U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant x
Filed by a Party other than the Registrant o
Check the appropriate box:
o Preliminary Proxy Statement
o Confidential, for Use of the Commission Only (as permitted by Rule 14(a)-6(e)(2))
x Definitive Proxy Statement
o Definitive Additional Materials
o Soliciting Materials Pursuant to §240.14a-12
GLYECO, INC.
(Name of the Registrant as Specified in its Charter)
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GLYECO, INC.
10429 South 51st Street, Suite 235
Phoenix, AZ 85044
Telephone: (866) 960-1539
Dear Fellow Stockholder:
You are cordially invited to attend the 2014 Annual Meeting of Stockholders of GlyEco, Inc. on Friday, October 24, 2014 at 10:00 a.m. MST. The meeting will be held at our corporate offices located at 10429 South 51st Street, Suite 235, Phoenix, AZ 85044.
If you plan to attend the annual meeting in person, you must either call or email Matt Hamilton, General Counsel, at (866) 960-1539 Ext. 711 or mhamilton@glyeco.com on or before September 30, 2014, and ask to have your name placed on the attendance list. Only those whose names appear on the attendance list will be allowed to enter and attend the meeting. Please note that you will need to present picture identification to gain entrance to the meeting.
Enclosed please find our proxy statement and related materials. Whether or not you plan to attend the meeting, your vote is very important, and we encourage you to vote promptly. You may vote your shares over the Internet or by mail by following the instructions on the proxy card. If you do attend the meeting, you will, of course, have the right to revoke the proxy and vote your shares in person. If you hold your shares through an account with a broker, nominee, fiduciary, or other custodian, please follow the instructions you receive from them to vote your shares.
On behalf of the Board of Directors, I would like to express our appreciation for your continued support of GlyEco, Inc.
Sincerely,
/s/ John Lorenz
John Lorenz
Chairman, Chief Executive Officer and President
GLYECO, INC.
10429 South 51st Street, Suite 235
Phoenix, AZ 85044
Telephone: (866) 960-1539
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON OCTOBER 24, 2014
To Our Stockholders:
The 2014 Annual Meeting of Stockholders of GlyEco, Inc. will be held on Friday, October 24, 2014, at 10:00 a.m. MST, at the company’s corporate offices located at 10429 South 51st Street, Suite 235, Phoenix, AZ 85044, for the following purposes, as more fully described in the accompanying proxy statement:
| 1. | To elect a board of directors consisting of seven members to serve until the next annual meeting of stockholders or until their successors have been duly elected and qualified; | |
| 2. | To ratify the selection of Semple, Marchal & Cooper, LLP as the company’s independent registered public accounting firm for the fiscal year ending December 31, 2014; and | |
| 3. | To transact such other business as may properly come before the annual meeting. |
Only stockholders of record of the company’s common stock at the close of business on August 29, 2014, are entitled to notice of and to vote at our annual meeting or any continuations, adjustments, or postponements thereof. A list of stockholders as of this date will be available during normal business hours for examination at our offices by any stockholder for any purpose relevant to our annual meeting for a period of ten days prior to the annual meeting.
We hope that you can attend the annual meeting in person. However, even if you plan to attend, please vote your proxy as soon as possible, so that we may be assured of a quorum to transact business. If you receive more than one proxy because you own shares registered in different names or addresses, each proxy should be voted. Your proxy is revocable and will not affect your right to vote in person in the event you are able to attend the meeting.
Your attention is directed to the accompanying proxy statement. This proxy statement is first being mailed to stockholders on or about September 12, 2014.
Our annual and quarterly reports are available at the “SEC Filings” link on our website at www.glyeco.com/company.html.
Thank you for your ongoing support of GlyEco. We look forward to seeing you at the annual meeting.
| By Order of the Board of Directors, | |
/s/ Alicia Williams Young | |
Alicia Williams Young Chief Financial Officer and Secretary | |
Phoenix, Arizona September 12, 2014 |
TABLE OF CONTENTS
GLYECO, INC.
10429 South 51st Street, Suite 235
Phoenix, AZ 85044
Telephone: (866) 960-1539
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON OCTOBER 24, 2014
This proxy statement contains information related to the 2014 Annual Meeting of Stockholders of GlyEco, Inc. to be held on Friday, October 24, 2014, beginning at 10:00 a.m. local time, at the company’s corporate offices located at 10429 South 51st Street, Suite 235, Phoenix, AZ 85044, and any continuations, adjournments, or postponements thereof. This proxy statement is first being mailed to stockholders on or about September 12, 2014.
QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING
1. Why did I receive these proxy materials?
We are providing this meeting notice, proxy statement, and proxy cards (collectively referred to herein as the “Proxy Materials”) in connection with the solicitation by the Board of Directors of GlyEco, Inc., a Nevada corporation (referred to herein as “GlyEco,” the “Company,” “we,” “us,” and “our”), of proxies to be voted at our 2014 Annual Meeting of Stockholders (the “Annual Meeting”). The proxies also may be voted at any continuations, adjournments, or postponements of the Annual Meeting. This proxy statement contains information you may use when deciding how to vote in connection with the Annual Meeting.
2. When and where is the Annual Meeting, and who may attend?
The Annual Meeting will be held on Friday, October 24, 2014, at 10:00 a.m., local time, at the company’s corporate offices located at 10429 South 51st Street, Suite 235, Phoenix, AZ 85044. Stockholders who are entitled to vote may attend the meeting, as well as our invited guests.
3. Who is entitled to vote at the Annual Meeting?
You are entitled to vote if you owned shares of our common stock as of the close of business on the record date, August 29, 2014. Each share of common stock is entitled to one vote and there is no cumulative voting. As of August 29, 2014, we had 58,190,649 shares of common stock issued and outstanding. Both Nevada law and our Amended and Restated Bylaws require our Board of Directors to establish a record date in order to determine who is entitled to receive notice of the Annual Meeting, and to attend and vote at the Annual Meeting and any continuations, adjournments or postponements of the meeting.
4. What do I need to do to attend the Annual Meeting?
If you plan to attend the Annual Meeting in person, you must either call or email Matt Hamilton, General Counsel, at (866) 960-1539 Ext. 711 or mhamilton@glyeco.com on or before September 30, 2014, and ask to have your name placed on the attendance list. Only those whose names appear on the attendance list will be allowed to enter and attend the meeting. Please note that you will need to present picture identification to gain entrance to the meeting.
5. What proposals are being presented for stockholder vote at the Annual Meeting?
The following proposals will be considered and voted on at the Annual Meeting:
| 1. | The election of a board of directors consisting of seven members to serve until the next annual meeting of stockholders or until their successors have been duly elected and qualified (Proposal 1); |
| 2. | The ratification of the selection of Semple, Marchal & Cooper, LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2014 (Proposal 2); and |
| 3. | Any other business that may properly come before the meeting. |
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6. How does the Board of Directors recommend that I vote?
The Board of Directors recommends that you vote your shares:
| · | Proposal 1 – “FOR” the election of each of John Lorenz, Michael Jaap, Richard Q. Opler, Keri Smith, Dwight Mamanteo, David Ide, and Melvin L. Keating as directors of the Company; and |
| · | Proposal 2 – “FOR” the ratification of the selection of Semple, Marchal & Cooper, LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2014. |
7. Are there any other matters to be acted upon at the Annual Meeting?
We do not know of any other matter to be presented or acted upon at the meeting. If any matters not set forth in the meeting notice included in the Proxy Materials are properly brought before the meeting, the persons named in the enclosed proxy will vote thereon in accordance with their best judgment.
8. How many votes must be present to hold the Annual Meeting?
A majority of the shares entitled to vote on the matters to be considered at the Annual Meeting, or 29,095,325 shares, must be present in person or by proxy to hold the Annual Meeting. If a share is represented for any purpose at the Annual Meeting, it is deemed to be present for quorum purposes and for all other matters as well. Abstentions and broker non-votes will count for purposes of establishing a quorum but will not count as votes cast on any matter.
9. How many votes are needed to approve the proposals?
| · | Proposal 1: To elect a board of directors consisting of seven members to serve until the next annual meeting of stockholders or until their successors have been duly elected and qualified, the seven nominees who receive the most votes cast in their favor shall be elected. Abstentions and broker non-votes will have no effect. |
| · | Proposal 2: To ratify the selection of Semple, Marchal & Cooper, LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2014, an affirmative vote of a majority of the shares cast on the proposal is required. Abstentions and broker non-votes will have no effect. |
10. How do I vote?
In Person at the Annual Meeting: All stockholders may vote in person at the Annual Meeting.
By Internet: You can vote via the Internet by following the instructions provided in the meeting notice or by accessing the Internet at www.proxyvote.com and following the instructions contained on that website.
By Mail: You can vote by mail by requesting a paper copy of the proxy materials be sent to your home address. Upon receipt of the materials, you may fill out the enclosed proxy card and return it per the instructions on the card.
11. What can I do if I change my mind after I vote my shares?
If you are a stockholder of record, you can revoke your proxy before it is exercised by (1) sending written notice to Matt Hamilton, General Counsel, at 4802 E. Ray Rd. Ste. 23-408, Phoenix, AZ 85044 (2) timely delivering a valid, later-dated proxy, (3) voting again over the Internet prior to meeting date and time, or (4) voting by ballot at the Annual Meeting. No such revocation will be effective, however, unless received by us at or prior to the Annual Meeting. Simply attending the meeting does not revoke your proxy.
12. What if I do not specify a choice for a matter when returning a proxy?
Proxies that are signed and returned but do not contain voting instructions will be voted (1) “FOR” the election of each of John Lorenz, Michael Jaap, Richard Q. Opler, Keri Smith, Dwight Mamanteo, David Ide, and Melvin L. Keating as directors of the Company, (2) “FOR” the ratification of the selection of Semple, Marchal & Cooper, LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2014, and (3) in accordance with the best judgment of the named proxies on any other matters properly brought before the meeting.
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If necessary, and unless the shares represented by the proxy are voted in a manner contrary to the manner described in the preceding sentence, the persons named in the proxy may also vote in favor of a proposal to recess the Annual Meeting and to reconvene it on a subsequent date or dates, without further notice, in order to solicit and obtain sufficient votes to approve or disapprove any matters being considered at the Annual Meeting.
13. Will my shares be voted if I do not provide my proxy or instruction form?
If you are a stockholder of record and do not provide a proxy, you must attend the Annual Meeting in order to vote.
14. What does it mean if I receive more than one meeting notice?
If you received multiple meeting notices, it means that you hold your shares in different ways or in multiple accounts. You should vote all of your shares either in person, by Internet, or by mail.
15. Who will pay for the cost of this proxy solicitation?
We will bear the cost of this proxy solicitation.
16. May stockholders ask questions at the Annual Meeting?
Yes. The Chairman will answer questions from stockholders during the designated question and answer period of the meeting. In order to provide an opportunity for everyone who wishes to ask a question, stockholders may be limited to two minutes each to present their question. When speaking, stockholders must direct questions to the Chairman and confine their questions to matters that relate directly to the business of the meeting. Stockholders will not be able to make statements.
17. Are there any rights of appraisal or similar rights of dissenters with respect to any matter to be acted upon at the Annual Meeting?
Under the Nevada Revised Statutes, stockholders do not have any dissenters’ appraisal rights with respect to the matters to be acted upon at the Annual Meeting.
