To ratify the appointment of Mayer Hoffman McCann P.C., (“MHM”), as our independent registered public accounting firm for the year ending December 31, 2021;
To consider an advisory vote on compensation of the Company’s Named Executive Officers;
To approve the |
• | To transact such other business properly brought before the meeting and any adjournment or postponement of the meeting. |
Who is entitled to notice of and to vote at the annual meeting?
You are entitled to vote, in person or by proxy, at the annual meetingAnnual Meeting if you owned shares of our common stock as of the close of business (5:00 p.m. EST)Eastern Daylight Savings Time) on April 26, 2006,16, 2021, the record date of the annual meeting. On the record date, 23,140,467
Who can attend the meeting?
All stockholdersshareholders as of the record date, or their duly appointed proxies, may attend. Please note that if you hold shares in “street name” (that is, through a broker or other nominee), youShareholders will need a control number to bring a copy of a brokerage statement reflecting your stock ownership as ofattend the record date.
What shares may I vote?
You may vote all shares you owned as of the record date. These includeinclude: (1) shares owned directly in your name as stockholderthe shareholder of record and (2) shares held for you as the beneficial owner through a stockbroker, bank, or otheranother nominee.
What is the difference
between holding shares as aMost of our stockholdersshareholders hold their shares through a stockbroker, bank or other nominee rather than directly in their own name. As summarized below, there are some differences between shares held of record and those beneficially owned.
If our shares are registered directly in your name with our transfer agent, Continental Stock Transfer & Trust Company, you are considered the stockholdershareholder of record with regard toregarding those shares. As the stockholdershareholder of record, you have the right to grant your proxy directly to us to vote your shares on your behalf at the meetingAnnual Meeting, using the control number on the Notice of Internet Availability of Proxy Materials or the right to vote in person at the meeting. We have enclosed or sent a proxy card for you to use.
If you hold our shares in a stock brokerage account or bythrough a bank or other nominee, you are considered the beneficial owner“beneficial owner” of the shares held in “street name,”name”, and these proxy materials have been forwarded to you by your brokerstockbroker, bank, or nominee, which is considered the stockholder of record with respect to those shares.another nominee. As the beneficial owner, you have the right to direct your brokerstockbroker, bank, or other nominee how to vote and you are also invited to attend the annualAnnual Meeting via the Internet and vote during the meeting. Beneficial owners who do not have a control number may gain access to the meeting so long as you bring a copyby logging into their brokerage firm’s website. Instructions should be provided on the voting instruction card provided by your stockbroker, bank, or another nominee.
How do I vote?
Shareholders at the close of a brokerage statement reflecting your ownership as ofbusiness on April 16, 2021, can vote at the record date. However, since you are notAnnual Meeting via proxy in the stockholder of record, you may not vote thesemanner described herein.
Any shareholder who holds shares in person at“street name” through a broker, bank or other nominee should receive separate instructions from the meeting unlessfirm holding his or her shares describing the procedure for voting those shares. You should follow the voting instructions provided by your broker, bank or other nominee when voting your shares. You may complete and mail a voting instruction card to your broker, bank, or another nominee or, in most cases, submit voting instructions by telephone or the Internet to your broker or nominee. If you obtain
Shareholders of record may vote in the rightfollowing ways:
• | Vote by Internet: www.proxyvote.com |
Use the Internet to transmit your voting instructions and for electronic delivery of information. Vote by 11:59 p.m., Eastern Daylight-Saving Time, on Thursday, June 10, 2021. Have the 16-digit control number included in our Notice or your proxy card in hand when you access the above website and follow the instructions to obtain your records and to create an electronic voting instruction form. |
• | Vote by Telephone: 1-800-690-6903 |
If you received paper copies of the proxy materials, use any touch-tone telephone to transmit your voting instruction. Vote by 11:59 p.m., Eastern Daylight Savings Time, on Thursday, June 10, 2021. Have your proxy card in hand when you call and follow the instruction. |
Vote by Mail.
If you received paper copies of the proxy materials, please 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. |
Vote During the Annual Meeting.
You can vote your shares during the Annual Meeting at www.virtualshareholdermeeting.com/DYAI2021. To participate in the Annual Meeting, you will need the 16-digit control number included in your Notice or on your proxy card. |
You need only vote in one way (so that, if you vote by internet or telephone, you need not return the shares. Your broker or nominee has enclosed or provided a voting instruction card forproxy card).
If you to use to direct your broker or nomineehave any questions about how to vote these shares.
Can I submit questions at the annualAnnual Meeting?
Yes. During the live virtual meeting, a quorum will be present at the annual meeting. Shares held by persons attending the annual meeting but not voting, and shares represented in person or by proxy and for which the holder has abstained from voting, will be counted as present at the annual meeting for purposes of determining the presence or absence of a quorum.
Can I change my vote after I return my proxy card?
Yes. Even afterIf you have submittedvoted by mail, you may revoke your proxy card,at any time before it is exercised by executing and delivering a timely and valid later-dated proxy, by voting by ballot at the meeting or by giving written notice to the Secretary. If you voted via the Internet or by phone, you may change your vote with a timely and valid later internet or telephone vote, or by voting by ballot at any timethe meeting. Attendance at the meeting will not have the effect of revoking a proxy unless (1) you give proper written notice of revocation to the Secretary before the proxy is exercised, or (2) you vote by filing with our Secretary either a notice of revocation or a duly executed proxy card bearing a later date. In such event, the later submitted vote will be recorded and the earlier vote revoked. The powers of the proxy holders will be suspended if you are a holder of record and attend the meeting in person and so request, although attendanceballot at the meeting will not by itself revoke a previously granted proxy.
If your shares are held in “streetstreet name,” you should contact the institution that holds your shares to change your vote.
Is my vote confidential?
Yes. All votes remain confidential unless you provide otherwise.
How are votes counted?
Before the Annual Meeting, our Board will appoint one or more inspectors of election for the meeting. The inspector(s) will determine the number of shares represented at the meeting, the existence of a quorum and the validity and effect of proxies. The inspector(s) will also receive, count, and tabulate ballots and votes and determine the results of the voting on each matter that comes before the Annual Meeting.
Abstentions and votes withheld, and shares represented by proxies reflecting abstentions or votes withheld, will be treated as present for purposes of determining the existence of a quorum at the Annual Meeting. They will not be considered as votes for or against any matter for which the shareholder has indicated their intention to abstain or withhold their vote. Broker or nominee non-votes, which occur when shares held in street name by brokers or nominees who indicate that they do not have discretionary authority to vote on a particular matter, will not be considered as votes for or against that particular matter. Broker and nominee non-votes will be treated as present for purposes of determining the existence of a quorum and may be entitled to vote on certain matters at the Annual Meeting.
What percentage of our outstanding common stock do our directors and executive officers own?
As of April 16, 2021, our directors and executive officers owned, or have the right to acquire within 60 days through the exercise of option, approximately 26.5% of our outstanding common stock. See the discussion under the heading “Security Ownership of Certain Beneficial Owners and Managements” below for more details.
Who was our independent public accountant for the year ended December 31, 2020? Will they be represented at the Annual Meeting?
Mayer Hoffman McCann P.C is the independent registered public accounting firm that audited our financial statements for the year ended December 31, 2020. We expect a representative of Mayer Hoffman McCann P.C. to be virtually present at the Annual Meeting. The representative will have an opportunity to make a statement and will be available to answer your questions.
What are the board’sBoard’s recommendations?
The boardBoard recommends a vote “FOR”:FOR:
The nominees for Class II directors;
The proposal to ratify the appointment of Mayer Hoffman McCann P.C. (MHM), as our independent registered public accounting firm for the year ending December 31, 2021;
To approve the adoption of the |
• | The compensation of the |
Unless you give other instructions on your proxy card, the personsperson named as proxiesa proxy on the proxy card will vote “FOR” each ofFOR the nominees for Class II directors and the other proposals.
We do not expect that any other matters will be brought before the annual meeting.Annual Meeting. If, however, other matters are properly presented, the persons named as proxies will vote the shares represented by properly executed proxies in accordance with their judgment with respect to those matters, including any proposal to adjourn or postpone the annual meeting.Annual Meeting. No proxy that is voted against all of the proposals will be voted in favor of any adjournment or postponement of the annual meetingAnnual Meeting for the purpose of soliciting additional proxies.
What constitutes a quorum?
If a majority of the shares of our common stock outstanding on the record date is represented either in person or by proxy at the Annual Meeting, a quorum will be present at the Annual Meeting. Virtual attendance at the Annual Meeting constitutes presence in person for purposes of quorum at the Annual Meeting. Shares held by persons attending the Annual Meeting but not voting, and shares represented in person or by proxy and for which the holder has abstained from voting, will be counted as present at the Annual Meeting for purposes of determining the presence or absence of a quorum.
Applicable stock exchange rules determine whether a proposal presented at a shareholder meeting is routine or non-routine. If a proposal is routine, a broker or other entity holding shares for an owner in street name may vote on the proposal without receiving voting instructions from the beneficial owner. If a proposal is non-routine, the broker or other entity may vote on the proposal only if the beneficial owner has provided voting instructions. A broker non-vote occurs when a broker or other entity is unable to vote on a particular proposal and the broker or other entity has not received voting instructions from the beneficial owner. Therefore, if you do not give your broker or other entity specific instructions, your shares will not be voted on non-routine matters. However, the broker non-votes will be counted as present at the Annual Meeting for purposes of determining whether a quorum exists. The election of directors is considered a non-routine proposal. The proposal to ratify the appointment of MHM to serve as our independent auditor is considered routine proposals.
What vote is required to approve the proposal?
Proposal 1: Election of Class II Directors
Proposal 2: ApprovalRatification of Amended and Restated 2001 Equity Compensation Plan. Appointment of MHM as our Independent Registered Public Accounting Firm. The affirmative vote of the holders of a majority of all shares casting votes, either in person or by proxy, at the annual meetingAnnual Meeting is required to approveratify the Amended and Restated 2001 Equity Compensation Plan effectiveappointment of MHM as our independent registered public accounting firm for the fiscal year ending December 31, 2021. We are not required to submit this matter to a vote of January 1, 2005. This approvalshareholders for ratification; however, our Board is required (i)doing so, based upon the recommendation of its audit committee, as a matter of good corporate practice. You may vote for, purposesagainst, or abstain with respect to the ratification of compliance with certain exclusions from the limitationsappointment of Section 162(m) of the Internal Revenue Code of 1986,MHM as amended, and (ii) by the applicable rules of the American Stock Exchange.our independent registered public accounting firm. A properly executed proxy marked “abstain”abstain with respect to this proposal will not be voted for or against the proposal, although it will be counted for purposes of determining whether there is a quorum. Abstentions and brokerBroker non-votes will have the same effectnot be considered as a votevotes cast for or against this proposal.
Proposal 3:
Advisory Vote on Named Executive Officers Compensation. The votes that shareholders cast “for” must exceed the votes that shareholders cast “against” to approve the advisory vote on compensation of our Named Executive Officers. You may vote for, against, or abstain with respect to the advisory vote on compensation of the Company’s Named Executive Officers. A properly executed proxy marked abstain with respect to this proposal will not be voted for or against the proposal, although it will be counted for purposes of determining whether there is a quorum. Broker non-votes will not be considered as votes cast for or against this proposal, although it will be counted for purposes of determining whether there is a quorum.Proposal 4: Approval of 2006 Stock Option Plan.
Other Items.
In the event other items are properly brought before theBecause your votes are advisory on Proposal 3, they will havenot be binding on the effect of a negative vote.
Who pays for the preparation of the proxy and soliciting proxies?
We will pay the cost of preparing, assembling and mailing the proxy statement and the accompanying noticeNotice of annual meeting,Annual Meeting and proxy card and annual report to stockholders.card. In addition to the use of mail, our directors, officers, and employees may solicit proxies by telephone or other electronic means or in person. These persons will not receive additional compensation for soliciting proxies. Arrangements also will be made with brokerage houses and other custodians, nominees, and fiduciaries for the forwarding of solicitation materials to the beneficial owners of stock held of record by these persons, and we will reimburse them for reasonable out-of-pocket expenses.
What should I have received to enable me to vote?
We are furnishing proxy materials to this proxy statement, you should have receivedour shareholders primarily via the accompanying notice of annual meeting, a proxy card,internet under the SEC’s “Notice and our 2005 annual report to stockholders. The mailing date of these materials is onAccess” rules. On or about May 5, 2006.
We are providing internet distribution of our proxy materials to expedite receipt by shareholders, reduce costs and conserve paper. However, if you would like to receive printed proxy materials, please follow the instructions on the Notice.
How can I obtain additional copies?
The Notice of Meeting, Proxy Statement and our Annual Report on Form 10-K are available online athttp://www.dyadic.com/investorsand may be accessed at https://materials.proxyvote.com/26745T.
For additional copies of any of this proxy statement and the enclosed proxy card, and annual report to stockholders, you shouldplease contact either our corporate office at 140 Intracoastal Pointe Drive, Suite 404, Jupiter, Florida 33477, Attention: Alexander (Sasha) Bondar,Heidi Zosiak, telephone: (561)743-8333 or Continental Stock Transfer & Trust Company, 17 Battery Place, New York,Broadridge Financial Solutions, Inc., 51 Mercedes Way, Edgewood, NY 10004,11717, telephone: (212) 509-4000.(631) 257-4339.
SECURITYSECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS DIRECTORS
The following table below sets forth certain information regarding the beneficial ownership of our common stock as of April 26, 2006,16, 2021 (except as noted below), by:
each person known by us to be the following individuals or groups:beneficial owner of more than 5% of the outstanding shares of our common stock;
each of our directors, named executive officers; and
all our directors and executive officers as a group.
The amounts and percentages of common stock beneficially owned are reported based on regulations of the SEC governing the determination of beneficial ownership is determined in accordance withof securities. Under the rules of the Securities and Exchange Commission (“SEC”) and generallySEC, a person is deemed to be a “beneficial owner” of a security if that person has or shares voting power, which includes the power to vote or direct the voting of a security, or investment power, with respectwhich includes the power to securities. Sharesdispose of our common stockor to direct the disposition of a security. A person is also deemed to be a beneficial owner of any securities of which that are subjectperson has a right to our options, warrants and convertible notes that are presently exercisable or exercisableacquire beneficial ownership within 60sixty (60) days of April 26, 200616, 2021. Securities that can be so acquired are deemed to be outstanding and beneficially owned by the person holding any of such convertible securities for the purposepurposes of computing thesuch person’s ownership percentage, of ownership of that person, but are not treated as outstanding for the purposepurposes of computing the percentage of any other person.
As of April 16, 2021, the Company has shares of common stock beneficially owned by them. As of April 26, 2006, we had outstanding 23,140,467issued and 27,554,157 shares of our common stock.
Name and Address of Beneficial Owner | Number of Shares | Percentage Ownership | |||||
Mark A. Emalfarb (1)(9)(10) | 7,098,559 | 28.9 | % | ||||
The Francisco Trust U/A/D February 28, 1996 (2) | 4,769,578 | 20.5 | % | ||||
The Pinnacle Fund, L.P. Barry M. Kitt (3) | 2,277,494 | 9.9 | % | ||||
Stephen J. Warner (4)(11) | 461,050 | 2.0 | % | ||||
Glenn E. Nedwin, Ph.D. (9) | 11,990 | * | |||||
Robert B. Shapiro (5)(9) | 34,688 | * | |||||
Richard J. Berman (5)(9) | 56,250 | * | |||||
Harry Z. Rosengart (5)(11) | 34,167 | * | |||||
Wayne Moor (5)(10) | 277,889 | 1.2 | % | ||||
Ratnesh (Ray) Chandra (6)(10) | 103,716 | * | |||||
Kent M. Sproat (7)(10) | 143,716 | * | |||||
Alexander V. Bondar (8)(10) | 73,716 | * | |||||
All directors, director nominees and executive officers as a group (10 persons) | 8,295,741 | 32.7 | % |
Number of | Percentage of | |||||||||||||||
Common | Common | |||||||||||||||
Share | Share | |||||||||||||||
Number of | Options | Equivalents | Equivalents | |||||||||||||
Common | Exercisable | Beneficially | Beneficially | |||||||||||||
Name and Address of Beneficial Owner (1) | Shares Held | within 60 Days | Owned | Owned (%) (2) | ||||||||||||
5% Shareholders: | ||||||||||||||||
Mark A. Emalfarb (3) | 4,166,987 | 1,295,000 | 5,461,987 | 18.9 | % | |||||||||||
The Francisco Trust U/A/D February 28, 1996 (4) | 3,723,528 | — | 3,723,528 | 13.5 | % | |||||||||||
Named Executive Officers and Directors: | ||||||||||||||||
Mark A. Emalfarb (3) | 4,166,987 | 1,295,000 | 5,461,987 | 18.9 | % | |||||||||||
Michael P. Tarnok | 188,929 | 326,875 | 515,804 | 1.9 | % | |||||||||||
Jack L. Kaye | 72,707 | 317,500 | 390,207 | 1.4 | % | |||||||||||
Seth J, Herbst, M.D. | 30,000 | 321,875 | 351,875 | 1.3 | % | |||||||||||
Arindam Bose, Ph.D. | — | 308,125 | 308,125 | 1.1 | % | |||||||||||
Barry C. Buckland, Ph.D. | — | 106,875 | 106,875 | * | ||||||||||||
Patrick Lucy (5) | — | — | — | * | ||||||||||||
Ping W. Rawson | 18,500 | 365,640 | 384,140 | 1.4 | % | |||||||||||
Ronen Tchelet, Ph.D. | ��� | 485,000 | 485,000 | 1.7 | % | |||||||||||
Matthew S. Jones | — | 315,000 | 315,000 | 1.1 | % | |||||||||||
All current executive officers and directors as a group | 4,477,123 | 3,841,890 | 8,319,013 | 26.5 | % |
(10 persons)
______________--
Notes:
(*) Less than 1%.
(1) | Except as otherwise noted, the address for each shareholder is c/o Dyadic International, Inc., 140 Intracoastal Pointe Drive, Suite 404, Jupiter, FL 33477. |
(2) | Based on 27,554,157 shares of common stock outstanding as of April 16, 2021. Shares of common stock subject to options that are currently exercisable or exercisable within 60 days are deemed outstanding for purposes of computing the percentage of the person holding such options but are not deemed outstanding for purposes of computing the percentage of any other person. |
(3) | Includes 4,166,987 shares held by Mark A. Emalfarb beneficially through the MAE Trust U/A/D October 1, 1987, of which Mr. Emalfarb is the sole beneficiary and serves as sole trustee. In addition, Mr. Emalfarb holds 1,295,000 shares of common stock underlying options that are presently exercisable. Based on the information available to us, the address of the MAE Trust U/A/D October 1, 1987 is 193 Spyglass Court, Jupiter, 33477. |
(4) | The trustee of the Francisco Trust is Adam Morgan, and the beneficiaries thereof are the spouse and descendants of Mark A. Emalfarb. The address of the Francisco Trust is 3128 San Michele Drive, Palm Beach Gardens, Florida 33418. Mr. Emalfarb disclaims beneficial ownership of such shares. |
(5) | On January 8, 2021, Patrick Lucy was appointed to the Board. As a non-employee director of the Company, Mr. Lucy received a new director grant of 35,000 options at an exercise price of $5.50. The options will vest in one year from the date of grant. |
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Our Board has determined that the warrant that may be acquired upon the exerciseaudit committee of the warrantBoard (the “Audit Committee”) is best suited to review and approve transactions with related persons. Prior to entering into a transaction with a related person, (a) the director, executive officer, nominee or significant holder who has a material interest (or whose immediate family member has a material interest) in the transaction or (b) the business unit or function/department leader responsible for the potential transaction with a related person is required to provide notice to the Chairman of the Audit Committee of the Company (“Audit Committee Chairman”) of the material facts and circumstances of the potential transaction with a related person and such information concerning the transaction as the Audit Committee Chairman may reasonably request. If the Audit Committee Chairman determines that the proposed transaction is a related person transaction, the proposed related person transaction must be submitted to the Audit Committee for consideration at the next Audit Committee meeting or, in those instances in which the Audit Committee Chairman determines that it is not practicable or desirable for the Company to wait until the next Audit Committee meeting, the Audit Committee Chairman possesses delegated authority to act between Committee meetings.
The Audit Committee will consider all the relevant facts and circumstances available to the Audit Committee, including (if applicable) but not limited to: (a) the benefits to the Company; (b) the availability of other sources for comparable products or services; (c) the terms of the transaction; and (d) the terms available to unrelated third parties or to employees generally. No member of the Audit Committee will participate in any review, consideration, or approval of any related person transaction if such member, or any of his or her immediate family members, is the related person. The Audit Committee or Audit Committee Chairman, as applicable, will convey the approval or disapproval of the transaction to the Chief Executive Officer or Secretary, who will convey the decision to the appropriate persons within the Company. The Audit Committee Chairman will report to the Audit Committee at the next Audit Committee meeting any approval under this policy made by the chairperson pursuant to delegated authority.
In the event we become aware of a related person transaction that has not been previously approved or previously ratified under this procedure, and such transaction is pending or ongoing, it will be submitted to the Audit Committee or Audit Committee Chairman, as applicable, promptly, and the Audit Committee or Audit Committee Chairman will consider all the relevant facts and circumstances available to the Audit Committee or Audit Committee Chairman as provided above. Based on the conclusions reached, the Audit Committee or Audit Committee Chairman, as applicable, will evaluate all options, including but not limited to, 64,254 sharesratification, amendment, or termination of the common stockrelated person transaction.
CORPORATE GOVERNANCE AND RELATED MATTERS
General
The following discussion summarizes certain corporate governance matters relating to insure that, following such exercise, the total number of shares of common stock then beneficially owned by PinnacleCompany, including information about director independence, Board and its affiliatesCommittee structure, function and other persons whose beneficial ownership of common stock would be aggregated with Pinnacle’s for purposes of Section 13(d)composition, charters, policies, and procedures. For additional information on the Company’s corporate governance, including copies of the Act, does not exceed 9.999%charters approved by the Board for the Audit Committee, the compensation committee of the total number of our issued and outstanding shares. The address of Pinnacle and Mr. Kitt is 4965 Preston Park Blvd.Board (“Compensation Committee”), Suite 240, Plano, Texas 75093.
Board of Directors and Committees
Board of Directors
The Board is responsible for directing and overseeing the business and affairs of the Company. The Board represents the Company’s shareholders, and its primary purpose is to build long-term shareholder value. The Board meets on a regularly scheduled basis during the year to review significant developments affecting the Company and to act on matters that, in accordance with good corporate governance, require Board approval. It also holds annual meetings and acts by unanimous written consent when an important matter requires Board action between scheduled meetings. The Board held seven (7) meetings during 2020 and each of Stephen J. Warner and Harry Z. Rosengart to stand for re-election as a Class II director, each for a three-year term expiring in 2009.
We have a classified Board currently fixed at seven members. The Board has four committees: Audit Committee, Compensation Committee, Nominating Committee, and Science and Technology Committee. Currently, Mr. Michael Tarnok serves as Chairman of the Board and Chairman of the Compensation Committee. Mr. Jack Kaye serves as Audit Committee Chairman, Dr. Seth Herbst serves as Chairman of the Nominating Committee, and Dr. Arindam Bose serves as Chairman of the Science and Technology Committee.
The Board’s Role in Risk Oversight
Our Board, as a whole and at the annual meeting by the holders of shares of our common stock entitled to vote at the annual meeting is required for the election of these nominees as Class II directors.
Independence of directors since October 2004, and a directorDirectors
In evaluating the independence of Dyadic International (USA), Inc., our wholly-owned subsidiary (“Dyadic-Florida”), since August 15, 2004. Mr. Warner currently is the managing member of Bioform LLC, which beneficially owns 274,800 shares of our common stock. Mr. Warner also serves as chairman of Maxim TEP, Inc. a private energy company based in Houston, Texas, and Search Energy Solutions, Inc., a private company offering energy savings services for large air conditioning systems based in Palm Beach Gardens, Florida. He also serves as a director of UCT Coatings Inc., a private, metal finishing technology company in Stuart, Florida, and AOI Medical, Inc., a private medical device company in Orlando, Florida. Mr. Warner has over 25 years of venture capital experience. In 1981, Mr. Warner founded Merrill Lynch Venture Capital Inc., a wholly-owned subsidiary of Merrill Lynch & Co. Inc. in New York and served as its President and Chief Executive Officer from 1981 to 1990. Under his leadership, Merrill Lynch Venture Capital managed over $250 million and made over 50 venture capital investments. In 1999, Mr. Warner co-founded, and became Chairman and CEO, of Crossbow Ventures Inc., a private equity fund that invests in early and expansion stage technology companies primarily located in Floridamembers and the Southeast, with over 20 venture capital investments in Florida. Mr. Warner earned a B.S. degree from the Massachusetts Institute of Technology and an MBA from the Wharton School of Business, University of Pennsylvania.
Name | Age | Class | Term Expiring |
Richard J. Berman | 63 | I | 2008 |
Robert B. Shapiro | 67 | I | 2008 |
Mark A. Emalfarb | 51 | III | 2007 |
Glenn E. Nedwin, Ph.D. | 50 | III | 2007 |
Committees of the Board
The boardBoard has established an Audit Committee, a Compensation Committee, a Nominating Committee and a Science and Technology Committee to devote attention to specific subjects and to assist the Board in the discharge of directors held eleven (11) meetings during 2005,its responsibilities. The following table provides membership and meeting information for each of the directors attended at least seventy-five percent (75%) of the total number of meetings of the board of directors and committee (if any) on which he served. The board of directors has a standing audit committee, compensation committee and nominating committee. Each of the committees has a written charter which can be found on our website at
Name | Audit | Compensation | Nominating | Science and Technology | ||||||||
Michael P. Tarnok | X | X* | X | — | ||||||||
Seth J. Herbst, M.D. | — | X | X* | X | ||||||||
Arindam Bose, Ph.D. | X | — | — | X* | ||||||||
Jack L. Kaye | X* | X | — | — | ||||||||
Barry C. Buckland, Ph.D. | — | — | X | X | ||||||||
Patrick Lucy | — | — | — | X | ||||||||
Mark A. Emalfarb | — | — | — | X |
* Committee Chairman
Audit Committee.
