SCHEDULE 14A INFORMATION
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 [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e) (2) )
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
MANNATECH, INCOPORATED
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Name of Registrant as Specified in its Charter
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Name of Person(s) Filing Proxy Statement if other than the Registrant
Payment of Filing Fee (Check Appropriate Box):
[X] No fee required
[ ] Fee computed on table below per exchange Act Rules 14a-6 (i) (1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11 (a) (2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date File:
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[ LOGO ] Mannatech Incorporated
April 26, 2002
To Our Shareholders:
We are pleased to invite you to attend Mannatech's 2002 annual
shareholders' meeting to be held Tuesday, June 4, 2002, at 9:00 a.m. Central
Daylight Time, at the Grapevine Convention Center located at 1209 South Main
Street, Grapevine, Texas. We have enclosed with this letter:
o an official notice of our annual shareholders' meeting;
o a pamphlet with frequently asked questions about our annual
shareholders' meeting;
o a proxy statement that describes the matters to be considered and
acted upon at our annual shareholders' meeting;
o our 2001 annual shareholders' report; and
o a proxy-voting card that will instruct you on how to cast your vote.
PLEASE CAREFULLY REVIEW THE ENCLOSED VOTING INSTRUCTIONS, AS THEY
MAY BE DIFFERENT DEPENDING ON WHETHER YOU HAVE DIRECT OR BENEFICIAL
OWNERSHIP OF YOUR SHARES.
Your vote is important to us, regardless of the number of shares that you
hold. Whether or not you plan to attend our annual shareholders' meeting, we
urge you to cast your vote, prior to the meeting, on the Internet, by telephone
or by signing and returning the enclosed proxy-voting card in the postage-paid
envelope.
Thank you for your ongoing support of, and continued interest in,
Mannatech, Incorporated. We look forward to seeing you at our annual
shareholders' meeting.
Sincerely,
/s/ Robert M. Henry
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Robert M. Henry
Chief Executive Officer
[ LOGO ] Mannatech Incorporated
----------------------------------
2002
Notice of
Annual Shareholders' Meeting
and Proxy Statement
----------------------------------
Tuesday, June 4, 2002
At 9:00 a.m. Central Daylight Time
Grapevine Convention Center
1209 South Main Street
Grapevine, Texas
TABLE OF CONTENTS
Page
----
NOTICE OF ANNUAL SHAREHOLDERS' MEETING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
PROXY STATEMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
General Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Shareholders Entitled to Vote. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Voting by Proxy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Direct Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Beneficial Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Tabulating the Votes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Solicitation of Proxy-Votes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Admission and Voting at Our Annual Shareholders' Meeting . . . . . . . . . . . . . . . . . . . . . 5
Shareholder Procedures for Nominating Board Members and Introducing Proposals. . . . . . . . . . . 5
PROPOSAL 1--Election of Directors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Directors and Executive Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Classes of Our Board of Directors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Committees of Our Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Compensation of Directors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 16(a) Beneficial Ownership Reporting Compliance. . . . . . . . . . . . . . . . . . . . . . 11
Executive Compensation and Summary Compensation Table. . . . . . . . . . . . . . . . . . . . . . . . 12
Stock Options Granted in the Last Fiscal Year. . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Aggregated Option Exercises in the Last Fiscal Year and Fiscal Year-End Option Values. . . . . . . 13
Executive Employment Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Management Bonus Plan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Stock Option Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
401(k) Plan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Compensation Committee Interlocks and Insider Participation. . . . . . . . . . . . . . . . . . . . 16
Report of the Compensation Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Performance Graph. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Report of the Audit Committee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Security Ownership of Certain Beneficial Owners and Management . . . . . . . . . . . . . . . . . . . 20
Certain Relationships and Related Party Transactions . . . . . . . . . . . . . . . . . . . . . . . . 20
Loans to the Partners of Agritech Labs, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Commissions Paid to William C. Fioretti. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Consulting Agreement with Samuel L. Caster . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Consulting Agreement with J. Stanley Fredrick. . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Receivable and Lock-up Agreement with Charles E. Fioretti. . . . . . . . . . . . . . . . . . . . . 21
Separation Agreements with Former Executives . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Cancellation of Incentive Agreement and Certain Transactions with Marlin Ray Robbins . . . . . . . 22
Commissions and Royalties Paid to Dr. Bill H. McAnalley Ph.D . . . . . . . . . . . . . . . . . . . 23
PROPOSAL 2--Ratification of the Re-Appointment of Our Independent Accountants. . . . . . . . . . . . 24
Fees Paid to Independent Accountants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Other Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Additional Information Available . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Forward-Looking Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Appendix:
Appendix A--Frequently Asked Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
MANNATECH, INCORPORATED
NOTICE OF ANNUAL SHAREHOLDERS' MEETING
TO BE HELD ON JUNE 4, 2002
To Our Shareholders:
The 2002 annual shareholders' meeting of Mannatech, Incorporated will be
held at the Grapevine Convention Center, located at 1209 South Main Street,
Grapevine, Texas, on Tuesday, June 4, 2002, at 9:00 a.m. Central Daylight Time,
for the following purposes:
o Proposal 1--To elect Directors: Dr. John Stewart Axford and Messr.
Alan D. Kennedy and to re-elect Messr. Terry L. Persinger.
o Proposal 2--To ratify the re-appointment of PricewaterhouseCoopers
LLP as Mannatech's independent accountants for the year ending
December 31, 2002.
o To act upon such other matters as may properly come before the
annual meeting.
The close of business on April 9, 2002 has been fixed as the record date
for the determination of shareholders entitled to receive notice of and to vote
at our 2002 annual shareholders' meeting or any adjournment(s) thereof.
By order of our Board of Directors
/s/ Samuel L. Caster
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Samuel L. Caster
Chairman of the Board
April 26, 2002
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IMPORTANT
Whether or not you expect to attend our annual shareholders' meeting, we
strongly urge you to cast your vote on the Internet, by telephone or by mailing
in your proxy-voting card at your earliest convenience to help ensure the
presence of a quorum for our meeting and to save the expense and extra work of
additional solicitation.
PLEASE READ ALL OF THE INSTRUCTIONS IN YOUR PROXY INFORMATION PACKET AS
THE INSTRUCTIONS, INTERNET ADDRESSES, TELEPHONE NUMBERS AND MAILING ADDRESSES
MAY BE DIFFERENT DEPENDING ON WHETHER YOU HAVE DIRECT OR BENEFICIAL OWNERSHIP OF
YOUR SHARES. To cast your vote using the proxy-voting card, simply complete the
proxy-voting card, sign, date and return the enclosed proxy-voting card in the
pre-addressed envelope contained in your proxy information packet. To vote your
shares other than by sending in your proxy-voting card you must use the control
number printed in the box on your proxy-voting card. The control number is your
personal code to access the telephone and Internet voting systems.
1. To vote using the Internet, log onto the website designated on your
proxy-voting card and follow the instructions.
2. To vote using a touch-tone telephone, call the telephone number on
your proxy-voting card and follow the instructions.
If you vote by telephone or the Internet you DO NOT need to mail your
proxy-voting card. Proxy voting by any method prior to the meeting will not
prevent you from attending our annual shareholders' meeting or revoking your
vote and voting at our annual shareholders' meeting.
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MANNATECH, INCORPORATED
600 SOUTH ROYAL LANE, SUITE 200
COPPELL, TEXAS 75019
PROXY STATEMENT FOR OUR ANNUAL SHAREHOLDERS' MEETING
TO BE HELD ON JUNE 4, 2002
GENERAL INFORMATION
Your proxy statement is furnished to you in connection with the
solicitation of votes by our Board of Directors. This proxy statement, our 2001
annual shareholders' report, a pamphlet containing frequently asked questions
and your proxy-voting card are being mailed or delivered to shareholders of
record on or about April 26, 2002. The list of frequently asked questions is
also attached to this proxy statement as Appendix A. Unless otherwise stated,
all references in this proxy statement to "Mannatech," the "Company," "us,"
"our" or "we" are to Mannatech, Incorporated.
SHAREHOLDERS ENTITLED TO VOTE
Shareholders who owned common stock of Mannatech as of the close of
business on April 9, 2002, the record date, are called shareholders of record
and are entitled to vote at our annual shareholders' meeting. On April 9, 2002,
we had 25,134,840 outstanding shares of common stock, $0.0001 par value, which
is our only class of voting securities. On April 9, 2002, we had approximately
5,020 shareholders of record that held our common stock directly and
approximately 126 security brokerage firms that held approximately 47.4% of our
common stock on behalf of approximately 8,200 beneficial shareholders. Each
shareholder is entitled to one vote for each share of Mannatech common stock
held. A complete list of shareholders entitled to vote at our annual
shareholders' meeting will be available for examination by our shareholders for
a period of 10 days prior to our meeting. The examination should be limited to
purposes pertaining to our annual shareholders' meeting. The list will be
available at our corporate headquarters in Coppell, Texas, during normal
business hours, from May 24, 2002 until June 3, 2002 and will also be available
during our annual shareholders' meeting. A shareholder wanting to examine the
list should contact our Chief Financial Officer.
VOTING BY PROXY
Properly executed votes by proxy received prior to our annual
shareholders' meeting will be counted at our annual shareholders' meeting on
June 4, 2002 and at any adjournment(s) thereof. If a shareholder specifies how
their proxy-vote is to be cast on any business to come before the meeting, it
will be voted in accordance with such specifications. If no specification is
made, the shareholder's vote by proxy will be voted "FOR" each of the proposals
as recommended by our Board of Directors. A shareholder may revoke, at any time
prior to the meeting, any executed vote by proxy by submitting a revised vote by
proxy bearing a later date. A shareholder who attends our annual shareholders'
meeting may request a ballot and vote in person, thereby revoking any and all
prior votes by proxy; however, attendance at our 2002 annual shareholders'
meeting will not automatically revoke your vote by proxy.
DIRECT OWNERSHIP
Direct ownership means the stock certificates are in the shareholders'
physical possession and that the shareholder receives all of our mailings from
either our transfer agent -- EquiServe Trust Company N.A. or from our solicitor
- -- Georgeson Shareholder.
BENEFICIAL OWNERSHIP
Beneficial ownership means your stock certificates were sent to your
broker or you purchased shares through your broker and you receive all of our
mailings from either your broker or through their solicitor, which is usually
ADP Proxy Services. As a beneficial owner, you own these shares, but our
transfer agent does not have access to any detailed information such as the
individual names of shareholders from the various brokers. The only information
our transfer agent has about shareholders owning stock through brokers is the
broker's name and aggregated total number of shares held by each broker on
behalf of its clients.
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EACH BROKERAGE FIRM WILL HAVE ITS OWN SET OF VOTING INSTRUCTIONS THAT MAY
DIFFER FROM THE INSTRUCTIONS PROVIDED BY US OR OUR SOLICITOR. A SHAREHOLDER
SHOULD READ ALL THE INFORMATION PROVIDED IN THEIR PROXY INFORMATION PACKET AND
USE THE SPECIFIC VOTING INSTRUCTIONS, TELEPHONE NUMBERS, INTERNET ADDRESSES,
MAILING ADDRESSES AND ENVELOPES INCLUDED IN THEIR PROXY INFORMATION PACKETS.
If a shareholder receives more than one proxy information packet it means
that shares are registered with different names or the shareholder has more than
one account in which shares of Mannatech stock are held. EACH PROXY INFORMATION
PACKET MAY HAVE A DIFFERENT SET OF VOTING INSTRUCTIONS, ACCOUNT AND CONTROL
NUMBERS, ADDRESSES AND PHONE NUMBERS. AS A RESULT, EACH SHAREHOLDER SHOULD BE
CAUTIONED TO USE ONLY THE SET OF VOTING INSTRUCTIONS, ACCOUNT AND CONTROL
NUMBERS, ADDRESSES AND TELEPHONE NUMBERS PROVIDED IN EACH SET OF PROXY
INFORMATION PACKET TO ENSURE THEIR VOTE IS PROPERLY INCLUDED IN THE TABULATION
OF VOTES.