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DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The members of the Board of Directors of the Company serve until the next annual meeting of stockholders or until their successors have been duly elected and qualified. The executive officers of the Company are appointed by our Board of Directors and hold office until their death, resignation, or removal from office. The following table sets forth certain information with respect to the current directors, director nominees, and executive officers of the Company:
| Name | Age | Position | Director Since | ||||
John Lorenz | 71 | Chief Executive Officer, President and Chairman | November 28, 2011 | ||||
Michael Jaap | 58 | Director | November 28, 2011 | ||||
Richard Q. Opler | 59 | Director | July 29, 2013 | ||||
Keri Smith | 49 | Director | July 29, 2013 | ||||
Dwight Mamanteo | 44 | Director | January 15, 2014 | ||||
David Ide | 41 | Director Nominee | - | ||||
Melvin L. Keating | 67 | Director Nominee | - | ||||
Alicia Williams Young | 37 | Chief Financial Officer and Secretary | - | ||||
Richard Geib | 67 | Chief Technical Officer | - | ||||
Todd Smith | 52 | Chief Operating Officer | - | ||||
Janet Carnell Lorenz | 52 | Chief Business Development Officer | - |
John Lorenz – Chairman, Chief Executive Officer and President. Mr. Lorenz served as the Chief Executive Officer, President, and sole director of Global Recycling Technologies from its formation in May 2006 until the reverse triangular merger of Global Recycling Technologies with the Company on November 28, 2011. Upon the consummation of the merger, Mr. Lorenz replaced Ralph M. Amato as the Chief Executive Officer, President and Chairman of the Board of Directors of the Company. Mr. Lorenz is experienced in identifying and managing new technologies, financing industry consolidations and acquisitions, and providing initial financing for such ventures. Mr. Lorenz has served as a founder and management, financial and strategic consultant to a number of emerging, public and private companies. Mr. Lorenz founded Environmental Waste of America, Inc. (“EWA”) in 1986, where he participated in virtually all management aspects of the solid waste industry, including acquisitions and integration. He served as President, Chief Executive Officer, and a director of EWA between 1986 and 1997 until its merger with Envirofil, Inc., a public company that is now Waste Management, Inc. In addition, Mr. Lorenz was formerly a founder, director, and Chief Executive Officer of Automotive Services of America. Earlier in his career, Mr. Lorenz worked as a financial, marketing, and political consultant, doing media, market, and public opinion research. Mr. Lorenz has articles on diachronic survey research, and is an author and editor of the book, The Political Image Merchants, published in 1971. Mr. Lorenz is an “inventor” on patents and is a frequent lecturer at Universities in the United States on capital, financial strategies, and equity development. Mr. Lorenz holds an Adjunct Professorship at Marylhurst University, and is preparing a book for publication in 2014 on financial strategies in challenging economic environments. Mr. Lorenz is an active triathlete and regularly competes in triathlons and marathons in the US. Mr. Lorenz holds an undergraduate degree with honors from the University of Portland, and a master’s degree from the University of Chicago.
Michael Jaap – Director. Mr. Jaap has had an extensive career in the field of nonferrous scrap metal recycling, including the areas of copper recycling and copper related raw material feed procurement. Mr. Jaap has worked with companies such as Amax Copper, where he held positions of purchasing copper and precious metal based scrap. Mike also worked for Commercial Metals, where he ran the yard operations of their Los Angeles facility. Mr. Jaap worked for Metal Traders, Warrenton Refining Company, owned by Phillip Anschutz. Mr. Jaap was involved with scrap copper procurement and copper ingot sales. Cyprus Copper Company acquired Warrenton, and Mr. Jaap worked for the Cyprus Copper Division in Phoenix, AZ. The sale of Warrenton by Cyprus prompted Mr. Jaap to set up his own companies over the next 19 years. These companies include Copper Consulting Industries, DeReelTech, Southwest Metals, Commodity Choppers, INTL Sieramet, Carbontech, JPH LLC and other ventures not specific to the recycling industry. Mr. Jaap currently owns and operates a copper recycling facility in Indiana, and is an active member of Southwest Metals in Glendale, AZ. Mr. Jaap is a graduate of Michigan State University with a BS in Microbiology and Public Health.
Richard Q. Opler – Director. Since 1998, Mr. Opler has worked in real estate development. Previously Mr. Opler held careers as a commercial real estate agent, VP of Finance for a technology startup firm, and VP of a business consulting and venture capital firm. From 1977 to 1985 he worked at World’s Finest Chocolate. Mr. Opler received a Bachelor’s degree from Duke University in 1977 and a Master’s degree in business from the University of Chicago in 1981.
Keri Smith – Director. Ms. Smith has 25 years of experience in Securities Services, during which she has occupied many significant operational and management positions. From 2009 to 2012, Ms. Smith served as the Executive Director of the WSS, Global Fund Services Division for JPMorgan Chase, Boston and JPMorgan Chase, London. From 2006 to 2008, she was the Global Head/Director – Worldwide Network Management for RBC Dexia Investor Services, London. From 1998 to 2006, Ms. Smith was the Director – Global Network Management of Investors Bank & Trust Company, and from 1995 to 1998, she was the Vice President – Global Network Management of BankBoston. Ms. Smith received a Bachelor’s degree from the Rhode Island College for Teaching in 1987.
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Dwight Mamanteo – Director. Since November 2004, Mr. Mamanteo has served as a Portfolio Manager at Wynnefield Capital, Inc. Since March 2007, Mr. Mamanteo has served on the Board of Directors of MAM Software Group, Inc. (NASDAQ: MAMS), a provider of innovative software and data solutions for a wide range of businesses, including those in the automotive aftermarket. Mr. Mamanteo serves as the Chairman of the Compensation Committee and as a member of the Audit and Governance Committees. Since June 2013, Mr. Mamanteo has served on the Board of Directors of ARI Network Services, Inc. (NASDAQ: ARIS), a provider of products and solutions that serve several vertical markets with a focus on the outdoor power, power sports, marine, RV, and appliance segments. Mr. Mamanteo serves as the Chairman of the Governance Committee and as a member of the Compensation Committee. From March 2012 to April 2012, Mr. Mamanteo served on the Board of Directors of CDC Software Corp. (NASDAQ: CDCS), a provider of Enterprise CRM and ERP software designed to increase efficiencies and profitability. Mr. Mamanteo served as a member of the Audit Committee. From April 2009 to November 2010, Mr. Mamanteo served on the Board of Directors of EasyLink Services International Corp. (NASDAQ: ESIC), a provider of on demand electronic messaging and transaction services that help companies optimize relationships with their partners, suppliers and customers. Mr. Mamanteo served as a member of the Compensation and Governance & Nominating Committees. From December 2007 to November 2008, Mr. Mamanteo served on the Board of Directors and as the Chairman of PetWatch Animal Hospitals, Inc. (a private company), a provider of primary care and specialized services to companion animals through a network of fully owned veterinary hospitals. Mr. Mamanteo received an M.B.A. from the Columbia University Graduate School of Business and a B.Eng. in Electrical Engineering from Concordia University (Montreal).
David Ide – Director Nominee. Since August 2010, Mr. Ide has served as an Independent Director, Investor, and Advisor to technology and start-up ventures including Spindle, Inc. (OTC: SPDL), a mobile commerce company focused on developing simple to access mobile SaaS, CMS, and custom marketing and payment systems for small to medium businesses, developers, and enterprise customers. Mr. Ide was a founder and the Chairman and Chief Executive Officer of Modavox, Inc. in October 2005 after he managed the transition of SurfNet Media into Modavox, Inc. Mr. Ide engineered accretive acquisitions of four companies for Modavox, formulated the integration processes, and enhanced the technology and intellectual property foundation creating a profitable and pioneering virtual marketing and media company. In July 2009, Mr. Ide developed and executed Modavox, Inc.’s acquisition of Augme Technologies, Inc. creating the first full service mobile agency for Fortune 100 companies (currently 38 of Fortune 100 leverage the ADLife platform). At that time, Mr. Ide was appointed to the Board of Directors of Augme Technologies, Inc. and became the Chief Strategy Officer where he continued to manage the forward vision and M&A strategies for the combined companies. He resigned as an officer and director in August 2010 to engage in developing and advising technology companies, but remained a consultant for Augme Technologies, Inc. through June 2011. Prior to 2005 Mr. Ide served as President of a successful digital agency in Arizona focused on ecommerce, targeted and demand marketing, CMS, and SaaS marketing platforms for fortune 500 companies. Mr. Ide is a technology entrepreneur and an experienced CEO, chairman, patented inventor, and director.
Melvin L. Keating – Director Nominee. Since July 2010, Mr. Keating has served as a director of Red Lion Hotels Corp. (NYSE: RLH), a hospitality and leisure company primarily engaged in the ownership, operation, and franchising of hotels. Mr. Keating has served as Chairman of the Board of Red Lion Hotels Corp. since January 2013. Mr. Keating is also a director of API Technologies Corp. (Nasdaq: ATNY) where he is a member of the Audit, Compensation, and Nominating & Governance Committees, and BluePhoenix Solutions Ltd. (Nasdaq: BPHX) where he is Chairman of the Board. During the course of his career, Mr. Keating has also served on the boards of directors of the following public companies: Integral Systems, Inc.; Integrated Silicon Solutions Inc.; Plymouth Rubber Co.; Price Legacy Corp.; InfoLogix, Inc.; Tower Semiconductor Ltd.; LCC International, Inc.; White Electronic Designs Corp.; Aspect Medical Systems Inc., Crown Crafts Inc. and Bitstream Inc. Since November 2008, Mr. Keating has been a private consultant, providing investment advice and other services to private equity firms. From 2005 to October 2008, he was President and Chief Executive Officer of Alliance Semiconductor Corporation, a worldwide manufacturer and seller of semiconductors. From 2004 to 2005, he served as Executive Vice President, Chief Financial Officer and Treasurer of Quovadx Inc., a healthcare software company. Mr. Keating was employed as a Strategy Consultant for Warburg Pincus Equity Partners from 1997 to 2004, providing acquisition and investment target analysis and transactional advice. Mr. Keating holds a B.A. in Art History from Rutgers University, as well as an M.S. in Accounting and an M.B.A in Finance, both from The Wharton School of the University of Pennsylvania.
Alicia Williams Young, Esq. – Chief Financial Officer and Secretary. Ms. Williams Young was appointed as Chief Financial Officer of the Company by the Board of Directors on September 20, 2013. She had previously served as the Company’s interim principal financial officer since January 15, 2013. Ms. Williams Young was appointed as Secretary of the Company by the Board of Directors on November 30, 2011. From October 2008 until the date Global Recycling Technologies merged with and into the Company, Ms. Williams Young served as the Director of Internal Operations of Global Recycling Technologies. Upon the consummation of the merger of Global Recycling Technologies with and into the Company, Ms. Williams Young became the Controller and VP of Internal Operations of the Company. From August 2004 until she joined the Company, Ms. Williams Young was a full-time law student and/or part-time law clerk. From March 2000 to August 2004, Ms. Williams Young served as a Senior Systems Analyst/Data Lead at Intel Corporation in Chandler, Arizona. Ms. Williams Young holds a law degree (J.D.) from the University of Southern California Gould School of Law in Los Angeles, California (December 2007) and a Bachelor of Science in Management Information Systems & Accounting (December 1999). Ms. Williams Young was admitted to practice law in the state of Arizona (2008).
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Richard Geib – Chief Technical Officer. Mr. Geib was appointed as the Chief Technical Officer of the Company upon the consummation of the merger. Mr. Geib served as Global Recycling Technologies’ Director of Technology and Development from July 2007 until the merger. Since 2002 through current, Mr. Geib has served as the President of WEBA, which develops advanced additive packages for antifreeze and heat transfer fluid and used glycol treatment processes, including re-distillation and recovery technology. Under Mr. Geib’s direction, WEBA launched its additive sales into Canada and Mexico. From 1998 through 2002, Mr. Geib served as President of Additives Inc., a former chemical division of Silco Distributing Co., where he developed new products, added many domestic customers, began industry trade show participation, became chairman of ASTM Coolants Committee, and established a laboratory, customer service, production, and sales department. From 1994 to 1998, Mr. Geib served as the Manager of the Chemical Division of Silco Distributing Company, where he developed and grew his division, developed products, designed a production plant, negotiated contracts for outside production, wrote marketing and technical literature, developed and implemented a sales program, arranged freight, and managed cash flow. From 1990 to 1994, Mr. Geib served as the President of Chemical Sales Company. From 1969 through 1989, Mr. Geib held several positions with Monsanto Company, including, Director of Sales, Detergents and Phosphates Division; Director, Process Chemicals, Europe/Africa Monsanto’s Europe/Africa Headquarters, Brussels, Belgium; Strategic and Financial Planning Director, Process Chemicals Division; Business Manager for Maleic Anhydride, Chlor-Alkali, Phosphate Esters, Fumaric Acid, etc.; Plant Manager Monsanto’s W.G. Krummrich Plant; Operations Superintendent Monsanto’s W.G. Krummrich Plant; Production Supervisor for the 4-Nitrodiphenylamine Chlorine and Caustic Soda/Potash plants; and Design and Plant Engineer World Headquarters.