TheThe SEC and NASDAQ have established rules and regulations regarding the composition of audit committees and the qualifications of audit committee members. Our Board has examined the composition of our Audit Committee and the qualification of our Audit Committee members in considering the current rules and regulations governing audit committee. Based upon this examination, our Board has determined that each member of our Audit Committee is independent and is otherwise qualified to be a member of our Audit Committee in accordance with the rules of the SEC and NASDAQ.
Additionally, the SEC requires that at least one member of the audit committee have a heightened level of financial and accounting sophistication. Such a person is known as the “audit committee financial expert” under the SEC’s rules. Our Board has responsibilities and authority necessary to comply with Rule 10A-3(b) (2)determined that Mr. Kaye is an “audit committee financial expert”, (3), (4), and as defined in Item 407(d)(5) of Regulation S-K and is an independent member of our Board and our Audit Committee. Please see Mr. Kaye’s biography included in this proxy statement for a description of his relevant experience.
Compensation Committee. The Compensation Committee held three (3) meetings during the Exchange Act, concerningyear ended December 31, 2020. The duties and responsibilities of the Compensation Committee are set forth in the Charter of the Compensation Committee. A copy of the Charter of the Compensation Committee is available on our website, located at www.dyadic.com. As discussed in its charter, among other things, the duties and responsibilities relating to: (a) registered public accounting, (b) complaintsof the Compensation Committee include evaluating the performance of the Chief Executive Officer, Chief Financial Officer, and other key personnel of the Company, including, but not limited to, our incentive and equity-based plans. The Compensation Committee evaluates the performance of the Chief Executive Officer, Chief Financial Officer, and other key personnel of the Company on an annual basis and reviews and approves on an annual basis all compensation programs and awards relating to accounting, internal accounting controls or auditing matters, (c) authoritysuch officers and key personnel. From time to engage advisorstime, the Company engages compensation consultants to evaluate compensation of all Company Officers and (d) funding. These andBoard Members. The Compensation Committee then uses discretion in applying these ranges to the individual executive compensation packages to ensure compliance with the Company’s compensation philosophy. The Chief Executive Officer makes recommendations to the Compensation Committee with respect to the compensation packages for officers other
Nominating Committee.
The nominating committeeNominating Committee does not currently have any formal minimum qualification requirements that must be met by a nominee to serve as a member of the board of directors.Board. The nominating committeeNominating Committee will take into accountconsider all factors they considerit considers appropriate, which may include experience, accomplishments, education, understanding of the business and the industries in which we operate, specific skills, general business acumen and the highest personal and professional integrity.
The Nominating Committee currently has no fixed process for identifying new nominees for election as a director, thereby retaining the flexibility to adapt its process to the circumstances. The nominating committeeNominating Committee has the ability, if it deems it necessary or appropriate, to retain the services of an independent search firm to identify new director candidates. The nominating committeeNominating Committee has determined that it will give consideration toconsider any potential candidate proposed by a member of our boardBoard or senior management. Any director candidate so proposed will be personally interviewed by at least one member of the nominating committeeNominating Committee and our chief executive officerChief Executive Officer and their assessment of his or her qualifications will be provided to the full nominating committee.Nominating Committee. For this annual stockholders’ meeting,the Annual Meeting, the nominating committee received no proposalsone proposal for new director candidates,candidate, Mr. Patrick Lucy, and considered only and nominated Mr. Lucy together with the incumbent Class II directors to serve as the nominees for re-election.
Our policy and procedures regarding director candidates recommended by stockholdershareholders are contained in the nominating committee’sNominating Committee’s charter. The nominating committeeNominating Committee may consider for inclusion in its nominations for new directors any candidates recommended by stockholders,shareholders, but must consider any candidate for director recommended by (i) any stockholdershareholder beneficially owning more than 5% of our outstanding common stock for at least one year as of the date the recommendation was made or (ii) a group of stockholdersshareholders that beneficially owned, in the aggregate, more than 5% of our outstanding common stock, with each of the shares used to calculate that ownership held for at least one year as of the date the recommendation was made. The nominating committeeNominating Committee will consider the candidate based on the same criteria established for selection of director nominees generally. The nominating committeeNominating Committee reserves the right to reject any candidate in its discretion, including, without limitation, rejection of a candidate who has a special interest agenda other than the best interests of usthe Company and our stockholders,the shareholders, generally. Any stockholdershareholder who wishes to recommend for the nominating committee’sNominating Committee’s consideration a director candidate should followabide by the following procedures:
Submit the following written information about the candidate by mail to the Nominating Committee, c/o Dyadic International, Inc., 140 Intracoastal Pointe Drive, Suite 404, Jupiter, Florida 33477, Attention: Chair of Nominating Committee, the name, mailing address, telephone number, e-mail address, resume, business history, listing of other past and present directorships and director committees, any biotech industry experience and other relevant information;
Explain in the submission why the shareholder believes the candidate would be an appropriate member of our Board and the benefits and attributes that the candidate will provide to us in serving as a director;
Provide evidence of the submitting party’s requisite ownership of our common stock along with the recommendation; and
Indicate whether we may identify the shareholder in any public disclosures that we make regarding the consideration of the director candidate.
For a director candidate to be considered by the nominating committeeNominating Committee for nomination at the 2007 annual meeting of stockholders,Annual Meeting, the submission must behave been received by us no later than December 28, 2006.
Science and the reporting process including the systems of internal controls. In fulfilling its oversight responsibilities, the audit committee has reviewedTechnology Committee. The Science and discussed the audited financial statements in the annual report with management including a discussion of the quality, not just the acceptability, of the accounting principles, the reasonableness of significant judgments, and the clarity of disclosures in the financial statements.
1) | Review, evaluate and report to the Board regarding the performance of the Vice-President, Research and Development (and his or her team), the contract research organizations being considered or working on behalf of the Company in achieving the strategic goals and objectives and the quality and direction of the Company’s biopharmaceutical research and development programs. |
2) | Identify and discuss significant emerging science and technology issues and trends. |
3) | Review the Company’s approaches to acquiring and maintaining a range of distinct technology positions (including but not limited to contracts, grants, collaborative efforts, alliances, and capital investments). |
4) | Evaluate the soundness/risks associated with the technologies in which the Company is investing its research and development efforts. |
5) | Periodically review the Company’s overall patent strategies. |
Shareholder Communications
Our Board believes that it is important for our shareholders to have a process to send communications to the Board. Accordingly, shareholders desiring to send a communication to the Board, or to a specific director, may do so by delivering a letter to the Secretary of the Company at 140 Intracoastal Pointe Drive, Suite 404, Jupiter, Florida 33477. The mailing envelope must contain a clear notation indicating that the enclosed letter is a “shareholder-director communication.” All such letters must identify the author as filedthe shareholder and clearly state whether the intended recipients of the letter are all the members of our Board or certain specified individual directors. The Secretary will open such communications, make copies, and then circulate them to the appropriate director or directors.
Human Capital
The Company believes that its success depends on the ability to attract, develop, retain, and incentivize our existing and new employees, consultants, and key personnel. It also believes that the skills, experience, and industry knowledge of its key personnel significantly benefits its operations and performance. The principal purposes of equity and cash incentive plans are to attract, retain and reward personnel through the granting of stock-based and cash-based compensation awards, to increase shareholder value and the success of our company by motivating such individuals to perform to the best of their abilities and achieve our objectives.
Employee health and safety in the workplace is one of the Company’s core values. The COVID-19 pandemic has underscored the importance of keeping employees safe and healthy. In response to the COVID-19 pandemic, the Company has taken actions aligned with the SecuritiesWorld Health Organization and Exchange Commission.
Employee levels are managed to align with the pace of business and management believes it has sufficient human capital, along with the third-party research organizations with who we have collaboration agreements, to operate its business successfully.
Policy Concerning Director Attendance at Annual Meetings of Shareholders
While we encourage all members of our Board to attend our Annual Meeting of our shareholders, there is no formal policy as to their attendance at such meetings. All members of the Board attended the 2020 Annual Meeting of Shareholders.
Code of Conduct and Ethics
We have adopted a Code of Conduct and Ethics, as amended, that applies to all employees, key consultants, officers, and directors of our company, including our principal executive officer, principal financial officer and principal accounting officer, or persons performing similar functions. Our Code of Conduct and Ethics is available on the “Corporate Governance” page of the “Investors” section of our website at www.dyadic.com. A copy of our Code of Conduct and Ethics can also be obtained free of charge by contacting our Secretary, c/o Dyadic International, Inc, 140 Intracoastal Pointe Drive, Suite 404, Jupiter, FL 33477. We intend to satisfy the disclosure requirement under Item 5.05 of Form 8-K regarding any amendment to, or waiver from, a provision of our Code of Conduct and Ethics by posting such information on our website.
Compensation of April 26, 2006.
The following table sets forth the total compensation earned, accrued or paid tofor our Chief Executive Officer and each of our four most highly compensated executive officers who served in such capacities as of December 31, 2005, collectively referred to below and throughout this proxy statement as the “named executive officers,”non-employee directors for the yearsyear ended December 31, 2005, 2004 and 2003.
Annual Compensation (1) | Long-Term Compensation Awards | ||||
Name and Principal Position | Year | Salary ($) | Bonus ($) | Restricted Stock Awards | Securities Underlying Option Awards |
Mark A. Emalfarb(2) Chairman, President and Chief Executive Officer | 2005 | 300,000 | - | - | - |
2004 | 300,000 | 75,000 | - | - | |
2003 | 300,000 | 35,970 | - | - | |
Wayne Moor(3) Chief Financial Officer and Vice President | 2005 | 207,120 | - | - | 307,889 |
Ratnesh (Ray) Chandra (4) Senior Vice President, Marketing - Biotechnology Systems | 2005 | 165,517 | - | - | 30,000 |
2004 | 149,856 | 30,000 | - | 60,000 | |
2003 | 144,004 | 23,250 | - | 15,000 | |
Kent M. Sproat (5) Executive Vice President, Enzyme Business | 2005 | 179,154 | - | - | 30,000 |
2004 | 145,206 | 30,000 | - | 80,000 | |
2003 | 139,505 | 23,250 | - | 10,000 | |
Alexander (Sasha) Bondar (6) Vice President, Strategy & Corporate Development | 2005 | 139,755 | - | - | 20,000 |
2004 | 138,105 | 25,000 | - | 45,000 | |
2003 | 74,157 | 23,250 | - | 25,000 |
Nonqualified | ||||||||||||||||||||||||||||
Fees earned | Options | Non-equity | deferred | All other | ||||||||||||||||||||||||
or paid in | Stock awards | awards | incentive plan compensation | compensation | compensation | |||||||||||||||||||||||
Name (4) | cash (1) | ($) | ($) (1)(2)(3) | ($) | earnings ($) | ($) | Total ($) | |||||||||||||||||||||
Michael P. Tarnok | $ | 75,000 | $ | — | $ | 154,301 | $ | — | $ | — | $ | — | $ | 229,301 | ||||||||||||||
Jack L. Kaye | $ | 75,000 | $ | — | $ | 154,301 | $ | — | $ | — | $ | — | $ | 229,301 | ||||||||||||||
Seth J. Herbst, MD | $ | 60,000 | $ | — | $ | 102,867 | $ | — | $ | — | $ | — | $ | 162,867 | ||||||||||||||
Arindam Bose, Ph.D. | $ | 75,000 | $ | — | $ | 154,301 | $ | — | $ | — | $ | — | $ | 229,301 | ||||||||||||||
Barry C. Buckland, Ph.D. | $ | 60,000 | $ | — | $ | 102,867 | $ | — | $ | — | $ | — | $ | 162,867 |
___________________
Notes:
(1) | Directors who are also employees or officers |
(2) | The Stock Option Awards represented the grant date fair market value of each option granted in 2020, computed in accordance with FASB ASC Topic 718. These amounts do not correspond to the actual value that will be recognized by the named |
(3) |
Options to purchase | |
(4) | On January 8, 2021, Patrick Lucy was appointed to the Board. Mr. Lucy serves as a member of |
COMPENSATION AND OTHER INFORMATION CONCERNING OFFICERS
Philosophy and Objectives
The philosophy underlying our executive compensation program is to provide an attractive, flexible, and market-based total compensation program tied to performance and aligned with the interests of our shareholders. Our objective is to recruit and retain the caliber of executive officers and other key employees necessary to deliver sustained high performance to our shareholders, customers, and communities where we have a strong presence. Our executive compensation program is an important component of these overall human resources policies. Equally important, we view compensation practices as a means for communicating our goals and standards of conduct and performance and for motivating and rewarding employees in relation to their achievements. The organization’s executive compensation program is designed to:
Encourage the attraction and retention of high-caliber executives.
Provide a competitive total compensation package, including benefits.
Reinforce the goals of the organization by supporting teamwork and collaboration.
Ensure that pay is perceived to be fair and equitable.
Be flexible to potentially reward individual accomplishments as well as organizational success.
Ensure that the program is easy to explain, understand, and administer.
Balance the needs of both the Company and employees to be competitive with the limits of available financial resources.
Ensure that the program complies with state and federal legislation.
From time to time, the Company will consult with a compensation specialist to determine whether its overall compensation practices and policies are appropriate for the specific market conditions for the Company and the industries in which it operates.