TABULATING THE VOTES
Representatives from our transfer agent, EquiServe Trust Company N.A.,
First Chicago Trust Division, will be responsible for tabulating all of the
votes for our annual shareholders' meeting. The presence, in person or by
proxy-vote, of the holders of at least a majority of shares of our common stock
outstanding as of the record date is necessary to have a quorum for our annual
shareholders' meeting. Abstentions and broker "non-votes" will be counted as
present for purposes of determining a quorum for our annual shareholders'
meeting. A broker "non-vote" is defined as a vote by proxy in which a beneficial
owner does not give their broker or broker's solicitor discretionary voting
powers. If a proxy-voting card is signed by the shareholder but submitted
without providing specific voting instructions, the shareholder's vote will be
counted as a vote "FOR" each of the proposals. OUR BOARD OF DIRECTORS RECOMMENDS
A VOTE "FOR" EACH OF THE PROPOSALS.
For the election of directors, broker "non-votes" will NOT be counted in
tabulating the number of votes for each nominee. The nominees receiving the
highest number of "FOR" votes from the shares present in person or represented
by proxy-votes and entitled to vote will be elected as directors. The shares
represented by the enclosed proxy-voting card will be voted as "FOR" all of the
nominees, unless the shareholder specifies differently. To specify differently
the shareholder of record must checkmark either the box "FOR ALL EXCEPT" or
"WITHHOLD ALL." If the shareholder checkmarks the "FOR ALL EXCEPT" box, the
shareholder should then list the names of the nominee(s) they wish to vote
against in the space provided. If the shareholder checkmarks the "WITHHOLD ALL"
box, the shareholder's vote will be considered a vote against all of the named
nominees.
A shareholder cannot write-in the names of additional nominees when voting
by proxy. However, at our annual shareholders' meeting, shareholders of record
will be allowed to write-in additional names of nominee(s) on the ballot. To
write-in a nominee on the ballot the shareholder will need to checkmark either
the "WITHHOLD ALL" box or the "FOR ALL EXCEPT" box on the ballot and then list
the names of the nominees they wish to vote against in the space provided. The
shareholder is only allowed to write-in as many nominees as the shareholder has
voted against. For example, if there were a total of three nominees listed on
the ballot and the shareholder wishes to withhold their vote for two of the
three nominees then the shareholder may write-in up to two additional names for
nominees to our Board of Directors.
For the ratification of the re-appointment of independent accountants,
"ABSTENTIONS" will be counted as a vote "against" this proposal. The
ratification of the re-appointment of independent accountants requires a "FOR"
vote from a majority of shares present or represented by proxy-votes entitled to
vote at our annual shareholders' meeting.
SOLICITATION OF PROXY-VOTES
We or our solicitor may solicit proxy votes through the mail, in person
and by telecommunications. Mannatech will bear all expenses in preparing,
printing and mailing the proxy materials to our shareholders. We have hired
Georgeson Shareholder to assist in the solicitation of proxies at a cost of
approximately $6,000 plus out-of-pocket expenses.
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ADMISSION AND VOTING AT OUR ANNUAL SHAREHOLDERS' MEETING
Attendance at our meeting will be limited to shareholders of record,
beneficial owners having evidence of ownership on that date and invited guests
of Mannatech. If you are not a direct shareholder, please bring evidence of your
ownership to the meeting. Evidence should include your proxy-voting card or
brokerage statement showing proof of stock ownership as of the close of business
on April 9, 2002. At the meeting, shareholders will be admitted upon
verification of stock ownership. No cameras or recording equipment will be
permitted in the meeting room. As a courtesy and as time permits, Mannatech will
provide a brief question and answer period for its shareholders of record.
Direct shareholders will be given ballots upon check-in and verification
of stock ownership. Beneficial shareholders must obtain a power of attorney form
or legal proxy from their broker in order to vote by ballot at our meeting.
BENEFICIAL SHAREHOLDERS ARE INSTRUCTED TO READ THE PROXY-VOTING CARD
INSTRUCTIONS GIVEN TO THEM BY THEIR BROKER OR THEIR BROKERS' SOLICITOR ON HOW TO
ATTEND AND VOTE AT OUR ANNUAL SHAREHOLDERS' MEETING. IF THE BENEFICIAL
SHAREHOLDER DOES NOT FOLLOW THEIR BROKERS' INSTRUCTIONS, OUR TRANSFER AGENT MAY
NOT BE ALLOWED TO COUNT THEIR VOTE BY BALLOT.
SHAREHOLDER PROCEDURES FOR NOMINATING BOARD MEMBERS OR INTRODUCING PROPOSALS
For our 2002 annual meeting, the deadline for nominating a director to our
Board of Directors and for introducing proposals to be included in our proxy
information package has expired. A shareholder of record can write-in nominees
for our Board of Directors on their ballot at our annual shareholders' meeting.
See instructions above under the heading "Tabulating the Votes. Mannatech
reserves the right to reject, rule out-of-order or take other appropriate action
with respect to any proposal that does not comply with these and other
applicable requirements.
Under our Fourth Amended and Restated Bylaws, nominations for candidates
for director shall be made by our Nominating Committee of our Board of
Directors. A shareholder entitled to vote at our annual shareholders' meeting
may deliver written notice to our Chief Financial Officer ("CFO") of proposed
candidates for director no later than December 31, 2002 so our Board of
Directors can consider such persons for nomination at our 2003 annual
shareholders' meeting. The CFO will then forward all written notices to the
Nominating Committee of our Board of Directors. The Nominating Committee, which
consists of five members of our Board of Directors, reviews all of the proposed
candidates and will submit its recommendations to our Board of Directors. Our
Board of Directors then will approve certain proposed of candidates. The
candidates approved by our Board of Directors are the only nominees that will be
listed on the ballot, proxy-voting card and in our proxy statement on Schedule
14A, which is expected to be filed with the Securities and Exchange Commission
on or before April 30, 2003.
Proposals by shareholders intended to be presented at our 2003 annual
shareholders' meeting must be received by Mannatech's CFO on or before December
27, 2002, in order to be eligible for inclusion in our proxy statement and
proxy-voting card. Such proposals must also comply with all applicable
provisions of Rule 14a-8 under the Securities Exchange Act of 1934.
Pursuant to Rule 14a-4(c)(1) under the Securities Exchange Act of 1934, if
any shareholder proposals are intended to be presented at our 2003 annual
shareholders' meeting without inclusion in our proxy statement for such meeting
the proposal must be received in writing by our CFO by March 12, 2003, which is
45 days from the estimated mailing date of the 2003 proxy statement. The holder
of a proxy will have the ability to confer discretionary authority to vote on
such proposal. We reserve the right to reject, rule out-of-order or take other
appropriate action with respect to any proposal that does not comply with these
and other applicable requirements.
A copy of our Fourth Amended and Restated Bylaws may be obtained upon
written request to our General Counsel at our corporate offices located at 600
S. Royal Lane, Suite 200, Coppell, Texas 75019.
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PROPOSAL 1--ELECTION OF DIRECTORS
Three directors are to be elected at our annual shareholders' meeting. Our
Articles of Incorporation provide for a classified Board of Directors, divided
into Classes I, II and III, the terms of office of which are currently scheduled
to expire, respectively, on the dates of our annual shareholders' meeting in
2003, 2004 and 2002.
NOMINEES
The nominees for election at our annual shareholders' meeting are Terry L.
Persinger, Alan D. Kennedy and Dr. John Stewart Axford as Class III directors.
Class III nominees will be elected for a three-year term expiring on the date of
our annual shareholders' meeting in 2005 or until the earlier of
disqualification, resignation, death or removal. Our Board of Directors
nominated Alan D. Kennedy and Dr. John Stewart Axford to replace James M. Doyle
Jr. and Dr. Stephen A. Barker, Ph.D. who are not standing for re-election.
OUR BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE NOMINEES.
TERRY L. PERSINGER, age 57, joined Mannatech in November 1999 to serve as
our Executive Vice President, Chief Operating Officer and as a Class III
director on our Board of Directors. Mr. Persinger also served as our Corporate
Secretary from November 1999 until November 2001. Mr. Persinger began serving as
our President in May 2000. Mr. Persinger's current term as director expires on
June 4, 2002. From 1968 until August 1999, Mr. Persinger worked at Goodyear Tire
and Rubber Company, an international manufacturer of tires and rubber products
and from January 1995 to August 1999 he served as their Vice President and
General Manager of Engineered Products. Mr. Persinger received a B.S. in
Chemical Engineering from the University of Cincinnati and is a graduate of the
PMD management program at Harvard University. Mr. Persinger is the
brother-in-law of Donald W. Herndon, our Vice President of Marketing
Administration. Mr. Herndon is the brother-in-law of Mr. Samuel L. Caster, our
Chairman of the Board.
DR. JOHN STEWART AXFORD, age 49, is currently serving as the President of
the Royal Society of Medicine, Section of Clinical Immunology and Allergy and
has performed various clinical studies and research for Mannatech. Since 1990,
Dr. Axford has been a member of the Faculty at St. George's Hospital Medical
School, University of London, serving as Senior Lecturer in Rheumatology and
since 1998, as a consultant and Reader in Rheumatology and Clinical Immunology.
Dr. Axford also currently serves on the editorial boards of three medical
journals and on numerous medical and health related committees. Dr. Axford has
lectured extensively throughout the United States, the United Kingdom, Europe,
Australia and Asia and has authored and co-authored over 50 published
peer-reviewed scientific papers, over 100 published abstracts and letters and
two best-selling medical textbooks. Mr. Axford is actively involved with
research in Rheumatology and served as chairman of the 2000 Royal Society of
Medicine Conference, Glycobiology and Medicine, held in London where
approximately 200 experts from around the world discussed the biological
activity of carbohydrates and their relationship with health and disease. Dr.
Axford received a Bachelor of Medicine degree and Bachelor of Surgery degree
from University College in London, England. Dr. Axford spent two years in
medical research in the United Kingdom and Kenya followed by a series of
appointments in clinical medicine at hospitals in the United Kingdom. In 1989,
Dr. Axford was chosen to be a Fulbright Scholar and performed various immunology
research at Tuft's University in Boston, Massachusetts. In 1990, Dr. Axford
completed his research thesis in arthritic diseases and in 1991was awarded his
M.D. with a Specialist Accreditation in Rheumatology and Immunology. Dr. Axford
has received a number of awards for academic excellence and in 1995 was also
awarded his Fellow of the Royal College of Physicians.
ALAN D. KENNEDY, age 71, served as President Worldwide for Tupperware
Corporation, a publicly-traded company that distributes and sells various
products in over 100 countries from 1996 until his retirement in December 2001.
While President of Tupperware, Mr. Kennedy was responsible for its North
America, Latin America and Asia-Pacific operations. Since retiring, Mr. Kennedy
continues as a consultant for Tupperware. From 1989 to 1996, Mr. Kennedy served
as President and Chief Executive Officer of Nature's Sunshine Products, Inc., a
publicly-traded, network marketing company that manufactures and markets
nutritional and personal care products worldwide. From 1986 to 1989, Mr. Kennedy
provided various consulting services for various direct selling companies. From
1982 to 1986, Mr. Kennedy served as Vice President of Sales Development and from
1965 to 1974, Mr. Kennedy served as the Director of Marketing for Avon Products,
Inc., a multinational manufacturer and distributor of cosmetics, toiletries,
jewelry, chemicals and clothing. From 1974 to 1979, Mr. Kennedy held several
6
management positions including Senior Vice President for Shaklee Corporation, a
direct selling company that distributes and sells nutritional and household
products. Mr. Kennedy received a B.A. degree, with honors, in Economics from
Colgate University in Hamilton, New York. Mr. Kennedy has many professional
affiliations including serving as Chairman of the Direct Selling Association
from 1995 to 1996 and Chairman of the Direct Selling Educational Foundation from
1996 to 1997. Mr. Kennedy currently serves on the Board of the Direct Selling
Educational Foundation and serves on the Current Board of Regents for
Mercersburg Academy, a private secondary school in Mercersburg, Pennsylvania.