Todd Smith – Chief Operating Officer. Mr. Smith was appointed as the Company’s Chief Operating Officer on January 8, 2014. Prior to being appointed as Chief Operating Officer, Mr. Smith served as Senior VP Sales, Mergers & Acquisitions of the Company since 2010. From 1995 to 2008, Mr. Smith served as President of Northeast Environmental Services, Inc. (“NES”), located in Cumberland, Rhode Island. NES specialized in the recycling of used engine coolants, and the distribution of recycled automotive antifreezes, as well as various other collection and disposal services offered to the customer base. Mr. Smith was responsible for all aspects of the NES operations, and by 2007, NES had gone from its infancy to achieving $5,000,000 in gross revenues. Mr. Smith supervised the daily operations, research and development, and finances of NES. Additionally, Mr. Smith was directly involved in the development of a sales force that led to a customer base of over 3,000 clients, maintaining account relations and retention, and the expansion of NES from a 100 mile radius to the entire Northeastern United States. In 2000 and 2003, Mr. Smith was nominated for the Small Business Association Entrepreneur of the Year Award.
Janet Carnell Lorenz– Chief Business Development Officer. Ms. Carnell Lorenz was appointed as the Company’s Chief Business Development Officer on January 14, 2014. Prior to being appointed as Chief Business Development Officer, Ms. Carnell Lorenz served as Senior VP of Corporate Development and Marketing of the Company since 2010. Ms. Lorenz founded CyberSecurity Group, Inc. (dba Market Tactics) in 2000 to assist developing technologies into innovative and marketable products. She has synthesized a twenty-one year background in computer systems engineering, corporate development and marketing into a resource for creativity and business acumen. Clients include Apple’s iPhone application developers center and Digital Ghost. She provides in-depth knowledge of corporate branding, market validation, product development and positioning, consumer sales, and viral marketing. She has placed dozens of successful product lines with retailers including Best Buy, Office Depot, Amazon.com and Costco Wholesale. Prior to founding CyberSecurity Group, Inc., she was a founding partner at a top ranked marketing representative's firm. She created the company’s international sales division, devising channel and localization strategies which grew sales to over $40 Million per year. Clients included Hewlett-Packard’s PC division, Hitachi Hard Drives, Creative Labs, Lexmark Printers, PNY Electronics, Umax Technologies, and Fuji Digital Cameras. She attended the University of Washington receiving her Bachelor of Arts in Business Administration, has earned several technical certifications, and is an authorized instructor for a number of computing platforms.
Family Relationships
John Lorenz and Janet Carnell Lorenz are married, and Keri Smith and Todd Smith are siblings. No other family relationship exists between the individuals listed above that is reportable under Item 401(d) of Regulation S-K.
Employment / Consulting Agreements
Richard Geib - On August 4, 2014, the Company entered into a Consulting Agreement with Richard Geib, the Company’s Chief Technical Officer. The Consulting Agreement superseded the terms of the Consulting Agreement previously entered into between Global Recycling Technologies, Ltd., a Delaware corporation (“Global Recycling”), and Mr. Geib on May 3, 2010, which the Company assumed upon the consummation of a reverse triangular merger with Global Recycling on November 28, 2011.
The Consulting Agreement is for a term of two years and may be extended for additional one-year terms by written agreement. Pursuant to the Consulting Agreement, Mr. Geib will assist in the further development and implementation of the Company’s proprietary technology for recycling glycol, the GlyEco TechnologyTM, and perform such other duties as requested by the Company’s Chief Executive Officer. In consideration for his services during the term, the Company will compensate Mr. Geib with an initial engagement fee of $50,000, a monthly consulting fee of $12,500 per month for the first year of the term, a to be determined monthly consulting fee for the second year of the term, and a total of 2,700,000 warrants to purchase shares of GlyEco common stock, par value $0.0001 per share, at an exercise price of $0.73 per share, of which half shall vest immediately and the remaining amount shall vest on August 4, 2015.
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Director Independence
The Board of Directors has determined that each of the following qualify as an “independent director” as defined by Section 10A(m)(3)(ii) of the Exchange Act and Rule 5065(a)(2) of the NASDAQ Marketplace Rules: Michael Jaap, Richard Q. Opler, Keri Smith, Dwight Mamanteo, David Ide, and Melvin L. Keating.
John Lorenz is not an “independent director” due to the fact that he is also an employee of the Company.
Board Oversight of Risk Management
The Board of Directors has responsibility for general oversight of risks facing the Company. The Board is informed by senior management on areas of risk facing the Company and periodically conducts discussions regarding risk assessment and risk management. The Board believes that evaluating how the executive team manages the various risks confronting the Company is one of its most important areas of oversight. The Board’s Audit Committee reviews and assesses the Company’s processes to manage financial reporting risk and to manage investment, tax, and other financial risks.
Code of Business Conduct and Ethics
On August 5, 2014, the Board of Directors of the Company adopted a Code of Business Conduct and Ethics (the “Code of Business Conduct and Ethics”), which sets forth legal and ethical standards of conduct applicable to all directors, officers, and employees of the Company.
The Code of Business Conduct and Ethics supersedes and replaces the Code of Ethics previously adopted by the Board of the Company on January 20, 2012 (the “Prior Code”). The adoption of the Code of Business Conduct and Ethics did not relate to, or result in, any waiver, explicit or implicit, of any provision of the Prior Code.
A copy of the Code of Business Conduct and Ethics may be requested, free of charge, by sending a written communication to Matt Hamilton, General Counsel, at 4802 E. Ray Rd. Ste. 23-408, Phoenix, AZ 85044. The Code of Business Conduct and Ethics has also been posted on the Company’s website, www.glyeco.com.
Committees of the Board of Directors and Meeting Attendance
Our Board of Directors has an Audit Committee, a Compensation Committee, and a Governance and Nominating Committee, each of which has the composition and responsibilities described below.
Audit Committee. Our Audit Committee oversees a broad range of issues surrounding our accounting and financial reporting processes and audits of our financial statements, including the following:
| ● | monitors the integrity of our financial statements, our compliance with legal and regulatory requirements, our independent registered public accounting firm’s qualifications and independence, and the performance of our internal audit function and independent registered public accounting firm; | |
| ● | assumes direct responsibility for the appointment, compensation, retention and oversight of the work of any independent registered public accounting firm engaged for the purpose of performing any audit, review or attest services and for dealing directly with any such accounting firm; | |
| ● | provides a medium for consideration of matters relating to any audit issues; and | |
| ● | prepares the audit committee report that the rules require be included in our filings with the SEC. |
The members of our Audit Committee are Richard Q. Opler, Michael Jaap, and Dwight Mamanteo. Mr. Opler serves as chairperson of the committee. The Board of Directors has determined that Mr. Opler meets the criteria of an “audit committee financial expert” (as defined under Item 407(d)(5)(ii) of Regulation S-K. Mr. Opler is also an “independent director” as defined by Section 10A(m)(3)(ii) of the Exchange Act and Rule 5065(a)(2) of the NASDAQ Marketplace Rules.
The Board of Directors has adopted a written charter for the Audit Committee, a copy of which can be accessed online at www.glyeco.com/corporategov.html.
Compensation Committee. Our Compensation Committee reviews and recommends policy relating to compensation and benefits of our directors and executive officers, including reviewing and approving corporate goals and objectives relevant to the compensation of our Chief Executive Officer and other senior officers, evaluating the performance of these persons in light of those goals and objectives and setting compensation of these persons based on such evaluations. The Compensation Committee reviews and evaluates, at least annually, the performance of the compensation committee and its members, including compliance of the Compensation Committee with its charter.
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The members of our Compensation Committee are Michael Jaap, Richard Q. Opler, Dwight Mamanteo, and John Lorenz. Mr. Jaap serves as chairperson of the committee.
The Board of Directors has adopted a written charter for the Compensation Committee, a copy of which can be accessed online at www.glyeco.com/corporategov.html.
Governance and Nominating Committee. The Governance and Nominating Committee oversees and assists our Board of Directors in identifying, reviewing and recommending nominees for election as directors; evaluating our Board of Directors and our management; developing, reviewing and recommending corporate governance guidelines and a corporate code of business conduct and ethics; and generally advises our Board of Directors on corporate governance and related matters.
The members of our Governance and Nominating Committee are Dwight Mamanteo, Richard Q. Opler, Michael Jaap, John Lorenz, and Keri Smith. Mr. Mamanteo serves as chairperson of the committee.
The Board of Directors has adopted a written charter for the Governance and Nominating, a copy of which can be accessed online at www.glyeco.com/corporategov.html.
Attendance
During the fiscal year ended December 31, 2013, the Board held three meetings and took action by written consent on two occasions. Each member of the Board attended or participated in 75% or more of the aggregate of (i) the total number of meetings of the Board (held during the period for which such person has been a director) and (ii) the total number of meetings held by all committees of the Board on which such person served (during the periods that such person served).
The Company does not have a written policy requiring directors to attend the annual meeting of stockholders, but attendance is encouraged. In 2013, two of the directors attended our annual meeting of stockholders. We presently anticipate that at least one director will attend this year’s annual meeting of stockholders.
Director Nomination
The Governance and Nominating Committee has nominated John Lorenz, Michael Jaap, Richard Q. Opler, Keri Smith, and Dwight Mamanteo, each of whom is a current member of the Board, for re-election at the Annual Meeting. The committee has also nominated David Ide and Melvin L. Keating for election to the Board as new members.
The Board of Directors seeks to ensure that it is composed of members whose particular experience, qualifications, attributes and skills, when taken together, will allow the Board to satisfy its oversight obligations effectively. In selecting Board candidates, it is the Governance and Nominating Committee’s goal to identify persons who it believes have appropriate expertise and experience to contribute to the oversight of a company of the Company’s nature while also reviewing other appropriate factors.
The Board of Directors believes that each of the persons nominated for election at the Annual Meeting have the experience, qualifications, attributes and skills that, when taken as a whole, will enable the Board to satisfy its oversight responsibilities effectively.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our executive officers and directors, and persons who beneficially own more than 10% of a registered class of our equity securities to file with the Securities and Exchange Commission initial statements of beneficial ownership, reports of changes in ownership and annual reports concerning their ownership of our common shares and other equity securities, on Forms 3, 4 and 5, respectively. Executive officers, directors and greater than 10% stockholders are required by the Securities and Exchange Commission regulations to furnish us with copies of all Section 16(a) reports they file.
During the last completed fiscal year, the following reports required by Section 16(a) were not timely filed with the Securities and Exchange Commission:
| Richard Q. Opler failed to timely file a Form 3 upon becoming a director on July 29, 2013, and failed to timely file a Form 4 upon the receipt of stock options under the Company’s 2012 Equity Incentive Plan on September 20, 2013. |
| Keri Smith failed to timely file a Form 3 upon becoming a director on July 29, 2013, and failed to timely file a Form 4 upon the receipt of stock options under the Company’s 2012 Equity Incentive Plan on September 20, 2013. |
| John Lorenz failed to timely file a Form 4 upon the receipt of stock options under the Company’s 2012 Equity Incentive Plan on September 20, 2013. |
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| Michael Jaap failed to timely file a Form 4 upon the receipt of stock options under the Company’s 2012 Equity Incentive Plan on September 20, 2013. |
| Alicia Williams Young failed to timely file a Form 4 upon the receipt of stock options under the Company’s 2012 Equity Incentive Plan on September 20, 2013. |
| Richard Geib failed to timely file a Form 4 upon the receipt of stock options under the Company’s 2012 Equity Incentive Plan on September 20, 2013. |
| Janet Carnell Lorenz failed to timely file a Form 4 upon the receipt of stock options under the Company’s 2012 Equity Incentive Plan on September 20, 2013. |
DIRECTOR COMPENSATION
For the first three quarters of 2013, our directors were paid $500 per quarter for sitting on the Board of Directors. Beginning in the fourth quarter of 2013, director compensation was increased to $600 per quarter.