Summary Compensation Table
The following table sets forth grantssummarizes the compensation paid or accrued to our “named executive officers” (as defined by the SEC’s disclosure requirements) during the fiscal years 2020 and 2019:
Salary | Bonus | Stock Awards | Option Awards | Nonequity incentive plan compensation | Nonqualified deferred compensation earnings | All other payments | |||||||||||||||||||||||||||
Name and Principal Position | Year | ($) | ($)(1) | ($) | ($)(2)(3) | ($) | ($) | ($) (4) | Total ($) | ||||||||||||||||||||||||
Mark A. Emalfarb (*) | 2020 | $ | 500,000 | $ | 200,000 | $ | — | $ | 657,342 | $ | — | $ | — | $ | 24,291 | $ | 1,381,633 | ||||||||||||||||
President, CEO and Director | 2019 | $ | 440,000 | $ | 250,000 | $ | — | $ | 156,000 | $ | — | $ | — | $ | 228,049 | $ | 1,074,049 | ||||||||||||||||
Ping W. Rawson (5) | 2020 | $ | 231,750 | $ | 57,938 | $ | — | $ | 164,336 | $ | — | $ | — | $ | 11,400 | $ | 465,424 | ||||||||||||||||
Chief Financial Officer | 2019 | $ | 220,000 | $ | 56,250 | $ | — | $ | 114,250 | $ | — | $ | — | $ | 8,807 | $ | 399,307 | ||||||||||||||||
Ronen Tchelet, Ph.D. (6) | 2020 | $ | 217,865 | $ | 42,052 | $ | — | $ | 154,301 | $ | — | $ | — | $ | — | $ | 414,218 | ||||||||||||||||
VP of Research and Business Development | 2019 | $ | 207,647 | $ | 41,193 | $ | — | $ | 57,000 | $ | — | $ | — | $ | — | $ | 305,840 | ||||||||||||||||
Matthew S. Jones (7) | 2020 | $ | 276,410 | $ | 88,906 | $ | — | $ | 154,301 | $ | — | $ | — | $ | — | $ | 519,617 | ||||||||||||||||
Managing Dir. of Bus. Dev and Licensing | 2019 | $ | 269,450 | $ | 82,954 | $ | — | $ | 57,000 | $ | — | $ | — | $ | — | $ | 409,404 |
___________________
Notes:
(*) Mr. Emalfarb also serves on the Board, for which he receives no direct, indirect, or incremental compensation.
(1) | All 2020 bonuses were accrued as of December 31, 2020 and paid in January 2021. All 2019 bonuses were accrued as of December 31, 2019 and paid in January 2020. |
(2) | The Option Awards amount reported in this column represented stock options granted in 2020 and 2019 (including annual share-based compensation awards for all named executives, and Ms. Rawson’s awards upon promotions for 2019 in the amount of $55,250), vesting upon grant, or the one or four-year anniversary in accordance with their individual employment agreement or consulting agreement. |
(3) | The Option Awards amount reported in this column represented the grant date fair market value of each option granted, computed in accordance with FASB ASC Topic 718. These amounts do not correspond to the actual value that will be recognized by the named executive officers. The assumptions used in the valuation of these awards are consistent with the valuation methodologies specified in the notes to our consolidated financial statements. The table above does not include the value of the following performance-based vesting stock options, as the achievement of the conditions was not deemed probable at the grant date and the value of the awards was deemed zero in accordance with ASC 718. |
Upon the Company’s uplisting to the NASDAQ in April 2019, 400,000 shares of performance-based vesting stock options granted to acquireMr. Emalfarb in 2016 became vested, and the related estimated value of the awards at the grant date in the amount of $392,000 was recorded in 2019 in accordance with FASB ASC Topic 718.
Upon the achievements of different conditions in 2019, 175,000 shares of our commonperformance-based vesting stock made during the year ended December 31, 2005 to the named executive officers. No stock appreciation rights wereoptions granted to these individuals during that year.
Name | Number of Securities Underlying Options Granted (#) | % of Total Options Granted to Employees in Fiscal Year | Exercise or Base Price ($/SH) | Expiration Date |
Mark A. Emalfarb | - | - | - | - |
Wayne Moor | 277,889 | 28% | 3.68 | 01/31/10 |
Ratnesh (Ray) Chandra | 50,000 | 5% | 3.025 | 03/30/10 |
Kent M. Sproat | 70,000 | 7% | 3.025 | 03/30/10 |
Alexander (Sasha) Bondar | 35,000 | 4% | 3.025 | 03/30/10 |
(4) | Other payments include following: |
(5) | Ms. Rawson was promoted to Chief Financial Officer in June 2019, and she previously served as the Company’s Chief Accounting Officer. |
(6) | The amounts represent the compensation for services of Mr. Tchelet for the year ended December 31, 2020 and 2019, in accordance with the Sky Blue Biotech Agreement indicated below. |
(7) | The amounts represent the compensation for services of Mr. Jones for the year ended December 31, | |||
Base Salary and Bonus. The Emalfarb Agreement provided for an annual base salary of $375,000, which was increased to $405,000 in January 2019, to $475,000 in June 2019, to $500,000 in January 2020, and to $525,000 in January 2021. The Emalfarb Agreement also provided for an annual bonus award, with the timing and amount of any such bonus determined in the sole discretion of the Compensation Plan isCommittee of the Board, which determined to retainaward Mr. Emalfarb a cash bonus of $200,000 for 2020 and attract key management, employees, nonemployee directors and consultants by providing those persons with a proprietary interest in us. $250,000 for 2019.
Performance Stock Options. The compensation committee administersEmalfarb Agreement provided Mr. Emalfarb the Equity Compensation Plan and may grantopportunity to be awarded annual stock options, which may beoption grants, each such annual option incentive stock options or nonqualified stock options that do not comply with Section 422 of the Internal Revenue Code, stock awards and performance unitsoption grant will be to eligible persons with such terms and conditions as are determined by the committee. The committee may grant one or more types of awards in any combinationpurchase up to an eligible person in a particular year, subject to certain limitations. The Equity Compensation Plan was recently amended and restated by our board of directors effective as of January 1, 2005 to (a) reduce the number ofthree hundred thousand (300,000) shares of common stock reserved(the “Maximum Option Bonus”) based on performance achievements. Performance incentives will be based solely on the Compensation Committee’s evaluation of Mr. Emalfarb’s performance during that period.
For fiscal year 2020, Mr. Emalfarb was awarded a stock option grant to purchase 200,000 shares of common stock for issuance under the Plan to 4,478,475 shares from 5,152,447 shares his annual performance (granted in 2021), (b) to conform certain provisionsrepresenting 66.7% of the PlanMaximum Option Bonus. For each of fiscal years 2019 and 2018, Mr. Emalfarb was awarded 300,000 shares of common stock for his annual performance (granted in 2020 and 2019, respectively), representing 100% of the Maximum Option Bonus.
All options granted to Mr. Emalfarb for fiscal years 2020 and 2019 vest annually in equal installments over four years and have a ten-year term from the date of grant. All options granted to Mr. Emalfarb for prior fiscal years vested immediately upon grant and have a five-year term from the date of grant.
Stock Exchange Stock Option. In addition, Mr. Emalfarb received a stock option grant to purchase up to four hundred thousand (400,000) shares of common stock at an exercise price of $1.67, equal to the requirementsclosing price of Section 409ADyadic common stock on June 21, 2016. The stock option would vest and become exercisable only if the Company’s shares of common stock commence trading on the NASDAQ Capital Markets or other stock exchange approved by the Board. The Stock Exchange stock option grant has a five-year term. All 400,000 stock options granted to Mr. Emalfarb in 2016 became vested, upon the Company’s uplisting to the NASDAQ in April 2019.
Licensing/Collaboration Transaction Stock Options. A stock option to purchase up to six hundred thousand (600,000) shares of common stock shall be proportionally awarded, vest and become exercisable when each of three (3) Bona Fide Licensing / Collaboration Transactions are entered into with the Company. A Bona Fide transaction is defined as a license, joint venture, or other collaboration for a specific biologic with the intent to commercialize and/or a license agreement that generates a cumulative five million dollars in non-refundable cash, or when either the vaccine or biologics pharmaceutical business categories are sold. On November 12, 2019, the Company entered an amendment (the “Amendment”) to the Emalfarb Agreement. Pursuant to the Amendment, the stock options to be awarded to Mr. Emalfarb upon the Company entering a first or second licensing and/or collaboration transaction, as provided in the Emalfarb Agreement, shall each be awarded on the date of the Internal Revenue Coderelevant licensing and/or collaboration transaction and shall each have a fixed exercise date on the tenth anniversary of 1986,the date of grant.
Severance Terms. Mr. Emalfarb will be eligible for severance benefits comparable to other executives at his level. In addition, if Mr. Emalfarb’s employment is terminated by the Company without cause, by Mr. Emalfarb for good reason, or due to Mr. Emalfarb’s death or disability, then the Company shall fulfill its obligations as amended,for annual base salary through the effective date of termination and (c) increasehe will be entitled to receive his accrued but unpaid vacation through the maximum limitationdate thereof plus, in the sole discretion of shares thatthe Compensation Committee, the Maximum Option Bonus and performance incentive may be subjectawarded. In addition, all of Mr. Emalfarb’s unvested Stock Exchange Stock Options and Licensing/Collaboration Transaction Stock Options will vest immediately in the event milestones for which the options would have been awarded are achieved within one year from the date of termination or upon a change of control.
Change of Control. In the sole discretion of the Compensation Committee, Mr. Emalfarb may be awarded an additional bonus on or before the occurrence of a change of control.
Side Letter. In connection with the execution of the Emalfarb Agreement, the Company and Mr. Emalfarb entered into a separate agreement (the “Side Letter”) under which the Company agreed to awards granted underpay Mr. Emalfarb in monthly installments over the Plan to any one individual for any fiscal year during theinitial term of the PlanEmalfarb Agreement, $1,335,000, equal to 1,200,000 shares from 100,000 shares. For a descriptionthe amount of the 2001 Equity Compensation Planseverance payments that would have been payable under his previous employment agreement if Mr. Emalfarb resigned for “good reason” in connection with a change in control. All payments under this Side Letter have been made, and the Company has no additional obligation associated with this Side Letter as amendedof June 2019.
Ping W. Rawson
In connection with Ping Rawson’s appointment as the Company’s Chief Financial Officer in June 2019, the Board approved her base salary at $225,000 per year, which was increased to $231,750 in January 2020, and restated$238,700 in January 2021, which increases were consistent with annual increases for which wethe majority of the Company’s employees. Ms. Rawson will also receive discretionary annual cash bonuses and other equity compensation as determined by the Company. Ms. Rawson will be eligible for twelve (12) months of severance benefits, if her services are seeking stockholder approval atno longer required due to a change of control or any reason other than for cause.
For fiscal year 2020, Ms. Rawson was awarded a stock option grant to purchase 75,000 shares of common stock for her annual performance (granted in 2021). For fiscal years 2019 and 2018, Ms. Rawson was awarded stock option grants to purchase 75,000 and 100,000 shares of common stock, respectively (granted in 2020 and 2019, respectively). For fiscal year 2019, Ms. Rawson received an additional 25,000 options associated with her promotion to the CFO in June 2019. Ms. Rawson was awarded a cash bonus of $57,938 for 2020 and $56,250 for 2019 based on her annual meeting, see “Proposal 2: Approvalperformance from the prior year. A total of Amended175,000 of stock options granted to Ms. Rawson became vested upon the Company becoming an SEC reporting entity and Restated 2001 Equity Compensation Plan”listing on page 25.
Ronen Tchelet, Ph.D.
We entered into a consulting agreement with Sky Blue Biotech kft, dated January 1, 2016 (the “Sky Blue Biotech Agreement”), to engage Mr. Tchelet to serve as our Vice President of Research and Business Development. The engagement term of the Sky Blue Biotech Agreement is one year and will renew annually on the anniversary date of the agreement, unless the Company or Mr. Tchelet provides notice of non-renewal any time after the one year anniversary date with not less than 90 days’ notice. Mr. Tchelet is subject to an annual performance evaluation and adjustment of his base consulting fees, in the sole discretion of the Company. Mr. Tchelet was compensated EUR €180,000 per annum in 2018 for the consulting services provided, which was increased to EUR €185,400 per annum in January 2019, to EUR €190,962 in January 2020, and to EUR €196,118 in January 2021, which increases were consistent with annual increases for the majority of the Company’s employees.
Mr. Tchelet is also eligible for a discretionary annual target bonus of up to 40% of his base contract amount if specific performance targets are met. For fiscal years 2020 and 2019, Mr. Tchelet was awarded a cash bonus of EUR €34,373 and EUR €37,080, respectively, for his annual performance. For fiscal year 2020, Mr. Tchelet was awarded a stock option grant to purchase 67,500 shares of common stock for his annual performance (granted in 2021). For fiscal years 2019 and 2018, Mr. Tchelet was awarded stock option grants to purchase 75,000 and 100,000 shares of common stock, respectively (granted in 2020 and 2019, respectively). All options granted to Mr. Tchelet vest upon the one-year anniversary and have established a tax qualified employee savingsten-year term from the date of grant.
During the engagement period, Mr. Tchelet shall be entitled to reimbursement of all business travel, entertainment and retirement plan,other business expenses reasonably incurred in the performance of his duties for the Company. Additionally, if the Company enters into a licensing agreement or research and development agreement sourced and developed by Mr. Tchelet during the engagement period, Mr. Tchelet shall receive the following: (i) a commission of up to 1% of the up-front licensing revenue and (ii) a commission of up to 2.5% of the research and development revenue. Commissions will be paid quarterly within 30 days of the Company’s receipt of payment.