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information regarding our executive
officers and directors, including their ages as of April 9, 2002:
NAME AGE POSITION
- ---- --- --------
Samuel L. Caster. . . . . . . . . . . 51 Chairman of the Board
Robert M. Henry . . . . . . . . . . . 55 Chief Executive Officer and Director
Terry L. Persinger. . . . . . . . . . 57 President, Chief Operating Officer and Director
Stephen D. Fenstermacher. . . . . . . 49 Senior Vice President of Accounting and Chief Financial Officer
Bettina S. Simon. . . . . . . . . . . 52 Senior Vice President, Corporate Secretary and General Counsel
Bill H. McAnalley, Ph.D . . . . . . . 57 Senior Vice President of Research and Product Development
and Chief Scientific Officer
Brad G. Wayment . . . . . . . . . . . 36 Senior Vice President of Marketing
Cynthia L. Tysinger . . . . . . . . . 44 Vice President and Chief Information Officer
John F. Crowley . . . . . . . . . . . 55 President of International Operations
Steven A. Barker, Ph.D. . . . . . . . 52 Director
Roger E. Beutner. . . . . . . . . . . 71 Director
J. Stanley Fredrick . . . . . . . . . 63 Director
Marlin Ray Robbins. . . . . . . . . . 56 Director
James M. Doyle, Jr. . . . . . . . . . 57 Director
Jules Zimmerman . . . . . . . . . . . 67 Vice-Chairman of the Board
The following biographical information about our directors and executive
officers is in alphabetical order:
STEVEN A. BARKER PH.D. has served as one of our independent directors
since January 1998. His term as director expires on June 4, 2002 and he will not
stand for re-election. Dr. Barker has been a full professor of Physiology,
Pharmacology and Toxicology at Louisiana State University since April 1990. Dr.
Barker received a B.S. degree and M.S. degree in Chemistry and a Ph.D. in
Chemistry/Neurochemistry from the University of Alabama-Birmingham.
ROGER E. BEUTNER has served as one of our independent directors since
November 2000. His term as director expires in 2004. Mr. Beutner worked at Amway
Corporation, a network-marketing multinational distributor, from 1970 until
retiring in 1995. Mr. Beutner held several management positions at Amway,
including Senior Vice President of Operations. Since 1995, Mr. Beutner has
worked as a consultant for various companies. Mr. Beutner received a B.S. degree
in Mechanical Engineering at Stevens Institute of Technology in Hoboken, New
Jersey and a B.S. degree in Industrial Engineering at New York University. Mr.
Beutner also received an M.B.A. degree in Management from Georgia State
University and is a licensed Professional Engineer in the State of Missouri.
SAMUEL L. CASTER is a significant shareholder, a company co-founder and
began serving as our Chairman of the Board on March 5, 2002. Mr. Caster served
as our President and as a director on our Board of Directors from November 1993
until his resignation on March 31, 2000. From June 1, 2000 through March 4,
2002, Mr. Caster provided various consulting services, for us, which included
concentrating on our associates' needs and revising our associates' global
incentive plan to help stimulate demand and expand our existing associate base.
Mr. Caster was reappointed as a director to our Board of Directors on August 2,
2000 and his term as director expires in 2004.
7
On June 4, 2001, our Board of Directors elected Mr. Caster as Co-Chairman
of our Board of Directors and on March 5, 2002, Mr. Caster became an employee
and was elected as Chairman of our Board of Directors. Mr. Caster is a
co-founder of MannaRelief, a non-profit international ministry formed to help
supply food supplements to at-risk children by working with other ministries,
non-profit organizations and missionaries throughout the world.
JOHN F. CROWLEY joined Mannatech in December 2001 to serve as our
President of International Operations. From 1997 to 2000, Mr. Crowley served as
Vice President of Avon/Betterware Joint Venture Businesses and from 1995 to
1997, he served as President/Managing Director of Betterware U.K. Ltd. From 1992
to 1995, Mr. Crowley served as President of Roselight, Inc., a start up direct
selling company specializing in decoratives and gifts. Mr. Crowley has also
served in various management positions with Princess House, Inc. Mr. Crowley
received a B.A. degree in Sociology and Business Administration from Stonehill
College in North Easton, Massachusetts and has completed a variety of business
courses at institutions such at Harvard University, Boston University, American
Management Association and Harbridge.
JAMES M. DOYLE, JR. has served as one of our independent directors since
October 1999. His current term as director expires on June 4, 2002 and he will
not stand for re-election. In 1975, Mr. Doyle joined the law firm of Matthews &
Branscomb, P.C., located in San Antonio, Texas where he is currently a
shareholder. Mr. Doyle practices in the area of business transactions, mergers
and acquisitions and corporate law. Mr. Doyle is a Fellow of the Texas Bar
Foundation and a director of the San Antonio Sports Foundation and the San
Antonio Bowl Association. Mr. Doyle received a B.A. degree in History from the
University of the South in Sewanee, Tennessee and a J.D. from Vanderbilt
University.
STEPHEN D. FENSTERMACHER joined Mannatech in November 1998 to serve as our
Vice President of Accounting and Controller. In October 1999, Mr. Fenstermacher
was promoted to Senior Vice President and Chief Financial Officer. From January
1998 to October 1998, Mr. Fenstermacher was a consultant for Kibel, Green, Issa,
Inc., a crisis management firm specializing in turnaround strategy and execution
consulting. From April 1995 to October 1997, Mr. Fenstermacher served as
Executive Vice President and Chief Financial Officer for The Johnny Rockets
Group, Inc. Mr. Fenstermacher has also served in various management positions
for Brinker International and On the Border Cafes. Mr. Fenstermacher received a
B.A. degree in Government with a minor in Life Sciences from the University of
Notre Dame and a M.B.A. degree in Finance and Accounting from the University of
Pittsburgh.
J. STANLEY FREDRICK was appointed to serve as one of our directors on
September 28, 2001 to replace Mr. Charles E. Fioretti, who resigned from our
Board effective August 22, 2001. Mr. Fredrick's term as director expires in
2004. Mr. Fredrick currently is the owner of Fredrick Consulting Services, which
provides consulting to various direct selling companies. From 1972 to 1975, Mr.
Fredrick served as the President and Chief Executive Officer of SMC Industries,
a publicly-traded parent company of five direct selling companies including
Saladmaster(R)Corporation. Mr. Fredrick was the co-founder of Cameo Couture,
Inc., which operated as Colesce Couture. Cameo Couture designed and sold
lingerie through international direct selling channels. Mr. Fredrick also
co-founded Colony House, Inc., a private label cookware company, which sold
through direct selling channels. He served as Chairman of Colony House, Inc.
from 1961 until he sold his interest in the company in 1975. Mr. Fredrick has
served as a board member of Texas Central Bank. Mr. Fredrick co-founded Irving
National Bank Shares, a commercial bank holding company and served as a
consultant to them from 1994 until the bank was sold in 2000. Mr. Fredrick has
many professional affiliations including founding board membership of the
National Aloe Science Council and served as a board member of the Personal
Selling Institute of Baylor University. Over the past 20 years, Mr. Fredrick has
been very involved in the Direct Selling Association including serving on their
Board and various committees of their Board. From 1987 to 1988, Mr. Fredrick
served as Past Chairman of the Direct Selling Association and from 1988 to 1989,
served as Chairman of the Direct Selling Education Foundation. Mr. Fredrick is a
recipient of the "Hall of Fame Award," which is the Direct Selling Association's
highest honor and he was inducted into the "Circle of Honor" by the Direct
Selling Education Foundation.
ROBERT M. HENRY joined Mannatech in April 2000 to serve as our Chief
Executive Officer. Mr. Henry was appointed to our Board of Directors in May
2000. His current term as director expires in 2003. From 1995 to August 1998,
Mr. Henry served as the Chief Operating Officer and Vice President of Operations
and Systems for the Hosiery Corp. of America, which is a manufacturer and
distributor of pantyhose and other women's intimate apparel. From 1982 until
1986, Mr. Henry served as Corporate Controller Worldwide for Amway Corporation,
a multi-level marketing distributor of various products. From 1971 until 1982,
8
Mr. Henry served in various management positions for Avon Products, Inc., a
multinational manufacturer and distributor of cosmetics, toiletries, jewelry,
chemicals and clothing. Mr. Henry received a B.S. degree in Accounting from
Hunter College in New York and a J.D. from Brooklyn Law School. Mr. Henry has
been a member of the New York State Bar since 1975. Mr. Henry also serves on the
Board of Directors of Purity Products Inc. In December 2001, Mr. Henry was
elected to the Board of Directors of the Direct Selling Association, which is
recognized as a national trade association of leading firms that manufacture and
distribute goods and services sold directly to consumers.
BILL H. MCANALLEY, PH.D. joined Mannatech in July 1996 to serve as our
Senior Vice President of Research and Product Development. In December 1997, he
began serving as our Chief Scientific Officer. From March 1995 to July 1996, he
was a consultant to Mannatech. From March 1987 to February 1995, Dr. McAnalley
served as Vice President of Research and Product Development at Carrington
Laboratories, Inc., a publicly traded pharmaceutical research, development and
manufacturing company. Dr. McAnalley received a B.S. degree in Mathematics from
Angelo State University in San Angelo, Texas and a Master of Science degree in
Chemistry and Biology from New Mexico Highlands University and a Ph.D. in
Pharmacology and Toxicology from the University of Texas Health Science Center
in Dallas, Texas. Dr. McAnalley obtained his post-doctoral training in Forensic
and Clinical Toxicology from the Dallas Institute of Forensic Science as well as
from the Southwestern Medical School Program at Parkland Hospital in Dallas
Texas.
TERRY L. PERSINGER joined Mannatech in November 1999 to serve as our
Executive Vice President, Chief Operating Officer and a director. Mr. Persinger
also served as our Corporate Secretary from November 1999 until November 2001.
Mr. Persinger began serving as our President in May 2000. Mr. Persinger's
current term as director expires on June 4, 2002. From 1968 until August 1999,
Mr. Persinger worked at Goodyear Tire and Rubber Company, an international
manufacturer of tires and rubber products and from January 1995 to August 1999
he served as their Vice President and General Manager of Engineered Products.
Mr. Persinger received a B.S. in Chemical Engineering from the University of
Cincinnati and is a graduate of the PMD management program at Harvard
University. Mr. Persinger is the brother-in-law of Donald W. Herndon, our Vice
President of Marketing Administration. Mr. Herndon is the brother-in-law of Mr.
Samuel L. Caster, our Chairman of the Board.
MARLIN RAY ROBBINS is a significant shareholder, company co-founder and an
associate. Mr. Robbins has served as a director on our Board of Directors since
June 5, 2001. His current term as director expires in 2004. Mr. Robbins has over
25 years experience with various companies in sales and direct selling. Mr.
Robbins currently holds multiple positions in our associates' global incentive
downline network-marketing system. Mr. Robbins provides various consulting
services to us related to associate relations and our associate global incentive
plan. Mr. Robbins received a B.S. degree in Biology and Chemistry from Southwest
Texas State University in San Marcos, Texas.
BETTINA S. SIMON joined Mannatech in October 2001 to serve as our General
Counsel and Senior Vice President. Ms. Simon was appointed Corporate Secretary
in November 2001. From 1998 to 2000, Ms. Simon served as Vice President, General
Counsel and Corporate Secretary of Home Interiors and Gifts, Inc., a direct
seller and manufacturer of home decorative accessory products. From 1995 to
1998, Ms. Simon was a partner with Simon and Simon, a law firm. From 1983 to
1995, Ms. Simon served as Assistant General Counsel of Zale Corporation, one of
the world's largest retail jewelry chain. Ms. Simon received a B.F.A. degree,
with honors, in Journalism from Southern Methodist University in Dallas, Texas
and a J.D. from Southern Methodist University School of Law in Dallas, Texas.
Ms. Simon is a member of the State Bar of Texas, Dallas Bar Association and the
American Bar Association. Ms. Simon is also a member of the American Corporate
Secretary's Society and the Texas General Counsel Forum.
CYNTHIA L. TYSINGER joined Mannatech in November 2000 to serve as our Vice
President and Chief Information Officer. From May 1997 to October 2000, Ms.