The table below sets forth the compensation paid to our directors during the fiscal year ended December 31, 2013.
| Director | Fees Earned or Paid in Cash | All Other Compensation | Stock Awards | Total | ||||||||||||||||||
John Lorenz | $ | 2,100 | (1) | $ | 205,000 | (1) | $ | 198,090 | (1) | $ | 405,190 | |||||||||||
James Flach | $ | 1,000 | (2) | $ | $ | - | $ | 1,000 | ||||||||||||||
Michael Jaap | $ | 2,100 | (3) | $ | 2,000 | (3) | $ | 44,020 | (3) | $ | 48,120 | |||||||||||
William Miller | $ | 1,000 | (4) | $ | 72,000 | (4) | $ | - | $ | 73,000 | ||||||||||||
Joseph Ioia | $ | 2,100 | (5) | $ | 74,069 | (5) | $ | 44,020 | (5) | $ | 120,189 | |||||||||||
Rick Opler | $ | 600 | (6) | $ | $ | 22,010 | (6) | $ | 22,610 | |||||||||||||
Keri Smith | $ | 600 | (7) | $ | $ | 22,010 | (7) | $ | 22,610 | |||||||||||||
| (1) | Mr. Lorenz was paid $205,000 in salaries and bonuses for his position as CEO, in addition to the $2,100 he was paid for sitting on the Board of Directors. Mr. Lorenz was granted on September 20, 2013, 450,000 shares of Common Stock issuable upon the exercise of options at $1.00 per share until September 20, 2023. 225,000 of the options granted vested immediately upon grant with the balance of the options vesting fifty percent on each of the next two anniversaries of the grant date. The aggregate grant date estimated fair value of these options, determined by the Black-Scholes method, in accordance with FASB ASC 718, was $198,090. |
| (2) | Mr. Flach was paid $1,000 as compensation for sitting on the Board of Directors. Mr. Flach served on the Board of Directors from November 28, 2011, to July 29, 2013. |
| (3) | Mr. Jaap was paid $2,000 in consulting services for his work on a special project, in addition to the $2,100 he was paid for sitting on the Board of Directors. Mr. Jaap was granted on September 20, 2013, 100,000 shares of Common Stock issuable upon the exercise of options at $1.00 per share until September 20, 2023. 50,000 of the options granted vested immediately upon grant with the balance of the options vesting fifty percent on each of the next two anniversaries of the grant date. The aggregate grant date estimated fair value of these options, determined by the Black-Scholes method, in accordance with FASB ASC 718, was $44,020.. |
| (4) | Mr. Miller was paid $72,000 in consulting services for his work on a special project, in addition to the $1,000 he was paid for sitting on the Board of Directors. Mr. Miller served on the Board of Directors from November 28, 2011, to July 29, 2013. |
| (5) | Mr. Ioia, who until August 22, 2014 was a member of our Board of Directors, was paid $74,069 pursuant to his consulting agreement, in addition to his compensation of $2,100 for sitting on the Board of Directors. On September 23, 2013, Mr. Ioia was granted 100,000 shares of Common Stock issuable upon the exercise of options at $1.00 per share until September 20, 2023. 50,000 of the options granted vested immediately upon grant with the balance of the options vesting fifty percent on each of the next two anniversaries of the grant date. The aggregate grant date estimated fair value of these options, determined by the Black-Scholes method, in accordance with FASB ASC 718, was $44,020. |
| (6) | Mr. Opler was paid $600 as compensation for sitting on the Board of Directors. On September 20, 2013, Mr. Opler was granted 50,000 shares of Common Stock issuable upon the exercise of options at $1.00 per share until September 20, 2023. 25,000 of the options granted vested immediately upon grant with the balance of the options vesting fifty percent on each of the next two anniversaries of the grant date. The aggregate grant date estimated fair value of these options, determined by the Black-Scholes method, in accordance with FASB ASC 718, was $22,010. |
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| (7) | Ms. Smith was paid $600 as compensation for sitting on the Board of Directors. On September 20, 2013, Ms. Smith was granted 50,000 shares of Common Stock issuable upon the exercise of options at $1.00 per share until September 20, 2023. 25,000 of the options granted vested immediately upon grant with the balance of the options vesting fifty percent on each of the next two anniversaries of the grant date. The aggregate grant date estimated fair value of these options, determined by the Black-Scholes method, in accordance with FASB ASC 718, was $22,010. |
EXECUTIVE COMPENSATION
The following table sets forth all plan and non-plan compensation for the last two completed fiscal years paid to all individuals who served as the Company’s principal executive officer (“PEO”), principal financial officer (“PFO”), or acting in similar capacity during the last completed fiscal year regardless of compensation level, and other individuals as required by Item 402(m)(2) of Regulation S-K. We refer to all of these individuals collectively as our “named executive officers.”
Summary Compensation Table
| Name & Principal Position | Year | Salary ($) | Bonus ($) | Warrant Awards ($) | Option Awards ($)(15) | Non-Equity Incentive Plan Compensation ($) | Change in Pension Value and Non- Qualified Deferred Compensation Earnings ($) | All Other Compensation ($) | Total ($) | |||||||||||||||||||||||||||||||
John Lorenz, President and CEO (PEO) | 2013 | $ | 175,000 | $ | 30,000 | $ | - | $ | 198,090 | (1) | $ | - | $ | - | $ | 2,100 | (8) | $ | 405,190 | |||||||||||||||||||||
2012 | 137,500 | - | - | 36,135 | (1) | - | - | 13,000 | (9) | 186,635 | ||||||||||||||||||||||||||||||
Kevin Conner, CFO (PFO) | 2013 | - | - | - | - | - | 31,775 | (10) | 31,775 | |||||||||||||||||||||||||||||||
2012 | - | - | - | 4,015 | (2) | - | 72,245 | (10) | 76,260 | |||||||||||||||||||||||||||||||
Alicia Williams Young, CFO (PFO) | 2013 | 100,500 | 17,500 | - | 132,060 | (3) | - | - | 250,060 | |||||||||||||||||||||||||||||||
2012 | 58,500 | 1,500 | - | 28,507 | (3) | - | - | 19,500 | (11) | 108,007 | ||||||||||||||||||||||||||||||
Richard Geib, Chief Technical Officer | 2013 | - | - | 58,000 | (4) | 44,020 | (5) | - | - | - | 102020 | |||||||||||||||||||||||||||||
2012 | - | - | 4,940 | (4) | - | - | - | - | 4,940 | |||||||||||||||||||||||||||||||
Janet Carnell Lorenz, Chief Business Development Officer | 2013 | - | 5,000 | - | 132,060 | (6) | - | - | 108,000 | (12) | 245,060 | |||||||||||||||||||||||||||||
2012 | - | - | 28,105 | (6) | - | - | 77,000 | (13) | 105,105 | |||||||||||||||||||||||||||||||
Todd Smith, Chief Operating Officer | 2013 | 120,000 | 5,000 | - | 132,060 | (7) | - | - | 257,060 | |||||||||||||||||||||||||||||||
2012 | 69,000 | - | 34,128 | (7) | - | - | 21,000 | (14) | 124,128 | |||||||||||||||||||||||||||||||
| (1) | The estimated value of the options issued to Mr. John Lorenz is based on the Black-Scholes method. See the disclosure below under “Option/SAR Grants in Fiscal Years Ended December 31, 2012 and 2013.” |
| (2) | The estimated value of the options issued to Mr. Kevin Conner is based on the Black-Scholes method. See the disclosure below under “Option/SAR Grants in Fiscal Years Ended December 31, 2012 and 2013.” |
| (3) | The estimated value of options issued to Ms. Williams Young is based on the Black-Scholes method. See disclosure below under “Option/SAR Grants in the Fiscal Years Ended December 31, 2012 and 2013.” |
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| (4) | The estimated value of the warrants issued to Mr. Geib is based on the Black-Scholes method. See disclosure below under “Options/SAR Grants in the Fiscal Years Ended December 31, 2012 and 2013.” |
| (5) | The estimated value of the options issued to Mr. Geib is based on the Black-Scholes method. See disclosure below under “Options/SAR Grants in the Fiscal Years Ended December 31, 2012 and 2013.” |
| (6) | The estimated value of the options issued to Ms. Carnell Lorenz is based on the Black-Scholes method. See disclosure below under “Options/SAR Grants in the Fiscal Year Ended December 31, 2012 and 2013.” |
| (7) | The estimated value of the options issued to Mr. Smith is based on the Black-Scholes method. See disclosure below under “Options/SAR Grants in the Fiscal Years Ended December 31, 2012 and 2013.” |
| (8) | Consisted $2,100 paid to Mr. Lorenz as compensation for being a Director. |
| (9) | Consisted of consulting service fees paid to Mr. Lorenz by the Company. Mr. Lorenz provided management consulting services to the Company through Barcid Investment Group (Barcid), a corporation solely owned by Mr. Lorenz. Neither Barcid nor Mr. Lorenz has a formal written consulting agreement with the Company. Mr. Lorenz, by and through Barcid, was paid on a monthly basis and earned $12,500 for consulting services rendered to the Company in January of 2012. Mr. Lorenz became an employee of the Company in February of 2012. In addition, Mr. Lorenz was paid $500 for compensation for being a Director. |
| (10) | Consisted of consulting service fees paid to Mr. Conner by the Company. Mr. Conner provided accounting and management consulting services to the Company through Conner LLP. Conner LLP has a formal written consulting agreement with the Company, by which it is paid on a monthly basis. |
| (11) | Consisted of consulting service fees paid to Ms. Williams Young by the Company. Ms. Williams Young provided accounting and business management consulting services to the Company through AJile Concepts LLC, a company owned by Ms. Williams Young and her husband. Neither Ms. Williams Young nor AJile Concepts has a formal written consulting agreement with the Company. Ms. Williams Young, by and through AJile Concepts, was paid on a monthly basis and earned $6,500 for consulting services rendered to the Company from January 2012 to March 2012. Ms. Williams Young became an employee of the Company in April 2012. |
| (12) | Consisted of consulting service fees paid to Ms. Carnell Lorenz by the Company. Ms. Carnell Lorenz provided marketing consulting services to the Company through Market Tactics, Inc., a corporation solely owned by Ms. Carnell Lorenz. Neither Ms. Carnell Lorenz nor Market Tactics has a formal written consulting agreement with the Company. Ms. Carnell Lorenz, by and through Market Tactics, was paid on a monthly basis and earned $7,500 from January 2013 to March 2013 and $9,500 from April 2013 to December 2013. |
| (13) | Consisted of consulting service fees paid to Ms. Carnell Lorenz by the Company. Ms. Carnell Lorenz provided marketing consulting services to the Company through CyberSecurity, Inc., a corporation solely owned by Ms. Carnell Lorenz. Neither Ms. Carnell Lorenz nor CyberSecurity has a formal written consulting agreement with the Company. Ms. Carnell Lorenz, by and through CyberSecurity, was paid on a monthly basis and earned $5,500 in January 2013 and $6,500 from February 2013 to December 2013. |
| (14) | Consisted of consulting service fees paid to Mr. Smith by the Company. Mr. Smith provided operations consulting services to the Company through Ocean State Absorbents, a company owned solely by Mr. Smith. Neither Mr. Smith nor Ocean State Absorbents has a formal written consulting agreement with the Company. Mr. Smith, by and through Ocean State Absorbents, was paid on a monthly basis and earned $7,000 for consulting services rendered to the Company from January 2012 to March 2012. Mr. Smith became an employee of the Company in April 2012. |
| (15) | These amounts represent full grant date fair value of these awards, in accordance with the Financial Accounting Standard Board’s (“FASB”) ASC Topic 718. Assumptions used in the calculation of dollar amounts of these awards are included in Note 11 of our audited financial statements for the fiscal year ended December 31, 2013. |
Option/SAR Grants in Fiscal Year Ended December 31, 2013
In 2013, our named executive officers were granted the following:
| Mr. Lorenz was granted on September 20, 2013, 450,000 shares of Common Stock issuable upon the exercise of options at $1.00 per share until September 20, 2023. 225,000 of the options granted vested immediately upon grant with the balance of the options vesting fifty percent on each of the next two anniversaries of the grant date. The aggregate grant date estimated fair value of these options, determined by the Black-Scholes method, was $198,090. | |