Mr. Tchelet is subject to certain restrictive covenants, including Company ownership of Mr. Tchelet’s work product which shall remain the sole and exclusive property of the Company, non-disclosure for five years following the date of execution of the agreement or for three years following the termination of agreement whichever is last to occur, and non-solicitation for five years following the termination of the Sky Blue Biotech Agreement.
Matthew S. Jones
We entered into a consulting agreement with Novaro Ltd. dated March 31, 2017 (the “Jones Consultant Agreement”) to engage Mr. Jones as our Managing Director Business Development and Licensing. The engagement term of the Jones Consultant Agreement is one year and will renew annually on the anniversary date of the agreement unless the Company or Novaro Ltd. provides notice of non-renewal any time after the first annual anniversary date with then not less than 90 days’ notice. Mr. Jones is subject to an annual performance evaluation and adjustment of his base consulting fees, in the sole discretion of the Company. Mr. Jones was compensated GBP £203,528 per annum in 2018 for the consulting services provided, which was increased to GBP £209,634 per annum in January 2019, to GBP £215,923 in January 2020, and to GBP £222,400 in January 2021 which increases were consistent with annual increases for the majority of the Company’s employees.
Mr. Jones is also eligible for a discretionary annual target bonus of up to 40% of the base contract value if specific performance targets are met as specified in the Jones Consultant Agreement. For fiscal years 2020 and 2019, Mr. Jones was awarded a cash bonus of £64,777 and £62,890, respectively, for his annual performance. For fiscal year 2020, Mr. Jones was awarded a stock option grant to purchase 75,000 shares of common stock for his annual performance (granted in 2021). For fiscal years 2019 and 2018, Mr. Jones was awarded stock option grants to purchase 75,000 and 100,000 shares of common stock, respectively (granted in 2020 and 2019, respectively). All options granted to Mr. Jones vest upon the one-year anniversary and have a ten-year term from the date of grant.
During the engagement period, Mr. Jones shall be entitled to reimbursement of all business travel, entertainment and other business expenses reasonably incurred in the performance of his duties on behalf of the Company. Mr. Jones is subject to certain restrictive covenants, including Company ownership of Mr. Jones’ work product which shall remain the sole and exclusive property of the Company, non-disclosure for five years following the date of execution of the agreement or for three years following the termination of agreement whichever is last to occur, and non-solicitation for five years following the termination of agreement.
Outstanding Equity Awards at Fiscal Year-End
The following table summarizes the outstanding equity award holdings held by our “named executive officers” (as defined by the SEC’s disclosure requirements) as of December 31, 2020.
Option Awards | Stock Awards | ||||||||||||||||||||||||||||||||
Equity | |||||||||||||||||||||||||||||||||
Equity | Incentive | ||||||||||||||||||||||||||||||||
Incentive | Plan | ||||||||||||||||||||||||||||||||
Market | Plan | Awards: | |||||||||||||||||||||||||||||||
Value | Awards: | Market | |||||||||||||||||||||||||||||||
Number | of | Number | or Payout | ||||||||||||||||||||||||||||||
Equity | of | Shares | of | Value of | |||||||||||||||||||||||||||||
Incentive | Shares | or | Unearned | Unearned | |||||||||||||||||||||||||||||
Plan | or Units | Units | Shares, | Shares, | |||||||||||||||||||||||||||||
Number of | Number of | Awards: | of | of | Units or | Units or | |||||||||||||||||||||||||||
Securities | Securities | Number of | Stock | Stock | Other | Other | |||||||||||||||||||||||||||
Underlying | Underlying | Securities | That | That | Rights | Rights | |||||||||||||||||||||||||||
Unexercised | Unexercised | Underlying | Option | Have | Have | That | That | ||||||||||||||||||||||||||
Options | Options | Unexercised | Exercise | Option | Not | Not | Have Not | Have Not | |||||||||||||||||||||||||
(#) | (#) | Unearned Options | Price | Expiration | Vested | Vested | Vested | Vested | |||||||||||||||||||||||||
Name | Exercisable | Unexercisable | (#) | ($) | Date | (#) | ($) | (#) | ($) | ||||||||||||||||||||||||
Mark A. Emalfarb | 100,000 | — | — | 1.67 | 6/20/2021 | — | — | — | — | ||||||||||||||||||||||||
400,000 | — | — | 1.67 | 6/20/2021 | — | — | — | — | |||||||||||||||||||||||||
150,000 | — | — | 1.63 | 1/3/2022 | — | — | — | — | |||||||||||||||||||||||||
270,000 | — | — | 1.39 | 1/2/2023 | — | — | — | — | |||||||||||||||||||||||||
300,000 | — | — | 1.87 | 1/2/2024 | — | — | — | — | |||||||||||||||||||||||||
(1) | — | 300,000 | — | 5.27 | 1/2/2030 | — | — | — | — | ||||||||||||||||||||||||
Ping W. Rawson | 25,000 | — | — | 1.62 | 6/26/2026 | — | — | — | — | ||||||||||||||||||||||||
(1) | 8,918 | 2,972 | — | 1.63 | 1/3/2027 | — | — | — | — | ||||||||||||||||||||||||
(1) | 15,000 | 15,000 | — | 1.39 | 1/2/2028 | — | — | — | — | ||||||||||||||||||||||||
50,000 | — | — | 1.44 | 3/19/2028 | — | — | — | — | |||||||||||||||||||||||||
(1) | 25,000 | 25,000 | — | 1.44 | 3/19/2028 | — | — | — | — | ||||||||||||||||||||||||
125,000 | — | — | 1.76 | 11/16/2028 | — | — | — | — | |||||||||||||||||||||||||
(1) | 25,000 | 75,000 | — | 1.87 | 1/2/2029 | — | — | — | — | ||||||||||||||||||||||||
25,000 | — | — | 6.26 | 6/28/2029 | — | — | — | — | |||||||||||||||||||||||||
(1) | — | 75,000 | — | 5.27 | 1/2/2030 | — | — | — | — | ||||||||||||||||||||||||
Ronen Tchelet, Ph.D. | 200,000 | — | — | 1.57 | 1/18/2026 | — | — | — | — | ||||||||||||||||||||||||
50,000 | — | — | 1.63 | 1/3/2027 | — | — | — | — | |||||||||||||||||||||||||
60,000 | — | — | 1.39 | 1/2/2028 | — | — | — | — | |||||||||||||||||||||||||
100,000 | — | — | 1.87 | 1/2/2029 | — | — | — | — | |||||||||||||||||||||||||
(2) | — | 75,000 | — | 5.27 | 1/2/2030 | — | — | — | — | ||||||||||||||||||||||||
Matthew S. Jones | 40,000 | — | — | 1.63 | 1/3/2027 | — | — | — | — | ||||||||||||||||||||||||
50,000 | — | — | 1.39 | 1/2/2028 | — | — | — | — | |||||||||||||||||||||||||
50,000 | — | — | 1.44 | 3/19/2028 | — | — | — | — | |||||||||||||||||||||||||
100,000 | — | — | 1.87 | 1/2/2029 | — | — | — | — | |||||||||||||||||||||||||
(2) | — | 75,000 | — | 5.27 | 1/2/2030 | — | — | — | — |
___________________
Notes:
(1) The options vest annually in equal installments over four years after the grant date.
(2) The options will vest upon the one-year anniversary after the grant date.
Pension Benefits
The Company has a 401(k) defined contribution plan (the “401(k) Plan”) in place, under which all employees are eligible to participate. Participantsparticipants may elect to defer up to 80%100% of their compensation up to a maximum amount determined annually pursuant to Internal Revenue Service regulations. Employee contributions may begin on90 days after the date of hire and are immediately vested. The 401(k) Plan provides a safe harbor basic match contribution for all eligible employees who make salary deferrals. The match contribution is equal to 100% of the employee’s salary deferral up to 4% of such employee’s annual deferred compensation. This match contribution is credited to the employee’s account and is 100% vested at the time of contribution.
Equity Compensation Plan Information
The following table summarizes information about our equity compensation plans as of December 31, 2020:
Number of | ||||||
Securities | ||||||
Remaining | ||||||
Number of | Available for | |||||
Securities | Future Issuance | |||||
to be Issued Upon | Under Equity | |||||
Exercise of | Weighted-Average | Compensation | ||||
Outstanding | Exercise Price of | Plans (Excluding | ||||
Options, | Outstanding | Securities | ||||
Warrants and | Options, Warrants | Reflected in | ||||
Plan Category | Rights(a) | and Rights (b) | Column (a)) (c) | |||
Equity compensation plans approved by security holders | 4,638,390 | $ 2.44 | 2,134,211 |
MATTERS TO BE CONSIDERED AT THE ANNUAL MEETING
PROPOSAL 1: ELECTION OF CLASS II DIRECTORS
General
We have the discretion to make matching contributions to this retirement plan, but have not done so ever.
Our Nominating Committee is charged with identifying, evaluating, and recommending director nominees to the Board. There are no minimum qualifications for nomination of directors. The purposeNominating Committee generally seeks individuals with broad experience at the policy-making level in business, or with industry expertise. While we do not have a formal diversity policy for board membership, we look for potential candidates that help ensure that the Board has the benefit of a wide range of attributes. We believe that all our directors should be committed to enhancing shareholder value and should have sufficient time to carry out their duties and to provide insight and practical wisdom based on experience. Each director must also represent the interests of all shareholders.
The Board has nominated Jack L. Kaye and Barry C. Buckland, Ph.D. to stand for re-election as Class II directors, and Mr. Patrick Lucy for a new Class II directors. If elected, Messrs. Kaye and Lucy and Dr. Buckland will serve for a term expiring in 2024.
We expect each such nominee for election as Class II directors to be able to serve, if elected. If either is unable to serve, proxies may be voted for a substitute nominee so designated by the present Board.
Vote Required
The affirmative vote of a plurality of the Stock Option Plan is to retain and attract key management, employees, nonemployee directors and consultantsvotes cast, by providing those persons with a proprietary interest in us. The compensation committee will administerproxy, at the Stock Option Plan
Plan Category | Number of Securities to be Issued upon Exercise of Outstanding Options, Warrants and Rights (a) | Weighted Average Exercise Price of Outstanding Options, Warrants and Rights (b) | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a) (c) | |||
Equity compensation plans approved by security holders (1) (3) | 1,597,639 | $3.62 | 3,536,184 (2) | |||
Equity compensation plans not approved by security holders | N/A | N/A | N/A | |||
Total | 1,597,639 | $3.62 | 3,536,184 (2) |
Recommendation of the Board
The Board recommends ashareholders vote “
Nominees for Election as Directors
The board deems it advisable to conform certain provisions of the Plan to the requirements of Section 409A of the Code to avoid certain tax penalties that could be imposed by Section 409A upon plan participants.
Jack L. Kaye, 77, joined the Board in May 2015 and (ii) was not subject to substantial risk of forfeiture on that date. However, because a special rule applies to certain equity-based compensation, including stock options, options that were immediately
Barry Buckland, Ph.D., 73, joined the Board in January 2018. Dr. Buckland retired from Merck Research Laboratories in 2009 after 28 years of contributions to the Bioprocess R&D group including more than 12 years as leader in the position of Vice President. Since leaving the Merck Research Laboratories, Dr. Buckland has headed up his own consulting company (BiologicB, LLC). He also is President of Engineering Conferences International (ECI), a not-for-profit organization which organizes prestigious conferences with an engineering focus. Dr. Buckland has chaired successful conference such as Microbial Engineering I and Vaccine Technology Conferences I to IV. He is also a visiting professor at University College London in the Biochemical Engineering Department and is the author or co-author of more than 70 publications. His previous board experience includes Enumeral Biomedical and Mucosis. Dr. Buckland was a Senior Advisor to Protein Sciences until they were purchased by delivering sharesSanofi in 2017. Dr. Buckland became Executive Director of our common stock ownedNIIMBL (National Institute for Innovation for Manufacturing Biopharmaceuticals) in 2017. Dr. Buckland was elected to the USA National Academy of Engineering in 1997. In 2008, Dr. Buckland was awarded the ACS Marvin Johnson award for Biotechnology. In 2009, Dr. Buckland was awarded the Discoverers Award by the optionee (including shares acquiredPharmaceutical Research and Manufacturers of America (PhRMA) for his role in connection with the exercisediscovery and development of GARDASIL, an option)effective vaccine against HPV. He was one of three recipients.
Patrick Lucy, 53, was elected by and having a fair market value on the date of exercise equal to the exercise price or toBoard on January 8, 2021 following the ownershipidentification, evaluation, and nomination of shares, haveMr. Lucy by the Nominating Committee. Mr. Lucy also serves as a fair market value on the date of exercise equal to the exercise price (c) payment through a broker in accordance with procedures permitted by Regulation Tmember of the Federal Reserve, or (d) by such other methodBoard’s Science and Technology Committee. Mr. Lucy is currently President and Chief Executive Officer of Lykan Bioscience (“Lykan”), a privately held cell therapy contract manufacturing organization based in Hopkinton, MA. Mr. Lucy served as the compensation committee may approve.