Tysinger served as the Director of Engineering Services for Technology Concepts
and Design, Inc., a design, development, database management and engineering
company. While employed by Technology Concepts and Design, Inc., Ms. Tysinger
was a consultant to Mannatech and one of the lead system designers for our
website, www.GlycoScience.com. From July 1992 to May 1997, Ms. Tysinger served
as the Program Control Manager for GTE Information Systems Division. Ms.
Tysinger has over 27 years of experience in the Information Systems and Internet
Technologies fields while working in various management positions for the United
States Department of Defense, Boeing and Hughes Aircraft.
9
BRAD G. WAYMENT joined Mannatech in November 1999 to serve as our Vice
President of Marketing. In November 2000, Mr. Wayment was promoted to Senior
Vice President of Marketing. From June 1998 to October 1999, Mr. Wayment served
as Vice President of Marketing at New Vision International, a network marketing
company involved in the distribution and sale of nutritional and personal care
products. From November 1996 to June 1998, Mr. Wayment served as the Business
Development/Product Marketing Manager with Novell Inc., a network and Internet
directory software and services company. From November 1989 to November 1996,
Mr. Wayment served as the Product Management Team Leader of Marketing/Product
Development at Nu Skin Enterprises, Inc., a direct selling company involved in
the distribution and sales of nutritional and personal products. Mr. Wayment
received a B.A. degree in Spanish with a minor in Organization Behavior and an
M.B.A. degree in Marketing and Finance from Brigham Young University.
JULES ZIMMERMAN has served as one of our independent directors since June
2000 and as our Co-Chairman from June 2001 until March 4, 2002. On March 5,
2002, Mr. Zimmerman was elected Vice-Chairman of our Board of Directors. His
current term as director expires in 2004. Mr. Zimmerman served as President and
Chief Executive Officer of Hickok Associates Inc., a financial consulting firm
from 1991 until his retirement in December 1996. From 1976 to 1988, Mr.
Zimmerman served in various executive management positions at Avon Products
Inc., a multinational manufacturer and distributor of cosmetics, toiletries,
jewelry, chemicals and clothing including serving as their Chief Financial
Officer from 1985 to 1988. Mr. Zimmerman received a B.B.A. degree in Accounting
from Hofstra University in Hempstead, New York and is a Certified Public
Accountant.
CLASSES OF OUR BOARD OF DIRECTORS
Our Board of Directors is divided into three classes that serve staggered
three-year terms expiring on the day of our annual shareholders' meeting as
follows:
CLASS EXPIRATION BOARD MEMBERS
- ----- ---------- -------------
Class I . . . . . . . . . . 2003 Robert M. Henry, Roger Beutner, Marlin Ray Robbins
Class II. . . . . . . . . . 2004 Jules Zimmerman, Samuel L. Caster, J. Stanley Fredrick
Class III . . . . . . . . . 2002 Dr. Stephen A. Barker Ph.D., Terry L. Persinger, James M. Doyle, Jr.
During 2001, our Board of Directors held four regular meetings and three
special meetings. During 2001, all current directors attended at least 75% of
the meetings of the Board of Directors and the various Board Committees of which
they are members.
COMMITTEES OF OUR BOARD OF DIRECTORS
Our Board of Directors has five committees with various functions. The
Committees and their functions are as follows:
o THE AUDIT COMMITTEE is responsible for reviewing our annual audit
and meeting with our independent accountants to review our internal
controls and financial management practices. The Audit Committee
held five meetings during 2001.
o THE COMPENSATION COMMITTEE is responsible for establishing salaries,
bonuses and other compensation for our executive officers. The
Compensation Committee held two meetings during 2001.
o THE OPTION COMMITTEE has the authority to determine the terms and
conditions of granting stock options under our stock option plans
and is responsible for administration of each such plan. The Option
Committee held one meeting during 2001. The Option Committee will be
merged into the Compensation Committee on June 5, 2002.
o THE NOMINATING COMMITTEE is responsible for recommending nominees to
our Board of Directors. The Nominating Committee also reviews and
recommends to our Board of Directors any additional nominations to
our Board of Directors made by a shareholder who has submitted a
written nomination to our Chief Financial Officer. For additional
information on nominating nominees see "SHAREHOLDER PROCEDURES FOR
NOMINATING BOARD MEMBERS OR INTRODUCING PROPOSALS." The Nominating
Committee held three meetings during 2001.
o THE EXECUTIVE COMMITTEE has the authority to make specific
recommendations and render advice to our Board of Directors on
various matters regarding operations. The Executive Committee held
four meetings during 2001.
10
As of April 22, 2002, the membership of each Committee was as follows:
NAME OF DIRECTOR AUDIT COMPENSATION OPTION(1) NOMINATING EXECUTIVE
- ---------------- ----- ------------ --------- ---------- ---------
NON-EMPLOYEE INDEPENDENT DIRECTORS:
Stephen A. Barker Ph.D. . . . . . X X X X
Roger Beutner . . . . . . . . . . X X
James M. Doyle Jr . . . . . . . . X X* X*
Jules Zimmerman(2). . . . . . . . X* X X X X
NON-EMPLOYEE DIRECTORS:
J. Stanley Fredrick . . . . . . . X
Marlin Ray Robbins. . . . . . . . X X
EMPLOYEE DIRECTORS:
Samuel L. Caster(3) . . . . . . . X* X
Robert M. Henry . . . . . . . . . X*
Terry L. Persinger. . . . . . . . X
- ----------------------
* Committee Chairman
(1) The Option Committee will be merged with the Compensation Committee on
June 5, 2002.
(2) Vice-Chairman of the Board of Directors
(3) Chairman of the Board of Directors.
COMPENSATION OF DIRECTORS
Only independent non-employee directors are compensated for serving on our
Board of Directors. Jules Zimmerman, our Vice-Chairman, who is an independent
director, receives annual cash compensation of $100,000. All other non-employee
independent directors receive annual cash compensation of $30,000 for serving on
our Board of Directors and $1,000 for each meeting or committee meeting they
attend plus reimbursement for any reasonable out-of-pocket expenses in
connection with their travel to, and attendance at, meetings of our Board of
Directors or its Committees.
On May 1, 2001, Mannatech granted stock options to purchase 50,000 shares
to Mr. Roger Beutner. The stock options vest immediately, exercisable at an
exercise price of $1.04 per share and expire on April 30, 2011. On November 1,
2001, Mannatech granted stock options to purchase 250,000 shares to Mr. Robert
M. Henry and stock options to purchase 150,000 shares to Mr. Terry L. Persinger,
which vest over three years and are exercisable beginning November 1, 2002 at an
exercise price of $2.69 per share. The exercise prices of the stock options
granted were the approximate fair value of our common stock on the date of
grant.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires our
directors and executive officers, and persons who own more than 10% of our
common stock, to file with the Securities and Exchange Commission initial
reports of ownership and reports of changes in their ownership of common stock
and other equity securities. Such persons are required by the Securities and
Exchange Commission's regulations to furnish us with copies of all Section 16(a)
reports they file.
Based solely upon a review of the copies of such reports furnished to us
or written representations that no other reports were required, we believe that
during the year ended December 31, 2001, our executive officers, directors and
greater than 10% beneficial owners complied with all applicable Section 16(a)
filing requirements, except for the following:
o Roger Beutner filed a late Form 4 relating to the reporting of stock
options granted to him in May 2001;
o Samuel L. Caster filed a late Form 4 relating to the reporting of
stock purchases in both July 2001 and August 2001.
11
EXECUTIVE COMPENSATION AND SUMMARY COMPENSATION TABLE
The following table sets forth certain information with respect to the
compensation of our Chief Executive Officer and four of the most highly
compensated executive officers, who were serving as executive officers at the
end of 2001 and for the year ended December 31, 1999, 2000 and 2001
(collectively, the "Named Executive Officers").
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
---------------------------------- ---------------- ---------------
NUMBER OF SHARES ALL
OTHER ANNUAL UNDERLYING OTHER ANNUAL
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION OPTIONS GRANTED COMPENSATION(1)
- --------------------------- ---- ------ -------- ------------ ---------------- ---------------
Robert M. Henry(2). . . . . . . . . . 2001 $353,159 $ -- $122,220(3) 250,000 $ 2,625
Chief Executive Officer 2000 $262,500 $ -- $ 41,218(4) 275,000 $ 2,625
1999 $ -- $ -- $ -- -- $ --
Terry L. Persinger. . . . . . . . . . 2001 $302,637 $ -- $ 10,904(5) 150,000 $ 2,625
President and 2000 $294,231 $ -- $ 91,268(6) 250,000 $ --
Chief Operating Officer 1999 $ 57,693 $ 8,498 $ -- -- $ --
Bill H. McAnalley, Ph.D . . . . . . . 2001 $251,129 $ -- $ 17,010(7) 50,000 $ 2,625
Senior Vice President of Research 2000 $255,423 $ -- $ 18,872(8) 50,000 $ 2,625
and Product Development and 1999 $250,000 $ 42,493 $ 9,013(9) -- $ 2,625
Chief Scientific Officer
Akihiro Sumitomo(10). . . . . . . . . 2001 $244,900 $ -- $ 76,374(11) -- $ 4,932(13)
General Manager of Mannatech 2000 $157,305 $ -- $ 38,362(12) 20,000 $ 2,717(14)
Japan 1999 $ -- $ -- $ -- -- $ --
Stephen D. Fenstermacher. . . . . . . 2001 $241,317 $ -- $ 10,813(15) 50,000 $ --
Senior Vice President of Accounting 2000 $244,615 $ -- $ 10,813(15) 50,000 $ --
and Chief Financial Officer 1999 $167,308 $ 24,540 $ -- 100,000 $ --
- ---------------------
(1) Includes Mannatech's matching contribution to the 401(k) plan paid to our
executive officers.
(2) Mr. Henry became our Chief Executive Officer on April 1, 2000.
(3) Represents $111,438 for temporary living and relocation expenses and
$10,782 for an auto allowance paid to Mr. Henry.
(4) Represents $34,929 for temporary living expenses and $6,289 for an auto
allowance paid to Mr. Henry.
(5) Represents an auto allowance paid to Mr. Persinger.
(6) Represents $80,364 for relocation and temporary living expenses and
$10,904 for an auto allowance paid to Mr. Persinger.
(7) Represents $4,613 of royalties paid for the sale of certain
GlycoLEAN(R)products and $12,397 for an auto allowance paid to Dr.
McAnalley.
(8) Represents $9,406 of royalties paid for the sale of certain GlycoLEAN(R)
products and $9,466 for an auto allowance paid to Dr. McAnalley.
(9) Represents royalties paid for the sale of certain GlycoLEAN(R)products
paid to Dr. McAnalley.
(10) Mr. Sumitomo was hired in 2000 as the General Manager of our Japan
operations, which opened in June 2000. Mr. Sumitomo retired effective
March 29, 2002, as an employee of Mannatech's subsidiary in Japan.
(11) Represents transportation and auto allowance paid to Mr. Sumitomo.
(12) Represents transportation and auto allowance paid to Mr. Sumitomo.
(13) Represents life insurance paid for Mr. Sumitomo.
(14) Represents retirement insurance paid for Mr. Sumitomo.
(15) Represents an auto allowance paid to Mr. Fenstermacher.
12
STOCK OPTIONS GRANTED IN THE LAST FISCAL YEAR
The following table provides information on options granted to our Named
Executive Officers during the year ended December 31, 2001:
POTENTIAL REALIZABLE VALUE AT
NUMBER OF ASSUMED ANNUAL RATES OF
SHARES PERCENT OF EXERCISE STOCK PRICE APPRECIATION FOR
UNDERLYING TOTAL OPTIONS OR BASE OPTION TERM(2)
OPTIONS GRANTED TO PRICE ----------------------------
NAME GRANTED(1) EMPLOYEES ($/SH) EXPIRATION DATE 5% 10%
- ---- ---------- ------------- -------- --------------- ------------- ------------
Robert M. Henry . . . . . . . . 250,000 23.6% $2.69 11/01/2011 $1,095,432 $1,744,292
Terry L. Persinger. . . . . . . 150,000 14.2 $2.69 11/01/2011 $ 657,259 $1,046,575
Bill H. McAnalley Ph.D. . . . . 50,000 4.7 $2.69 11/01/2011 $ 219,086 $ 348,858
Stephen D. Fenstermacher. . . . 50,000 4.7 $2.69 11/01/2011 $ 219,086 $ 348,858
Akihoro Sumitomo. . . . . . . . -- -- $ -- -- $ -- $ --
- ----------------------
(1) Options granted become exercisable, over three years, beginning November
1, 2003, the first anniversary of the date of grant.