Ms. Williams Young was granted on September 20, 2013, 300,000 shares of Common Stock issuable upon the exercise of options at $1.00 per share until September 20, 2023. 150,000 of the options granted vested immediately upon grant with the balance of the options vesting fifty percent on each of the next two anniversaries of the grant date. The aggregate grant date estimated fair value of these options, determined by the Black-Scholes method, was $132,060. |
| Mr. Geib was granted on September 20, 2013, 100,000 shares of Common Stock issuable upon the exercise of options at $1.00 per share until September 20, 2023. 50,000 of the options granted vested immediately upon grant with the balance of the options vesting fifty percent on each of the next two anniversaries of the grant date. The aggregate grant date estimated fair value of these options, determined by the Black-Scholes method, was $44,020. Pursuant to his consulting agreement, Mr. Geib was also issued 100,000 shares of Common Stock issuable upon the exercise of warrants at $0.50 per share until May 3, 2018. The aggregate grant date estimated fair value of these warrants, determined by the Black-Scholes method, was $58,000. |
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| Ms. Carnell Lorenz was granted on September 20, 2013, 300,000 shares of Common Stock issuable upon the exercise of options at $1.00 per share until September 20, 2023. 150,000 of the options granted vested immediately upon grant with the balance of the options vesting fifty percent on each of the next two anniversaries of the grant date. The aggregate grant date estimated fair value of these options, determined by the Black-Scholes method, was $132,060. |
| Mr. Smith was granted on September 20, 2013, 300,000 shares of Common Stock issuable upon the exercise of options at $1.00 per share until September 20, 2023. 225,000 of the options granted vested immediately upon grant with the balance of the options vesting fifty percent on each of the next two anniversaries of the grant date. The aggregate grant date estimated fair value of these options, determined by the Black-Scholes method, was $132,060. |
Option/SAR Grants in Fiscal Year Ended December 31, 2012
In 2012, our named executive officers were granted the following:
| Mr. Lorenz was granted on December 5, 2012, 450,000 shares of Common Stock issuable upon the exercise of options at $0.50 per share until December 5, 2022. Of these, 225,000 vested immediately upon grant with the balance of the options vesting fifty percent on each of the next two anniversaries of the grant date. The aggregate grant date estimated fair value of these options, determined by the Black-Scholes method, was $36,135. |
| Mr. Conner was granted on December 5, 2012, 50,000 shares of Common Stock issuable upon the exercise of options at $0.50 per share until December 5, 2022. Of these, 25,000 vested immediately upon grant with the balance of the options vesting fifty percent on each of the next two anniversaries of the grant date. The aggregate grant date estimated fair value of these options, determined by the Black-Scholes method, was $4,015. |
Ms. Williams Young was granted on December 5, 2012, 355,000 shares of Common Stock issuable upon the exercise of options at $0.50 per share until December 5, 2022. Of these, 177,500 vested immediately upon grant with the balance of the options vesting fifty percent on each of the next two anniversaries of the grant date. The aggregate grant date estimated fair value of these options, determined by the Black-Scholes method, was $28,507. Mr. Geib was granted pursuant to his consulting agreement on May 3, 2012, 100,000 shares of Common Stock issuable upon the exercise of warrants at $0.50 per share until May 3, 2017. The aggregate grant date estimated fair value of these warrants, determined by the Black-Scholes method, was $4,940. |
| Ms. Carnell Lorenz was granted on December 5, 2012, 350,000 shares of Common Stock issuable upon the exercise of options at $0.50 per share until December 5, 2022. Of these, 175,000 vested immediately upon grant with the balance of the options vesting fifty percent on each of the next two anniversaries of the grant date. The aggregate grant date estimated fair value of these options, determined by the Black-Scholes method, was $28,105. |
| Mr. Smith was granted on December 5, 2012, 425,000 shares of Common Stock issuable upon the exercise of options at $0.50 per share until December 5, 2022. Of these, 212,500 vested immediately upon grant with the balance of the options vesting fifty percent on each of the next two anniversaries of the grant date. The aggregate grant date estimated fair value of these options, determined by the Black-Scholes method, was $34,128. |
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Outstanding Equity Awards at Fiscal Year-End Table
The following table sets forth information for the named executive officer regarding the number of shares subject to both exercisable and unexercisable stock options, as well as the exercise prices and expiration dates thereof, as of December 31, 2013.
| Name | Number of Securities underlying Unexercised Options (#) Exercisable | Number of Securities underlying Unexercised Unearned Options (#) Unexercisable | Option Exercise Price ($/Sh) | Option Expiration Date | |||||||||||
John Lorenz | 119,172 | - | $ | 1.00 | 6/27/2021 | ||||||||||
318,356 | - | $ | 1.00 | 6/27/2021 | |||||||||||
488,750 | 86,250 | $ | 0.50 | 10/25/2021 | (1) | ||||||||||
337,500 | 112,500 | $ | 0.50 | 12/5/2022 | (2) | ||||||||||
225,000 | 225,000 | $ | 1.00 | 9/20/2023 | (3) | ||||||||||
Kevin Conner | 63,750 | 11,250 | $ | 0.50 | 10/25/2021 | (1) | |||||||||
37,500 | 12,500 | $ | 0.50 | 12/5/2022 | (2) | ||||||||||
Alicia Williams Young | 15,000 | - | $ | 1.00 | 6/27/2021 | ||||||||||
212,500 | 37,500 | $ | 0.50 | 10/25/2021 | (1) | ||||||||||
266,250 | 88,750 | $ | 0.50 | 12/5/2022 | (2) | ||||||||||
150,000 | 150,000 | $ | 1.00 | 9/20/2023 | (3) | ||||||||||
Richard Geib | 60,000 | - | $ | 1.00 | 6/27/2021 | ||||||||||
127,500 | 22,500 | $ | 0.50 | 10/25/2021 | (1) | ||||||||||
50,000 | 50,000 | $ | 1.00 | 9/20/2023 | (3) | ||||||||||
Todd Smith | 255,000 | 45,000 | $ | 0.50 | 10/25/2021 | (1) | |||||||||
318,750 | 106,250 | $ | 0.50 | 12/5/2022 | (2) | ||||||||||
150,000 | 150,000 | $ | 1.00 | 9/20/2023 | (3) | ||||||||||
Janet Carnell Lorenz | 80,000 | - | $ | 1.00 | 6/27/2021 | ||||||||||
180,000 | - | $ | 1.00 | 6/27/2021 | |||||||||||
255,000 | 45,000 | $ | 0.50 | 10/25/2021 | (1) | ||||||||||
262,500 | 87,500 | $ | 0.50 | 12/5/2022 | (2) | ||||||||||
150,000 | 150,000 | $ | 1.00 | 9/20/2023 | (3) | ||||||||||
| (1) | The unearned options vest on October 25, 2014 |
| (2) | The unearned options vest on December 5, 2014 |
| (3) | The unearned options vest 50% on September 20, 2014 and 50% on September 20, 2015. |
Stock Option Plans
Third Amended and Restated 2007 Stock Incentive Plan
Upon the consummation of the merger, Global Recycling’s Third Amended and Restated 2007 Stock Incentive Plan (the “2007 Stock Plan”) was assumed by the Company.
The following is a summary of certain of the more significant provisions of the 2007 Stock Plan. The statements contained in this summary concerning the provisions of the 2007 Stock Plan are merely summaries and do not purport to be complete. They are subject to and qualified in their entirety by the actual terms of the 2007 Stock Plan. A copy of the 2007 Stock Plan has been incorporated by reference as Exhibit 4.4 to our Annual Report on Form 10-K for the year ending December 31, 2013 and is incorporated by reference herein.
Shares Reserved Under the 2007 Stock Plan
We have reserved 6,742,606 shares of our common stock issuable upon exercise of options granted under the 2007 Stock Plan to employees, directors, proposed employees and directors, advisors, independent contractors (and their employees and agents), and other persons who provide valuable services to the Company (collectively, “Eligible Persons”). As of August 2014, we have issued 6,647,606 options to purchase the shares of our common stock originally reserved under the 2007 Stock Plan. All previously granted options issued pursuant to the 2007 Stock Plan will be subject to the requirements set forth in the 2007 Stock Plan and are Non-Qualified Stock Options.
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The aggregate number of shares that may be granted to any one Eligible Person in any year will not exceed 50.0% of the total number of shares that may be issued under the 2007 Stock Plan. At the discretion of the Plan Administrator (defined below), the number and type of shares of our common stock available for award under the 2007 Stock Plan (including the number and type of shares and the exercise price covered by any outstanding award) may be adjusted for any increase or decrease in the number of issued shares of our common stock resulting from any stock split, reverse stock split, split-up, combination or exchange of shares, consolidation, spin-off, reorganization, or recapitalization of shares.
Administration
The 2007 Stock Plan is currently being administered by our Board of Directors. Our Board of Directors may delegate its authority and duties under the 2007 Stock Plan to a committee. Our Board of Directors and/or any committee that has been delegated the authority to administer the 2007 Stock Plan is referred to as the “Plan Administrator.” Subject to certain restrictions, the Plan Administrator generally has full discretion and power to (i) determine all matters relating to awards issued under the 2007 Stock Plan, including the persons to be granted awards, the time of grant, the type of awards, the number of shares of our common stock subject to an award, vesting conditions, and any and all other terms, conditions, restrictions, and limitations of an award, (ii) interpret, amend, and rescind any rules and regulations relating to the 2007 Stock Plan, (iii) determine the terms of any award agreement made pursuant to the 2007 Stock Plan, and (iv) make all other determinations that may be necessary or advisable for the administration of the 2007 Stock Plan. All decisions made by the Plan Administrator relating to the 2007 Stock Plan will be final, conclusive, and binding on all persons.
Eligibility
The Plan Administrator may grant any award permitted under the 2007 Stock Plan to any Eligible Person. With respect to awards that are options, directors who are not employees of the Company, proposed non-employee directors, proposed employees, and independent contractors will be eligible to receive only Non-Qualified Stock Options (“NQSOs”). An award may be granted to a proposed employee or director prior to the date he, she, or it performs services for the Company, so long as the award will not vest prior to the date on which the proposed employee or director first performs such services.
Awards under the 2007 Stock Plan
Under the 2007 Stock Plan, Eligible Persons may be granted: (a) stock options (“Options”), which may be designated as NQSOs or Incentive Stock Options (“ISOs”); (b) stock appreciation rights (“SARs”); (c) restricted stock awards (“Restricted Stock”); (d) performance share awards (“Performance Awards”); or (e) other forms of stock-based incentive awards (collectively, the “Awards”). An Eligible Person who has been granted an Option is referred to in this summary as an “Optionee” and an Eligible Person who has been granted any other type of Award is referred to in this summary as a “Participant.”
No Award granted under the 2007 Stock Plan can be inconsistent with the terms and purposes of the 2007 Stock Plan. Additionally, the applicable exercise price for which shares of our common stock may be purchased upon exercise of an Award will not be less than (i) 100.0% of the Fair Market Value (as defined in the 2007 Stock Plan) of shares of our common stock on the date that the Award is granted, or (ii) 110.0% of the Fair Market Value if the Award is granted to an Eligible Person who, directly or indirectly, holds more than 10.0% of the total voting power of the Company.