Directors Continuing in Office
The following information is provided with respect to any portionthe directors who are not nominees for election as directors at the Annual Meeting:
Name | Age | Class | Term Expiring | Date of Appointment | ||||
Seth J. Herbst, MD | 63 | I | 2023 | June 2008 | ||||
Arindam Bose, Ph.D. | 68 | I | 2023 | August 2016 | ||||
Michael P. Tarnok, Chairman | 66 | III | 2022 | June 2014 | ||||
Mark A. Emalfarb | 65 | III | 2022 | October 2004 |
Mark A. Emalfarb, President, Chief Executive Officer and Director
Mark A. Emalfarb is the founder of Dyadic, and currently serves as the Chief Executive Officer and a member of the Board and Science and Technology Committee. He has been a member of the Board and has previously served as its Chairman from October 2004 until April 2007 and from June 2008 until January 2015. Since founding the predecessor to Dyadic in 1979, Mr. Emalfarb has served as a Director, President and Chief Executive Officer for substantially all of that time and has successfully led and managed the evolution of Dyadic from its origins as a pioneer and leader in providing ingredients used in the stone-washing of blue jeans to the discovery, development, manufacturing and commercialization of specialty enzymes used in various industrial applications and the development of an option thatintegrated technology platform based on Dyadic’s patented and proprietary C1 fungal microorganism. Mr. Emalfarb is settledan inventor of over 25 U.S. and foreign biotechnology patents and patent applications resulting from discoveries related to the patented and proprietary C1 fungus and has been the architect behind its formation of several strategic research and development, manufacturing and marketing relationships with U.S. and international partners. Mr. Emalfarb earned his B.A. degree from the University of Iowa in cash. If1977.
Michael P. Tarnok, Chairman, Director
Michael P. Tarnok joined the exercise or purchase price of an Option is paid for through the tender of shares, or withholding obligations are met through the tender or withholding of shares, those shares tendered or withheld will again be available for issuance under the 2001 Equity Compensation Plan.
Seth J. Herbst, MD, Director
Seth J. Herbst, M.D. has been on the Board since June 2008 and currently serves as chairman of the 2006 Stock Option PlanCompany’s Nominating Committee. Heals serves on the Company’s Compensation Committee. He is to retaina board-certified obstetrician/gynecologist who is also board certified in advanced laparoscopic and attract key management, employees, nonemployee directorsminimally invasive gynecologic surgery. Dr. Herbst is the founder and consultants by providing those persons with a proprietary interest in us. At the annual meeting, stockholders will be asked to approve the 2006 Stock Option Plan.
Arindam Bose, Ph.D., Director
Arindam Bose, Ph.D. joined the 2006 Stock Option PlanBoard on August 15, 2016 and currently serves as is permitted by applicable income tax laws.
Our directors hold office for terms of approximately three years or until the earlier of their death, resignation, or removal or until their successors have been elected and qualified. Our officers are elected annually by proxy,the Board and serve at the annual meeting is required to approve the 2006 Stock Option Plan.
Mayer Hoffmann McCann P.C. (“MHM”) audited our consolidated financial statements for the year ended December 31, 2005.2020. We had no disagreements with Ernst & Young LLPMHM on accounting and financial disclosures. The audit committeeAudit Committee has appointed Ernst & Young LLPMHM to serve as our independent registered public accounting firm for the year ending December 31, 2006.
The Audit Committee has reviewed the appointmentfees described below and concluded that the payment of such fees is compatible with maintaining MHM’s independence.
The following table presents fees billed, by our independent registered public accounting firm to a vote of our stockholders for ratification. However, the audit committee has recommended that our board submit this matter to stockholders as a matter of good corporate practice, which our board is doing. If stockholders fail to ratify the appointment, the audit committee will reconsider whether to retain Ernst & Young LLP, and may retain that firm or another without re-submitting the matter to our stockholders. Even if our stockholders ratify the appointment, the audit committee may, in its discretion, 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 advisable andprofessional services, in the best interests of us and our stockholders.years indicated, by category, as described in the notes to the table.
Years Ended December 31, | ||||||||
2020 | 2019 | |||||||
Audit fees (1) | $ | 162,000 | $ | 138,700 | ||||
Audit-related fees (2) | 13,000 | 11,000 | ||||||
Tax fees (3) | 14,900 | 13,500 | ||||||
Total fees | $ | 189,900 | $ | 163,200 |
___________
Notes:
(1) | Audit fees consist of fees billed for professional services by MHM for audit and quarterly review of our financial statements or services that are normally provided by the accountant in connection with statutory and regulatory filing or engagement for those years related to our periodic and current NASDAQ Capital Markets, and SEC filings and registration statements. |
(2) | Audit-related fees consist of fees billed for procedures performed by MHM in connection with the filing of registration statements on Form 10-12G and Form 10-12G/A (2019) and Form S-3 filing (2020). |
(3) | Tax fees consist of fees billed for tax professional services by an affiliate of MHM for the Netherlands subsidiary. |
We expect one or more representatives of Ernst & Young LLPMHM to be present at the annual meeting.Annual Meeting. They will have the opportunity to make a statement if they desire to do so, and we expect them to be available to respond to appropriate questions.
Vote Required
The affirmative vote of the holders of a majority of all shares casting votes, either in person or by proxy, at the annual meetingAnnual Meeting is required to ratify the appointment of Ernst & Young LLPMHM as our independent registered public accounting firm for the year ending December 31, 2006.
Recommendation of the Board
The Company’s Board recommends a vote FORthis responsibility, the audit committee has established aproposal.
Pre-Approval of Services
Our Audit Committee’s policy is to pre-approve all audit and permissible non-audit services provided by our independent auditors. These services may include audit services, audit-related services, tax services and other services. Pre-approval is generally provided for up to one year and any pre-approval is detailed as to the service or category of services. The independent auditor and management are required to periodically report to the Audit Committee regarding the extent of services provided by the independent auditor in accordance with this pre-approval. Any proposed services not included within the list of pre-approved services or any proposed services that will cause the Company to exceed the pre-approved aggregate amount requires specific pre-approval by the Audit Committee. All audit fees, audit-related fees, tax fees, and other fees listed in the table above were approved by the Audit Committee pursuant to its pre-approval policies and procedures.
Audit Committee Report
The Audit Committee reports as follows:
The Company’s management has the primary responsibility for the Company’s financial statements and the reporting process, including disclosure controls and the system of internal control over financial reporting. The Audit Committee, in its oversight role has:
Reviewed and discussed the annual audited financial statements as of and for the fiscal year ended December 31, 2020 with management;
Discussed with the Company’s independent registered public accountants the overall scope of, and plans for, their respective audits and has met with the independent registered public accountants, with and without management present, to discuss the Company’s financial reporting process and internal accounting firm.controls in addition to other matters required to be discussed by Auditing Standard No. 1301, Communications with Audit Committees, as adopted by the Public Company Accounting Oversight Board (“PCAOB”), as may be modified or supplemented;
Received from the independent registered public accountants written disclosures and the letter regarding the independence of the independent registered public accounting firm foraccountants required by the next year’s audit, management will submitPCAOB, and has discussed with the independent registered accountants their independence from the Company and its management;
• | An established charter outlining the practices it follows. The Audit Committee’s charter is available on the Company’s website at www.dyadic.com under the heading “Investors”; and |
Procedures that require the pre-approval by the Audit Committee of all fees paid to, and all services performed by, the audit committee for approval an aggregateCompany’s independent registered public accountants. The Audit Committee approves the proposed services, including the nature, type and scope of services expectedservice contemplated and the related fees, to be rendered by the firm during the year. In addition, engagements may arise during the year that year for eachare outside the scope of the four categories of services. Priorinitial services and fees approved by the Audit Committee. Any such additional engagements are approved by the Audit Committee or by the Audit Committee Chair pursuant to engagement,authority delegated by the audit committee pre-approves these services byAudit Committee. For each category of service. The fees are budgeted, and the audit committee requiresproposed service, the independent registered public accounting firmaccountants are required to confirm that the provision of such services does not impair their independence. Pursuant to the Sarbanes-Oxley Act of 2002, the fees and services provided as noted above were authorized and approved by the Audit Committee in compliance with the pre-approval procedures described herein.
Based on the Audit Committee’s review and discussions with management to report actual fees versusand the budget periodically throughout the year by category of service. During the year, circumstances may arise when it may become necessary to engage theCompany’s independent registered public accounting firmaccountants as described in this report, the Audit Committee recommended to the Board of Directors that the audited Consolidated Financial Statements as of and for additional services not contemplatedthe fiscal year ended December 31, 2020, be included in the original pre-approval. In those instances,2020 Form 10-K.
Audit Committee of the audit committee requires specific pre-approval before engagingBoard of Directors
Jack L. Kaye, Chairman
Michael P. Tarnok
Arindam Bose
PROPOSAL 3: ADVISORY VOTE ON COMPENSATION OF
THE COMPANY’S NAMED EXECUTIVE OFFICERS
Proposal 3 seeks an advisory vote on the independent registered public accounting firm.
As an advisory vote, this proposal is not binding upon the Company. However, the Compensation Committee, which is responsible for determining and setting the Named Executive Officers’ executive compensation, values the opinions expressed by shareholders in their vote on this proposal, and will consider the outcome of the vote when making future compensation decisions for the Named Executive Officers.
Vote Required
The audit committeevotes that shareholders cast FOR must exceed the votes that shareholders cast AGAINST to approve the advisory vote on compensation of our Named Executive Officers. You may delegate pre-approval authority to one or morevote FOR, AGAINST, of its members. The member to whom such authority is delegated must report, for informational purposes only, any pre-approval decisionsABSTAIN with respect to the audit committee at its next scheduled meeting.
Recommendation of the Securities Exchange ActBoard
The Board recommends that you consider and vote FOR the following resolution: “Resolved, that the shareholders approve, on an advisory basis, the compensation of 1934 requires that our directors and executive officers, and persons who own more than 10 percentthe Company’s Named Executive Officers, as disclosed in the Company’s Proxy Statement pursuant to the compensation disclosure rules of our common stock, to file with the Securities and Exchange Commission, initial reportsincluding the “Compensation and Other Information Concerning Officers” section of ownershipthis Proxy Statement.
Because your vote is advisory on Proposal 3, it will not be binding on the Board or the Company. However, the Board and reportsthe Compensation Committee will review the voting results and take them into consideration when making future decisions regarding the Named Executive Officers’ compensation.
PROPOSAL 4: APPROVAL OF ADOPTION OF THE DYADIC INTERNATIONAL, INC. 2021 EQUITY INCENTIVE AWARD PLAN
At the Annual Meeting, shareholders will be asked to approve the Dyadic International, Inc. 2021 Equity Incentive Award Plan (the “2021 Plan”), which was adopted, subject to shareholder approval, by the Board of changes in ownershipDirectors on April 9, 2021. The 2021 Plan is intended to be the successor to and continuation of common stock. Officers,the Dyadic International, Inc. 2011 Equity Incentive Award Plan (the “2011 Plan”).
Currently, we maintain the 2011 Plan to grant equity awards to our employees, directors, and greater than 10 percent stockholdersconsultants. We are required by SEC regulation to furnish us with all Section 16 reports they file.
If this Proposal 4 is approved by our shareholders, the 2021 Plan will become effective as of the date of the Annual Meeting and as of such reports furnisheddate, no additional awards will be granted under the 2011 Plan. If our shareholders do not approve this Proposal 4, the 2021 Plan will not become effective, and the 2011 Plan will continue to usbe effective in accordance with its terms, until its expiration date.
Why You Should Vote to Approve the 2021 Plan:
Equity Awards Are an Important Part of Our Compensation Philosophy
Our Board believes that our broad-based equity compensation program is essential to attract, retain and representations that no other reports were required,motivate people with the necessary talent and experience and to provide additional incentive to achieve our short- and long-term business objectives. All our employees participate in our equity compensation programs and we believe that all Section 16 filing requirements applicableour equity programs create a strong link between our employees and our shareholders’ interests. Equity compensation promotes an employee ownership culture, motivates employees to create shareholder value and, because the awards are typically subject to vesting and other conditions, promotes a focus on long-term value creation. Our Board believes we must continue to offer competitive equity compensation packages in order to attract and motivate the talent necessary for our officers,continued growth and success.
The Board believes that the shares currently available for future grant under the 2011 Plan will be insufficient to meet our anticipated retention and recruiting needs. The 2021 Plan will allow us to continue to utilize equity awards as long-term incentives to secure and retain the services of our employees, directors, and 10 percent beneficial owners were compliedconsultants, consistent with our compensation philosophy and common compensation practices for our industry. Therefore, the Board believes that the 2021 Plan is in the best interests of our business and our shareholders and unanimously recommends a vote in favor of this Proposal 4.
The Size of Our Share Reserve Request is Reasonable and We Manage Our Equity Use Responsibly
Our compensation philosophy reflects broad-based eligibility for equity awards, and we grant awards to all our employees. However, we recognize that equity awards dilute existing shareholders, and, therefore, we are mindful to responsibly manage the growth of our equity compensation program. We are committed to effectively monitoring our equity compensation share reserve, including our “burn rate,” to ensure that we maximize shareholders’ value by granting the appropriate number of equity awards necessary to attract, reward, and retain employees, directors, and consultants.
2018 - 2020 Burn Rate Outstanding Awards Overhang
The following table provides certain additional information regarding our equity incentive program and our equity burn rate over the last three fiscal years and current overhang. Note that burn rate and overhang are calculated on a non-diluted basis.