(2) In accordance with the rules of the Securities and Exchange Commission,
the amounts shown in this table represent hypothetical gains that could be
achieved for the respective options if exercised at the end of the option
term. These gains are based on the assumed rates of stock appreciation of
5% and 10% compounded annually from the date the respective options were
granted to their expiration date and do not reflect any estimates or
projections of the future price of our common stock. Actual gains, if any,
on stock option exercises will depend on future performance of our common
stock, the option holder's continued employment through the option period
and the date on which the options are exercised.
AGGREGATED OPTION EXERCISES IN THE LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The following table sets forth certain information concerning the exercise
of stock options held by our Named Executive Officers during the year ended
December 31, 2001:
NUMBER OF SHARES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS AT
FISCAL YEAR-END FISCAL YEAR-END(1)
SHARES ACQUIRED VALUE ------------------------------ ---------------------------
NAME ON EXERCISE (#) REALIZED($) EXERCISABLE (2) UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- --------------- ----------- --------------- ------------- ------------ -------------
Robert M. Henry . . . . . . . . -- $ -- 91,667 433,333 $ 17,417 $ 67,333
Terry L. Persinger. . . . . . . -- $ -- 83,333 316,667 $ 15,833 $ 51,667
Bill H. McAnalley Ph.D. . . . . -- $ -- 282,593 83,333 $ 247,077 $ 12,833
Stephen D. Fenstermacher. . . . -- $ -- 116,667 133,333 $ 3,167 $ 246,167
Akihoro Sumitomo. . . . . . . . 6,666 $7,333 -- 13,334 $ -- $ 2,533
- ----------------------
(1) Based on the closing price of $2.82 per share of our common stock on the
Nasdaq National Market on December 31, 2001 less the per share exercise
price multiplied by the number of options.
(2) 100,000 shares of Mr. Fenstermacher's stock options and 100,000 shares of
Dr. McAnalley's stock options were exercisable at $8.00 per share and are
considered out-of-the-money for the above value calculation.
EXECUTIVE EMPLOYMENT AGREEMENTS
Effective September 1, 1998, we entered into a five-year employment
agreement with Dr. Bill H. McAnalley Ph.D. to serve as our Chief Scientific
Officer and Senior Vice President of Research and Development. The employment
agreement specified a minimum salary of $250,000 per year and is extended
automatically each year for one additional year unless both parties agree to
termination prior to the end of any term. If we cancel his employment agreement
without cause, we will be required to pay his minimum salary for the remaining
duration of his agreement.
On November 1, 1999, we entered into a three-year employment agreement
with Mr. Terry L. Persinger to serve as our President and Chief Operating
Officer. The employment agreement specifies a minimum salary of $300,000 per
year and either party may cancel the agreement; however, if we cancel the
employment agreement
13
without cause, we will be required to pay him his base salary over the remaining
duration of his employment agreement. On November 1, 2001, we amended his
employment agreement to extend the term to December 31, 2004 and to increase his
minimum salary to $350,000 per year beginning January 1, 2002.
On April 1, 2000, we entered into a three-year employment agreement with
Mr. Robert M. Henry to serve as our Chief Executive Officer. The employment
agreement specifies a minimum salary of $350,000 per year and either party can
cancel the agreement; however, if we cancel his employment agreement without
cause, we will be required to pay him one year base salary and the total
remaining salary due from his employment agreement. On August 15, 2000, we
amended his employment agreement to include reimbursement of various temporary
and relocation expenses. On November 1, 2001, we amended his employment
agreement again to extend the term to December 31, 2004 and to increase his
minimum salary to $400,000 per year beginning January 1, 2002.
On May 5, 2000, Mr. Samuel L. Caster resigned as our President and on June
1, 2000, we entered into a consulting agreement with Mr. Caster. Under the terms
of his consulting agreement, we agreed to pay Mr. Caster $50,000 per month plus
an automobile lease, insurance and other expenses. During 2000 and 2001, we paid
Mr. Caster approximately $312,000 and $628,000, respectively of which $50,000
remained unpaid at December 31, 2000 and 2001, respectively. On March 5, 2002,
Mr. Caster became an employee of Mannatech and our Board of Directors elected
Mr. Caster as Chairman of the Board through December 31, 2004 with the same
terms as his consulting agreement. Under the terms of his employment, Mr. Caster
will be paid an annual salary of $600,000 and will be eligible for all benefits
offered to our other executives. In the event we terminate him as an employee
without cause, we will be required to pay him a severance of $300,000 plus
$25,000 a month for 12 months.
During 2000 and 2001, we entered into various severance agreements with
former officers who held employment agreements. The severance agreements
terminated their employment agreements with the company. For information about
the separation agreements see "Certain Relationships and Related Party
Transactions" in this report.
MANAGEMENT BONUS PLAN
Our executive officers and some other members of corporate management are
eligible to receive bonuses in addition to their base salaries. Our Compensation
Committee is responsible for reviewing and approving bonuses for these officers.
Under our existing management bonus plan, executive officers may earn an annual
bonus for the achievement of certain consolidated financial results, which are
certified by our independent accountants. Any earned bonuses will be paid by
March of the following year. No bonuses were paid under this management bonus
plan for the year ending December 31, 2001.
STOCK OPTION PLANS
Our 1997 Stock Option Plan was adopted by our Board of Directors and
approved by our shareholders on May 14, 1997. The 1998 Incentive Stock Option
Plan was adopted by our Board of Directors and approved by our shareholders on
April 8, 1998 and amended on September 4, 1998 to increase the number of shares
reserved for issuance from 500,000 to 1,000,000 shares. Our 2000 Stock Option
Plan was adopted by our Board of Directors and approved by our shareholders on
June 19, 2000. All stock option plans are intended to encourage investment by
our officers, employees, non-employee directors and consultants in shares of our
common stock so that they will have an increased interest in, and greater
concern for, our welfare.
Options granted under our 1997 and 2000 stock option plans may either be
incentive stock options or options that do not qualify for treatment as
incentive stock options under Section 422 of the United States Internal Revenue
Code of 1986. Options granted under our 1998 Incentive Stock Option Plan may
only be granted to our directors and employees.
Incentive stock options may be granted under our stock option plans to any
person who is an employee of Mannatech (including our directors) or any parent
or subsidiary that may exist in the future. The exercise price of incentive
stock options must equal the approximate fair market value of a share of our
common stock on the date of grant.
14
Our stock option plans may be amended or canceled by our Board of
Directors at any time without the approval of our shareholders, with a few
exceptions. However, our Board of Directors may not take action that affects
options previously granted under our stock option plans. The following table
sets forth information regarding our stock option plans as of April 22, 2002:
STOCK OPTION PLAN INFORMATION
# OF OPTIONS # OF
GRANTED WEIGHTED VESTED SHARES
# OF SHARES LESS AVERAGE AND AVAILABLE
AUTHORIZED CANCELED OPTIONS EXERCISE PRICE EXERCISABLE FOR GRANT
---------- ---------------- -------------- ----------- ---------
1997 Stock Option Plan . . . . . . . 2,000,000 1,905,307 $ 2.38 518,519 94,693
1998 Incentive Stock Option Plan . . 1,000,000 923,500 $ 7.88 470,669 76,500
2000 Stock Option Plan . . . . . . . 2,000,000 1,620,000 $ 2.62 473,029 380,000
Each of our Compensation Committee and Option Committee consists of the
following three independent directors: Messrs. Barker, Doyle and Zimmerman. The
Committees make recommendations to our Board of Directors regarding certain
rules that control our stock option plans and take all other actions necessary
for the proper administration of our stock option plans. On June 5, 2002, the
Option Committee will be merged with our Compensation Committee. These
Committees have full and final authority in their discretion, subject to
provisions of our stock option plans, to determine, among other things:
o the individuals to whom options shall be granted;
o whether the option granted shall be an incentive stock option or a
non-qualified stock option;
o the number of shares of common stock covered by each option;
o the time or times at which options will be granted;
o the option vesting schedule;
o the exercise price of the option;
o the duration of the options granted;
o to prescribe, amend and rescind rules and regulations relating to
our stock option plans;
o whether to accelerate or defer (with the consent of the optionee)
the exercise date of any option; and
o whether to authorize any person to execute on our behalf any
instrument required to effectuate the grant of an option previously
granted by our Board of Directors.
401(K) PLAN
On May 9, 1997, we adopted a 401(k) Pre-tax Savings Plan. All employees
who have been employed by us for at least 90 days at the beginning of a quarter
and are at least 21 years of age are eligible to participate in the 401(k)Plan.
Employees may contribute up to a maximum of 20% of their current annual
compensation to the 401(k) Plan, which is the statutorily prescribed annual
limit. We will make regular matching contributions to the 401(k) Plan in the
amount of $0.25 for each $1.00 contributed by a participating employee, up to
6.0% of such employee's annual compensation, including overtime. The 401(k) Plan
also provides that Mannatech can make profit-sharing contributions to the 401(k)
Plan each year based upon our profit. We did not make any profit-sharing
contribution in 2001. Employee contributions and our matching contributions are
paid to a corporate trustee and are invested as directed by the participating
employee. Our contribution to our 401(k) Plan vests over five years or earlier
if the participating employee retires at age 65, becomes disabled or dies.
Payments to participating employees may also be made in the case of financial
hardship. Payments may be made in a lump sum. Our 401(k) Plan is intended to
qualify under Section 401 of the United States Internal Revenue Code of 1986, so
that contributions made by employees or by us to our 401(k) Plan, and income
earned on these contributions, are not taxable to our employees until withdrawn
from the 401(k) Plan.
15
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Our Compensation Committee is responsible for reviewing the compensation
of our executive officers on an annual basis. The Compensation Committee is
composed of three independent directors, Messrs. Barker, Doyle and Zimmerman.
None of our executive officers serves as a member of the board of directors or
on the compensation committee of any other entity that has or has had one or
more executive officers serving as a member of our Board of Directors or
Compensation Committee.
WITH RESPECT TO ANY FUTURE FILINGS WITH THE SECURITIES AND EXCHANGE
COMMISSION INTO WHICH THIS PROXY STATEMENT IS INCORPORATED BY REFERENCE, THE
FOLLOWING MATERIAL UNDER THE HEADINGS "REPORT OF THE COMPENSATION COMMITTEE,"
"REPORT OF THE AUDIT COMMITTEE" AND "PERFORMANCE GRAPH" SHALL NOT BE DEEMED TO
BE SOLICITING MATERIAL OR TO BE FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES EXCHANGE ACT OF
1934 OR INCORPORATED BY IN ANY DOCUMENT SO FILED.
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee Report summarizes Mannatech's executive
compensation policies and the basis for the compensation paid to its executive
officers, including Mr. Robert M. Henry, our Chief Executive Officer, during the
year ended December 31, 2001.
COMPENSATION POLICY. Mannatech's policy with respect to its executive
compensation has been designed to:
o adequately and fairly compensate its executive officers in relation
to their responsibilities, capabilities and contributions to
Mannatech in a manner that is commensurate with compensation paid by
other similarly-sized companies or other companies within our
industry; and
o reward its executive officers for the achievement of short-term
operating goals and for the enhancement of long-term value.
COMPONENTS OF COMPENSATION. The primary components of compensation paid to
Mannatech's executive officers and the relationship of such components of
compensation to Mannatech's performance are discussed below:
(a) BASE SALARY. At the beginning of each new year the Compensation
Committee reviews the base salaries of Mannatech's executive
officers to ensure the salaries are reasonable based upon a number
of factors. These factors include Mannatech's performance (to the
extent such performance can fairly be attributed or related to each
executive officer's performance), as well as the nature of each
executive officer's responsibilities, capabilities, loyalties and
contributions. We believe that the base salaries for Mannatech's
executive officers are reasonable as compared to other
similarly-sized companies or other companies within the same
industry.