The Plan Administrator may grant to Optionees NQSOs or ISOs that are evidenced by stock option agreements. A NQSO is a right to purchase a specific number of shares of our common stock during such time as the Plan Administrator may determine. A NQSO that is exercisable at the time an Optionee ceases providing services to the Company will remain exercisable for such period of time as determined by the Plan Administrator. Generally, Options that are intended to be ISOs will be treated as NQSOs to the extent that the Fair Market Value of the common stock issuable upon exercise of such ISO, plus all other ISOs held by such Optionee that become exercisable for the first time during any calendar year, exceeds $100,000.
An ISO is an Option that meets the requirements of Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”). To qualify as an ISO under the Code, the Option generally must (among other things) (x) be granted only to employees, (y) have an exercise price equal to or greater than the Fair Market Value on the date of grant, and (z) terminate if not exercised within 10 years from the date of grant (or five years if granted to an Optionee who, at the time the ISO is granted, directly or indirectly, holds more than 10.0% of the total voting power of the Company). Except in certain limited instances (including termination for cause, death, or disability), if any Optionee ceases to provide services to the Company, the Optionee’s rights to exercise vested ISOs will expire within three months following the date of termination.
A SAR is a right granted to a Participant to receive, upon surrender of the right, payment in an amount equal to (i) the excess of the Fair Market Value of one share of common stock on the date the right is exercised, over (ii) the Fair Market Value of one share of common stock on the date the right is granted.
Restricted Stock is common stock that is issued to a Participant at a price determined by the Plan Administrator. Restricted stock awards may be subject to (i) forfeiture upon termination of employment or service during an applicable restriction period, (ii) restrictions on transferability, (iii) limitations on the right to vote such shares, (iv) limitations on the right to receive dividends with respect to such shares, (v) attainment of certain performance goals, and (vi) such other conditions, limitations, and restrictions as determined by the Plan Administrator.
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A Performance Award grants the Participant the right to receive payment upon achievement of certain performance goals established by the Plan Administrator. Such payments will be valued as determined by the Plan Administrator and will be payable to or exercisable by the Participant for cash, shares of our common stock, other awards, or other property determined by the Plan Administrator.
Other Awards may be issued under the 2007 Stock Plan, which include, without limitation, (i) shares of our common stock awarded purely as a bonus and not subject to any restrictions or conditions, (ii) convertible or exchangeable debt or equity securities, (iii) other rights convertible or exchangeable into shares of our common stock, and (iv) awards valued by reference to the value of shares of our common stock or the value of securities or the performance of specified subsidiaries of the Company.
Exercise Price
The price for which shares of our common stock may be purchased upon exercise of a particular Award will be determined by the Plan Administrator at the time of grant. However, the applicable exercise price for which shares of our common stock may be purchased upon exercise of an Award will not be less than (i) 100.0% of the Fair Market Value (as defined in the 2007 Stock Plan) of shares of our common stock on the date that the Award is granted, or (ii) 110.0% of the Fair Market Value if the Award is granted to an Eligible Person who, directly or indirectly, holds more than 10.0% of the total voting power of the Company.
No Deferral Features
No Award granted under the 2007 Stock Plan will contain a deferral feature. Awards cannot be modified or otherwise extended. No Award will contain a provision providing a reduction in the applicable exercise price, an addition of a deferral feature, or any extension of the term of the award.
Payment / Exercise of Award
An Award may be exercised using as the form of payment (a) cash or cash equivalent, (b) stock-for-stock payment, (c) cashless exercises, (d) the granting of replacement awards, (e) any combination of the above, or (f) such other means as the Plan Administrator may approve. No shares of our common stock will be delivered in connection with the exercise of any Award until payment in full of the exercise price is received by the Company.
Change of Control
The Stock Option provides that if a Change of Control (as defined in the 2007 Stock Plan) occurs, then the surviving, continuing, successor, or purchasing entity (the “Acquiring Company”), will either assume our rights and obligations under outstanding Awards or substitute for outstanding Awards substantially equivalent awards for the Acquiring Company’s capital stock. If the Acquiring Company elects not to assume or substitute for such outstanding Awards in connection with a Change of Control, our Board of Directors may determine that all or any unexercisable and/or unvested portions of outstanding Awards will be immediately vested and exercisable in full upon consummation of the Change of Control. Unless otherwise determined by our Board of Directors, Awards that are neither (i) assumed or substituted for by the Acquiring Company in connection with the Change of Control, nor (ii) exercised upon consummation of the Change of Control, will terminate and cease to be outstanding effective as of the date of the Change of Control. Upon the consummation of the Merger, the Company assumed the obligations of Global Recycling under the Plan.
Amendment
Our Board of Directors may, without action on the part of our stockholders, amend, change, make additions to, or suspend or terminate the 2007 Stock Plan as it may deem necessary or appropriate and in the best interests of the Company; provided, however, that our Board of Directors may not, without the consent of the Participants, take any action that disqualifies any previously granted Option for treatment as an ISO or which adversely affects or impairs the rights of the holder of any outstanding Award. Additionally, our Board of Directors will need to obtain the consent of our stockholders in order to (a) amend the 2007 Stock Plan to increase the aggregate number of shares of our common stock subject to the plan, or (b) amend the 2007 Stock Plan if stockholder approval is required either (i) to comply with Section 422 of the Code with respect to ISOs, or (ii) for purposes of Section 162(m) of the Code.
Term
The 2007 Stock Plan will remain in full force and effect through May 30, 2017, unless terminated earlier by our Board of Directors. After the 2007 Stock Plan is terminated, no future Awards may be granted under the 2007 Stock Plan, but Awards previously granted will remain outstanding in accordance with their applicable terms and conditions.
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2012 Equity Incentive Plan
On February 23, 2012, subject to stockholder approval, the Company’s Board of Directors approved of the Company’s 2012 Equity Incentive Plan (the “2012 Plan”). By written consent in lieu of a meeting, dated March 14, 2012, Company stockholders owning an aggregate of 14,398,402 shares of Common Stock (representing approximately 66.1% of the 22,551,991 outstanding shares of Common Stock) approved and adopted the 2012 Plan. Also by written consent in lieu of a meeting, dated July 27, 2012, stockholders of the Company owning an aggregate of 12,676,202 shares of Common Stock (representing approximately 51.8% of the then 24,451,991 outstanding shares of Common Stock) approved an amendment to the 2012 Plan to increase the number of shares reserved for issuance under the 2012 Plan by 3,000,000 shares.
There are an aggregate of 6,500,000 shares of our Common Stock reserved for issuance upon exercise of awards granted under the 2012 Plan to employees, directors, proposed employees and directors, advisors, independent contractors (and their employees and agents), and other persons who provide valuable services to the Company. As of August 2014, we have issued 4,338,072 options under the 2012 Plan. The following description of the 2012 Plan does not purport to be complete and is qualified in its entirety by reference to the full text of the 2012 Plan. A copy of the 2012 Plan has been filed as Exhibit 4.5 to our Annual Report on Form 10-K for the year ending December 31, 2013 and is incorporated by reference herein.
Purpose of the 2012 Plan
The purpose of the 2012 Plan is to attract, retain, and motivate employees, directors, advisors, independent contractors (and their employees and agents, or, in the Plan Administrator’s discretion, any of their employees or contractors), and other persons who provide valuable services to the Company by providing them with the opportunity to acquire a proprietary interest in the Company and to link their interest and efforts to the long-term interests of the Company’s stockholders. The Company believes that increased share ownership by such persons will more closely align stockholder and employee interests by encouraging a greater focus on the profitability of the Company. The Company has reserved and authorized the issuance of up to 6,500,000 shares of the Company’s Common Stock pursuant to awards granted under the 2012 Plan, subject to adjustment in the case of any stock dividend, forward or reverse stock split, split-up, combination or exchange of shares, consolidation, spin-off, reorganization, or recapitalization of shares or any like capital adjustment.
The 2012 Plan includes a variety of forms of awards, including (i) stock options intended to qualify as Incentive Stock Options (“Incentive Stock Options”) under the Section 422 of the United States Internal Revenue Code of 1986, as amended (the “Code”), (ii) stock options not intended to qualify as Incentive Stock Options under the Code (“Nonqualified Stock Options”), (iii) stock appreciation rights, (iv) restricted stock awards, (v) performance stock awards and (vi) other stock-based awards to allow the Company to adapt its incentive compensation program to meet the needs of the Company.
Plan Administration
The 2012 Plan will be administered by the Board of Directors of the Company (the “Board”). The Board may delegate all or any portion of its authority and duties under the 2012 Plan to one or more committees appointed by the Board and consisting of at least one member of the Board, under such conditions and limitations as the Board may from time to time establish. Notwithstanding anything contained in the 2012 Plan to the contrary, only the Board or a committee thereof composed of two or more “Non-Employee Directors” (as that term is defined in Rule 16b-3 of the Exchange Act may make determinations regarding grants of awards to executive officers, directors, and 10% stockholders of the Company (“Affiliates”).
The Board and/or any committee that has been delegated the authority to administer the 2012 Plan, as the case may be, will be referred to as the “Plan Administrator.”
The Plan Administrator has the authority, in its sole and absolute discretion, to grant awards as an alternative to, as a replacement of, or as the form of payment for grants or rights earned or due under the 2012 Plan or other compensation plans or arrangements of the Company or a subsidiary of the Company, including the 2012 Plan of any entity acquired by the Company or a subsidiary of the Company.
Eligibility
Any employee, director, proposed employee or director, independent contractor (or employee or agent thereof), or other agent or person who provides valuable services to the Company will be eligible to receive awards under the 2012 Plan. With respect to awards that are options, directors who are not employees of the Company, proposed non-employee directors, proposed employees, and independent contractors (and their employees and agents, or, in the Plan Administrator’s discretion, any of their employees or contractors) will be eligible to receive only Nonqualified Stock Options.
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Change of Control
Unless otherwise provided by the Board, in the event of a Change of Control (as defined in the 2012 Plan), the surviving, continuing, successor, or purchasing entity or parent entity thereof, as the case may be (the “Acquiring Company”), will either assume the Company’s rights and obligations under outstanding awards or substitute for outstanding awards substantially equivalent awards for the Acquiring Company’s capital stock. In the event the Acquiring Company elects not to assume or substitute for such outstanding awards in connection with a Change of Control, the Board may, in its sole and absolute discretion, provide that all or any unexercisable and/or unvested portions of the outstanding awards will be immediately vested and exercisable in full upon consummation of the Change of Control. The vesting and/or exercise of any award that is permissible solely by reason of this section will be conditioned upon the consummation of the Change of Control. Unless otherwise provided by the Board, any awards that are neither (i) assumed or substituted for by the Acquiring Company in connection with the Change of Control, nor (ii) exercised upon consummation of the Change of Control, will terminate and cease to be outstanding effective as of the date of the Change of Control.
Exercise Price of Options
The price for which shares of Common Stock may be purchased upon exercise of a particular option will be determined by the Plan Administrator at the time of grant; provided, however, that the exercise price of any award granted under the 2012 Plan will not be less than 100% of the Fair Market Value (as defined in the 2012 Plan) of the Common Stock on the date such option is granted (or 110% of the Fair Market Value of the Common Stock if the award is granted to a stockholder who, at the time the option is granted, owns or is deemed to own stock possessing more than 10% of the total combined voting power of all classes of capital stock of the Company or of any parent or subsidiary of the Company).
Term of Options; Modifications
The Plan Administrator will set the term of each stock option, but no Incentive Stock Option will be exercisable more than ten years after the date such option is granted (or five years for an Incentive Stock Option granted to a stockholder who, at the time the option is granted, owns or is deemed to own stock possessing more than 10% of the total combined voting power of all classes of capital stock of the Company or of any parent or subsidiary of the Company).
Payment; No Deferrals.