Burn Rate | 2018 | 2019 | 2020 | |||||||||
Stock Options Granted | 1,120,500 | 1,089,000 | 913,000 | |||||||||
Weighted Average Common Shares Outstanding | 27,673,300 | 27,003,695 | 27,471,587 | |||||||||
Burn Rate(1) | 4.05 | % | 4.03 | % | 3.32 | % | ||||||
Total Equity Awards Forfeited | 250,000 | - | - | |||||||||
Net Burn Rate(2) | 3.15 | % | 4.03 | % | 3.32 | % |
(1) Burn Rate equals number of shares subject to equity awards granted during thea fiscal year ended December 31, 2005, other thandivided by weighted average common shares outstanding for that fiscal year.
(2) Net Burn Rate equals (i) number of shares subject to equity awards granted during a late filingfiscal year minus total equity awards forfeited during that fiscal year, divided by (ii) weighted average shares of common stock outstanding for Form 4 in December 2005 by director Stephen J. Warner for salesthat fiscal year.
Current Overhang (As of April 16, 2021) | ||
Stock Options Outstanding | 5,324,215 | |
Weighted Average Exercise Price of Outstanding Stock Options | $ | 2.28 |
Weighted Average Remaining Term of Outstanding Stock Options |
| 5.99 years |
Shares Remaining Available for Future Grant | 1,388,386 | |
Common Stock Outstanding as of April 16, 2021 | 27,554,157 |
The closing price of our common stock as reported on Nasdaq Capital Market on April 16, 2021, the record date for the Annual Meeting was $5.01.
Shareholder Vote Necessary to Approve the 2021 Equity Plan
Approval of the 2021 Plan requires the affirmative vote of the holders of a majority of all shares casting votes, by proxy, at the Annual Meeting. In tabulating the votes, abstentions will not be voted “for” or “against” this proposal and broker non-votes will be disregarded and have no effect on the outcome of the vote.
The 2021 Plan Combines Compensation and Governance Best Practices
The 2021 Plan includes provisions that are designed to protect our shareholders’ interests and to reflect corporate governance best practices, including:
• | No “evergreen” provision requiring shareholder approval for authorizing additional shares. The 2021 Plan does not contain an annual “evergreen” provision. The 2021 Plan authorizes a fixed number of shares, so that shareholder approval is required to issue any additional shares. | |
• | Restrictions on dividends. The 2021 Plan provides that (i) no dividends or dividend equivalents may be paid with respect to any shares of our common stock subject to an award before the date such shares have vested, and (ii) no dividends or dividend equivalents shall be payable if the holder forfeits the award. | |
• | No liberal share counting provisions. Only shares of common stock subject to an award that terminates, expires, or lapses for any reason, or is settled in cash without delivery of shares, will become available again for issuance under the 2021 Plan. | |
• | No liberal change in control definition. The change in control definition in the 2021 Plan is not a “liberal” definition. A change in control transaction must occur for the change in control provisions in the 2021 Plan to be triggered. | |
• | Awards subject to forfeiture/claw back. Awards granted under the 2021 Plan will be subject to recoupment in accordance with any claw back policy that we adopt, including as may be required pursuant to the listing standards of any national securities exchange or association on which our securities are listed or as is otherwise required by the Dodd-Frank Wall Street Reform and Consumer Protection Act or other applicable law. In addition, the Board or the Compensation Committee may impose other claw back, recovery or recoupment provisions in an award agreement, including a reacquisition right in respect of previously acquired shares or other cash or property upon the occurrence of cause. | |
• | One-year minimum vesting period. Awards under the 2011 Plan will have a minimum one-year vesting period, other than awards comprising no more than five percent of the authorized shares and acceleration for death, disability, or a change in control. |
Description of our 2005 annual report withthe 2021 Plan
The material features of the 2021 Plan are described below. The following description of the 2021 Plan is a summary only and is qualified in its entirety by reference to the complete text of the 2021 Plan. Shareholders are urged to read the actual text of the 2021 Plan in its entirety, which is attached to this proxy statement as Appendix A.
Purpose
The 2021 Plan is designed to holderspromote the success and enhance the value of the Company by linking the personal interests of the members of the Board, employees, and consultants to those of Company shareholders and by providing such individuals with an incentive for outstanding performance to generate superior returns to Company shareholders. The 2021 Plan is also designed to provide flexibility to the Company in its ability to motivate, attract, and retain the services of members of the Board, employees, and consultants upon whose judgment, interest, and special effort the successful conduct of the Company’s operation is largely dependent.
Continuation of and Successor to 2011 Plan
The 2021 Plan is intended to be the continuation of and successor to the 2011 Plan. If the 2021 Plan is approved by our shareholders, no additional awards will be granted under the 2011 Plan upon and following the date of the Annual Meeting. If the 2021 Plan is not approved by our shareholders, the 2021 Plan will not become effective and the 2011 Plan will continue to be effective in accordance with its terms, until its expiration date.
Types of Awards
The terms of the 2021 Plan provide for the grant of incentive stock options, nonstatutory stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards, dividend equivalent awards, stock payment awards and deferred stock awards.
Shares Available for Awards
Subject to adjustment for certain changes in our capitalization, the aggregate number of shares of our common stock that may be issued under the 2021 Plan will not exceed 4,388,386 shares (which includes 3,000,000 new shares and the number of shares remaining available for the grant of new awards under the 2011 Plan as of the record date. We will provide without charge, to each holder ofApril 16, 2021), plus shares of our common stock assubject to outstanding awards granted under the 2011 Plan that following April 16, 2021 are not issued because such award or any portion thereof lapses, expires or otherwise terminates without all of the record date, a copyshares covered by such award having been issued or are not issued because such award or any portion thereof is settled in cash. In addition, if any shares of our Annual Report on Form 10-KSB for the year ended December 31, 2005, as filed with the SEC, upon the written request of any such holder addressedcommon stock issued pursuant to the Secretary of Dyadic at 140 Intracoastal Pointe Drive, Suite 404, Jupiter, Florida 33477. We will provide copies of any exhibit to the Annual Report on Form 10-KSB upon written request and upon reimbursement of any reasonable expenses incurred by us in furnishing the exhibit.
Vesting and Forfeiture Provisions
Awards granted under the 2011Plan will be included in our proxy statement.
Eligibility
All our employees, non-employee directors and consultants are eligible to receive awards under the 2021 Plan and may receive all types of awards other than incentive stock options. Incentive stock options may be granted under the 2021 Plan only to employees. As of April 16, 2021, we had six employees, six non-employee directors and approximately eight consultants.
Administration
The 2021 Plan will be administered by our Compensation Committee or another committee or committees composed of members of the CompanyBoard. Our Board may exercise the rights and duties of the Compensation Committee under the 2021 Plan and, acting by a majority of its subsidiaries, (ii) certain consultants and advisors who perform services for the Company or its subsidiaries and (iii)members, will act as administrator with respect to awards granted to non-employee members of the Board of DirectorsBoard.
Subject to the terms of the Company (the “Board”),2021 Plan, the administrator may determine the recipients, the types of awards to be granted, the number of shares of our common stock subject to awards, and the terms and conditions of awards granted under the 2021 Plan, including the period of their exercisability and vesting. The administrator has the authority to provide for accelerated exercisability and vesting of awards. Subject to the limitations set forth below, the administrator also determines the fair market value applicable to an award and the exercise or strike price of stock options and stock appreciation rights granted under the 2021 Plan.
In addition, the administrator may delegate to one or more members of the Board or one or more officers the authority to grant or amend awards other than awards to or held by officers or directors or persons to whom such authority has been delegated by the Board.
Repricing; Cancellation and Re-Grant of Stock Options or Stock Appreciation Rights
Under the 2021 Plan, unless our shareholders have approved such an action, the administrator does not have the authority to reprice any outstanding stock option or stock appreciation right by (i) reducing the exercise or strike price of the stock option or stock appreciation right or (ii) canceling any outstanding stock option or stock appreciation right that has an exercise or strike price greater than the then-current fair market value of our common stock in exchange for cash or other awards or property (other than in connection with a corporate transaction or similar event).
Dividends and Dividend Equivalents
The 2021 Plan provides that dividends or dividend equivalents may be credited with respect to any shares of our common stock subject to an award; provided, however, that (i) no dividends or dividend equivalents may be paid with respect to any such shares before the opportunitydate such shares have vested and (ii) no dividends or dividend equivalents shall be payable if the holder forfeits the award.
Stock Options
Stock options may be granted under the 2021 Plan pursuant to receive grantsstock option agreements. The 2021 Plan permits the grant of stock options that are intended to qualify as incentive stock options nonqualified(“ISOs”), and nonstatutory stock options (“NSOs”).
The exercise price of a stock option granted under the 2021 Plan may not be less than 100% of the fair market value of the common stock subject to the stock option on the date of grant and, in the case of certain ISOs, may not be less than 110% of such fair market value.
The term of stock options granted under the 2021 Plan may not exceed ten years from the date of grant and, in the case of certain ISOs, may not exceed five years from the date of grant. The administrator will determine the period during which holders may vest in and have the right to exercise stock options granted under the 2021 Plan.
Limitations on Incentive Stock Options
In accordance with current federal tax laws, the aggregate fair market value, determined at the time of grant, of shares of our common stock with respect to ISOs that are exercisable for the first time by a participant during any calendar year under all our stock plans may not exceed $100,000. The stock options or portions of stock options that exceed this limit or otherwise fail to qualify as ISOs are treated as NSOs. No ISO may be granted to any person who, at the time of grant, owns or is deemed to own stock possessing more than 10% of our total combined voting power unless the following conditions are satisfied:
Subject to adjustment for certain changes in our capitalization, the aggregate maximum number of shares of our common stock that may be issued pursuant to the exercise of ISOs under the 2021 Plan is 3,000,000 shares.
Stock Appreciation Rights
Stock appreciation rights may be granted under the 2021 Plan pursuant to stock appreciation right agreements. Each stock appreciation right is denominated in common stock share equivalents. The strike price of each stock appreciation right will be determined by the administrator but will in no event be less than 100% of the fair market value of the common stock subject to the stock appreciation right on the date of grant. The term of stock appreciation rights granted under the 2021 Plan may not exceed ten years from the date of grant. The administrator may also impose restrictions or conditions upon the vesting of stock appreciation rights that it deems appropriate. The appreciation distribution payable upon exercise of a stock appreciation right may be paid in shares of our common stock, in cash, in a combination of cash and stock, or in any other form of consideration determined by the administrator and set forth in the stock appreciation right agreement. Stock appreciation rights will be subject to the same conditions upon termination of continuous service and restrictions on transfer as stock options under the 2021 Plan.
Restricted Stock Awards
Restricted stock awards may be granted under the 2021 Plan pursuant to restricted stock award agreements. Shares of our common stock acquired under a restricted stock award may be subject to forfeiture in accordance with a vesting schedule to be determined by the administrator. Rights to acquire shares of our common stock under a restricted stock award may be transferred only upon such terms and conditions as are set forth in the restricted stock award agreement. Upon a participant’s termination of continuous service for any reason, any shares subject to restricted stock awards held by the participant that have not vested as of such termination date may be forfeited to or repurchased by us.
Restricted Stock Unit Awards
Restricted stock unit awards may be granted under the 2021 Plan pursuant to restricted stock unit award agreements. A restricted stock unit award may be settled by the delivery of shares of our common stock, in cash, in a combination of cash and stock. Restricted stock unit awards may be subject to vesting in accordance with a vesting schedule to be determined by the administrator. Except as otherwise provided in a participant’s restricted stock unit award agreement or other written agreement with us, restricted stock units that have not vested will be forfeited upon the participant’s termination of continuous service for any reason.
Performance Awards
The 2021 Plan allows us to grant performance units;awards. A performance award is an award that may vest or may be exercised, or that may become earned and
Changes to Capital Structure
In the event of certain capitalization adjustments, the administrator will appropriately and proportionately adjust: (i) the class(es) and maximum number of shares of our common stock subject to the 2021 Plan; (ii) the class(es) and maximum number of shares of our common stock that may be issued pursuant to the exercise of ISOs; and (iii) the class(es) and number of shares of our common stock and the exercise, strike or purchase price per share of our common stock subject to outstanding awards.
Corporate Transaction and Change in Control
In the event of certain stock dividends, stock splits, combinations or exchanges of shares, mergers, consolidations or other distributions (other than normal cash dividends) or changes affecting the shares as described in the 2021 Plan, the administrator may make equitable adjustments to the aggregate number and kind of shares that may be issued under the 2021 Plan, the number and kind of shares subject to outstanding awards; the terms and conditions of any outstanding Awards and the grant or exercise price for any outstanding awards. Furthermore, in the event of any such transaction or certain other unusual or nonrecurring events, the administrator may take one or more actions specified in the 2021 Plan to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan, or to facilitate such transactions or events or to give effect to such changes in laws, regulations or principles, and the administrator shall make such equitable adjustments as the administrator may deem appropriate to reflect any equity restructuring.
In addition, the 2021 Plan provides that, in the event of a change in control (as defined in the 2021 Plan), each outstanding award shall be assumed or an equivalent award substituted by the Company believedsuccessor corporation or a parent or subsidiary of the successor corporation, provided that, in the event that the Plan would encouragesuccessor corporation in a change in control refuses to assume or substitute for an award upon a change in control, each award shall become fully vested and, if applicable, exercisable and all forfeiture restrictions on the participants to contribute materiallyaward shall lapse as of immediately prior to the growthconsummation of the Company, thereby benefitingchange in control and, if an award is exercisable in lieu of assumption or substitution in the Company’s shareholders,event of a change in control, the award shall be fully exercisable for and would alignwill terminate upon expiration of a period of fifteen days, contingent upon the economic interestsoccurrence of the participants with thosechange in control.