(b) BONUS. Each executive officer is eligible to participate in
Mannatech's management bonus plan. The bonus plan is based upon
Mannatech achieving certain consolidated financial results, which
are certified by our independent accountants. Bonuses earned by
Mannatech's executive officers are reviewed and approved by the
Compensation Committee and paid in March of the following year. No
cash bonuses were paid for year 2001.
(c) ALL OTHER ANNUAL COMPENSATION. Mannatech maintains certain other
plans and arrangements for the benefit of its executive officers and
other members of its management, including participation in the
401(k) plan, use of a company vehicle and enrolled in health, life,
automobile and long-term disability insurance. All of the Vice
Presidents are paid monthly auto allowances of $500.00. In addition,
Senior or Executive Vice Presidents and above are either paid an
auto allowance or awarded the use of a company-leased vehicle. We
believe these benefits are reasonable in comparison to the executive
compensation practices of other similarly-sized companies or other
companies within the same industry.
(d) LONG-TERM COMPENSATION. Mannatech maintains stock option plans to
reward certain members of its management for the attainment of
certain goals or events. The stock option grants are reviewed and
approved by the Option and Compensation Committees. We believe these
long-term compensation arrangements are reasonable in relation to
the executive compensation practices of other similarly-sized
companies or other companies within the same industry.
16
2001 CHIEF EXECUTIVE OFFICER'S COMPENSATION. As previously described, the
Compensation Committee considers several factors in determining the chief
executive officer's compensation package, with the primary factors focusing on
Mannatech's financial performance and the competitive compensation paid to other
executive officers of similarly-sized companies or other companies within the
same industry. Specific actions taken by the Compensation Committee regarding
Mr. Henry's compensation paid in 2001 are summarized below:
(a) BASE SALARY. Mr. Henry's base salary was based on a number of
factors, including Mannatech's overall performance and its
consolidated financial results, as well as the nature of Mr. Henry's
responsibilities, capabilities, loyalties and contributions to
Mannatech's performance. For 2001, Mr. Henry's base salary was
$350,000 per annum.
(b) BONUS. Mr. Henry is allowed to participate in Mannatech's management
bonus plan. The bonus plan is based upon the attainment of certain
consolidated financial results, which are certified by Mannatech's
independent accountants. No cash bonus was paid to Mr. Henry for
2001.
(C) ALL OTHER ANNUAL COMPENSATION. Mr. Henry, as well as all of the
other executive officers, may participate in the 401(k) plan. Mr.
Henry has the use of a company leased vehicle and is enrolled in
health, life, automobile and disability insurance.
(D) LONG-TERM COMPENSATION. On November 1, 2001, Mr. Henry was granted
250,000 stock options at an exercise price of $2.69 per share. The
options vest over three years, beginning on November 1, 2002, and
expire on October 31, 2011. The stock options were granted to Mr.
Henry with a view toward tying Mr. Henry's future compensation
directly with the future return on Mannatech's stock.
$1 MILLION PAY DEDUCTIBILITY CAP. Under Section 162(m) of the United
States Internal Revenue Code, public companies are precluded from receiving a
tax deduction on compensation paid to their executive officers in excess of $1
million, unless the compensation is excluded from the $1 million limit as a
result of being classified as performance-based compensation. At this time,
Mannatech's executive officers' cash compensation levels have not exceeded the
$1 million limit and we do not anticipate exceeding this limit in the near
future. Nonetheless, we periodically review all of the executive officers'
compensation in light of Section 162(m).
CONCLUSION. We believe the concepts discussed above further our
shareholders' interests and that Mannatech's executive officers' compensation
encourages responsible management. The Compensation Committee will regularly
consider the effect of executive compensation on Mannatech's shareholders'
interests. These factors, reports from the various Board of Directors Committees
of Mannatech and discussions with, and information compiled by, various
independent consultants are used in determining Mannatech's executive officers'
compensation.
The Compensation Committee
James M. Doyle Jr., CHAIRMAN
Stephen A. Barker Ph. D.
Jules Zimmerman
17
PERFORMANCE GRAPH
The graph below depicts our common stock price as an index, assuming
$100.00 was invested on February 16, 1999, the date of our initial public
offering, along with the composite prices of companies listed in the S&P Midcap
Index and our peer group. Media General Financial Services has provided us with
this information. The comparisons in the graph are required by regulations of
the Securities and Exchange Commission and are not intended to forecast or to be
indicative of the possible future performance of our common stock. The
publicly-traded companies in our peer group are Twinlab Corp., Weider Nutrition
International, Inc., Nature's Sunshine Products, Inc., Reliv International,
Inc., USANA Health Sciences Inc. and Nu Skin Enterprises Inc.
COMPARISON OF THE CUMULATIVE TOTAL RETURN* OF MANNATECH,
INCORPORATED, THE S&P MIDCAP INDEX AND
MANNATECH'S PEER GROUP INDEX
[ PERFORMANCE GRAPH ]
* $100.00 invested on February 16, 1999 instock or index including
reinvestment of dividends for the years ending December 31, 1999, 2000,
and 2001
MEASUREMENT PERIOD MANNATECH S&P MIDCAP INDEX PEER GROUP INDEX
February 16, 1999 . . . . . . $ 100.00 $100.00 $100.00
December 31, 1999 . . . . . . 23.06 125.97 48.65
December 31, 2000 . . . . . . 5.56 148.02 26.16
December 31, 2001 . . . . . . 12.53 136.91 40.12
18
REPORT OF THE AUDIT COMMITTEE
The purpose of the Audit Committee is to assist our Board of Directors in
overseeing our financial reporting, internal control and audit functions. Our
Audit Committee is comprised of all four of our independent directors and
operates under a written charter adopted by our Board of Directors. Our Audit
Committee reviews and addresses the adequacy of its charter on an annual basis.
We are responsible for the preparation of our consolidated financial
statements. The independent accountants are responsible for auditing our
consolidated financial statements. The activities of our Audit Committee are in
no way designed to supersede or alter our or our independent accountant's
respective responsibilities. Our Audit Committees' role does not provide any
special assurances with regard to our consolidated financial statements, nor
does it involve a professional evaluation of the quality of the audits performed
by our independent accountants. Our Audit Committee has furnished our Board of
Directors the following report:
The Audit Committee has reviewed and discussed with management the
consolidated audited financial statements of and for the year ended December 31,
2001. The Audit Committee has also discussed with the independent accountants
the matters required to be discussed by Statements on Auditing Standards No. 61,
"Communication with Audit Committees," as amended. The Audit Committee has also
received the written disclosures and the letter from the independent accountants
required by Independence Standards Board Standard No. 1, "Independence
Discussions with Audit Committees," as amended, and has discussed with the
independent accountants, the firm's independence from management.
Based on the review and discussions referred to above, the Audit Committee
recommends to Mannatech's Board of Directors that the year-end audited
consolidated financial statements are to be included in Mannatech's Annual
Report and the Form 10-K for the year ended December 31, 2001 for filing with
the Securities and Exchange Commission.
The Audit Committee
Jules Zimmerman, CHAIRMAN
Stephen A. Barker Ph. D.
Roger E. Beutner
James M. Doyle, Jr.
19
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information, as of April 22, 2002
by (a) each person known by us to beneficially own 5% or more of its outstanding
shares of our common stock, (b) each of our directors and the "Named Executive
Officers," and (c) all of our current executive officers and directors as a
group.
BENEFICIAL OWNERSHIP(1)
WARRANTS --------------------------------
NUMBER OF SHARES AND STOCK % OF CLASS
NAME OF DIRECTORS AND EXECUTIVE OFFICERS EXCLUDING OPTIONS OPTIONS(2) TOTAL OUTSTANDING(3)
- ---------------------------------------- ----------------- --------- ----------- --------------
Samuel L. Caster. . . . . . . . . . . . 5,730,616 -- 5,730,616 22.8%
J. Stanley Fredrick(4). . . . . . . . . 4,190,848 -- 4,190,848 16.7
Marlin Ray Robbins. . . . . . . . . . . 2,223,509 -- 2,223,509 8.9
Bill H. McAnalley Ph.D. . . . . . . . . 303,410 282,593 586,003 2.3
Robert M. Henry . . . . . . . . . . . . 70,000 91,667 161,667*
Stephen D. Fenstermacher. . . . . . . . 2,000 141,667 143,667*
Terry L. Persinger. . . . . . . . . . . 1,000 83,333 84,333*
Stephen A. Barker Ph.D. . . . . . . . . -- 50,000 50,000*
Roger Beutner . . . . . . . . . . . . . -- 50,000 50,000*
James M. Doyle Jr . . . . . . . . . . . -- 16,667 16,667*
Jules Zimmerman . . . . . . . . . . . . -- 16,667 16,667*
All 15 executive officers and directors
as a group. . . . . . . . . . . . . 11,831,160 757,594 12,588,754 8.6
- ---------------------------
* Less than 1%
(1) The information contained in this table with respect to beneficial
ownership reflects "beneficial ownership" as defined in Rule 13d-3 under
the Securities Exchange Act of 1934. All information with respect to the
beneficial ownership of any shareholder has been furnished by such
shareholder and, except as otherwise indicated or pursuant to community
property laws, each shareholder has sole voting and investment power with
respect to shares listed as beneficially owned by such shareholder.
(2) The directors and executive officers have the right to acquire shares of
our common stock shown in this column within 60 days through the exercise
of their stock options or warrants.
(3) Shares of our common stock that are not outstanding but the beneficial
ownership of which can be acquired by a person upon exercise of their
option or warrant within 60 days of April 22, 2002 are deemed outstanding
for the purpose of computing the percentage of outstanding shares
beneficially owned by such person and by the group of executive officers
and directors. However, such shares are not deemed to be outstanding for
the purpose of computing the percentage of outstanding shares beneficially
owned by any other person.
(4) Mr. Fredrick directly owns 3,500,000 shares, or 13.9% of total shares
outstanding plus beneficially owns the sole voting power to 690,848 shares
of Mannatech's common stock, which are owned by Mr. Charles E. Fioretti.
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
LOANS TO THE PARTNERS OF AGRITECH LABS, INC.
On February 17, 1999, we signed new notes receivable agreements with each
of the five individual partners of Agritech Labs, Inc., who owned 90% of
Agritech Labs, Inc. The five individuals included Messrs. Charles E. Fioretti,
William C. Fioretti, Samuel L. Caster, Gary Watson and Patrick D. Cobb. All of
these individuals were shareholders of Mannatech and over the past several years
held various management positions within Mannatech. The new notes bear interest
at 6.0% per year, with the first payment due on February 17, 2000 and the
remainder to be paid in annual installments through February 17, 2004. On June
4, 2001, we agreed to modify the terms of Charles E. Fioretti's note receivable
as part of his separation and release agreement. Under the terms of his modified
agreement, Mr. C. Fioretti's remaining principal balance of $127,121 will
continue to accrue interest and will be due on the earlier of February 17, 2011
or thirteen days after the date in which Mr. C. Fioretti owns less than 100,000
shares of our common stock.
20
As of February 17, 2002, Gary Watson had not paid two payments totaling
$15,836 and William C. Fioretti had not paid his annual payment of $47,508. As
of April 22, 2002 these payments were outstanding. As of March 31, 2002, the
remaining principal and interest balance owed by each of the five individuals is
as follows:
PAST DUE REMAINING TOTAL
BALANCE BALANCE BALANCE
------- --------- ---------
Samuel L. Caster. . . . . . . . . . . $ -- $ 87,651 $ 87,651
Patrick D. Cobb . . . . . . . . . . . -- 14,609 14,609
Charles E. Fioretti . . . . . . . . . -- 135,159 135,159
William C. Fioretti . . . . . . . . . 47,508 87,651 135,159
Gary Watson . . . . . . . . . . . . . 15,836 14,609 30,445
------- -------- --------
Total . . . . . . . . . . . . . . . . $63,344 $339,679 $403,023
======= ======== ========
COMMISSIONS PAID TO WILLIAM C. FIORETTI
Mr. William C. Fioretti still holds an associate position in our
association global network-marketing system. In 2000 and 2001, we accrued
commission expenses to William C. Fioretti, a former significant shareholder and
former executive officer, of approximately $181,000 and $117,000, respectively,
of which $16,000 remained unpaid at December 31, 2001. William C. Fioretti is
the cousin of Charles E. Fioretti, our former Chief Executive Officer and
Chairman of the Board.