Awards granted under the 2012 Plan may be settled through exercise by (i) cash payments, (ii) the delivery of Common Stock (valued at Fair Market Value), (iii) the cashless exercise of such award, (iv) the granting of replacement awards, (v) combinations thereof as the Plan Administrator will determine, in its sole and absolute discretion, or (vi) any other method authorized by the 2012 Plan. The Plan Administrator will not permit or require the deferral of any award payment, including, without limitation, the payment or crediting of interest or dividend equivalents and converting such credits to deferred stock unit equivalents. No award granted under the 2012 Plan will contain any deferral feature.
Other Stock-Based Awards
Stock Appreciation Rights.
The Plan Administrator may grant stock appreciation rights, either in tandem with a stock option granted under the 2012 Plan or with respect to a number of shares for which no option has been granted. A stock appreciation right will entitle the holder to receive, with respect to each share of stock as to which the right is exercised, payment in an amount equal to (i) the excess of the Fair Market Value of one share of Common Stock on the date the right is exercised, over (ii) the Fair Market Value of one share of Common Stock on the date the right is granted; provided, however, that in the case of stock appreciation rights granted in tandem with or otherwise related to any award under the 2012 Plan, the grant price per share will be at least the Fair Market Value per share of Common Stock on the date the right was granted. The Plan Administrator may establish a maximum appreciation value payable for stock appreciation rights and such other terms and conditions for such rights as the Plan Administrator may determine, in its sole and absolute discretion.
Restricted Stock Awards.
The Plan Administrator may grant restricted stock awards consisting of shares of Common Stock or denominated in units of Common Stock in such amounts as determined by the Plan Administrator, in its sole and absolute discretion. Restricted stock awards may be subject to (i) forfeiture of such shares upon termination of employment or Service (as defined below) during the applicable restriction period, (ii) restrictions on transferability, (iii) limitations on the right to vote such shares, (iv) limitations on the right to receive dividends with respect to such shares, (v) attainment of certain performance goals, such as those described in Section 5.8(c) of the 2012 Plan, and (vi) such other conditions, limitations, and restrictions as determined by the Plan Administrator, in its sole and absolute discretion, and as set forth in the instrument evidencing the award. These restrictions may lapse separately or in combinations or may be waived at such times, under such circumstances, in such installments, or otherwise as determined by the Plan Administrator, in its sole and absolute discretion. Certificates representing shares of Common Stock subject to restricted stock awards will bear an appropriate legend and may be held subject to escrow and such other conditions as determined by the Plan Administrator until such time as all applicable restrictions lapse.
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Performance Share Awards.
The Plan Administrator may grant performance share awards that give the award recipient the right to receive payment upon achievement of certain performance goals established by the Plan Administrator, in its sole and absolute discretion, as set forth in the instrument evidencing the award. Such payments will be valued as determined by the Plan Administrator and payable to or exercisable by the award recipient for cash, shares of Common Stock (including the value of Common Stock as a part of a cashless exercise), other awards, or other property as determined by the Plan Administrator. Such conditions or restrictions may be based upon continuous Service (as defined below) with the Company or the attainment of performance goals related to the award holder’s performance or the Company’s profits, profit growth, profit-related return ratios, cash flow, stockholder returns, or such other criteria as determined by the Plan Administrator. Such performance goals may be (i) stated in absolute terms, (ii) relative to other companies or specified indices, (iii) to be achieved during a period of time, or (iv) as otherwise determined by the Plan Administrator.
Other Stock-Based Awards.
The Plan Administrator may grant such other awards that are payable in, valued in whole or in part by reference to, or otherwise based on or related to shares of Common Stock, as may be deemed by the Plan Administrator to be consistent with the purposes of the 2012 Plan and applicable laws and regulations. Such other awards may include, without limitation, (i) shares of Common Stock awarded purely as a bonus and not subject to any restrictions or conditions, (ii) convertible or exchangeable debt or equity securities, (iii) other rights convertible or exchangeable into shares of Common Stock, and (iv) awards valued by reference to the value of shares of Common Stock or the value of securities or the performance of specified subsidiaries of the Company.
Transferability
Any Incentive Stock Option granted under the 2012 Plan will, during the recipient’s lifetime, be exercisable only by such recipient, and will not be assignable or transferable by such recipient other than by will or the laws of descent and distribution. Except as specifically allowed by the Plan Administrator, any other award granted under the 2012 Plan and any of the rights and privileges conferred thereby will not be assignable or transferable by the recipient other than by will or the laws of descent and distribution and such award will be exercisable during the recipient’s lifetime only by the recipient.
Term of the 2012 Plan
The 2012 Plan will terminate on February 23, 2022, unless sooner terminated by the Board. After the 2012 Plan is terminated, no future awards may be granted under the 2012 Plan, but awards previously granted will remain outstanding in accordance with their applicable terms and conditions and the 2012 Plan’s terms and conditions.
Consideration
The Board or Committee will grant Stock Options under the 2012 Plan in consideration for services rendered. There will be no other consideration received or to be received by the Company or any of its subsidiaries for the granting or extension of Stock Option under the 2012 Plan.
Golden Parachute Compensation
There exists no agreement or understanding, whether written or unwritten, concerning any type of compensation, whether present, deferred, or contingent, that is based on or otherwise relates to an acquisition, merger, consolidation, sale or other disposition of the assets of the Company.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding our Common Stock beneficially owned on August 29, 2014, for (i) each stockholder known to be the beneficial owner of 5% or more of our outstanding common stock, (ii) each executive officer, director, and director nominee and (iii) all executive officers, directors, and director nominees as a group. In general, a person is deemed to be a “beneficial owner” of a security if that person has or shares the power to vote or direct the voting of such security, or the power to dispose or to direct the disposition of such security. A person is also deemed to be a beneficial owner of any securities of which the person has the right to acquire beneficial ownership within 60 days. Shares of Common Stock subject to options, warrants or convertible securities exercisable or convertible within 60 days of the date of determination are deemed outstanding for computing the percentage of the person or entity holding such options, warrants or convertible securities but are not deemed outstanding for computing the percentage of any other person. To the best of our knowledge, subject to community and marital property laws, all persons named have sole voting and investment power with respect to such shares, except as otherwise noted.
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| Name and Address of Beneficial Owner (1) | Number of Shares Beneficially Owned | Percentage of Outstanding Common Stock (2) | ||||||||
| Executive Officers, Directors, and Director Nominees | ||||||||||
John Lorenz --CEO, President, and Chairman of the Board of Directors | 6,152,751 | (3) | 10.09 | % | ||||||
Alicia Williams Young --Chief Financial Officer, Secretary, and VP of Internal Operations | 940,311 | (4) | 1.60 | % | ||||||
Richard Geib --Chief Technical Officer | 2,084,900 | (5) | 3.47 | % | ||||||
Todd Smith --Chief Operating Officer | 1,544,752 | (6) | 2.62 | % | ||||||
Janet Carnell Lorenz --Chief Business Development Officer | 6,152,751 | (7) | 10.09 | % | ||||||
Michael Jaap --Director | 358,500 | (8) | * | |||||||
Keri Smith --Director | 84,700 | (9) | * | |||||||
Richard Q. Opler --Director | 192,200 | (10) | * | |||||||
Dwight Mamanteo --Director | 175,000 | (11) | * | |||||||
David Ide --Director Nominee | 5,000 | (12) | * | |||||||
Melvin L. Keating --Director Nominee | 0 | * | ||||||||
Executive Officers, Directors, and Director Nominees as a group (11 persons) | 11,538,114 | (13) | 17.77 | % | ||||||
| 5% Stockholders | ||||||||||
Leonid Frenkel 401 City Avenue, Suite 528 Bala Cynwyd, PA 19004 | 8,753,656 | (14) | 13.94 | % | ||||||
Ralph M. Amato 2098 Cherry Creek Circle Summerlin, NV 89135 | 7,321,600 | (15) | 12.42 | % | ||||||
Wynnefield Capital Management, LLC 450 Seventh Avenue, Suite 509 New York, NY 10123 | 4,481,339 | (16) | 7.70 | % | ||||||
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*Represents less than 1%
| (1) | Unless otherwise indicated, the business address of each individual named is 4802 East Ray Road, Suite 23-408, Phoenix, Arizona 85044. |
| (2) | Based on 58,190,649 shares of Common Stock of GlyEco, Inc. outstanding as of August 29, 2014. |
| (3) | Includes an aggregate of (i) 437,528 shares of Common Stock issuable upon the exercise of options at $1.00 per share until June 27, 2021, (ii) 488,750 shares of Common Stock issuable upon the exercise of options at $0.50 per share until October 25, 2021, (iii) 337,500 shares of Common Stock issuable upon the exercise of options at $0.50 per share until December 5, 2022, (iv) 337,500 shares of Common Stock issuable upon the exercise of options at $1.00 per share until September 20, 2023 and (v) 156,000 shares of Common Stock issuable upon exercise of warrants at $1.25 per share until February 15, 2016. Also includes an aggregate of 3,751,139 shares of Common Stock beneficially held by Mr. Lorenz’s wife, Janet Carnell Lorenz. Pursuant to Section 13 of the Securities Exchange Act of 1934, as amended, Mr. Lorenz is deemed to beneficially own shares of Common Stock held by his wife. |
| (4) | Includes (i) 15,000 shares of Common Stock issuable upon the exercise of warrants at $1.00 per share until June 27, 2021, (ii) 212,500 shares of Common Stock issuable upon the exercise of options at $0.50 per share until October 25, 2021, (iii) 266,250 shares of Common Stock issuable upon the exercise of options at $0.50 per share until December 5, 2022, (iv) 225,000 shares of Common Stock issuable upon the exercise of options at $1.00 per share until September 20, 2023, and (v) 21,521 shares of Common Stock issuable upon the exercise of options at $0.69 per share until June 30, 2024. |
| (5) | Includes an aggregate of (i) 100,000 shares of Common Stock issuable upon the exercise of warrants at $0.50 per share until May 3, 2016, (ii) 40,000 shares of Common Stock issuable upon exercise of a warrant at $1.00 per share until June 27, 2021, (iii) 60,000 shares of Common Stock issuable upon exercise of options at $1.00 per share until June 27, 2021, (iv) 127,500 shares of Common Stock issuable upon the exercise of options at $0.50 per share until October 25, 2021, (v) 1,350,000 shares of Common Stock issuable upon the exercise of warrants at $0.73 per share until August 4, 2017, and (vi) 50,000 shares of Common Stock issuable upon the exercise of options at $1.00 per share until September 20, 2023. |
| (6) | Includes (i) 255,000 shares of Common Stock issuable upon the exercise of options at $0.50 per share until October 25, 2021, (ii) 318,750 shares of Common Stock issuable upon the exercise of options at $0.50 per share until December 5, 2022, and (iii) 225,000 shares of Common Stock issuable upon the exercise of options at $1.00 per share until September 20, 2023. |
(7) | Includes (i) 180,000 shares of Common Stock issuable upon the exercise of warrants at $1.00 per share until June 27, 2021 (ii) 255,000 shares of Common Stock issuable upon the exercise of options at $0.50 per share until October 25, 2021, (iii) 262,500 shares of Common Stock issuable upon the exercise of options at $0.50 per share until December 5, 2022, (iv) 225,000 shares of Common Stock issuable upon the exercise of options at $1.00 per share until September 20, 2023. and (v) 21,521 shares of Common Stock issuable upon the exercise of options at $0.69 per share until June 30, 2024. Also includes an aggregate of 2,401,612 shares of Common Stock beneficially held by Ms. Carnell Lorenz’s husband, John Lorenz. Pursuant to Section 13 of the Securities Exchange Act of 1934, as amended, Ms. Carnell Lorenz is deemed to beneficially own shares of Common Stock held by her husband. |
| (8) | Includes (i) 85,000 shares of Common Stock issuable upon the exercise of options at $0.50 per share until October 25, 2021, (ii) 112,500 shares of Common Stock issuable upon the exercise of options at $0.50 per share until December 5, 2022, (iii) 75,000 shares of Common Stock issuable upon the exercise of options at $1.00 per share until September 20, 2023, and (iv) 30,000 shares of Common Stock issuable upon the exercise of warrants at $1.25 until February 15, 2016. |
| (9) | Includes 37,500 shares of Common Stock issuable upon the exercise of options at $1.00 per share until September 20, 2023. |
| (10) | Includes (i) 20,000 shares of Common Stock issuable upon the exercise of warrants at $1.00 per share until June 27, 2021 (ii) 42,500 shares of Common Stock issuable upon the exercise of options at $0.50 per share until October 25, 2021, and (iii) 37,500 shares of Common Stock issuable upon the exercise of options at $1.00 per share until September 20, 2023. |
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| (11) | Includes 25,000 shares of Common Stock issuable upon the exercise of options at $1.04 per share until January 15, 2024. |
| (12) | Includes 5,000 shares of Common Stock issuable upon the exercise of options at $0.69 per share until June 30, 2024. |
| (13) | Includes 6,742,820 shares that all executive officers, directors, and director nominees as a group have the right to acquire within 60 days of the date of the table set forth above. The 6,152,751 shares of Common Stock that are deemed to be beneficially owned by both John Lorenz and Janet Carnell Lorenz, and that are included in the total beneficial ownership of Common Stock reported for each of them, are only counted once in the total number of shares of Common Stock reported as beneficially owned by the executive officers, directors, and director nominees. |
| (14) | Consists of (i) 1,000,000 shares of Common Stock issuable upon the exercise of a warrant at a purchase price of $0.0001 per share until May 25, 2015, (ii) 940,000 shares of Common Stock issuable upon the exercise of a warrant at a purchase price of $1.00 until February 15, 2016, (iii) 2,605,513 shares of Common Stock issuable upon exercise of a warrant at a purchase price of $1.00 until March 14, 2017, and (iv) 56,250 shares of Common Stock issuable upon the exercise of options at $1.00 per share until September 20, 2023. |
| (15) | Includes (i) 100,000 shares of Common Stock issuable upon the exercise of a warrant at a purchase price of $1.00 per share until September 1, 2015, (ii) 250,000 shares of Common Stock issuable upon the exercise of a warrant at a purchase price of $1.00 per share until December 1, 2015, and (iii) 400,000 shares of Common Stock issuable upon the exercise of a warrant at a purchase price of $1.00 per share until December 10, 2015. |
| (16) | Entities included: Wynnefield Partners Small Cap Value, L.P.I, Wynnefield Partners Small Cap Value, L.P., and Wynnefield Small Cap Value Offshore Fund, Ltd. Mr. Mamanteo, a member of our Board of Directors, serves as a Portfolio Manager at Wynnefield Capital. |
PROPOSAL 1:
ELECTION OF DIRECTORS
Nominees for Election at the 2014 Annual Meeting of Shareholders
The Governance & Nominating Committee of the Board has nominated John Lorenz, Michael Jaap, Richard Q. Opler, Keri Smith, Dwight Mamanteo, David Ide, and Melvin L. Keating for election as directors to serve until the next annual meeting of stockholder or until their successors are duly elected and qualified.