Plan Amendments and Termination
The Board will have the authority to amend or terminate the 2021 Plan at any time. However, except as otherwise provided in the 2021 Plan, no amendment or termination of the shareholders;2021 Plan may materially impair a participant’s rights under his or her outstanding awards without the participant’s consent. We will obtain shareholder approval of any amendment to the 2021 Plan as required by applicable law and
U.S. Federal Income Tax Consequences
The following is a summary of the principal United States federal income tax consequences to participants and us with respect to participation in the 2021 Plan. This summary is not intended to be exhaustive and does not discuss the income tax laws of any local, state, or foreign jurisdiction in which a participant may reside. The information is based upon current federal income tax rules and therefore is subject to change when those rules change. Because the tax consequences to any participant may depend on his or her situation, each participant should consult the participant’s tax adviser regarding the federal, state, local and other tax consequences of the grant or exercise of an award or the disposition of stock acquired the 2021 Plan. The 2021 Plan is not qualified under the provisions of Section 401(a) of the Internal Revenue Code of 1986, as amended, (the “Code”), and is not subject to any of the provisions of the Employee Retirement Income Security Act of 1974. Our ability to realize the benefit of any tax deductions described below depends on our generation of taxable income as addedwell as the requirement of reasonableness and the satisfaction of our tax reporting obligations.
Nonstatutory Stock Options
Generally, there is no taxation upon the grant of an NSO if the stock option is granted with an exercise price equal to the fair market value of the underlying stock on the grant date. Upon exercise, a participant will recognize ordinary income equal to the excess, if any, of the fair market value of the underlying stock on the date of exercise of the stock option over the exercise price. If the participant is employed by us or one of our affiliates, that income will be subject to withholding taxes. The participant’s tax basis in those shares will be equal to his or her fair market value on the date of exercise of the stock option, and the participant’s capital gain holding period for those shares will begin on that date.
Subject to the provisions of Section 162(m) of the Code, we will generally be entitled to a tax deduction equal to the taxable ordinary income realized by the American Jobs Creation Actparticipant.
Incentive Stock Options
Under the Code, a participant generally is not subject to ordinary income tax upon the grant or exercise of 2004, made certain changesan ISO. If the participant holds a share received upon exercise of an ISO for more than two years from the date the stock option was granted and more than one year from the date the stock option was exercised, which is referred to as the required holding period, the difference, if any, between the amount realized on a sale or other taxable disposition of that share and the participant’s tax basis in that share will be long-term capital gain or loss.
If, however, a participant disposes of a share acquired upon exercise of an ISO before the end of the required holding period, which is referred to as a disqualifying disposition, the participant generally will recognize ordinary income equal to the rules applicableexcess, if any, of the fair market value of the share on the date of exercise of the stock option over the exercise price or, if less, the amount realized on the sale. The excess, if any, of the amount realized over the fair market value on the date of exercise will be capital gain.
For purposes of the alternative minimum tax, the amount by which the fair market value of a share of stock acquired upon exercise of an ISO exceeds the exercise price of the stock option generally will be an adjustment included in the participant’s alternative minimum taxable income unless there is a disqualifying disposition of the share in the year in which the stock option is exercised.
We are not allowed a tax deduction with respect to amounts deferred under nonqualified deferred compensation plans onthe grant or exercise of an ISO, or the disposition of a share acquired upon exercise of an ISO after January 1, 2005; and
Restricted Stock Awards
Generally, the recipient of a restricted stock award will recognize ordinary income at the time the stock is received equal to the excess, if any, of the fair market value of the stock received over any amount paid by the recipient in exchange for the stock. If, however, the stock is not vested when it is received (for example, if the employee is required to work for a period of time in order to have the right to sell the stock), the Company now wishesrecipient generally will not recognize income until the stock becomes vested, at which time the recipient will recognize ordinary income equal to amend and restate the Plan effective January 1, 2005,excess, if any, of the fair market value of the stock on the date it becomes vested over any amount paid by the recipient in exchange for the stock. A recipient may, however, file an election with the Internal Revenue Service, within 30 days following his or her receipt of the restricted stock award, to recognize ordinary income, as of the date the recipient receives the restricted stock award, equal to the excess, if any, of the fair market value of the stock on the date the restricted stock award is granted over any amount paid by the recipient for the stock.
The recipient’s basis for the determination of gain or loss upon the subsequent disposition of shares acquired from a restricted stock award will be the amount paid for such shares plus any ordinary income recognized either when the stock is received or when the stock becomes vested.
Subject to the provisions of Section 162(m) of the Code, we will generally be entitled to a tax deduction equal to the taxable ordinary income realized by the recipient of the restricted stock award.
Restricted Stock Unit Awards
Generally, the recipient of a restricted stock unit award structured to comply with sectionthe requirements of Section 409A of the Code andor an exception to make certain other changesSection 409A of the Code will recognize ordinary income at the time the stock is delivered equal to the Plan.
The recipient’s basis for the determination of twogain or more persons who are “outside directors” as defined under sectionloss upon the subsequent disposition of shares acquired from a restricted stock unit award will be the amount paid for such shares plus any ordinary income recognized when the stock is delivered.
Subject to the provisions of Section 162(m) of the Code, and related Treasury regulations and “non-employee directors” as defined under Rule 16b-3 underwe will generally be entitled to a tax deduction equal to the Securities Exchange Act of 1934, as amended (the “Exchange Act”). However,taxable ordinary income realized by the Board may ratify or approve any grants as it deems appropriate.
Stock Appreciation Rights
Generally, if a stock appreciation right is granted with an exercise or restriction period, including the criteria for exercisability and the acceleration of exercisability, (iv) amend the terms of any previously issued grant, and (v) deal with any other matters arising under the Plan. Notwithstanding the authority grantedprice equal to the Committee in (iii) and (iv) above, the Plan shall prohibit the accelerationfair market value of the time or schedule of any payment of deferred compensation, exceptunderlying stock on the grant date, the recipient will recognize ordinary income equal to the extent permitted under section 409Afair market value of the stock or cash received upon such exercise. Subject to the provisions of Section 162(m) of the Code, andwe will generally be entitled to a tax deduction equal to the Treasury regulations thereunder.
Section 162(m) Limitations
Under Section 162(m) of the Committee shall be executed in its sole discretion, in the best interest of the Company, not as a fiduciary, and in keeping with the objectives of the Plan and need not be uniform asCode, compensation paid to similarly situated individuals.
New Plan Benefits under 2021 Plan
Awards granted under the 2021 Plan to our executive officers and other employees are discretionary and are not subject to set benefits or amounts under the terms of the 2021 Plan, and conditionswe have not granted any awards under the 2021 Plan subject to shareholder approval of this Proposal 4. Accordingly, the benefits or amounts that will be received by or allocated to our executive officers and other employees under the 2021 Plan are not determinable.
Awards granted under the 2021 Plan to our non-employee directors are discretionary and are not subject to set forth hereinbenefits or amounts under the terms of the 2021 Plan. However, pursuant to our current compensation program for non-employee directors, effective 2021, each of our current non-employee directors is eligible to receive an annual grant of 35,000 options and toeach director who serves as Chairman of the Board, Chair of the Audit Committee, and Chair of the Science and Technology Committee receives an additional annual grant of 17,500 options. On and after the date of the Annual Meeting, any such other terms and conditions consistentequity awards will be granted under the 2021 Plan if this Proposal 4 is approved by our shareholders. For additional information regarding our current compensation program for non-employee directors, please see “Director Compensation” above.
Vote Required
The approval of adoption of the Dyadic International, Inc. 2021 Equity Incentive Award Plan requires the affirmative vote of the holders of a majority of all shares casting votes, by proxy, at the Annual Meeting. You may vote FOR, AGAINST, of ABSTAIN with this Plan as the Committee deems appropriate and as are specified in writing by the Committeerespect to the individual in a grant instrument or an amendment to the grant instrument (the “Grant Instrument”). The Committee shall approve the form and provisions of each Grant Instrument. Grants under a particular Sectionapproval of the Plan needDyadic International, Inc. 2021 Equity Incentive Award Plan. A properly executed proxy marked ABSTAIN with respect to this proposal will not be uniformvoted FOR or AGAINST this proposal. Broker non-votes will not be considered as amongvotes cast FOR or AGAINST this proposal.
Recommendation of the grantees.
The Company’s Board recommends a vote FOR this proposal.
SHAREHOLDER PROPOSALS FOR THE 2021 ANNUAL MEETING
Shareholders of the Company (“Company Stock”) that maywishing to include proposals in the proxy material relating to the 2021 Annual Meeting of Shareholders must submit the same in writing to be issued or transferred underreceived at the Plan is 4,478,475 shares. The maximum aggregate numberexecutive offices of shares of Company Stock that shall be subject to Grants made under the Plan to any individual during any calendar year shall be 1,200,000 shares, subject to adjustment as described below. The shares may be authorized but unissued shares of Company Stock or reacquired shares of Company Stock, including shares purchased by the Company on or before January 12, 2022. Such proposals must also meet the open market for purposesother requirements of the Plan. Ifrules of the Securities and Exchange Commission relating to shareholder proposals. Proposals should be addressed to the extent Options granted under the Plan terminate, expire, or are canceled, forfeited, exchanged or surrendered without having been exercised or if any Stock Awards or Performance Units are forfeited, the shares subject to such Grants shall again be available for purposes of the Plan.
For any proposal that is not submitted for inclusion in next year’s proxy statement (as described in the preceding paragraph) but is instead sought to be presented directly at the 2021 Annual Meeting of Shareholders, the rules of the Board, and membersSEC permit the individuals named as proxies to vote shares represented by properly executed proxies in each individual’s discretion if the Company receives notice of the Board who are not Employees (“Non-Employee Directors”) shall be eligibleproposal no earlier than February 11, 2022 but no later than March 13, 2022. Notices of intention to participate in the Plan. Consultants and advisors who perform services for the Company or any of its subsidiaries (“Key Advisors”) shall be eligible to participate in the Plan if the Key Advisors render bona fide services to the Company or its subsidiaries, the services are not in connection with the offer and sale of securities in a capital-raising transaction and the Key Advisors do not directly or indirectly promote or maintain a
This proxy statement contains forward-looking statements that involve risks and uncertainties, as well as assumptions that, if they do not fully materialize or any parentprove incorrect, could cause our business, results or subsidiarycondition to differ materially from those expressed or implied by the forward-looking statements. The forward-looking statements include, without limitation, statements related to the timing and expected impact of the Company, unless the Exercise Price per share is not less than one hundred ten percent (110%)completion of the Fair Market Value of Company Stock on the date of grant.
Risks and uncertainties that date) the latest preceding date upon which a sale was reportedmay affect our business, results or (y) if the Company Stock iscondition include, but are not principally traded on such exchange or market, the mean between the last reported “bid” and “asked” prices of Company Stock on the relevant date, as reported on Nasdaq or, if not so reported, as reported by the National Daily Quotation Bureau, Inc. or as reportedlimited to, factors discussed in a customary financial reporting service, as applicable and as the Committee determines. If the Company Stock is notour publicly traded or, if publicly traded, is not subject to reported transactions or “bid” or “asked” quotations asavailable filings, including information set forth above,under the Fair Market Value per share shall be as determined by the Committee.
We know of no other matters that a legendwill be placed thereon.
We “incorporate by reference” into this proxy heretofore given, does hereby appoint Mark A. Emalfarb and Wayne Moor, and each of them, with full power to act alone, the true and lawful attorneys-in-fact and proxies of the undersigned, with full powers of substitution, and hereby authorize(s) them and each of them, to represent the undersigned and to vote all shares of common stock of the Company that the undersigned is entitled to vote at the 2006 Annual Meeting of Stockholders of the Company to be held on June 12, 2006 at 10:00 a.m., local time, at the Doubletree Hotel located at 4431 PGA Boulevard, Palm Beach Gardens, Florida 33410, and any and all adjournments and postponements thereof, with all powers the undersigned would possess if personally present, onstatement the following proposals, each as described more fully in the accompanying proxy statement, information, which can be accessed from our website at www.dyadic.comand any other matters coming before said meeting.
Annual Report on Form 10-KSBand Consolidated Financial Statements for the fiscal year ended December 31, 20052020 filed on Form 10-K.
The information incorporated by reference is hereby acknowledged.considered a part of this proxy statement as if stated herein. At your request, we will provide to you a copy of any or all the above documents that have been incorporated by reference into this proxy statement at no cost.
Requests for additional copies of this proxy statement or the enclosed proxy card, as well as requests for additional information, may be made by writing or calling us at the following address or telephone number:
140 Intracoastal Pointe Drive, Suite 404, Jupiter, Florida 33477, Attention: Heidi Zosiak, telephone: (561) 743-8333 or Broadridge Financial Solutions, Inc., 51 Mercedes Way, Edgewood, NY 11717, telephone: (631) 257-4339.
BY ORDER OF THE BOARD OF DIRECTORS | |||||
/s/ Mark Emalfarb | |||||
Mark Emalfarb President and Chief Executive Officer |
April 27, 2021
Jupiter, Florida