CONSULTING AGREEMENT WITH SAMUEL L. CASTER
On May 5, 2000, Samuel L. Caster resigned as our President. On June 1,
2000, we entered into a consulting agreement with Mr. Caster. Under the terms of
this agreement, we agreed to pay Mr. Caster $50,000 each month plus an
automobile lease, insurance and other expenses. During 2000 and 2001, Mr. Caster
earned approximately $312,000 and $628,000, respectively, relating to this
agreement, of which $50,000 remained unpaid at December 31, 2001. On March 5,
2002, Mr. Caster became an employee of Mannatech and our Board of Directors
elected him as our Chairman of the Board through December 31, 2004.
CONSULTING AGREEMENT WITH J. STANLEY FREDRICK
On October 1, 2001, we entered into a two-year consulting and lockup
agreement with Mr. Fredrick. This agreement automatically renews annually unless
30-day written notice is given to all parties. Under the terms of this
agreement, Mr. Fredrick will be responsible for recommending various policies
and procedures and will perform various functions for our Board of Directors for
which we will pay Mr. Fredrick $185,000 per year. In addition, under this
agreement, Mr. Fredrick is prohibited from selling any of his shares of
Mannatech's common stock. During 2001, we paid Mr. Fredrick $46,250 related to
this consulting agreement.
RECEIVABLE AND LOCK-UP AGREEMENT WITH CHARLES E. FIORETTI
On August 8, 2000, we loaned $500,000 to Mr. Charles E. Fioretti. The loan
was collateralized by 174,570 shares of Mr. C. Fioretti's Mannatech stock and
was repaid in six successive monthly installments of 26,455 shares of his common
stock beginning on September 3, 2000 and continuing through February 3, 2001.
During 2000, Mr. Fioretti tendered 105,820 shares of his stock to reduce the
amount owed on the loan by $333,000. During 2001, Mr. C. Fioretti tendered
52,910 shares of his Mannatech stock to pay the remaining balance of his loan.
On August 8, 2000, we entered into a lockup and repurchase agreement with
Mr. Charles Fioretti. Under the terms of the agreement, we agreed to buy up to
$1.0 million worth of his Mannatech stock. The commitment to repurchase our
common stock reduced our shareholders' equity on our balance sheet. On a monthly
basis beginning on March 3, 2001 and continuing through February 3, 2002, unless
canceled, we agreed to buy $83,333.33 worth of his Mannatech stock, valued at
90% of the fair market value price on the close of that business day. On
September 24, 2001, we amended this agreement with Mr. C. Fioretti to release
him from his lockup and repurchase agreement so that Mr. C. Fioretti could sell
3,500,000 shares of his common stock to J. Stanley Fredrick and transfer all of
his voting rights associated with his remaining shares to Mr. Fredrick. In
21
addition, Mr. Fredrick has the right of first refusal to acquire Charles E.
Fioretti's remaining 690,848 shares. During 2001, we purchased 589,971 shares
from Mr. C. Fioretti valued at $583,333 relating to this lockup and repurchase
agreement.
SEPARATION AGREEMENTS WITH FORMER EXECUTIVES
During 2000 and 2001, Mannatech recorded severance charges of $1.2 million
and $3.4 million, respectively. The severance charges primarily related to
compensation, insurance and automobile lease expenses to be paid to former
executive officers: Charles E. Fioretti, Anthony E. Canale, Deanne Varner and
Patrick D. Cobb. The terms of each of their separation agreements and the
estimated payments are as follows:
o On December 29, 2000, we entered into a separation agreement with
Mr. Anthony Canale, who resigned as our Chief Operating Officer of
International Operations as of February 28, 2001. We agreed to pay
Mr. Canale $400,000 on March 1, 2001, $250,000 on February 28, 2002
and $250,000 on February 28, 2003 and to continue to pay the
remaining lease payments for his car upon which we would transfer
the ownership of the car to him. In addition, we granted Mr. Canale
a total of 213,333 fully vested warrants on March 1, 2001 at an
exercise price ranging from $1.75 to $4.00 per share and exercisable
for seven years. As of April 22, 2002, none of these warrants had
been exercised. At December 31, 2000 and 2001, $950,000 and
$500,000, respectively, was included in accrued expenses, which
related to the remaining payments due to Mr. Canale under the terms
of his separation agreement. On March 1, 2001, Mr. Canale began
receiving $2,500 for each Board of Director's meeting he attended
and was reimbursed for any expenses related to these meetings. On
June 4, 2001, Mr. Canale resigned as a director from our Board of
Directors.
o In the second quarter of 2001, we entered into a separation
agreement with each of Ms. Deanne Varner and Mr. Patrick D. Cobb.
Under the terms of their agreements, the former executive officers
are bound by certain non-compete and confidentiality clauses under
which we agreed to pay Ms. Varner and Mr. Cobb a total of $978,301
and $961,216, respectively. The payments consist of various charges
including compensation related to the cancellation of their
employment agreements, accrued vacation, health insurance and
automobile leases. The payments to Ms. Varner are payable through
May 2003. The payments to Mr. Cobb are payable through June 2004. We
also granted Ms. Varner a total of 163,333 stock options and Mr.
Patrick Cobb a total of 60,000 stock options, all at exercise prices
ranging from $1.75 to $4.00 per share. The stock options vest on the
date they were granted and are exercisable for ten years. As of
April 22, 2002, none of these options had been exercised.
o On June 4, 2001, we entered into a separation agreement and full and
final release agreement with Charles E. Fioretti who resigned as an
employee and as our Chairman of the Board. Under the terms of the
separation agreement, we agreed to purchase 50,000 shares of our
stock from Mr. C. Fioretti's valued at $1.45 per share and to pay
Mr. C. Fioretti a total of $1.2 million in two equal payments of
$600,000 each due on June 11, 2001 and June 11, 2002. At December
31, 2001, the final payment of $600,000 remains payable to Mr.
Fioretti.
CANCELLATION OF INCENTIVE AGREEMENT AND CERTAIN TRANSACTIONS WITH MARLIN RAY
ROBBINS
In April 1994, we entered into an incentive compensation agreement with
Ray Robbins, an associate, shareholder, board member and company co-founder. The
incentive agreement required us to pay Ray Robbins a flat royalty fee based on
the number of new associates enrolled. In June 1999, this incentive agreement
was cancelled by us and we agreed to pay Ray Robbins $750,000 and agreed to
grandfather two of his associate positions to the highest associate achievement
level offered by Mannatech. Of the agreed amount, $500,000 was paid upon signing
this cancellation agreement. The remaining $250,000 was payable in monthly
installments of $10,000 over two years. In 2000, Ray Robbins disputed certain
terms of the cancelled incentive agreement and as a result, we agreed to pay Ray
Robbins an additional $200,000. On February 1, 2002, we entered into a final
release agreement with Ray Robbins to pay him approximately $61,000, which
related to commissions earned from the two associate positions we had
grandfathered. During 1999, 2000 and 2001, we paid Ray Robbins approximately
$618,000, $320,000 and $70,000, respectively, related to the cancellation of the
initial incentive agreement.
22
Ray Robbins holds multiple positions in our associate global downline
network-marketing system. Commissions are generally paid to our associates for
product sales and downline growth. During 2000 and 2001, Mannatech paid
commissions to Ray Robbins totalling $1.7 million, respectively. In addition, we
paid associate commissions totalling $160,000 in 2000 and $116,000 in 2001 to
Kevin Robbins and his wife Dawn Robbins, who are associates and the son and
daughter-in-law of Ray Robbins. All commissions paid to Ray Robbins and his
immediate family members were paid in accordance with our associates' global
incentive plan.
Ray Robbins also provides various consulting services to us and travels
extensively speaking at various functions to promote our business. We reimburse
Mr. Robbins for his expenses related to his consulting and traveling.
On September 28, 2001, we sold Ray Robbins 815,009 shares of our treasury
stock at $1.00 per share, which was the approximate fair market value of our
common stock on the date of sale. Mr. Ray Robbins is prohibited from selling
this stock before September 28, 2002.
COMMISSIONS AND ROYALTIES PAID TO DR. BILL H. MCANALLEY PH.D.
On September 1, 1999, Mannatech entered into a royalty agreement with Dr.
McAnalley. Under the terms of the agreement, Dr. McAnalley is paid a royalty
based on GlycoLEAN(R) product sales. During 1999, 2000 and 2001, Dr. McAnalley
was paid royalties totalling $9,013, $9,406 and $4,613, respectively.
Dr. McAnalley's wife holds an associate position in our associate global
downline network-marketing system and was paid commissions totalling $6,242 in
2000 and $59,548 in 2001. Dr. McAnalley's three children also hold associate
positions in our associate global downline network-marketing system and were
paid commissions totalling $13,753 in 2000 and $102,690 in 2001. All commissions
paid to Dr. McAnalley's family were paid in accordance with our associates'
global incentive plan.
23
PROPOSAL 2--RATIFICATION OF THE RE-APPOINTMENT OF OUR
INDEPENDENT ACCOUNTANTS
Although shareholder ratification of the selection of our independent
public accountants is not required by our Articles on Incorporation or Bylaws,
as amended, or other applicable legal requirements, our Board of Directors, as a
matter of good corporate governance, has decided to seek shareholder
ratification of our re-appointment of PricewaterhouseCoopers LLP as our
independent public accountants for the fiscal year ending December 31, 2002.
Our Board of Directors makes the appointment of our independent
accountants annually. The decision is based on the recommendation from our Audit
Committee, which reviews both the scope of the audit and estimated audit fees.
PricewaterhouseCoopers LLP has served as our independent accountants and audited
our consolidated financial statements and has provided us with certain tax and
consulting services since the year ending December 31, 1997. A representative
from PricewaterhouseCoopers LLP is expected to attend our annual meeting and
will have the opportunity to make a statement if he or she desires to do so and
to respond to any appropriate questions from our shareholders.
FEES PAID TO OUR INDEPENDENT ACCOUNTANTS
For the year ended December 31, 2001, we paid total fees to PricewaterhouseCoopers LLP as follows:
Audit Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $147,000
Financial Information Systems Design and Implementation Fees. . . . . . . . --
All Other Fees(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 189,000
---------
Total Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $336,000
=========
These fees represent services in connection with corporate tax consulting
of $71,000, certain consulting related to our international operations of
$98,000 and other consulting services of $20,000.
The members of our Audit Committee believe that the payment of the "other
fees" set forth above would not prohibit PricewaterhouseCoopers LLP from
maintaining its independence.
OUR BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE RATIFICATION OF THE
RE-APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS OUR INDEPENDENT ACCOUNTANTS FOR
THE YEAR ENDING DECEMBER 31, 2002.
OTHER MATTERS
Our Board of Directors does not know of any other matters that are to be
presented for action at our annual shareholders' meeting. However, if any other
matters properly come before our annual shareholders' meeting or any
adjournments thereof, it is intended that the enclosed proxy will be voted in
accordance with the judgment of the persons voting the proxy.
ADDITIONAL INFORMATION AVAILABLE
ACCOMPANYING THIS PROXY STATEMENT IS A COPY OF OUR 2001 ANNUAL
SHAREHOLDERS' REPORT, WHICH INCLUDES CERTAIN INFORMATION WHICH WAS CONTAINED IN
OUR ANNUAL REPORT ON FORM 10-K. OUR ANNUAL SHAREHOLDERS' REPORT AND OUR ANNUAL
REPORT ON FORM 10-K DO NOT FORM ANY PART OF THE MATERIALS FOR THE SOLICITATION
OF PROXIES. UPON WRITTEN REQUEST BY ANY SHAREHOLDER, MANNATECH WILL FURNISH A
COPY OF ITS FORM 10-K, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION.