If you sign your proxy or voting instruction card but do not give instructions with respect to the voting of directors, your shares will be voted for the nominees recommended by our Board. If you wish to give specific instructions with respect to the voting of directors, you may do so by indicating your instructions on your proxy or voting instruction card. The Board expects that the nominees will be available to serve as directors. If any nominee becomes unavailable, however, the proxy holders intend to vote for any nominee designated by the Board, unless the Board chooses to reduce the number of directors serving on the Board. If additional persons are nominated for election as directors, the proxy holders intend to vote all proxies received by them in such a manner as to assure the election of John Lorenz, Michael Jaap, Richard Q. Opler, Keri Smith, Dwight Mamanteo, David Ide, and Melvin L. Keating.
Vote Required and Board Recommendation
Directors are elected by a “plurality” of the shares voted. Plurality means that the nominee with the largest number of votes is elected, up to the maximum number of directors to be chosen (in this case, seven directors). Stockholders can either vote “for” the nominee or withhold authority to vote for the nominee. However, shares that are withheld will have no effect on the outcome of the election of directors. Broker non-votes also will have no effect on the outcome of the election of the directors.
The Board recommends that shareholders vote “FOR” the election of each of John Lorenz, Michael Jaap, Richard Q. Opler, Keri Smith, Dwight Mamanteo, David Ide, and Melvin L. Keating as directors of the Company.
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PROPOSAL 2:
RATIFICATION OF SEMPLE, MARCHAL & COOPER LLP
AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS
Audit Committee Appointment – Semple, Marchal & Cooper LLP
Our Audit Committee, pursuant to authority granted to it by the Board, has selected Semple, Marchal & Cooper LLP as the Company’s independent public accountants to examine our annual consolidated financial statements for the fiscal year ending December 31, 2014. The Board is submitting this proposal to the vote of the shareholders in order to ratify the Audit Committee’s selection. If shareholders do not ratify the selection of Semple, Marchal & Cooper LLP, the Audit Committee will reconsider its selection of our independent public accountants for fiscal 2014, although the Audit Committee will be under no obligation to change its selection. Semple, Marchal & Cooper LLP has been the Company’s independent public accounting firm since July 29, 2013.
Change in Independent Public Accountants
On July 15, 2013, the Board appointed Semple, Marchal & Cooper, LLP to be the Company’s independent registered public accountants. Concurrent with the appointment of Semple, Marchal & Cooper, LLP, on July 15, 2013, the Board dismissed Jorgensen & Co., which had served as the Company’s independent registered public accountants for the fiscal years ended December 31, 2012, and December 31, 2011.
The reports provided by Jorgensen & Co. in connection with the Company’s financial statements for the fiscal years ended December 31, 2012, and December 31, 2011, did not contain any adverse opinion or disclaimer of opinion, nor were such reports qualified or modified as to uncertainty, audit scope, or accounting principles, except that they contained an explanatory paragraph in respect to the substantial doubt of the Company’s ability to continue as a going concern.
During the two fiscal years prior to dismissal and through July 15, 2013, there was only one disagreement between the Company and Jorgensen & Co. The disagreement was in connection with the audit of the Company’s financial statements for the fiscal year ended December 31, 2012, and concerned the fair market value of shares issued in non-monetary transactions. The view of Jorgensen & Co. was that market conditions for the cash sale of securities (at $0.50) weighed heavily in the valuation of the shares, notwithstanding contractual agreements (at $1.00) for the parties to the non-monetary exchanges. The Board did not directly discuss the subject matter of the disagreement with Jorgensen & Co., and the disagreement was ultimately resolved to the satisfaction of Jorgensen & Co. The Company authorized Jorgensen & Co. to respond fully to any inquiries of Semple, Marchal & Cooper LLP concerning the subject matter of the disagreement.
Notwithstanding the disagreement disclosed above, there were no other disagreements between the Company and Jorgensen & Co. on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of Jorgensen & Co., would have caused Jorgensen & Co. to make reference to the subject matter of the disagreements in connection with their reports on the Company’s financial statements, and there were no other reportable events as that term is described in Item 304(a)(1)(v) of Regulation S-K.
On July 15, 2013, the Board appointed Semple, Marchal & Cooper, LLP to be the Company’s independent registered public accountants. During the two fiscal years prior to appointment and through July 15, 2013, neither the Company nor anyone on its behalf consulted with Semple, Marchal & Cooper, LLP regarding any of the following: (i) the application of accounting principles to a specific transaction, either completed or proposed; (ii) the type of audit opinion that might be rendered on the Company’s financial statements, and none of the following was provided to the Company (a) a written report, or (b) oral advice that Semple, Marchal & Cooper, LLP concluded was an important factor considered by the Company in reaching a decision as to an accounting, auditing, or financial reporting issue; or (iii) any matter that was subject of a disagreement, as that term is defined in Item 304(a)(1)(iv) of Regulation S-K, or a reportable event, as described in Item 304(a)(1)(v) of Regulation S-K
On July 29, 2013, the Company’s stockholders ratified the appointment of Semple, Marchal & Cooper, LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2013.
Principal Accounting Fees and Services
Set forth below are the fees paid to Semple, Marchal & Cooper, LLP and Jorgensen & Co. for each of the last two fiscal years:
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Audit Fees
Set below are the aggregate fees billed for each of the last two fiscal years for professional services rendered by the Company’s principal accountant for the audit of the Company’s annual financial statements and review of financial statements included in the Company’s Form 10-Q or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years.
| Auditor: | 2013 | 2012 | ||||||
| Semple, Marchal & Cooper, LLP | $ | 38,803 | $ | - | ||||
| Jorgensen & Co. | 77,500 | 53,500 | ||||||
Audit-Related Fees
Set forth below are the aggregate fees billed in each of the last two fiscal years for assurance and related services by the Company’s principal accountant that are reasonably related to the performance of the audit or review of the Company’s financial statements and are not reported under “Audit Fees” above.
| Auditor: | 2012 | 2013 | ||||||
| Jorgensen & Co. | $ | - | $ | 2,375 | ||||
Tax Fees
Set forth below are the aggregate fees billed in each of the last two fiscal years for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning.
| Auditor: | 2012 | 2013 | ||||||
| Jorgensen & Co. | $ | - | $ | 600 | ||||
All Other Fees
Set forth below are the aggregate fees billed in each of the last two fiscal years for products and services provided by the principal accountant, other than the services reported above. Registrants shall describe the nature of the services comprising the fees disclosed under this category.
| Auditor: | 2012 | 2013 | ||||||
| Jorgensen & Co. | $ | 80,500 | (1) | $ | - | |||
(1) The Company paid Jorgensen & Co. $80,500 for the audit of three companies that were acquired or to be acquired by the Company: MMT Technologies, Full Circle Manufacturing, and Antifreeze Recycling.
Pre-Approval Policies and Procedures
Before an independent registered public accounting firm is engaged by the Company to render audit or permissible non-audit services the engagement is approved by the Audit Committee of the Board.
Attendance at Annual Meeting
Representatives of Semple, Marchal & Cooper, LLP are not expected to be present at the Annual Meeting.
Vote Required and Board Recommendation
Approval of this proposal requires the affirmative vote of a majority of the votes cast on the proposal. Stockholders who return a signed proxy card but do not indicate how they wish to vote on Proposal 2 will be deemed to have voted “FOR” Proposal 2. Abstentions and broker non-votes will have no effect on the outcome of this proposal.
The Board recommends that shareholders vote “FOR” ratification of the selection of Semple, Marchal & Cooper LLP as the company’s independent registered public accounting firm for the fiscal year ending December 31, 2014.
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None reportable under Item 404 of Regulation S-K.
STOCKHOLDER PROPOSALS
If any shareholder of the Company intends to present a proposal for consideration at the 2015 Annual Meeting of Stockholders and desires to have such proposal included in the proxy statement and form of proxy distributed by the Board with respect to such meeting, such proposal must be received at 4802 E. Ray Rd., Ste. 23-408, Phoenix, AZ 85044, Attention: Corporate Secretary, not later than June 14, 2015. Proposals received after such date, including with respect to the nomination of directors, will not be considered timely.
For each matter that you wish to bring before the meeting, provide the following information:
| · | a brief description of the business and the reason for bringing it to the meeting; | |
| · | your name and record address; | |
| · | the number of shares of Company stock which you own; and | |
| · | any material interest (such as financial or personal interest) that you have in the matter. |
OTHER MATTERS
We know of no other matters to be presented at the Annual Meeting other than the election of directors and the ratification of the company’s independent registered public accounting firm, as described above. If other matters are properly presented at the meeting, the proxies will vote on these matters in accordance with their judgment of the best interests of the Company.
We will provide a free copy of our Annual Report on Form 10-K for the fiscal year ended December 31, 2013. Requests should be in writing and addressed to Matt Hamilton, General Counsel, at 4802 E. Ray Rd. Ste. 23-408, Phoenix, AZ 85044.
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