24
FORWARD-LOOKING STATEMENTS
This proxy statement may include "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of
the Securities Exchange Act of 1934, as amended, and the Private Securities
Litigation Reform Act of 1995. Forward-looking statements may be identified by
terminology such as "may," "will," "should," "could," "would," "expects,"
"plans," "intends," "anticipates," "believes," "estimates," "predicts,"
"projects," "potential," or "continue" or the negative of such terms and other
comparable terminology. Opinions, forecasts, projections, guidance or other
statements other than statements of historical fact are considered
forward-looking statements. These statements are based upon assumptions that are
subject to change and other risks. Although we believe that the expectations
reflected in such forward-looking statements are reasonable, we can give no
assurance that such expectations will prove to have been correct. Certain risks
and uncertainties inherent in our business are set forth in our filings with the
Securities and Exchange Commission. Estimates of future financial or operating
performance, provided by us, are based on existing marketing conditions and
information available at this time. Actual financial and operating performance
may be higher or lower. Future performance is dependent upon many factors,
including the success of our international operations, our ability to attract
and retain associates, changes in laws and governmental regulations and changes
in market conditions. All subsequent written and oral forward-looking statements
attributable to Mannatech or to individuals acting on Mannatech's behalf are
expressly qualified in their entirety by this paragraph.
By order of our Board of Directors
/s/ Samuel L. Caster
----------------------
Samuel L. Caster
CHAIRMAN OF THE BOARD
Dated: April 26, 2002
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APPENDIX A
MANNATECH, INC.
FREQUENTLY ASKED QUESTIONS
Mannatech's Board of Directors urges each shareholder to read all of the
information included in the proxy materials provided to you. As a courtesy, our
Board of Directors is providing each shareholder with a list of frequently asked
questions in hopes of eliminating some of the more commonly asked questions and
helping to make sure its shareholders are informed of the various policies and
procedures that must be followed for its annual shareholders' meeting.
1. WHAT INFORMATION IS CONTAINED IN THESE MATERIALS?
The information in the proxy statement contains information about the
proposals, background information about Board nominees and compensation of
Mannatech's Board members and officers. In addition, the materials include our
2001 annual shareholders' report and a proxy-voting card, which gives you
instructions on how to cast your vote.
2. WHAT IS THE DIFFERENCE BETWEEN A PROXY-VOTING CARD AND A BALLOT?
A proxy-voting card is what is mailed to you. It gives you specific
instructions on how to cast your vote by mail, telephone or the Internet. The
instructions on the proxy-voting card are different depending on whether you own
your shares directly or you own your shares through a broker. Make sure you read
and follow all of the enclosed instructions carefully to ensure your vote is
counted. Ballots are only handed out at our annual shareholders' meeting to
shareholders of record on the close of business on April 9, 2002 who own their
shares directly or beneficial shareholders of record who have the proper
paperwork from their broker allowing them to cast their vote at the meeting.
3. WHAT SHARES OWNED BY ME CAN BE VOTED EITHER BY PROXY OR AT THE MEETING?
All shares owned by you directly or as a beneficial owner as of the record
date may be voted by you prior to the meeting using your proxy-voting card.
At the meeting, direct shareholders of record will be verified and given a
ballot card. At the meeting, beneficial owners of record will be verified by the
beneficial shareholder having a power of attorney form from their broker
allowing them to vote at the meeting. If you do not have this information from
your broker, our transfer agent may not be able to count your vote as your
broker may have already cast a vote on your behalf. We strongly recommend you
read the back of your proxy-voting card prior to the meeting to understand how
you can attend our shareholders' meeting and cast your vote at the meeting. Your
broker can usually mail or fax you the necessary paperwork prior to the meeting.
4. WHAT IS THE DIFFERENCE BETWEEN DIRECT OWNERSHIP AND BENEFICIAL OWNERSHIP?
DIRECT OWNERSHIP means the stock certificates are in your possession and
you receive all of our mailings from either our transfer agent, EquiServe Trust
Company N.A., or our solicitor, Georgeson Shareholder.
BENEFICIAL OWNERSHIP means your stock certificates were sent to your
broker or you purchased shares through your broker and you receive all of our
mailings from either your broker or through their solicitor, which is usually
ADP Proxy Services. As a beneficial owner, you own these shares, but our
transfer agent does not have the names of individual shareholders from the
brokers. The only information our transfer agent has about shareholders owning
stock through their broker is the aggregated total number of shares each broker
holds on behalf of its clients.
5. WHAT DOES IT MEAN IF I RECEIVE MORE THAN ONE PROXY-VOTING CARD?
If you receive more than one proxy-voting card it means your shares are
registered with different names or you have more than one account in which you
hold shares of Mannatech stock. Each proxy-voting card may have different
instructions, phone numbers or email addresses so make sure you read all
instructions on the back of each proxy-voting card.
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6. HOW IS VOTING DIFFERENT FOR DIRECT HOLDERS VERSUS BENEFICIAL OWNERS?
Our transfer agent has the names of the shareholders who hold the shares
directly, but does not have any detailed information such as shareholder names
of the individuals who own shares held through their brokers. Only the
individual brokers have the detailed information about their beneficial owners
or individuals who own our stock through their brokerage group. Each brokerage
group is responsible for all mail outs to our shareholders who own stock through
their brokerage firm. Each brokerage group also has its own set of instructions
on how to cast a vote using their proxy-voting card.
7. CAN I CHANGE MY VOTE?
Both direct shareholders and beneficial shareholders can revoke their
proxy-vote. Attendance at the annual shareholders' meeting will not in itself
constitute a revocation of your proxy-vote. Generally you may revoke your
proxy-vote by submitting a new proxy-vote with a later date or by voting in
person at the annual shareholders' meeting. You should contact the customer
service department in your information packet to obtain specific instructions on
how to revoke your proxy-vote. Specific instructions on how to revoke your
proxy-vote may be different depending on whether you are a direct shareholder or
a beneficial shareholder.
Each set of instructions should include your account number, solicitors
phone number and their email address. Our transfer agent or our solicitor will
only count the verified proxy-vote received with the latest date as the vote by
each shareholder and brokerage firm. Each share of Mannatech's stock represents
one vote. You should contact the customer service phone number provided to you
in your shareholder information packet if you are unsure or have any questions.
Phone numbers may be different depending on whether you are a direct shareholder
versus a beneficial shareholder. The phone numbers may also be different if you
hold shares at different brokerage firms.
8. HOW CAN I ATTEND THE 2002 ANNUAL SHAREHOLDERS' MEETING?
The meeting will be held on June 4, 2002 at 9:00 a.m., at the Grapevine
Convention Center in Grapevine, Texas. Shareholders will be admitted upon
check-in and verification of stock ownership. No cameras or recording equipment
will be permitted in the meeting room.
9. WHERE CAN I FIND THE VOTING RESULTS OF THE ANNUAL MEETING?
Mannatech will announce preliminary voting results of its annual
shareholders' meeting in a press release and publish final voting results in its
quarterly report on Form 10-Q for the second quarter of 2002, which is expected
to be filed with the SEC on or before August 15, 2002.
10. CAN I HAVE SOMEONE ELSE CAST MY VOTE FOR ME AT THE SHAREHOLDERS' MEETING?
In order to have someone cast your vote you must provide the person with
whom you would like to cast your vote with a power of attorney form. This person
is called a shareholder designee ("designee"). A valid power of attorney form
must be notarized and contain the following: o the date; o the full name of the
designee; o the number of shares held by you to be voted by the designee; o the
nature and extent of the authority granted to the designee; o an expiration date
that terminates the designee's rights to cast your vote on your behalf; and o
your signature.
The original power of attorney form must be attached to the ballot that is
turned in by the designee. If the original shareholder is a beneficial owner,
the original shareholder must also provide the proper documentation from their
broker to the designee, which would allow the original shareholder to vote and
attend the meeting. The designee should then attach all of the form(s) to the
ballot to be turned in at the shareholders' meeting.
The designee must complete a separate ballot and attach the original power
of attorney form and/or the proper documentation from the broker (only if the
shares are held through a broker) and must sign each ballot as the designee for
each shareholder.
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11. HOW CAN I VOTE AGAINST SOME OR ALL OF THE NOMINEES FOR MANNATECH'S BOARD OF
DIRECTORS?
To vote against some but not all of the nominees a shareholder should
checkmark the "FOR ALL EXCEPT" box on their proxy-voting card or ballot and
write-in the nominee(s) name you wish to vote against in the space provided.
If you want to withhold your vote for all of the nominees you can
checkmark the "WITHHOLD ALL" box on your proxy-voting card or ballot.
12. HOW CAN I WRITE-IN A NOMINEE FOR MANNATECH'S BOARD OF DIRECTORS?
A shareholder cannot write-in nominees on their proxy-voting card when
they vote by mail, telephone or the Internet. A shareholder can write-in the
names of additional nominees they wish to vote for on the ballot at the meeting.
To write-in a nominee on the ballot the shareholder needs to checkmark
either the "WITHHOLD ALL" box or "FOR ALL EXCEPT" box. The "WITHHOLD ALL" box
casts your vote against all of the nominees, whereas a vote "FOR ALL EXCEPT"
casts your vote for all of the nominees except for the nominees you list in the
blank provided. Any of the nominees not listed in the blank provided will be
automatically voted as "FOR." You can only write-in as many nominees as you
voted against. For example, if there were a total of three nominees listed on
the ballot and you withheld your vote for two of the three nominees then you can
write-in up to two additional nominees.
13. HOW CAN I NOMINATE A PERSON TO BE LISTED ON THE BALLOT AS A NOMINEE?
A shareholder needs to submit in writing any nominee(s) for the Board of
Directors to Mannatech's CFO by December 31, 2002 so the Board of Directors can
consider them for nomination at the 2003 annual shareholders' meeting. The CFO
will then forward all of the nominees to the Nominating Committee of the Board
of Directors. The Nominating Committee, which consists of various board members,
reviews all of the nominees and recommends a list of nominees to our Board of
Directors. Our Board of Directors then votes on the nominees. The nominees
approved by our Board of Directors are the only nominees that will be listed on
the ballot, proxy-voting card and in Mannatech's proxy statement on Schedule
14A, which is expected to be filed with the SEC on or before April 30, 2003.
14. HOW ARE THE VOTES COUNTED?
Representatives from our transfer agent, EquiServe Trust Company N.A.,
will be responsible for tabulating all of the votes for our annual shareholders'
meeting. The presence, in person or by proxy-vote, of the holders of at least a
majority of shares of Mannatech's common stock outstanding as of the record date
is necessary to have a quorum for our annual shareholders' meeting. Abstentions
and broker "non-votes" will be counted as present for purposes of determining a
quorum. A broker "non-vote" occurs when the beneficial owner does not give their
broker or broker's solicitor discretionary voting powers.
In tabulating the votes, if a proxy-vote or ballot is signed by the
shareholder but submitted without providing specific voting instructions the
shareholder's vote will be counted as a vote "FOR" each of the proposals.
For the election of directors, broker "non-votes" will not be counted in
tabulating the number of votes for each nominee. The nominees receiving the
highest number of "FOR" votes from the shares present in person or represented
by proxy-votes entitled to vote will be elected as directors.
For the ratification of the re-appointment of independent accountants,
"abstentions" will be counted as a vote "against" this proposal. The
ratification of re-appointment of independent accountants requires a "FOR" vote
from a majority of shares present or represented by proxy-votes entitled to vote
at our annual shareholders' meeting.
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15. WHAT SHOULD I DO IF I NEVER RECEIVED MY PROXY MATERIALS OR IF I HAVE LOST MY
PROXY MATERIALS?
If you own your shares directly and you never received your proxy-voting
card or voting materials or if you have lost or destroyed your proxy-voting card
and/or proxy materials you can call our solicitor's toll-free customer service
telephone number at (866) 219-9918. Our solicitor will verify that you are a
direct shareholder holding shares on the close of business on April 9, 2002.
Once verified, the solicitor will mail or fax you the information packet and
provide you with instructions on how you can cast your vote by mail, telephone
or the Internet.
If you are a beneficial shareholder, meaning you own your shares through a
broker, you should contact your broker's customer service department. Your
broker will verify that you are a shareholder on the close of business on April
9, 2002 and give you specific instructions on how to obtain a new proxy-voting
card, information packet and how to cast your vote.
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